Ford and Toyota, those two mortal enemies, are deep into discussion about a possible partnership to produce a Toyota car or van in one of Ford's U.S. assembly plants.
The assembly line would divide near the end, one branch getting Ford grills and nameplates, the other getting the insignia of the Japanese auto company, and the vehicles -- identical in every other way -- would be on their way to the respective dealers.
Chrysler meanwhile is searching for a partner to invest in production of new, front-wheel-drive engines and transaxles (combined transmissions and front-wheel axles) that both Chrysler and the partner could use.
"We have a full court press on, talking to everybody in the world," said Chrysler chairman Lee A. Iacocca, in an interview this week.
The pain that the U.S. auto companies went through last year -- which looked like death throes, in Chrysler's case -- really turned out to be the birth pangs of a new, worldwide auto industry built around four giant, multinational companies, says Iacocca.
"There will be GM Global," the General Motors amalgamation, he predicted. "There will be Japanese Global, and there'll be two more," a [West] German-led combination, and another, probably involving the French. "I'd like to have a hand in one of those two," Iacocca said.
The stakes are very high in the international reorganization of the auto industry that is already under way. Decisions on which plants to close, which plants to open or expand and which materials to use in the cars of the future will dictate shifts in employment and wealth within countries and between countries.
The Reagan administration's sharp internal debate over Japanese auto import policy is just another example of the hard economic and political choices raised by the international auto trade. There are major labor issues, as well. Auto unions here and in Europe fear that the trend toward common designs and components could make it easier for manufacturers to defeat local strikes by bringing in material from other countries.
The goal for all auto companies will be the same, Iacocca said: To find the right combination of manufacturing plants, markets and dealer-distribution networks worldwide that will produce the lowest costs and highest profits. It will be a global shakeout equal in scope to the consolidation of the U.S. auto industry after World War I, led by Alfred Sloan's organization of General Motors, said Iacocca. "You're going to do that one more time in the 1980s or the 1990s, for sure," said Iacocca.
Already, there are dozens of arrangements among auto companies worldwide.General Motors is constructing six new plants in Europe and expanding in Latin America and Australia. Ford's world car, the Escort, is produced in this country, Britain and West Germany and its components are made in Spain, Italy, Britain, Japan and Brazil. Mexico is becoming a major manufacturer of small auto engines for companies such as GM, Ford, Chrylser and VW of America. American Motors Corp., now owned by Renault, is planning production of French-designed cars in Kenosha, Wis.
A joint venture between Ford and Toyota would be on a larger scale, however, since the production goal would be 300,000 cars a year, and the discussions have proceeded slowly.
"They are serious and we're certainly serious," says David McCammon, vice president of Ford. "We really haven't decided what the product is for sure, where it would be built and what the arrangements would be. I think we have decided we'd aim for one plant's worth in capacity, and we'd split it up in some fashion and have something that both of us can sell."
What Ford hopes to do is fill a gap in its future product line by joining with Toyota, he continued, using existing design and engineering plans from Japan to avoid the huge expense of producing these on its own.
"That's the main objective, and that's the reason why you'll probably see more and more joint ventures. Everybody is in the position of having to keep their products modern and invest a great deal of money, so one way to compete is to share in that investment, and that's basically what we'd be trying to do," said McCammon.
Norman Lean, a former Ford executive who is senior vice president of Toyota Motor Sales U.S.A. Inc., says he would like to see the two companies produce a mini-van, which would be slightly smaller than the Volkswagen camper and would get about 25 miles per gallon.
There is speculation in the industry that what Ford wants instead is a roomy four-passenger compact, perhaps to replace the Mustang, which has a two-year-old design now and is not scheduled for a major redesign for three years, at least.
Why would Toyota want to make such a deal? Lean was asked.
Because the company has much to learn about worldwide expansion, he said. While Toyota's sales arm operates comfortably anywhere in the world, the parent manufacturing company has virtually no experience outside Japan and does not know whether it would be successful manufacturing elsewhere. "They're very sensitive about their ability to do it. They don't want to fail," said Lean.
Through a joint venture with Ford, "they would learn about the manufacturing technology and all about the suppliers in the United States, so if they wanted to expand production either here or in another part of the world, they'd have that confidence.
"I don't know how close it is, but on each round of discussion there are more people involved. That's typically Japanese. . . . The thing seems to be maturing."
In Lean's view, however, it could be thrown off course if Ford's demands for import restrictions on Japanese cars are adopted by Congress or the Reagan administration. McCammon says a good way for Toyota to defuse hard feelings in this country is to build more of its cars here.
Both sides hope a decision can be made this summer, with production beginning two years later.
Chrysler's timetable isn't even that precise. The pace of its search for a new partner hasn't been fast enough to suit its current partner -- the federal government, represented by the Chrysler Loan Guarantee Board. In the final week of the Carter administration, G. William Miller, then the Treasury secretary, concluded Chrysler wasn't really trying and ordered them to take some visible action toward a merger, if they wanted $400 million more in federally guaranteed loans.
Chrysler got the $400 million, and is looking. Industry analysts speculate that the most likely partner would be France's Peugeot, in which Chrysler already has a 15 percent interest. Iacocca says the field is open, and Chrysler isn't going to be forced into a shotgun marriage on someone else's terms.
"Big mergers come in steps. They come in joint ventures [and] through research and development sharing.
"The only thing we know is that everybody wants a piece of the U.S. market. Through all this travail and all this talking about protectionism, one thing is sure, the [American] market is still huge and rich and everybody wants a piece of it. For nothing!"
Potential investors, who held back when Chrysler was on the ropes, gradually are becoming more interested, particularly since Chrysler won wage concessions from the United Auto Workers and shucked off more than $1 billion in long-term debt, in an arrangement with its bank creditors.
Iacocca sounds interested in finding a partner to share the expense of building a new engine for the six-passenger, front-wheel-drive car that Chrysler wants to build in the spring of 1983.
A prospective partner would get the engines that could be used in its products, plus the opportunity to sell those products through Chrysler's 3,800 dealerships, plus engines that could be used in its products.
The high price of gasoline almost everywhere in the world makes good fuel economy essential and, thus, is forcing all cars into similar molds. Compacts and subcompacts are "all beginning to look alike," Iaocca said. "As the designs become the same, within a half-inch or a quarter-inch, or the engines become the same, except the pistons travel two inches more in one car, you say, 'Hold it, hold it. Why don't we pool our resources and make a common power train?'"