Comeback Kids

Mazda roars ahead

Few companies have survived setbacks as stunning as the one that befell Japan's Toyo Kogyo Co. Ltd., the maker of Mazda cars and trucks, in the mid-1970s. At the time, nearly half of Mazda's vehicles used the revolutionary Wankel engine, in which a rotor instead of pistons produces the power. When the world oil crisis began in 1973, the gas-guzzling Wankels became a sales disaster because they delivered a maximum of only about 15 miles to the gallon. The company seemed headed for the corporate scrap heap. Recalls one executive: "Every day felt like doomsday back then."

Today, however, Hiroshima-based Toyo is flourishing. Its 1981 profits reached a record $84.9 million, while sales of $4.9 billion made the firm the world's ninth largest automaker and the third biggest in Japan, behind Toyota and Nissan. About 10% of those sales went to the Ford Motor Co., which buys Toyo parts and cars and has owned 24.4% of the company since 1979.

Mazda's front-wheel-drive compact, known in the U.S. as the GLC (for Great Little Car), has become the world's third bestselling model after the Toyota Corolla and the Volkswagen Rabbit. Mazda's RX7, the only rotary engine vehicle that the company exports, is the second most popular foreign sports car in America.

Toyo Kogyo's road back from disaster started with an appeal to its workers. President Yoshiki Yamasaki asked the company union for permission to shift nearly 5,000 blue-and white-collar workers into sales jobs. Engineers, designers and factory hands were soon manning Mazda showrooms at 110 locations around Japan. Said one union leader of the arrangement: "It was a matter of whether Toyo Kogyo would live or die. We would be jobless if it died." The unions also allowed attrition to slash Toyo's payroll from 37,000 employees in 1973 to 28,000 today. The reduction boosted assembly-line productivity from 19.3 vehicles per worker in 1975 to 45.7 vehicles this year.

Blue-collar workers are now enjoying some of the benefits of Toyo Kogyo's new prosperity. Last week union members got a 6.9% pay hike. Says Masao Isoda, a 28-year-old foreman: "In the bad old days, I could afford only noodle soup for lunch. Now I allow myself the luxury of a fat, fried prawn with my soup."

Just after the 1973 oil embargo, the company created a special unit to develop new cars. The notable results include the RX-7 sports car, which gets about 24 m.p.g. from its improved Wankel engine, and the GLC. That compact is known as the Familia in Japan and the 323 in other parts of the world. Ford markets a version of its own, called the Laser, in 44 Asian countries. While the car looks suspiciously like a Volkswagen Rabbit, there is one important difference: the GLC sells for about $5,475, while a Rabbit costs $6,165.

Despite its recent success, Toyo still has problems. The firm is trying to raise at least $1 billion to build a new plant and develop cars to add to its current line of only five models. It is also seeking to boost sales in Japan, where it has long been a laggard. Toyo now sells more than 70% of its vehicles abroad; the Japanese car industry average is 54%.

Such heavy dependence on foreign markets can be dangerous, given the protectionist mood of many countries. Voluntary export restraints by Japan have slowed GLC sales in the U.S. Americans bought only 13,388 of the autos in the first three months of 1982, in contrast to 21,209 a year ago. After recovering from the Wankel crisis, though, any troubles now seem almost minor.

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