Can Ford Fix Mazda?

Nestled in a bay on the Sea of Japan lies Mazda Motor Corp.'s Hofu assembly plant, a feat of automated manufacturing and worker-friendly industrial design. In the "human zone," workers in spanking-white coats operate under gleaming fluorescent lights. Hot, heavy, noisy work is fully automated in a separate area. The decor is soothing greens, grays, and blues. Modular mini-lines churn out subassembled sections.

Unfortunately, this ergonomic high-tech marvel is running at only 35% of capacity these days. Mazda sank $550 million into the plant, which it opened in 1992 to ramp up production of upscale passenger cars. Then, Japan entered an economic slump, and consumers turned to sport utilities, wagons, and vans. But the Hofu plant can't make those kinds of vehicles. "Hofu is our most modern plant and our most efficient, but it's also our least flexible," concedes Mazda President Henry D.G. Wallace, who was dispatched by major shareholder Ford Motor Co. more than two years ago. "We tend to run into restrictions with what we want to do at Hofu."