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Calling the shots
Page 26
Page 27
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Isuzu Motors president Yoshinori Ida dragged the manufacturer back from the brink of disaster and now he is now guiding its resurgence.
Steve Brooks catches up with him in, of all places, Las Vegas.
ilnterviewing senior Japanese managers can be like pulling teeth with plastic pliers. No matter how carefully a question is phrased, how courteously it is asked and how important the issue under discussion, clear-cut answers are as hard to come by as 'Save the Whales' signs in a Tokyo fish market.
Fortunately, there is at least one exception to this rule: one man whose track record gives him the confidence to drop the corporate rhetoric and call it the way he sees it... within reason. Yoshinori Ida runs IS11711 Motors, and to those close to him his business savvy and bold tenacity are the stuff of corporate legend.
Ida was appointed president of Isuzu Motors in 2000 with a clear but challenging brief: to rescue Isuzu from disaster.The depth of the crisis facing the company can hardly he overstated. By late 2001 the Asian economic meltdown and executive procrastination had carried Isuzu's total interest-bearing debt to a staggering ./..5bn.
With no hope of help from its General Motors stablemate —which had its own financial dramas to deal with—Isuzu was desperate and alone.
Targeting the excesses of a company he believed had been hoodwinked by a corporate mindset of invincibility and reliant on Japan's unrealistically low interest rates, Ida ordered savage cuts as the first stage of a three-year recovery programme.
The plan worked. Helped by an expanding market, 2004,2005 and 2006 were exceptionally strong years for Isuzu, allowing vital funds to be directed to product development. In 2005 alone the equivalent of £300m was committed to research and development.This figure is part of a business plan running from April 2005 to March 2008 in which £840m will be spent on R&D and acquisitions, bringing distributors under direct Isuzu control as the company takes greater control of its destiny.
Isuzu's Australian operation, for example, changed from Isuzu-General Motors to Isuzu Motors Australia (IMA) once Isuzu had paid £500,000 for GM's 40% stake. Ida told the Australian road haulage magazine Diesel: "We're selling Isuzu-designed and Isuzu-made products,so we want to sell them through Isuzuowned distributors. Wherever we have a joint venture we now want to make it totally Isuzu."
Bold targets
CM caught up with Ida at the Las Vegas casino and convention centre being used for the US launch of Isuzu's N-Series light trucks. He had already left Isuzu's American associates in no doubt about his expectations for a prompt rise in the firm's US sales from 35,000 to 50,000 units a year — part of Ida's target of 3()0,000 overseas sales a year.
Ida starts our discussion on the strong performance of Isuzu's Australian operation. While Isuzu competes in about 100 countries (and at last count was market leader in 23 of them), he takes particular pleasure from 18 consecutive years of market leadership Down Under: -I'm backing 1MA 100% and I like to take direct responsibility for that market."' Australia, he explains, is a highly competitive market and to hold the numbcrone position for so long is a "very worthy achievement."
Hino's plan to wrest leadership from Isuzu has not escaped Ida's attention. He states that Isuzu has now passed Hino in Japan's light and medium-duty markets, adding:-We aim to overtake and stay ahead of Hino all over the world." But according to recent reports in Japan, Isuzu and Hino are exploring possibilities for joint truck development. Ida remarks: "Aftertreatment development on heavy-duty trucks is one area where we could combine our strengths and do a better, more efficient and effective job.
-Also, the Japanese truck industry is expected to shrink significantly — we could see some benefit in working together in supplier sources."
But with Hino's parent company Toyota recently taking a 5.9% stake in Isuzu,it might be suggested that the two companies are forming a long-term alliance to withstand challenges from outside Japan — not least DaimierChrysler's takeover of Mitsubishi's truck business and Volvo's ownership of Nissan Diesel.
"It is as you say," says Ida. "Our alliance with Toyota is a long-term undertaking rather than a short-term move.., we're only looking at a specific area of co-operation with Toyota for now—the diesel engine joint development.
-Of course, when it comes to business relations lsuzu and Toyota are primary competitors. We cannot take an easy course or look in a hasty manner for areas of co-operation. We have to he mindful of our partnerships with other companies, and take a prudent course on expanding areas of co-operation with Toyota."
Do the company's growth plans in the US typify its intentions in other major regions, such as South America and Europe? "Yes indeed," Ida replies. "We're finding significant opportunities in many countries—China, Russia, Brazil — but as yet these opportunities aren't synonymous with earnings opportunities.
The Brazilian market holds particular appeal for Ida, despite earlier se tbacks:"We were once in that market but we packed up and came hack to Japan with a feeling of defeat. But I've seen that market for myself and if we could establish ourselves quickly there, we could say we have become a real global company As for North America, including Canada and Mexico, we're looking at it as an integral region. We've been leaving Canada in the hands of GM but we're now making our own inroads and will be doing a lot more on our own to increase sales volumes.., likewise, we have growth opportunities in Mexico: with the volumes in Canada and in the US, our 50,000 annual sales target is not far-fetched."
Regional approach isuzu's global strategy includes significant changes for the Europe market. Isuzu's previous approach was to develop operations on a country-by-country basis: "Entering into I taly, for instance, we would have self-contained operations with sales and so on,and the same for other markets like Spain, Portugal and the UK.
"Gradually that approach has been expanded to cover more countries including Benelux and Germany. Dealer appointments have already started. Now we are at the position where we can look at Europe as a collective whole,not on a country-by-country basis.
"Now we are poised for the future and robust growth, especially with thernewl F-series trucks; that will require us to secure a production front for those markets. We plan to make o ur Turkish facility serve those European countries."
This regional approach also applies in the southern hemisphere: "It's not good for us to develop products for the Australian market specifically. We have to look at it from a regional perspective, including New Zealand and South Africa and all those other resource-rich countries where right-hand drive is the key."
Global products In engineering terms, he adds, this process has already started.The new N and F-series models were developed as global products without costly variations for individual markets.
In terms of those models Ida acknowledges that the heavy-duty sector is a weak link for the marque, explaining that it is a case of priorities: "Isuzu has a vision to become a leading global company and our strengths are in mediumduty and light-duty. Our first mission is to hone our strengths in medium and light-duty so that we can really consider ourselves as having overwhelming power over any of our competition from Europe or elsewhere.
"After that we'll focus on heavy-duty, but we're already looking at howwe could approach this challenge. I can't go into detail on product plans... but I assure you the learning process to eradicate this weak link is already there. We're getting a lot of feedback from IMA."
Isuzu, like its competitors, is working on alternative fuels and power systems such as hybrids, di-methyl ether (DME) and compressed natural gas (CNG). But how much of this is done to satisfy the environmental lobby'? "Our development efforts in hybrid and alternative fuel vehicles aren't for the purpose of environmental lobbying," Ida stresses. "But we consider it our responsibility to address those environmental concerns.
"One of the keys is cost. Compared to an ordinary gas (petrol) or diesel engine it is a lot more complex. And how best we address this requires a major effort. But looking forward at global resource availability, CNG has a lot more potential and will rate more positively with people because it is pollution-free."
Before we part there is one question I have to ask: does Ida feel a sense of irony about launching such an aggressive US strategy only a few years after Isuzu was effectively discarded by GM?
"I don't see any irony," he says with a shrug. "But it would be very good if GM viewed us as doing a good job in America."
If not irony, perhaps a sense of satisfaction? No comment... just an enigmatic smile that doesn't bode well for the competition. •