At least on the surface, informal local content regulations in Europe looked very attractive to Ford's executives. The Japanese threat was surely very real. Production levels in Europe in 1980 were about the same as they had been in 1970, and in the last decade, while European exports to non-European markets fell 42 percent, Japanese worldwide exports rose 426 percent. Ford's market analysts forecast slow growth for the European market in the future, indicating that higher Japanese sales in Europe would come directly from those of the established European producers. The existing structure of voluntary agreements to limit Japanese imports into individual European countries was fragile. Although "voluntary" was clearly a euphemism, any cracks in the agreements could quickly lead to more Japanese imports before new and possibly more lenient agreements were negotiated. West Germany and Belgium were thought to be the weak spots.
If a European local content rule were to be established on the basis of local sales (i.e., if a specified percentage of each manufacturer's European sales had to be produced in Europe), then the existing system of individual national voluntary trade agreements would become redundant. Alternatively, if a local content rule were to be applied to local production (i.e., if a specified percentage of the content of each manufacturer's cars assembled in Europe had to be sourced in Europe), then some controls on automobile imports would still be needed. A local content rule of this type would prevent the Japanese from circumventing the intent of import controls by importing the bulk of their components from Japan while establishing only token assembly operations in Europe.
Yet there were many potential negative consequences for European producers if local content regulations spread across Europe. It was not obvious that European producers should object to Japanese imports, even at a substantially higher level than at present, if the alternative was to be new Japanese greenfield plants in Europe. Even if they complied scrupulously with local content rules, these new plants, employing the most advanced production technology and work methods, could be tough competitors, unshackled from any form of constraint. At the very least, they would add production capacity to a market already suffering from 20 percent excess capacity. A price war was certainly not impossible to imagine. And Ford, among others, was worried about the impact that these plants could have on fleet sales, particularly in the high-margin U.K market, if nationalistic customers began to think of Nissan, for example, as a "national" producer.
Another problem was that local content rules could limit Ford's own manufacturing flexibility. The key new concept in the automobile industry in the 1970s was that of a "world car." A world car is assembled in local markets (tailored to local consumers' tastes) from a common set of components. Each component is produced in very high volume at one site, where it can be done least expensively, and then shipped around the world to the scattered assembly plants. Local content rules and world cars were seemingly incompatible.
Ford's "Erika" project (the 1981 "Escort") was the first of the world cars. In actual practice, the world car concept was of questionable success. The Escort that was marketed in the United States differed so much in style and design from its European sibling that there was little parts commonality, and transportation costs ate away at the efficiency gains from large-scale production of the common parts. The result was that although there was some international trade in components within Ford, most movement of parts was either within Europe or within the United States.
General Motors had similar problems with its "J car" ( the Vauxhall "Cavalier" in the United Kingdom and Opel "Rekord" in West Germany) and "X car" (the Vauxhall "Royale" in the United Kingdom and Opel "Senator" in Germany). General Motors seemed to have been more successful than Ford, however, in standardizing components, and whereas Ford had primarily maintained an approach of European sourcing for European markets, GM had already moved to exploit its global reach.
To make matters even more complex, Ford had a 25 percent share in Toyo Kogyo (Mazda) and thus an option of working with Mazda to import inexpensive Japanese vehicles. Indeed, a Mazda pickup truck was sold in the United States and Greece as a Ford truck, and the very successful Ford "Laser" in the Far East was a version of the Mazda 626 made in Japan. (In July 1983, Ford was threatening such a policy to counteract the proposed GM-Toyota production plant in California.)
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