1 In mid-1983, the Management Committee of Ford of Europe (the company's senior decision-making committee) was once again examining the trends, opportunities, and threats offered by the European market. The principal threat perceived by management was the growing Japanese presence in Europe. Japanese manufacturers had increased their car sales in Western Europe from 750,000 units in 1979 to almost one million units in 1983 and they were beginning to establish a manufacturing foothold in Europe. Nissan, for example, was just beginning to produce automobiles in Italy, it would soon increase its production of vehicles for Europe from a Spanish plant, and, most worrisome, the company was expected to announce imminently a decision to proceed with a previously shelved plan to construct a new and very large assembly plant in the United Kingdom. Although Ford competed very successfully against the other European producers-and for the first time had captured the number one European market share position in the second quarter of 1983-Japanese producers' plants in Europe would constitute a new and severe challenge. What especially worried Ford was the possibility that Nissan's new U.K. plant would import major automobile components into Europe from Japan, assemble them into finished vehicles, and then claim that the vehicles were European in origin and thus not subject to any existing European-Japanese trade agreements or understandings.
This worry had led Ford executives back in 1981 to consider seriously local content regulations as a way of reducing this risk and helping to stem the growth of the Japanese producers' share of the European market. Local content regulations, most commonly employed by developing countries against multinational firms based in developed countries, defined the percentage of a product that must be produced in a specified geographical region as a precondition of sale in that region.
Although local content regulations had been discussed occasionally in the Management Committee for the past two years, no conclusions had been reached, and pressure was building to push the discussion through to a definitive policy stance. If the Committee were to decide to favor local content regulations, it would then have to decide on strategy and tactics. Regulations could take various forms, some of which might be more advantageous to Ford than others. And, of course, Ford would have to decide how to represent its position to the governmental bodies that would have to introduce, monitor, and enforce the regulations ....
- 1039 reads
