| BUSINESSWEEK ONLINE : APRIL 26, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
Look Who's Bowing to Japan Inc. Now (int'l edition) The French are cozying up to their carmaking rivals As French Prime Minister in 1991, Edith Cresson referred to the Japanese causing France's trade deficit as ''ants.'' Today, French attitudes couldn't be more different. Renault, formerly a state-protected icon, has purchased a giant stake in Nissan Motor Co. Toyota Motor Corp. recently began importing its new $10,000 Yaris compact into France. And encouraged by a $55 million subsidy, Toyota is pushing ahead on a $666 million auto plant in the depressed mining town of Valenciennes to produce the Yaris locally by 2001. The change of heart reflects how France is opening up. Instead of trying to keep the world at bay, the French are learning that they can do better by teaming up with rivals in some cases, while actively competing with them in others. Part of the shift is because of external pressure. The European Union's single market makes France's former insularity dangerously uncompetitive. But it also stems from the realization that the French can profit from inviting the Japanese to the party. They get jobs and investment--plus lessons from some of the world's best manufacturers. Government officials hope the Toyota investment will signal to other foreign companies that France is open for business. ''Toyota is a benchmark for Japan,'' says Laurent Fiscus, deputy prefect of the Nord Pas de Calais region, who spearheaded the project. A former official at the French embassy in Tokyo, he says such companies as Sony Corp. and Toshiba are watching the deal carefully. Already, Gumma-based parts supplier Ogura Clutch has built a plant next to Toyota's site. JUST IN TIME. The French hope Japanese carmakers will bring new manufacturing methods with them. Toyota has long been famed for its superefficient just-in-time production, which minimizes inventory. The new Toyota plant will test the company's latest ideas, including a radical shrinking of space. The Valenciennes facility will churn out 150,000 autos a year on only 12 hectares, 40% less space than traditional factories producing similar volume. For Toyota, Valenciennes is a crack at the local market. It has a market share of more than 35% in Asia, including Japan, and 8.7% in North America, but only 3% in Europe and 1% in France. It has never come close to surpassing European quotas on Japanese cars, which expire at the end of this year. Now it's going head to head with homegrown competition. Toyota's Yaris is competing with Renault's best-selling Clio and Volkswagen's Polo. The compact segment accounts for about 40% of all cars sold in France. As the first Toyota model ever designed in Europe, the Yaris boasts sharper lines, bolder colors, and tighter handling than the traditional Japanese compact. Toyota has also just broken ground for a new design studio outside Nice, to open next year. Toyota executives say the Renault-Nissan deal has not changed their plans, but admit the combination will be tough competition. ''There's a lot we can learn from Renault and Nissan,'' says Akira Yokoi, Toyota's executive vice-president for overseas operations. Moreover, ''Toyota also knows that Nissan never will build a plant in France,'' says Fiscus. Valenciennes, a town of 340,000, suffers from a 20% unemployment rate. The Toyota factory will employ about 2,000 people--and already has 11,000 job applicants to choose from. The city government is building new homes for Japanese expatriates and establishing a Japanese- and English-speaking international class in a local lycee. ''I'm even invited all the time to homes for dinner,'' says Seiichiro Adachi, director-general of the Valenciennes operation. For someone who was once put down as an ant, that represents a real revolution. By William Echikson in Valenciennes, with Emily Thornton in Tokyo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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