Good morning everyone!

It's a pleasure to be here in Dearborn - especially at this time of year. And I am very pleased to have this opportunity to tell you about the progress we are making at Mazda.

Often as CFO, when I stand up to speak I come armed with multi-megabytes of complex slides explaining the intricacies of Mazda's finances.

Well, today I want to do something a bit different. I want to tell you a story...

Over the past six years it has been my great privilege to witness - and participate in - a remarkable transformation.

I'm talking about the rebirth of Mazda.

I don't expect most of you will have heard this story... because frankly it remains very much "work in progress" and, secondly... well, Hiroshima is a long, long way from Detroit. At times, it even seems a long, long way from Tokyo!

But after a long hard road, Mazda now has a story we can begin to tell with growing confidence... and pride.

What's going on, you might ask? First of all, we're back in the black, although frankly that's just an early report card of our efforts to date. More importantly, we are attacking head-on the longstanding legacies of failed strategies we pursued as far back as the late 1980s. And as we do so, we're also returning to our roots after what seems a very long time in the wilderness.

And as evidence of that, we're now launching a wave of new products - great cars that are being greeted with enthusiasm by the automotive press and customers alike. These are products that fully represent what Mazda once stood for - and must stand for again - if we're to be successful in the future.

Throughout the company, we now have firm but quiet confidence that Mazda once again is gaining traction.

How remarkable is all that? You can only really appreciate the significance of these achievements if you understand how far we have come - and how hard a road we have traveled.

So today I would like to tell you a bit about that road. Better yet, I would like to tell you about some exciting things we see ahead.

First, let's rewind to the early to mid-nineties...

Mazda's very future was in question. Our backs were against the wall. Frankly, if we had been based in the U.S. rather than in Japan, our very ability to survive would have been in doubt. Why?

We had substantially increased our fixed costs and debt levels in the late 1980s and early 1990s to pursue a growth strategy that then simply failed.
At about the same time, the economy of our home market entered a protracted downturn - a downturn that has yet to end as I speak today.
To make matters worse, we were - and still are - the most export-oriented of the major Japanese manufacturers. By the mid-1990s, we found ourselves suddenly facing an unprecedented strong yen... which wreaked havoc with our profitability, distribution, and competitiveness in markets outside Japan.
At the same time, in our core markets of Japan, North America and Europe, we faced intense competition from companies far larger than us and with deeper pockets.
And, we had to confront the stark realities shared by all smaller independents... steep goals for safety, emissions and fuel economy meant that each successive generation of product was becoming more costly to develop.
As the nineties progressed, liquidity became an increasing concern. As a result - and due in part to our failed experiences of the early nineties, our product lineup - in general - became cautious, conservative, even bland.
Perhaps most critically - the company - and our products - had no brand focus. We had forgotten who we were, what we represented. We became a car company that developed "me too" products, losing the spark, uniqueness and daring that had made us stand out in a very tough crowd.

Mazda was in a bad way. And yet...

There was still enormous value in the organization. Mazda was an "original" with tremendous spirit, a company that literally rose from the ashes of Hiroshima. It had - and continues to have - tremendous technical capability. And at its best, Mazda had a great sense of style and a knack for producing original, inspired products.

But back to the story...

By the mid-1990s, Mazda had literally run out of gas, although there still were tremendous latent strengths in the organization. What did we do? Simple. We did something that we had done in another, earlier time of trouble, back in the 1970s. We turned to Ford Motor Company, our long-time partner, for assistance.

That was when I joined Mazda. 1996.

Henry Wallace came in as the first foreign president of a Japanese automaker - which was an earth-shaking event in Japan. I can still recall today the press articles in Japan that referred to his becoming president of Mazda as the "second coming" of the "black ships" of Admiral Perry, the catalyst for the modernization of Japan 150 years ago.

But once the initial shock wore off, the reaction in Japan was surprisingly mature, in no small part due to the outstanding manner in which Henry carried out his responsibilities. People accepted the foreign presence in Mazda as a necessary step.

And it helped that we had some early successes... notably our first Demio small car, which kicked off the explosive growth in Japan of the small car or B segment.

Still, it was soon evident there were going to be no quick fixes. Mazda's problems were fundamental and deep-seated.

Although we achieved substantial improvement in Mazda's business conditions by the end of the nineties, it became clear - helped by a strong yen once again! - that much more needed to be done.

This is where things became very interesting - and where the strengths of the multiple cultures of Mazda - western and Japanese, Mazda and Ford - joined together to tackle the "hard choices" we needed to make if we were to finally get back on track.

A disparate group of individuals - the senior management of Mazda - came together with open minds and willingness - an eagerness, I might say - to truly understand our problems and issues. Equally importantly, this was combined with an inclusive and probing process to finding solutions.

In fact, the realization that the process we would follow would be critical was a key breakthrough for the non-Japanese members of the team, including me. And it turned out to be a critical step in achieving the full and complete buy-in from all the senior management of Mazda in the actions we would have to take to begin to address our issues.

So we sat down as a management team - Japanese, Americans, Australians, Mexicans, Europeans... and there may have been others! - and we took the time to listen, to debate and to develop a recognition, then a consensus, around the need for change.

Once we had achieved that, we worked to craft a vision of the evolutionary path we needed to find. Where did we want to take Mazda? What opportunities were open to us? What strengths could we build on? What were our critical weaknesses? How were we going to make Mazda - and our brand - relevant in a world full of automotive companies and, frankly, excellent products?

Well, the entire process took us eight months... and it was very demanding. But we came out of the process with a very detailed five-year plan - we call it the 'Millennium Plan' - backed by total and unanimous commitment from the management team.

It took much more than that, though. To achieve the kind of consensus that is one of Japan's greatest strengths... we had to bring each and every Mazda employee into that shared vision. They needed to fully understand both the need for change and how we needed to change.

Once we had that understanding we were able to begin to implement the first steps of the Millennium Plan. This included reducing production capacity in Japan by 25% and reducing our indirect or salaried headcount by over 20% - despite the historic Japanese expectation of lifetime employment.

We brought in merit-based promotion and compensation - which required new HR processes.

And we initiated a large-scale education scheme - we call it Mazda Business Leadership Development - to bring about radical change in our corporate culture... speeding up decision-making, for example, and developing a whole new awareness of cashflow and profitability issues in every facet of the business.

Most importantly, we put enormous effort into redefining what Mazda is - or must become - from a brand perspective and identifying the types of customers we wish to attract. And we linked this understanding directly to our R&D community and processes.

Consequently, we completely refocused the Mazda brand to align the company's historic strengths with the needs and aspirations of a closely targeted global customer base - people who share Mazda's vision of what a car should be.

I expect you have seen our Zoom-Zoom TV ads - and in simple terms that's what its all about. Mazda is for people who have never lost that pure thrill of motion you first experienced riding your bike as a child.

Our goal is to deliver that feeling in cars that, as we like to put it, are Stylish, Insightful and Spirited. If you're simply interested in transportation that will take you from Point A to Point B, we're not the car company for you. If you want to have fun getting there, however, look us up.

Mazda's new brand promise is now at the heart of everything we do - from product development through after-market service.

Again, all of this took time... we went 18 long months with no new products as we actually re-timed programs to ensure our products would truly deliver the brand promise we believe is critical to our success.

And let me tell you...

It's working.

Although we are only about 20 months into our Millennium Plan and only just now entering the growth phase, the early signs are that our strategies are working.

The world has seen how much the Japanese can achieve when they have a strongly shared vision and a clear path to reach it. That's how they transformed a feudal society in the mid-1880s to a Great Power 100 years later. And that's how they got from the low point of 1945 to the strong position they reached in the 1980s.

And in Japan's continuing economic troubles today you can see what happens when they lose that vision and sense of mission.

Well... Japanese and Westerners working together are getting one Japanese company back on track in a powerful new direction.

And once a Japanese organization 'gets it'... it is amazing to watch how lightning-fast the implementation can be and how seamless the teamwork is in action.

Before I get too enthusiastic - and that's easy to do! - let me tell you frankly that there is yet much work to be done. But we do have momentum.

We exceeded most of our objectives in FY2001, which ended this past March. This included recording a profit and achieving the greatest improvement in operating and net profitability in Mazda's 82-year history. We also continued to generate positive cash flow - despite substantial payouts associated with an early retirement program for our employees who elected to leave the company in early 2001.

Yes, a weak yen helped last year. As the old saying goes, "a rising tide lifts all boats." But in a year where results were not supported by any new product... the real credit still goes to thousands of Mazda employees who came to grips with key business issues in every facet of our operations.

The story through FY2001 was about Reform and Restructuring - and restoring profitability. We're moving to a new phase this year - product-led growth - and we are off to a promising start.

As I mentioned, we went a long time with no new product - quite deliberately. We felt it was vital to introduce excellent products that fully embody our new brand identity. Compromises or "almosts" simply were not and would not be acceptable.

The first thrust came in May with the launch in Japan of the new Mazda Atenza or Mazda6 as it is known in other markets - our lead mid-size product.

The response to date has exceeded all our expectations. Some of the world's most demanding car writers have rated the Mazda6 "top of its class." And early buyers seem to agree. We've had to boost monthly production at our Hofu plant from 10,000 to 14,500 units a month. And grade and option mix has been far stronger and richer than we expected.

The second thrust will come hours from now when the sun rises in Japan.

We are about to launch our next-generation Demio small car, our critical entry in the small-car segment... which is the most dynamic end of the Japanese market right now.

Although we are still a few hours away from the launch in Japan, I'd like to show you now the first glimpse of this exciting new product.

As I mentioned earlier, our original Demio was a hit in Japan. This all-new version builds on its strengths with class-leading driving dynamics and safety, innovative tailoring to customer lifestyles, ingenious and flexible interior packages... all wrapped in distinctive, athletic looking exteriors.

It comes with a line-up of new, in-line, four-cylinder engines, and all the Zoom-Zoom traits that are essential to delivering on our brand promise.

Our new president, my colleague Lewis Booth, says it even "smells like a Mazda." And one of the leading auto journalists in Japan said last week that even if there were no badges on either the Mazda6 or the Demio, you would know they came from the same stable.

Strongly positive reactions from the sneak previews we have done indicate that the Demio is going to do as well as, if not better than, the Mazda6.

Early next year we are going to follow up with a brand icon that will redefine the term "aspirational."

Our new rotary-engined RX-8 is the kind of car that people are going to find themselves dreaming about - and aching for.

It is a sports car like no other. It delivers superb handling and styling that will get your heart racing, but thanks to a new and significantly improved rotary engine, a sports car that will comfortably seat four adults plus luggage.

And there is much more to come from our product development teams.

The crucial point I would like to leave with you is that we are achieving what we set out to do.

We are successfully addressing problems that were deeply rooted in Mazda's corporate culture.

We have achieved a powerful new strategic focus - and brand focus - that is resulting in class-leading product.

We are proving - decisively - not only that Japanese and westerners can work together, but that this is in fact a winning combination. Synergies - which seem elusive in so many other industries when two companies and cultures come together - in fact are being delivered in the case of Mazda and Ford.

Mazda's new strength is a formidable hybrid of Japan's legendary technical capability and the best strategic and brand-building know-how from the US and Europe.

And Mazda's new strength is powerfully reinforced by extensive synergies with Ford:

Make no mistake, as I said earlier, we still have a lot of work to do - and we must contend with circumstances beyond our control: continuing economic stagnation in Japan and recently a suddenly weaker dollar are just two examples.

We are not at all complacent. In fact, we run "scared." But we now have confidence that newly acquired agility and discipline in Mazda's corporate culture will help us overcome challenges as they arise - and they surely will.

But Mazda is no longer 'limping' or 'ailing.' Mazda is back on track and gaining traction in all four wheels. We're geared up to go.

With strong strategic and brand focus and a revitalized corporate culture, Mazda is poised to recover its historic position in the Japanese market - and to win greater market share from our rivals in North America and Europe.

As the world begins to notice just what we are achieving at Mazda, I believe a new picture will emerge:

In the US and European auto industries, we tend to see the Japanese in one dimension only: as fierce competitors.

But with the growth of alliances such as we have between Ford and Mazda, I believe we are going to see a fully three-dimensional view emerge - one that includes the Japanese as valued colleagues and customers.

At Mazda we are discovering just how much can be achieved when different cultures work together with a common goal and vision. And given the issues the world faces today, I see something wonderfully hopeful in the fact that we are writing a bright, positive chapter in the history of Japan-US relations on the very site of one of the darkest chapters...in Hiroshima.

Coming back to where I began... the chance to witness and participate in the transformation of Mazda continues to be a fascinating experience. We certainly are not ready to close the book and say 'job done'... but let me assure you: Mazda is back!

Thank you very much.