Ladies and gentlemen, thank you for inviting me to the Japan National Press Club. It is a great privilege for me to be given this opportunity to talk to you.

Nearly 17 months have passed since I assumed the post of president of Mazda. Today I would like to talk a bit about my experience, the progress Mazda has made over the past two years and the prospects for the future.

I'll also touch on the relationship between Mazda and Ford.

On November 14, 1997, I became the second foreign president and CEO of a listed Japanese company, succeeding Mr. Henry Wallace.

During my first press conference that day, I said to the press that I was committed to serving as the president of Mazda for at least 5 years and added that it would make me even happier if 5 years became 10 years.

It was my love of Japan and the strong commitment to Mazda that made me feel so strongly about identifying Hiroshima to Ford management as my preferred assignment.

My love affair with Japan began in 1963 when our family made a trip here and we visited Tokyo, Kyoto and Sapporo. I recall that the tallest building in Tokyo at that time was only 18 or 20 stories high and still remember the great view of Mt. Fuji from our hotel.

That visit occurred after the second of three years of living in Taiwan where my family had moved because of my father's job. Those 3 years gave us opportunities to visit Japan and many other countries in the East for the first time.

The experience opened my eyes to differences in cultures and life styles to what a person raised in a typical western environment would ever be exposed to.

Respect for the aged, emphasis on harmony as well as the differences in value systems that governed ones personal and professional lives fascinated me. My feelings about the East were reawakened when I was assigned by Ford to work in New Zealand in early 1989 and became involved with Mazda. In fact, I visited Japan many times and made quite a number of acquaintances and friends at Mazda.

Consequently there was no hesitation on my part in accepting the position, when Ford offered me the opportunity to work at Mazda.

I still remember my father talking to the family before we moved to Taiwan and telling us we would see many customs and life style elements that were quite different to those with which we were accustomed.

He said always remember different is not bad, different is simply different. And always respect the differences. I think those words and my experiences over the intervening 36 years are the elements that have conditioned me to blend in quite naturally with Mazda as its president.

In April 1996, when Henry Wallace was appointed president of Mazda, many people reacted with horror. Headlines read:

The Black Ship called Ford has come!"

How many people will get the ax?

Is Mazda going to be reduced into a factory of Ford?

It has been interesting to me to see how different the reaction has been to the Nissan-Renault tie-up just 3 years later.

However, in that three years, Mazda's business performance has shown steady improvement. Don't misunderstand me, we still have a lot of work to do- as I've said many times, we're still far too highly for too highly leveraged and have to make considerable improvement to our balance sheet before I'll be comfortable. But let me highlight a couple of points that illustrate some progress. Break-even revenue has been reduced over 45 % in the last 5 years and breakeven volume is down nearly 30%.

At the March 1998 fiscal year-end we achieved our largest parent company profit in 7 years. And our interim profits reported late last year were our best since 1991 on both a parent company and consolidated basis.

The figures for the full year that ended last month are now being tallied and will be announced in a few weeks.

If we achieve our forecasted net profit of 320oku, it will be our best consolidated profit since 1985. I think we're headed in the right direction.

When I am interviewed, reporters invariably ask what the main factors were that contributed to our progress.

My response is quite simple. Many of you have heard me say before that we have focused on the fundamentals and it was just plain hard work. There is no magic formula.

However, a part of that was putting greater emphasis on numerical targets. Some people say the business style of setting numerical targets does not sit well with Japanese companies, but I disagree.

Ten years ago, Mazda production engineers talked to me about reducing cycle time by a 10^th of a second, or defects per car by a 10^th of a defect and that they measured performance constantly.

If targets were not met, the root cause would be analyzed and countermeasures taken. I believe that is one reason why Japanese automotive manufacturing rose to preeminence in the world.

Since it has been so routine to rigorously measure performance against targets in the manufacturing sector, I'm hard pressed to understand why the same approach doesn't naturally apply to the balance of the business.

That's what we've done-again nothing magic, just a fundamental approach to managing a business. As an example, we've established business plans and budgets for all of our subsidiary and affiliated companies with measurable performance targets for profit, cash flow, return on sales and assets, debt targets, etc. And we've established internal controls that include clear approval authorities on borrowing and investment decisionshe basics.

Some have characterized our progress as an example of good international integration where east meets west. I tend to borrow a phrase from our design philosophy, "Contrast in Harmony".

The fact of the matter is that the real credit for our successes up to now goes to our 24,000 employees who have shared with me a passion for re-building our company.

The foundation for further progress has been built on a focus on some very basic business imperatives; today I'll mention 3 of them:

1. Achieve people success.
   In my first speech to Mazda employees after I was appointed president, I mentioned the importance of people success.
   
   We are working to create an environment where every employee can achieve their fullest potential. We've made changes to our personnel system, but quite frankly have only begun to scratch the surface-more change is needed to better recognize individual contribution to the company's overall performance as well as to reward their capability to assume greater responsibilities.
   
   We are also working to better train, develop and motivate younger employees. I regularly meet with groups of younger employees--something I've been doing for many years in countries around the world.
   
   Recently, I spend about 90 minutes with 16 young employees who are in their second year of service at Mazda. Although some of our more senior managers would tell you we are rapidly changing the company, this group of young employees was saying that the pace of change is much too slow.
   
   I wasn't surprised--that's consistent with what young Ford employees told me in many countries before I moved to Japan.
   
   Mazda is devoting great emphasis to accelerate reform in its personnel policies to meet the needs of the next century, as I consider people to be our most important asset.
   
   
2. Number 2 is a very strong focus on building our corporate image and our brand image.
   One indicator of corporate image is the annual Diamond Weekly Survey-last years' survey indicated we had made good improvement in our overall corporate image ranking in the last 2 years, and were rated well in the "re-engineering the company" category.
   
   I also think the media has treated us and our products quite fairly in the past couple of years as we've worked hard to build our credibility and our lines of communication. (Though I must admit that from time to time I would like to help many of you edit your stories about Mazda.)
   
   I'm going to take minute to talk about brand image and our initiatives. It started a couple of years ago with a change to our brand mark, that now goes on all of our products.
   
   Step 2 was consensus on a single global brand strategy-because of our size that was an important step to insure we are consistent in our strategy in every market.
   
   We aren't big enough to deliver different strategies to different parts of the globe.
   
   The third step has been the implementation of brand management throughout our organization. The initiative is aimed at driving all of our efforts-from design to engineering to manufacturing to sales and service-from the customers perspective.
   
   The catalyst is what we refer to as our brand DNA, comprised of Personality attributesノstylish, insightful, and spiritedノ and Product attributesノdistinctive design, exceptional functionality and responsive handling and performance.
   
   Simply stated, the goal is to deliver that brand DNA in our products and services, and in doing so "connect" customers to our brand in a manner that builds both satisfaction and loyalty. The all new Premacy fully embodies this brand DNA as will all of our future products. You will also see it woven into all of our corporate communications.
   
   Successful brand development and management of the brand can be extraordinarily powerful.
   
   
3. The final element of our platform is to further strengthen and build our relationship with Ford Motor Company.
   
   The equity relationship between Mazda and Ford began nearly 20 years ago. And our actual business relationship began 28 years ago.
   
   Many people ask me "when" or "if" Ford is planning to increase its equity share in Mazda.
   
   My answer consistently is "please ask Ford". However, I always add that the Mazda management team operates without respect to the size of Ford's equity-we are partners with the second largest automotive company in the world, so it stands to reason that we will leverage that partnership to our maximum benefit.
   
   So does Ford.
   
   While the two companies intend for the identities of each company to remain very separate and unique, we also work every day to further strengthen our strategic cooperation.
   
   The partnership has developed over the past 28 years to build greater levels of competitiveness for both companies. I'm confident the future will bring similar success.

In recent years, Mazda has faced some tough challenges-like the days of '94 and '95 when losses were running at over one-oku yen per day.

We are not kidding ourselves about the size of the challenges that lie ahead-they are not diminishing. However, we have a very clear vision of where we want to go and how to get there.

I'm very confident we will achieve much success.