FMC rejects Mazda’s settlement offer

Mazda Motor Corp. of Japan may be facing a lawsuit as the settlement negotiations with Francisco Motor Corp. bogged down on disagreements over how much the Filipino-owned automotive pioneer would receive as compensation for developing the market for Mazda pickup trucks over the last 25 years.

A top FMC official said over the weekend that the company is now seriously exploring its legal options against its former partner for alleged violations of its 25-year agreement involving the manufacture and sale of Mazda pickups in the Philippines.

The FMC official said the talks between FMC and Mazda ended in a deadlock, with the Filipino company asking for a $66-million settlement and Mazda offering no more than $4 million.

Speaking on condition of anonymity, the official said Mazda had offered to pay FMC $4 million for the 25 years that the company developed the market for Mazda pickups, claiming that the amount was all they could afford.

Under a memorandum of agreement undertaken by FMC and Mazda, the official said FMC was supposed to have been given a lead time to develop the distributorship of Mazda pickups before the introduction of the Ford Ranger, a model that would compete directly with Mazda.

Since Mazda of Japan is at least 30 percent owned by Ford Motor Co., the official said the commitment binds both Ford and Mazda to the agreement with FMC.

When the agreement expires in 2003, the official said the manufacture of the Mazda pickup would be turned over to Ford Motor which had recently opened a new plant in the South after pulling out of the country in 1986.

After the turn-over, the official said FMC is also stipulated to receive $100 for every unit sold. The ultimate amount, he said, will depend on how good FMC had been at marketing the Mazda truck. Initial estimates show that FMC will be entitled to around $2.3 million.

Before this could happen, however, the official said Mazda had stopped giving FMC the price quotes for parts needed to assemble a pickup.

As a result, FMC’s production schedule was ultimately suspended and in the meantime, Ford launched and introduced its Ranger series.

Mazda had a similar agreement with Columbia Motor Co. and was finally reportedly compelled to pay the company at least $10 million as compensation for the market that Ford would take over.

The FMC official said it had already asked the Board of Investments (BOI) to intervene and stop issuing import permits for Ford’s Ranger series that are imported as completely knocked-down (CKD) packs and assembled at the company’s Laguna plant. – Des Ferriols