Crossing keiretsu lines: the SIA venture with Isuzu (1987)

What to secure first

The heart of this decision was that, crossing the keiretsu framework of the auto industry of the day, two sub-scale mid-size makers pooled a factory in North America. It was a choice to clear, together with Isuzu — which belonged to a different group — a profitability line that neither could reach alone. Taking on a heavy fixed asset like a factory first was also a large gamble at a time when demand could not be read. In fact, SIA’s losses were one of the triggers of the 1990 fall into operating loss and the reconstruction that followed, and coincided with the collapse of the Tajima regime.

Even so, the Indiana factory secured then stayed in Fuji Heavy’s hands as a production base even after the alliance was dissolved in 2002 and the plant switched to solo operation. The decision to cross keiretsu lines and lock down land and a factory first can be read as bringing, at once, the short-term pain of red ink and the long-term fruit of a foothold to keep building cars in North America. What should a sub-scale mid-size maker secure first in order to survive — this decision posed that question early.