Mitsubishi to Shut Adelaide Plant

[bs]

Feb. 4 (Bloomberg) -- Mitsubishi Motors Corp., Japan's fastest-growing car exporter, will shut a factory in Australia after the plant's models failed to attract buyers, said three company officials who declined to be named.

The carmaker will still meet its profit goal of 20 billion yen ($188 million) for the year ending March 31, even with the cost of the plant closure, said the people, who declined to be named before a public announcement. The timing of the closure has not yet been decided, the people said.

Mitsubishi Motors is shifting production to China and Russia, where demand for the carmaker's sport-utility vehicles and sedans is rising. The Australian factory in the southern city of Adelaide uses only a third of its production capacity.

``This is a rational decision since the carmaker can meet demand with imports from Japan,'' said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. ``It's also good timing since the Australian economy is doing very well and people can find other jobs.''

Mitsubishi Motors rose 2.8 percent to 182 yen as of 1:41 p.m. on the Tokyo Stock Exchange.

``We're considering the mid-and long-term plans for our Australian business, but nothing has been decided,'' the company said in a statement.

Slumping Production

Production at the plant has slumped to an annual 10,744 vehicles from 59,000 vehicles over ten years as the Australian government has reduced tariffs for imported cars. In July, Ford Motor Co. said it would close a car engine factory in Victoria state.

To stem the slide in sales of locally built models, Mitsubishi Motors in 2005 introduced the 380 sedan, its first new Australian-built car in nine years. The model failed to win customers.

Mitsubishi Motors has 1,140 employees in Australia, including sales units, according to its latest annual report. The company does not break out the number of workers at the factory. The company built 1.41 million vehicles worldwide in 2007.

Mitsubishi Motors is preparing to open a factory in Russia and in December the government cut import duties for car parts for the company. The carmaker's sales in Russia topped 100,000 units last year, accounting for a third of its total European sales.

The automaker is also in talks with Hunan Changfeng Motors Co. to set up a venture to make sport-utility vehicles in China, the world's second-largest auto market.

Mitsubishi Motors almost collapsed four years ago after it recalled more than 2 million vehicles and admitted covering up defects. Losses totaled 782 billion yen in the three years ended March 2005, forcing the company to get about 780 billion yen from shareholders and investors in cash and debt waivers in two bailouts in 2004 and 2005.

http://www.bloomberg.com/apps/news?pid= ... refer=home

[Omicron]

That's very unfortunate - it's a real shame that the nonsense belief of management that the 380 was to be the saviour for the Adelaide operations has now resulted in job losses for employees.

[frank1]

That sucks. To think that a few months ago that japan assured SA the plant would not close. On the plus side, maybe the government will focus on making better public transport now the motor car industry is moving to china.

[AtD]

This has always been inevitable, unfortunately.

[AG]

The Mitsubishi plant in Adelaide is a real waste of resources. It barely uses a third of its production capacity. It hasn't been economically viable for several years, particularly not with rising oil prices and the falling levels of tariff protection which only drive up the cost of imported cars, and all it really does is keep workers employed. Hopefully some of the workers such as mechanics will find jobs in sectors where they are really needed, like the mining and resources sector and other industries.

[Wayno]

Perhaps reuse the defunct Mitsubishi site for the Marj Hospital!

[bs]

It is very disappointing to see so many jobs lost but the reality is that in a small market like Australia it is very difficult for a car manufacturer to be viable.

It has been apparent for a while that the closure of the plant is inevitable. Hopefully the employees will be able to find jobs in the new mining/defence industries.

[bs]

Perhaps reuse the defunct Mitsubishi site for the Marj Hospital!

Yes it is interesting what will happen to the land if the site is closed, probably not a hospital though since it is so close to Flinders.

[bs]

THE fate of Adelaide's Mitsubishi operations hinges on a board meeting of the Japanese company in Tokyo tomorrow. "I've been told by Mitsubishi management that any decision will be solely a commercial decision, based on the viability of local manufacturing, as part of a global restructure of the company," Premier Mike Rann said this afternoon.

The Premier was commenting after holding talks with Mitsubishi Motors Australia chief executive Robert McEniry and speaking by phone to Mitsubishi president Osamu Masuko.

"In talks today, I've reiterated the State and Federal governments' longstanding support which was accepted on condition of Mitsubishi maintaining production until the end of 2010, and our expectation that agreement would be adhered to," Mr Ran said.

Mitsubishi would not rule out closure of the production line, saying only that "we have for some time been discussing with our parent company in Japan a range of studies for the future operations here".

"No decision has been made," a spokeswoman for Mr McEniry said.

The comments from Adelaide echoed official spokesman Fumio Nishizaki in Japan.

They were responding to media reports in Tokyo that three unnamed Mitsubishi officials had said the plant would close with production moved to China and Russia.

The Nikkei in Japan said the Tonsley plant would close as early as next month.

Mitsubishi Australia would meet its overall profit targets but the Adelaide-made 380 model was failing to attract buyers, leading to the closure, Bloomberg reported.

In 2007, Mitsubishi recorded a 20 per cent increase in sales to 65,397 vehicles. However, the increase was built on imported models with the 380 only selling 10,942 units, a drop of 11.9 per cent compared to 2006.

The Tonsley production line is running far below capacity.

Federal Innovation and Industry Minister Kim Carr said the Government was aware of the media speculation but was not able to comment further.

"It's really a matter for the company," Senator Carr said.

"The Australian Government is closely monitoring developments and is being kept informed.

"I am advised that Mitsubishi Australia's position is that no final decision has been made."

Speculation over Mitsubishi's operations have surfaced regularly over the past few years.

In November, Treasurer Kevin Foley and then federal Industry minister Ian Macfarlane met company president Osamu Masuko in Tokyo.

At the time Mr Macfarlane said they had been given an assurance the plant was not marked for closure.

Australian Manufacturing Workers Union state secretary John Camillo said workers at Mitsubishi knew nothing of the latest reports.

http://www.news.com.au/adelaidenow/stor ... 01,00.html

[muzzamo]

I hope to see the land used for a affordable housing for genuine first home buyers (not for property porn stars / speculators / investors)

[Wayno]

I hope to see the land used for a affordable housing for genuine first home buyers (not for property porn stars / speculators / investors)

who owns the land? Mitsubishi?

[JamesXander]

Is this a bad thing?


Its a waste of money. Precious land and employees. Deep down I think the government will be happy.

[urban]

Would the govt ramping-up it's purchase of new buses (from SA manufacturers) allow us to reuse the automotive expertise of these employees?

[Norman]

This area could be used in many ways... rail workshops, railyards, super school, affordable housing, office complex... let's hope the decision made will be a good one.

[crawf]

This was bound to happen, if it does close lets hope we make good use of this site.

As the chapter of the Manufacturing industry closes, a new chapter of defence and resources sector opens