Mitsubishi Workers Earn A Normal Reprieve
Mitsubishi’s lone manufacturing plant in North America is based in Normal, IL, what was originally developed as a jointly owned facility with Chrysler. Mitsubishi bought out Chrysler’s share of the plant a few years back, giving the Japanese automaker sole control of the facility.
The former DiamondStar collaboration has been struggling lately, falling far short of reaching its annual build capacity of 100,000 units. The Illinois plant produces Galant sedans, Endeavor SUVs, Eclipse coupes and Spyder convertibles, but production is down by 24% this year. Consumers just aren’t in the buying mood and for those who are Toyota, Honda, and Nissan are the vehicles of choice for them.
What could have turned out to be a plant closing has now been averted, thanks to the efforts of Mitsubishi’s union workers who decided it was better to accept a pay and benefits cut than risk seeing their plant close. Under a labor agreement ratified on October 4th, the plants 1260 workers agreed to pay more for their share of health costs while permitting Mitsubishi to trim their hourly wage from $28.50 to $24.
Though Japanese manufacturers are loathe to close an automotive plant, Mitsubishi’s position has been a bit more precarious of late. Over the past five years, the company has seen its sales decline by 63% in the US resulting in a 63% drop in plant employment. Earlier this year Mitsubishi closed an Australian plant and would have done the same thing in Illinois without the benefit of a revised labor agreement.
Under the terms of the agreement, Mitsubishi has pledged that they will keep the plant open through August 2012 while the union has agreed to a two-tier wage system where new assembly line hires can start at $14 per hour or $20 per hour for maintenance workers. Any recalled workers will be taken back at a lower wage rate, what amounts to be 70% of the new rate or $16.80 per hour.
(Source: Bloomberg News)
Big 3 Are Performing Poorly, But So Is Mitsubishi
Attempting to paint a rosy picture of the current automotive slump in the US is akin to trying to put lipstick on a pig — it is almost impossible to do and, if you were successful, you’d still be left with one ugly porker!
GM, Ford, and Chrysler are in a world of hurt with year-to-date sales through June 30th down 16.3, 14.0, and 22.0% respectively (according to AutoData Corp.) There are a few shining lights in each fleet including the Chevrolet Malibu, Ford Fusion, and the Jeep Compass. Beyond that, these three are paying for their over reliance on big trucks and SUVs, fleet mainstays for many years.
It is easy to focus on the three major U.S. manufacturers, while not taking into account the rest of the market. For sure, Honda and Subaru are bucking the trend and seeing sales rise, but there is one manufacturer whose YTD sales drop is making Chrysler’s plight look almost good — Mitsubishi. So far this year Mitsubishi sales have dropped 23.4%, but most notably the company was off by 42.4% in June. This isn’t a company whose fleet is dominated by SUVs although its Endeavor and Outlander have contributed to a slide in truck sales amounting to a near-halving of volume for the year.
The sporty Eclipse, compact Lancer, and the midsize Galant round out the Mitsubishi car line up, but only the Lancer is selling. Which underscores a bigger problem for Mitsubishi: the limited appeal Eclipse and the aged Galant are the only two other vehicles available, unless a rebadged Dodge Dakota (Raider) has some sort of attraction worth noting.
Mitsubishi has one factory in the US, reports Auto Trends, but has cut back on production of the Endeavor and Galant due to slow sales. As recently as 2000, Mitsubishi sold 314,000 vehicles in the US (including some models built for Chrysler), but if trends continue they’ll be hard-pressed to sell 108,000 for the entire year. This isn’t one company you’ll want to bet money on!
When thinking about the Japanese automotive industry, it is often put in the best light possible. Certainly, the glow from Toyota, Honda, Nissan, Subaru, and Mazda have contributed to the aura, but Daihatsu and Isuzu are two that have failed with Suzuki still trying to find its footing here.
Will Mitsubishi make its exit one day? Maybe not for awhile, but based on its current sales volume, product offering, and huge shrinkage from 2000, the possibility of that happening looms large.
Citroën, Mitsubishi & A Joint Russian Venture
The global expansion of the automotive industry is translating into some very interesting and diverse partnerships. For the past several years, American, European, and Asian automakers have been partnership with Chinese companies to produce automobiles and now Russia is becoming an important place for new ventures to spring up as well.
Citroën and Mitsubishi (MMC) are the latest companies collaborating to produce models, the former as as subsidiary of French automaker Peugeot. The two companies have announced a partnership to produce three brands of automobiles at a new factory in 
Kaluga a city some 180km southwest of Moscow. Groundbreaking is scheduled for June 10th, with the first of what will eventually be 160,000 annual vehicles rolling off the assembly line in early 2011.
Two vehicle segments will be produced at the plant:
- Mid-range vehicles which currently represent 50% of all automotive sales in Russia and,
- SUVs which is a fast growing and sought after category for Russian drivers.
The most recent Mitsubishi-Citroën arrangement isn’t the first between the companies. In 2005, MMC and PSA Peugeot Citroën began working together on developing an SUV for the European market, a vehicle that has been well received since its 2007 product launch.
Renault and Nissan each own shares in the other while Mitsubishi recently (2005) ended its relationship with the former DaimlerChrysler concern.
(Source: Mitsubishi Motors Corporation)
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