Motors Corporation chief operating officer Rolf Eckrodt has told the Australian
government what it will take to keep assembly lines operating at the car maker’s
two Adelaide factories, writes Mike Duffy.

He wants Australia’s tariffs on imported vehicles frozen for at least
five years – and not reduced from the present 15 percent to 10 percent
on January 1, 2005.

Eckrodt is the DaimlerChrysler executive charged with the job of turning around
the loss-making and vehicle recall-troubled MMC. He said he was looking for
stability in the lead-up to a decision in August on the future of the Australian
car making operation.

In an interview on ABC television Eckrodt said: “We might be looking for
an extension for five years.”

He added that Mitsubishi was looking to make a decision which would determine
the Australian subsidiary’s prospects well into the future.

The call for a stay of the current tariff level has been met with silence from
Australia’s federal government.

The four local car makers – Ford, Holden, Toyota and Mitsubishi –
last year signed off a tariff run-down in 2005 in exchange for $A2 billion of
investment grants under a five year Automotive Competitiveness and Investment
Scheme (ACIS).

Eckrodt – MMC COO

The federal government is clearly in no mood to get involved in a brawl with
MMC or risk bringing on the prospect of the closure of Mitsubishi Australia
with a general election due later in the year.

It feels it has set in concrete the next step towards planned zero tariffs.

Asked if a decision had been made on the upgraded 2003 Magna, Eckrodt said:
“Not really. Our main issue is to create new products and we have to do this
in line with affiliates all over the world.”

Yet against a backdrop of renewed uncertainty about Mitsubishi Australia’s
future, Eckrodt said: “We will have new product in Australia. There is a necessity.
The market is important and we will decide as soon as possible under the control
of the worldwide concept.

“We are checking our worldwide concept first then we will review the local

Eckrodt said MMC would complete its first overview by June and be in a position
to meet with federal government representatives. A final announcement on the
future of Australian manufacturing would be made by the end of August.

He said that Mitsubishi Australia making a profit this year after two years
of record losses – a $A130 million deficit in 1999 and a $A186 loss in
2000 – would not be sufficient to guarantee its future as a manufacturer
[rather than as an importer of completed cars].

Asked if a return to profit would guarantee Mitsubishi Australia’s [manufacturing] future, he said: “No. That’s not the criteria. We want to make a reasonable
margin of profit and that has to be sustainable for the following years.

“It has to be sustainable for five years and strategically effective for another
five years,” he said.

“That is the timeframe we are working on.

“We might make a decision that would keep the Australian operation going until
2006-2007, that is our intention.

“But there is no guarantee long term. We have to remain flexible. The
industry is dynamic, the market is dynamic.

“We have to be flexible, but we will try to hammer out our plan for a
longer period to create stability, to create confidence.”

Mitsubishi Motors Australia managing director Tom Phillips refused to comment
on what Eckrodt said on television.

“I believe if we continue to improve sales on the domestic market and
grow exports, our future is assured,” he said.

To view related research reports, please follow the links

Car Forecasts to 2005

b2b – Strategic threats and opportunities in the automotive supply chain