Motors Corp. of Japan has been forced to issue an official statement supporting
its Down Under affiliate following widespread reports that it would close Mitsubishi
Australia’s assembly operations next March, writes Mike Duffy.

The denial comes on the eve of talks between Australian Prime Minister John
Howard and MMC chief operating officer Rolf Eckrodt.

The Jiji Press news agency filed a news report early today day that MMC was
likely to stop car production in Australia as part of global restructuring,
leaving the company to continue as an importer.

Ironically, Mitsubishi Motors Australia Ltd had flown major dealers to Adelaide
to outline an aggressive telemarketing campaign designed to sell 5,000 new Magna/Verada
cars in coming weeks.

Dealers were more interested in hearing about their future than the new-approach
sales scheme and MMAL contacted head office requesting a statement of denial.

A statement, issued late in the day, said: “MMC remains committed to the
Australian market and we have no plans at this time to change our operations.

“We are pleased at significant progress MMAL has made in implementing
its restructuring and we continue to investigate opportunities for future improvement.

“This is an ongoing process and we have no further comment.”

However, the statement came too late for national television newscasts in Australia
which went on air with reports that the car maker would close its assembly lines,
costing 3,250 workers their jobs.

And that will not help Mitsubishi in its efforts to telephone 50,000 Magna/Verada
owners to offer them between $A2200 and $A2500 in special discounts if they
buy a new car.

MMAL has been forced to do business against a backdrop of regular reports that
closure of its assembly plant was likely following a $A130 million loss in 1999
and a record $A186 million in red ink last year.

The car maker has waged its future on a turnaround to a nominal $A10 million
profit this year.

To achieve this, a business plan penned by new managing director Tom Phillips
calls for 30,000 domestic sales of the Magna/Verada, 20,000 exports of the Diamante-badged
Verada, mainly to the United States and the Middle East, and favourable exchange

Domestic sales fell behind schedule in the first half of the year and the telemarketing
plan is designed to get Australian sales back on track.

The industry expects a more buoyant market in the second half of the year which
would allow MMAL to deliver on its sales projections.

To add to MMAL’s problems, the company will become the second victim of
200 striking component workers.

The workforce at Australia’s only steering column manufacturer is striking
in support of a new enterprise bargaining agreement.

General Motors‘ Australian affiliate Holden had to bring forward planned
days off from the day shift on Monday, costing it 570 vehicles a day and millions
of dollars in lost sales.

The striking workers are due to appear before the Industrial Relations Commission
in Sydney tomorrow (Thursday).

Even if the dispute is settled and workers return to work immediately, Holden,
Mitsubishi and Ford Australia will not be able to produce cars until component
supplies return to normal.

That could mean the industry does not get back to full production until the
middle of next week at the earliest.

To view related research reports, please follow the links

world’s car manufacturers: A financial and operating review

automotive industries of Asia-Pacific