Japanese car-maker Mitsubishi is considering closing its only Australian factory to turn around losses, writes the UK’s Financial Times (15/11/00). Quoting Mitsubishi Chief Executive Takashi Sonobe, the FT says that the plant – which has a production capacity of around 700,000 units per annum but is producing only 35,000 – is loss-making and the company is considering whether it was worth maintaining the site at globally competitive productivity and quality levels. To continue the plant’s operations would be difficult and the company is considering whether it would be feasible to continue just a sales operation within Australia, continued Mr Sonobe.

Deliberations concerning the fate of the plant prompted action from the Adelaide
Government with a reduction in import taxes on cars. As a result, domestically
manufactured products became uncompetitive compared to Japanese imports, says
the newspaper.

Following the import tax reduction, Mitsubishi cut 600 white-collar jobs at the
site alongside cutting production in April. This decision raised concerns over
the company’s manufacturing commitment within Australia.

Mr Sonobe, along with senior executives from DaimlerChrysler – which has a 34
per cent in the Japanese auto-maker – are set to restructure Mitsubishi in 2001.
The fate of the Adelaide-based plant will be decided before March next year, said
Mr Sonobe.

The site – one of Adelaide’s largest employers – has a payroll of over 4,000 and
its closure would deal a blow to the local economy, says the FT. The Adelaide
Government is reported to be lobbying aggressively to avoid the plant from closing,
although if the plant were to cease production, Mitsubshi’s 258-strong dealership
network may still be maintained.

Sales for Mitsubishi in Australia have declined from 81,000 units in 1998 to 67,000
last year, according to the article.