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Mitsubishi May Reconsider Models at Illinois Plant in Wake of UAW Contract

Mitsubishi and the UAW have ratified a deal keeping the Normal, Illinois, plant open through August 2012. It has long been operating under capacity, and media reports say workers agreed to pay cuts in exchange for job security.

October 7, 2008

Mitsubishi Motors Corp. may overhaul the models made at its only U.S. assembly plant after a “severe” labor deal that extends the beleaguered factory’s operations for four more years, company president Osamu Masuko said Saturday, October 4, the day the agreement was ratified by the automaker and the United Auto Workers.

It is too late for the Japanese carmaker to join the hybrid vehicle race and that instead it will use its electric car program as a springboard into plug-in hybrids, the Mitsubishi chief also said.

“We are very, very grateful to the members of the UAW for accepting the agreement, because on both sides, the conditions and terms were quite severe,” Masuko said at a news conference. “We are seriously re-evaluating our U.S. operations as to what kind of automobiles we should manufacture there, and eventually we hope to announce our decision.”

Mitsubishi and the UAW agreed to a deal that will keep the company’s Normal, Illinois, plant open through August 2012. The plant has long been operating at less than full capacity, and recent media reports have said workers there agreed to pay cuts in exchange for job security.

The factory can operate profitably if it produces 100,000 units a year, but it has failed to do so, Masuko said. The plant’s total capacity is 240,000 vehicles.

Part of the problem is that the factory makes vehicles that have fallen out of favor as customers rush to more fuel-efficient offerings, Masuko said.

“It is very difficult to sell the kinds of cars we are producing in this factory,” he said.

He did not say what models might be a better fit. The Normal plant now makes the Galant sedan, Eclipse coupe, Eclipse Spyder convertible and Endeavor crossover.

But Masuko tried to reassure that his company isn’t hurting as much as other carmakers, largely because its U.S. market share, less than 1 percent, was so small from the start.

“Unfortunately, our U.S. operations were not so big to begin with,” Masuko said. “So as a result, the slowdown of the U.S. economy is not affecting us so drastically.”

Filed by Hans Greimel, Tokyo-based Asia editor for Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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