News - Mitsubishi

Magna replacement will be Aussie-built

Shut down: V6 engines for the Magna replacement will come from overseas.

Mitsubishi will continue local vehicle production but closes its engine plant

Mitsubishi logo21 May 2004

THE replacement for the Mitsubishi Magna will be built in Australia, but its V6 engines will be sourced from overseas following an announcement this afternoon that one of two company plants in Adelaide will close.

While the Tonsley Park assembly line where the Magna is built will continue on, the Lonsdale engine plant will close in October 2005 taking with it around 650 jobs, the victim of Mitsubishi’s massive world wide losses.

The closure of Lonsdale is part of a plan announced in Tokyo today designed to revitalise the company which incurred a massive $2.71 billion dollar loss in the 2003 financial year, and has an accrued debt around $14 billion.

The outcome had been widely predicted over the last few days courtesy of the usual mass of leaks to the Japanese press from the company’s head office.

Mitsubishi has already invested $250 million in plant and model development related to the Magna replacement, which is scheduled to go on-sale in the third quarter of 2005 and is planned for production until 2011.

Mitsubishi also opened a new R&D facility at Tailem Bend last year to support the development of the Magna replacement and other models.

The Magna replacement is based on the PS41 global platform and is fundamentally the first facelift of the Galant model which went on-sale in the USA last year, albeit tuned and specified for Australian conditions.

It is expected to be powered by a 3.8-litre V6 engine which will come from a plant in Japan. The current Magna is powered by a 3.5-litre V6.

Today's announcement has effectively killed off plans to build a long wheelbase car alongside the Magna replacement from 2006.

Mitsubishi Australia will soon start the campaign for a second model line for Tonsly Park, which management acknowledges is vital to the long term viability of the plant.

The Tonsley Park factory employs around 2700 workers and redundancies will be offered to workers there, although nospecific number has been revealed.

“It is a day of mixed emotions for us. While we are delighted that Japan has confirmed its commitment to continuing manufacturing operations in Australia, we are of course extremely disappointed that local production of the V6 engine will cease,” said Mitsubishi Australia chairman and CEO Mr Tom Phillips.

“Our first concern is for the welfare of the employees affected by this decision and we will be providing every assistance to them we can throughout this transition. All entitlements will be paid in full and we will work closely with the relevant trade unions throughout this transition and in addition, we are working with Government to try and find alternative uses for the site,” Mr Phillips said.

“The ongoing speculation about the future of Mitsubishi’s manufacturing operations in Australia has been difficult for everyone associated with the company. We now have certainty regarding our manufacturing operations and look forward to returning Mitsubishi to its rightful position as one of Australia’s leading automotive brands.” “In particular, we look forward to working with our network of over 200 dealers to introduce a complete new model range over the next three years, including a new Australian made model next year. With the new model line up I am confident we will win sales and make major gains in the market,” Mr Phillips said.

Lonsdale is not the only victim of the cutback, with Mitsubishi Motors chairman Yoichiro Okazaki also announcing that a plant would be shut in Japan and nearly 8000 jobs shed worldwide over the next two years.

The company also plans a massive $5.73 billion capital injection courtesy of existing Mitsubishi Group shareholders and the stock market and a new model barrage to life sales.

"This plan is our last chance for survival as an automaker,” Mr Okazaki told a Tokyo press conference. “Everyone in the Mitsubishi Motors group is determined to rally together and bring the company back to health through a self-supported revival.”

Mitsubishi Motors has been plunged into financial crisis by the Triple 0 financing offered by its US subsidiary’s credit arm which resulted in a huge amount of bad debt. The company’s sales and reputation in Japan have also been damaged badly by a series of recall cover-ups.

Largest shareholder DaimlerChrysler had been working on a revitalisation plan but pulled any further financial support late April. Under Mr Okazaki’s new plan Phoenix Capital, a Tokyo-based turnaround fund, will become the biggest shareholder.

The Lonsdale plant was opened by Chrysler in 1966, two years after Tonsley Park. They were sold to Mitsubishi in 1980.

In recent years the future of Mitsubishi as a local manufacturer has been the centre of speculation several times, although it was thought to have been alleviated when substantial investment was announced two years ago.

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