Mitsubishi under a cloud
BY DAVID HASSALL | 30th Dec 1999
The plan - being prepared by Mitsubishi Australia managing director Mike Quinn - must convince the company's board that local production of the Magna will be viable in the future.
However, the signs from Japan are not good, with company president Katsuhiko Kawasoe already saying that production output from the Adelaide plant will have to be cut back.
He also said that it was now more economical to import cars from Japan than to build them locally.
Mr Kawasoe called on the Australian Federal Government to increase protection of the local car industry in order to prevent more job losses, but received a cool reaction from Industry Minister, Senator Nick Minchin.
Hundreds of jobs are likely to be shed by Mitsubishi in the new year, though Mr Quinn hopes these will mainly be from retirements and "natural attrition" rather than stand-downs.
Mitsubishi Motors Corp is heavily burdened by debt and has formulated a strategy - called "Heart-Beat 21" - to remain viable and independent.
"Mergers are not our priority," said Mr Kawasoe, announcing at a press conference in Tokyo that Mitsubishi would concentrate its resources in Japan, North America and Asia.
This will lead to reductions in output in Europe and Australia.
"We intend to maintain the same sales in Australia but we may have to consider a reduction in production there.
"Although we were coming to a conclusion of this issue at our board meeting last week, we need more time.
"Now we are waiting for a report from our Australian company on the break-even volume in Australia." Another board member, executive vice-president Katsuhisa Sato, summed up the situation: "Mitsubishi Australia is at a very significant turning point." Mitsubishi already has plans to reduce world passenger car production by 16 percent to 860,000 units, but there are elements in the company who want this reduced by a further 10 percent.
The company is headed for a five billion yen loss in the current financial year, which ends on April 1, 2000, but Mr Kawasoe projected a modest profit of 20 billion yen the following year.
By 2003/04, Mitsubishi Motors is scheduled to return a profit of 150 billion yen.
In the same period, the company's massive interest-bearing debt of 1.75 trillion yen is projected to be reduced to 1.0 trillion yen.
Mitsubishi's share price has taken a hammering this month, plummeting to 370 yen after trading at between 500 and 600 yen for most of the year.