SAN FRANCISCO – The fate of Mitsubishi’s long-underutilized plant in Normal, IL, could be decided in 2015, a U.S. company official says.
Don Swearingen, executive vice president-Mitsubishi Motors North America, tells WardsAuto a decision on the future of the plant, the automaker’s sole vehicle-assembly site in North America, likely will come this year.
“We are doing an evaluation of the plant,” he says in an interview here during a ’16 Mitsubishi Outlander media preview. “We just have to determine what’s the best use of (the Normal facility), and then make some decisions on what we’re going to do with it.”
Only one of the six models in Mitsubishi’s U.S. lineup is built in Normal, the Outlander Sport. The plant began building the compact CUV in 2012 after the Galant midsize sedan, Eclipse sports car and Endeavor CUV were discontinued.
The Outlander Sport has been a successful but low-volume model relative to its competitors. U.S. sales of the vehicle rose 8.2% through May to 13,945 units, compared with the 134,699 sales the segment-leading Honda CR-V delivered.
Swearingen hints the Outlander Sport’s U.S. volume easily could be handled by one of the automaker’s four other plants building the model, known as the ASX or RVR overseas.
“(Normal) has been a vital part of Mitsubishi, but at the end of the day we make the Outlander Sport in four or five different locations,” he says, referring to Mitsubishi plants in Japan, Brazil, China and Indonesia.
Unique as the only unionized Japanese-owned vehicle-assembly plant in the U.S., the central Illinois facility opened in 1988 as Diamond-Star Motors, a 50/50 joint venture between Mitsubishi and the former Chrysler Corp., building such models as the early 1990s-era Mitsubishi Eclipse/Eagle Talon/Plymouth Laser sports cars.
Since the Japanese automaker purchased Chrysler’s stake in 1991, the plant has been operated as a wholly owned entity of Mitsubishi, although it continued contract production for Chrysler in the late 1990s and early 2000s.
Once the Chrysler work dried up and Mitsubishi’s own U.S. sales tumbled, Normal was forced to operate sharply below capacity.
After hitting a record 222,036 vehicles built in 2000, output dipped to just 18,501 in 2009, WardsAuto data shows.
Although production climbed from 37,019 units in 2012 to 67,362 in 2013 and 69,178 last year, those numbers still are far off the 240,000-unit capacity.
WardsAuto data forecasts Normal’s output will fall this year to 58,188, before picking up slightly in 2016 to 61,994.
UAW Local 2488 President Jerry Harcharik, whose union represents the plant’s workers, has “complete confidence in the future viability of the Normal facility,” he tells WardsAuto in an emailed statement. “We believe that Mitsubishi should actually expand the use of our facility by bringing additional models. We have the capacity and the workforce ready to go.”
Russian Downturn to Impact Output
During the lean years of 2000s, Mitsubishi has been trying to keep Normal output up via exporting, but the scheme is backfiring a bit on the automaker this year.
Mitsubishi is the only manufacturer whose third-quarter output will be down significantly, WardsAuto data shows. Most automakers, with the exception of FCA, Hyundai-Kia and Tesla, will increase output in Q3, leading to record North American production for the quarter of 4.57 million units.
Swearingen says the projected 19.9% Mitsubishi decline has nothing to do with an expected slowdown for the brand in the U.S. market, where sales are up 23.6% through May, but the downturn in the Russian market.
“About half of (our plant’s) production is exported, and the majority of that export is to Russia,” he says. “That’s where all the loss is. We’ve actually, as the U.S. (sales arm of Mitsubishi), taken additional production, but we can’t make up for Russian (deliveries) declining.”
Light-vehicle sales in Russia were down 37.6% in May, another subpar month for the country thanks to the continued volatility of the ruble, which has lost 150% of its value in the past 10 years and sent auto sales into a tailspin.
The industry downturn has caused General Motors to halt production in the country and stop sales of its Opel and Chevrolet brands there. Toyota, Renault-Nissan and domestic manufacturer AvtoVAZ also have seen huge losses this year in Russia.