Mitsubishi May Shutter Its Only U.S. Factory: Is A Complete Withdrawal Coming? [UPDATE: CONFIRMED]

July 24, 2015

UPDATE: Mitsubishi has confirmed that the rumors of the Normal, Illinois plant closure are true. See below for the automaker's statement.

There are some very unpleasant rumors floating around the internet -- rumors that, if true, could have serious consequences for nearly 1,000 workers at Mitsubishi's only manufacturing facility in North America. According to Reuters, the Japanese automaker is considering a plan to shutter its plant in Normal, Illinois after the company's contract with union employees expires in August.

The news initially surfaced in Japan's Nikkei business journal. The outlet cites two inside sources who say that Mitsubishi wants to shift production to Asia to improve efficiency and meet demand in growing Asian markets.

According to the report, Mitsubishi will put the Illinois plant up for sale and work with labor reps to find jobs for the 918 employees affected by the move.

Elected officials in Normal have received no confirmation or denial about the rumors. Neither have union representatives.

WHY THE MOVE?

Even though the factory-closing is just a rumor at this point, we can't say it's especially shocking. If anything, we're a little surprised that the plant has lasted as long as it has.

The facility opened in 1988, when Mitsubishi was closely aligned with Chrysler (and growing closer). Production peaked around the year 2000, when Normal churned out more than 200,000 Mitsubishi vehicles. Last year, the facility produced 69,178 Outlander Sport crossovers.

No question about it: U.S. demand for Mitsubishi vehicles has fallen in recent years. Though sales are up an impressive 24.9 percent over 2014, that's not saying much, given last year's dismal stats. Mitsubishi's U.S. arm had only moved 39,672 units in the first six months of 2015. Mazda, by comparison, had sold 156,430, and Subaru, 238,008.

The factory closure wouldn't be unprecedented, either. Three years ago, Mitsubishi pulled production from Europe, handing over the reins of its NedCar brand to the VDL Groep. These days, most of Mitsubishi's manufacturing facilities are in Asia, with one outpost in Russia (thanks to a joint venture with Peugeot Citroen), one in Venezuela, and one in Brazil.

And perhaps the most important red flag of all, as we mentioned above, is that Mitsubishi's contract with the UAW expires in August. Mitsubishi is the only Japanese automaker whose U.S. workers are represented by the UAW. 

All together, that gives us a pattern of shrinking U.S. sales and rapidly consolidating global production, paired with a perfect opportunity for Mitsubishi to cut labor costs by shifting its manufacturing beyond the reach of unions. Seems like the plant closing is overdue, if anything.

The real question is: will Mitsubishi stick it out in the U.S.? Is it worth it selling so few mass-market automobiles, all of which have to be imported? Will the company eventually turn its backs on the U.S., as Isuzu did, and focus attention on other markets? And if it does, will that come as a surprise to anyone?

UPDATE

In an official statement, Mitsubishi has confirmed the rumors:

“Following a review of Mitsubishi Motor Corporation’s global supply chain, we have been informed it is necessary to end production and seek a strategic buyer for the Normal plant. MMC’s Board will make a formal decision in the near future and our focus right now is to identify a buyer who would continue to operate and maintain employment – the best potential outcome for our employees and the community. Today, we shared this news with our employees and our intent to work in partnership with the UAW and civic leaders over the coming months to achieve a successful result.”

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