Mitsubishi Australia spared job cuts

By CNN's Alex Frew McMillan

ADELAIDE, Australia (CNN) -- Mitsubishi Motors Co.'s troubled operations in Australia will be back to profitability this year, the company said Friday.

The Adelaide plant, which employs around 3,000 people, does not expect job cuts this year.

Its Tokyo-based parent is cutting 9,500 jobs, or 14 percent of its work force, by fiscal 2003. It said Friday it will shed around half those positions by next March.

But a spokesman said those cuts would mainly come from attrition, early retirement offers and a cut in new hires in Japan. Mitsubishi is closing passenger-car operations at its Oye plant near the city of Nagoya.

The Adelaide operations will be spared.

"They have already done the necessary restructuring," a Mitsubishi spokesman said.

Industry minister in Japan

The Australian industry minister, Nick Minchin, was less upbeat in his assessment after a visit to Mitsubishi headquarters on Thursday.

Minchin met with Mitsubishi Vice President and Chief Operating Officer Rolf Eckrodt, who is charged with engineering the company's turnaround.

He noted that Mitsubishi is still evaluating its operations worldwide.

"While that review will not be completed until later this year, I remain confident that the company will continue to manufacture vehicles in Australia," Minchin said.

He said Eckrodt promised to meet Australian officials when the review finishes.

The Australian government is desperate to keep the Mitsubishi plant. Minchin announced Thursday it would grant half a million Australian dollars to the company.

It is one of only four car manufacturers in Australia. Ford and Toyota both have factories in Melbourne. General Motors operates in Adelaide through its Holden subsidiary.

Minchin is also visiting Toyota headquarters in Japan.

Australia, Netherlands plants a problem

Analysts say Mitsubishi's loss-making plants in Adelaide and Born, the Netherlands, are millstones around the company's neck. It is trying to struggle back from record poor performance for the year through March.

Mitsubishi Motors Australia Ltd.'s plant at Tonsley Park in Adelaide has struggled for years. The elderly plant, which Chrysler opened in 1960, lost $98 million (A$186 million) last year.

But the factory has eliminated more than 1,000 jobs in 2000, two-thirds in management and one-third in production.

It also recently won an order to deliver 5,500 Diamante cars for export to the United States, bringing total orders for that model to 20,000. It is starting to export to the Middle East.

"There's many people who have gone around and said that we should be closed," said Charles Iles, general manager for corporate affairs. But those revitalization steps will see it back in the black in 2001, he said.

"We are very positive about the outlook for the balance of the year," Isles said.

The plant will run only one shift and run at just 65 percent of its 72,000-car capacity. But Iles said higher volume and a better exchange rate would improve results.

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.