Having delivered the news first to the Tonsley Park workforce, Mitsubishi Australia boss Rob McEniry publicly made the expected announcement of the closure of the company’s Adelaide assembly plant at a press conference in Adelaide this afternoon.
The straight-talking executive told media that the production of the large 380 sedan would cease around the end of March, with the loss of 930 jobs from Mitsubishi’s 1150-strong workforce.
With the local manufacturing operation losing $1.5 billion over the past 10 years, declining demand for large cars in Australia, and the continuing strength of the Australian dollar making an export program unfeasible, there was no other choice open to the company, said McEniry.
“The only viable, the only commercially responsible, and the only sustainable future for the brand in Australia, that would allow us to grow and be profitable and, importantly, to meet customers’ changing needs was to pursue a full-import business strategy,” McEniry said. “This joint decision was reached with much reluctance.”
In answer to questions after the official announcement, the executive also said persistently negative press had played a role in the demise of the factory. “There’s no doubt media speculation has had a significant impact,” he said.
But exchange rates were cited as the biggest single factor that contributed to the decision to end 27 years of Mitsubishi production in Adelaide. “Take our stretched 380 export program as an example,” McEniry said. “Back in 2002, when the export version of the 380 was approved for the US market, at the 58 cent exchange rate (to the US dollar) of the time, we would have received about $41,000 for each car exported. Currently, at an 88 cent, if not higher, exchange rate we would only receive $20,000 per unit.
“That particular project would not have been approved at these exchange rates,” McEniry said. “Had it not been cancelled in 2004, it would have been a highly unprofitable project for us now.”
McEniry also explained that Mitsubishi had repeatedly examined options that might have kept the factory running.
“Over the years we have undertaken a multitude of studies for manufacturing every conceivable model and/or export market,” he said. Export markets for large cars, studies on building a smaller car, studies on building SUVs – both light and heavy – studies on diesel engines, other alternate engines, and a second car line to be built alongside the 380 were all investigated.
“In the past few months, all of these studies have been reviewed one more time in absolute exhaustive detail, to see if any of these were remotely viable in the current and forecast market and economic conditions,” McEniry continued. “Unfortunately, none of them were.”
The closure would have little impact on the Australian car industry, McEniry said. Tonsley Park produced only two percent of the total number of cars made in the country in 2007, he said. Mitsubishi’s purchases from suppliers was in proportion, he added.
McEniry also denied Mitsubishi had been a major drain on the taxpayer’s purse. “I will take this opportunity to correct one chronic misconception of the company that has been fuelled over the last two days,” he began. “Mitsubishi has not been a government welfare case. We have not been propped up by government funding. Nor have we sought or are we seeking government funding assistance. Nor was it a consideration in this commercially responsible decision announced today.” The $35 million package the company received from the South Australian government as a contribution to the development of the 380 will be repaid, McEniry said.
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