Mitsubishi Motors Corp. President and COO Tetsuro Aikawa confirmed plans to end output at its sole North American plant in Normal, Illinois, and serve the U.S. market from factories in Japan and Thailand.
According to a report by Reuters, at its peak in the early 2000s, the Normal plant built more than 200,000 cars a year, while in calendar 2014 it produced 69,178 Outlander Sport vehicles. In the fiscal year ended March 2015, the company’s U.S. sales totaled 82,000, compared with a global total of around 1 million.
Aikawa said the move to pull the plug on the Normal factory, which opened in 1988 as a joint venture of Mitsubishi Motors and its then-partner Chrysler, was prompted by low-volume production rather than shifts in foreign exchange rates making exports from Japan cheaper. “Our motivation to exit from this facility is unrelated to labor costs or our relationship with the UAW,” said Hiroshi Harunari, chief of the company’s overseas operations, in a statement.
It may, however, be realted to the negotiations currently underway to complete the Trans-Pacific Partnership (TPP.) TPP is near an agreement on a plan to reduce duties between the U.S. and Japan, which may include autombiles just as the Korean FTA with the United States. Eliminating the 2.5% duty on imported automobiles from Japan and other member countries of the TPP would provide additional incentive to produce US vehicles in a TPP-member country – anywhere but the United States. That is because plants inside the United States would have no way to eliminate the 2.5% duty on imported parts, giving a financial advantage to overseas production and exacerbating the loss of manufacturing jobs in industries affected by the free trade agreement.
The plant will cease production by the end of November.