Mitsubishi's U.S. automaking subsidiary believes it will see a financial turn-around this year.
According to operating forecasts revealed last week, the company anticipates near-full production from its Normal, Ill., car factory this year and profits of at least $100 million. That's more than the company has seen in its 12 previous years of operation combined.
That $100 million pot will become the basis of a program devised last year. The initiative calls for the U.S. factory to self-fund its future products. The company is planning a makeover of its product line. It includes a new platform for the Eclipse and Galant and a sport-utility planned for 2003 to replace the Japanese-built Montero Sport.
In recent years, the Illinois automaker has struggled with operating losses and a couple of barely breakeven years.
But last year, the plant turned in a profit in the range of 'double digit' millions of dollars, according to a document released by Mitsubishi Motor Manufacturing of America Inc. The parent company in Japan, meanwhile, continues to post heavy losses.
While acknowledging that it still has some difficult improvements to make in Normal, the company said it expects to build 195,000 cars in 2000. The operation has never produced more than about 216,000 in a given year; listed capacity is 240,000.
Last year, after Mitsubishi declared that the Illinois automaker's financial breakeven point was 160,000 cars, the plant produced approximately 162,000.
The new volume forecast will be helped by this spring's launch of a new generation of Chrysler Sebrings and Dodge Avengers for DaimlerChrysler. And Mitsubishi's U.S. sales arm has been churning out large sales gains of its own. The make jumped 37 percent for 1999 sales and rose another 9 percent in January.
At the same time, the factory has been pushing a series of efficiency changes. In addition to cutting its work force by 700 people, the company expects to save about $40 million a year by reducing scrap, cutting back on engineering changes and tightening logistics controls.
The profits will be critical for the next few years. Mitsubishi wants to overhaul its U.S. product line, for which the Normal plant is the main source. Late last month, senior Mitsubishi officials informed plant workers that the parent company officially has approved the plan to build the sport-utility in Illinois. Mitsubishi only now has made the project official.
The plant also faces some production improvements.
Last year, the plant spent an average of 31.4 worker hours to produce each vehicle. At the end of last year, it had cut that to 27.5. Its goal this year is to reduce it further to 26 .9 hours.
On the measurement of 'first time capability' - which counts the percentage of vehicles that are completed without requiring rework - Mitsubishi wants to maintain an 85 percent mark. Last year, the plant averaged 75 percent.