As it broke ground last week on an expansion of its U.S. auto plant, Mitsubishi Motors North America Inc. faced up to a different capacity issue.
For most of the past 15 years, Mitsubishi has struggled with too much production capacity for its U.S. market. Now it doesn't have enough.
The company will spend $200 million to add capacity for 60,000 more vehicles annually at its Normal, Ill., factory, bringing the total to 300,000. That expansion is not a gamble on a new product line but simply more room to build more Galant sedans and Endeavor SUVs.
The plan will enable Mitsubishi to double the output of the just-introduced Endeavor to 8,000 units a month by 2004.
It also expects a sales boost from an upcoming redesigned Galant, says Rich Gilligan, president of Mitsubishi's manufacturing division. "The next-generation Galant will be unveiled at the New York auto show," Gilligan told an assembly of plant workers at last week's groundbreaking. "We'll launch that vehicle in the fall. And we're already working on pre-production for the next-generation Eclipse and Spyder. So the road ahead is very bright."
But expanding Normal is only part of the company's bullish new era.
Executives in the United States and Japan are considering a second North American plant. A study on that idea is nearing completion and could result in an announcement as early as June.
A manufacturing spokesman in Normal clarified that the Normal expansion and the need for more factory space are two different issues for the company.
Gilligan told workers that the plan would not necessarily require a separate factory but could result in another expansion of the Normal plant - depending on the study's outcome.
The change has been a dramatic turn of events. Just four years ago, Mitsubishi was trimming capacity and eliminated about 700 of the Illinois plant's 4,000 jobs. Last week, the company said volume needs will require it to hire 300 workers.
The Mitsubishi brand has surged since the late 1990s, although last month's sales tumbled by more than 24 percent from March 2002. Sales are up sharply compared with five years ago, when Mitsubishi was doubting the wisdom of even having a U.S. factory, which ran chronically under capacity through the 1990s.
The first three months of this year saw 73,548 sales, compared with 43,692 sales in the first three months of 1998.