TOKYO -- Just a year ago, Mitsubishi's beleaguered assembly plant in Illinois -- its only manufacturing outpost in North America -- seemed on the verge of closure.
But with the Japanese yen soaring to all-time highs against the dollar, a factory once branded as a loss-making albatross is suddenly featuring prominently in Mitsubishi's plans.
Mitsubishi Motors Corp. President Osamu Masuko intends to boost its annual output to 70,000 units, from the planned 50,000, after production of the Outlander Sport small crossover begins there next July. And half of the product will be for export.
Yes, exports from the United States.
What's more, Masuko is already talking about adding another model to that assembly line.
The stunning reversal of fortunes for the plant in Normal, Ill., underscores a sea change in Japan's auto industry being caused by the strength of the profit-eating yen. Foreign exchange fluctuation has long been an Achilles' heel for export-dependent Japanese brands. But there is increasing reason to think the situation finally has reached a tipping point.
Japan's automakers got a Halloween fright when the dollar tumbled to a postwar low of ¥75.31 on Oct. 31. Last year, every dollar taken in from the sale of a vehicle exported to the United States meant about ¥83 in revenue to a Japanese automaker. On Oct. 31, that same dollar equated to just ¥75 in revenue, but the automaker's costs, in yen, to build a car in Japan hadn't changed.
The until-then stoically detached Japanese government finally bowed to the automakers' incessant clamor for action and intervened in currency markets to buy dollars and weaken the yen. But even that had little impact: It nudged the dollar to just above ¥78.
As the government gets behind its exporters, Japan's carmakers are taking evasive action of their own. Their tools: cost cutting, offshore production, sourcing parts from low-cost countries and playing with pricing. The shift is an opportunity for U.S. manufacturing.
Like Mitsubishi, which is positioning its U.S. plant as an export base, Toyota will start exporting U.S.-made Sienna minivans to South Korea, the company announced last week. Other recent moves by Japanese automakers:
-- Lexus says it wants to source more vehicles from North America.
-- Subaru boss Yasuyuki Yoshinaga is considering adding new models at its U.S. factory.
-- Mazda and Honda announced new assembly plants in Mexico.
-- Nissan has sworn off further investments and new projects in Japan until the yen retreats.