Before it sees any profits, MMC will have to suffer through another year of losses according to management. The automaker plans to lose up to 230 billion yen in 2004/2005. All might look impossible if the brand hadn't managed to eke out a nominal profit of 37.4 billion yen in 2002/03, showing that it has what it takes to survive.
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| A carmaker at a crossroads, Chief Executive Officer Yoichiro Okazaki stated "this plan is our last chance for survival as an automaker." (Photo: Trevor Hofmann, Canadian Auto Press) |
"This plan is our last chance for survival as an automaker," stated Chief Executive Yoichiro Okazaki to the press.
As part of its restructuring process MMC will close its 27-year-old Okazaki plant in central Japan, leaving only two domestic car factories as part of its effort to cut costs, plus it will reduce its global non-factory workforce by 30 percent (7,600 people) over three years. That's a target of 18,800 workers compared its current 26,400 person staff. Some of the losses will be felt at the executive level, with 14 expected to leave from the 51 top positions resulting in 37 remaining.
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| MMC will close its 27-year-old Okazaki plant in central Japan, leaving only two domestic car factories as part of its effort to cut costs. (Photo: Mitsubishi Motors North America) |
MMC will reduce production capacity by 17 percent by 2006/07, as well as cut material costs by 15 percent over the same time period. What's more the Japanese automaker will raise its capacity utilization rate to 95 percent by 2006/07 from its current 70 percent status.
Despite all the cuts, some analysts are not sure the 450 million yen (USD$4 billion) investment will be sufficient to take care of all the problems at MMC, despite the automaker's outgoing CFO Keiichiro Hashimoto stating that the investment package would be enough for its revitalization plan.