Mitsubishi Motors to cut 6,200 (14%)

Mitsubishi Motors to Cut 6, 200 Jobs
By THE ASSOCIATED PRESS

Published: May 21, 2004

Filed at 4:52 a.m. ET

TOKYO (AP) -- Ailing Japanese automaker Mitsubishi Motors Corp. will cut about 6,200 jobs from its global work force and receive $4 billion in funding from the Mitsubishi group and other investors in a revival plan, the company said Friday.

Under the plan, Mitsubishi Motors will keep its U.S. plant in Normal, Ill. open and will target an overall sales increase over the next three years, the company said in a statement.

The job cuts will reduce the company's global work force from 44,400 to 38,200, officials said. Mitsubishi employs workers in factories and offices in Japan, the United States, Europe and Australia.

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Mitsubishi Motors said it plans to shutter an engine plant in Australia next fiscal year but will leave open a passenger car plant there. The company will close a passenger car plant in the southern Japanese city of Okazaki in fiscal 2006.

The automaker, burdened with more than 1 trillion yen (US$9 billion) in debt, plunging car sales in Japan and a spate of recalls, was dealt a serious blow by a surprise announcement last month by U.S.-German automaker DaimlerChrysler that it would not provide a fresh cash infusion. DaimlerChrysler owns 37 percent of Mitsubishi Motors.

But the Mitsubishi conglomerate has promised to stand behind the automaker. The group includes Mitsubishi Heavy Industries, which owns a 15 percent stake, trading company Mitsubishi Corp., which holds 5 percent, and Bank of Tokyo-Mitsubishi, which has 3 percent.

Mitsubishi Motors's biggest problem is its loss of credibility with Japanese drivers.

It is currently under criminal investigation for possible defect cover-ups. On Thursday, Mitsubishi Fuso Truck & Bus Corp., which was spun off from the automaker, acknowledged that defects had probably been concealed and announced a recall of 180,000 trucks.

That followed a massive recall two months ago of trucks for a wheel defect, which is under investigation in the 2002 death of a pedestrian. The company also admitted defect cover-ups in a massive recall of passenger cars in 2000.

Analysts say Mitsubishi Motors faces a struggle in reassuring consumers about the quality of its vehicles. The company has repeatedly said it has brought in quality-control methods from DaimlerChrysler but the recalls have not stopped.

And it is likely to have a hard time stopping the sales drop, said Tsuyoshi Mochimaru, an analyst at Daiwa Institute of Research.

``The company can't boost sales without new models,'' he said.

Rolf Eckrodt, sent to Mitsubishi Motors by DaimlerChrysler in 2001, resigned as chief executive and president shortly after the DaimlerChrysler decision not to inject more funds. He was replaced by Yoichiro Okazaki, formerly a director at Mitsubishi Heavy Industries.

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