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post #1 of 1 (permalink) Old 07-17-2004, 08:02 PM Thread Starter
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Mitsubishi may cut U.S. output capacity by third

From Automotive News:

Mitsubishi may cut U.S. output capacity by third

Reuters / July 16, 2004
TOKYO -- Mitsubishi Motors Corp. may cut its U.S. production capacity by as much as a third, or to 120,000 units a year, as part of its efforts to chip away at loss-making operations, the Japanese carmaker said Friday.

Plans will be complet4ed by September, a Mitsubishi spokesman said.

As a result, 600 to 700 workers out of the 3,000-strong workforce at Mitsubishi's sole U.S. plant in Normal, Ill., could lose their jobs, the Nihon Keizai newspaper reported, without citing any sources.

Mitsubishi is struggling to rebuild itself after partner DaimlerChrysler AG abandoned plans to rescue it this year, but sales have tumbled further after revelations of a series of vehicle defect coverups.

Its U.S. sales in June plunged 48 percent from a year earlier, and the slide in Japan has been even worse.

Japan's fourth-largest automaker had one bit of good news Friday when the government allowed it to be covered by a law that helps struggling companies rehabilitate.

The Industrial Revitalization Law would, among other things, allow Mitsubishi to pay lower taxes on the issuance of 496 billion yen ($4.52 billion) in shares to pay for sweeping restructuring measures to rebuild the company.

Mitsubishi issued a combined 201 billion yen ($1.84 billion) in new shares on Friday to J.P. Morgan Chase, Tokyo investment fund Phoenix Capital and Nippon Oil Corp..

Chief Executive Yoichiro Okazaki said Mitsubishi would also consider asking the state-backed Development Bank of Japan for low-interest loans, permitted for companies covered by the law.

"We will do our utmost to repair our business by working to regain customers' trust," Okazaki told a small group of reporters after receiving approval from the Ministry of Economy, Trade and Industry.

Mitsubishi has used the rehabilitation law twice in the past, when it issued shares for capital tieups with Sweden's Volvo AB in 1999 and DaimlerChrysler in 2000.
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