TOKYO — Mitsubishi Motors will shutter a plant in the U.S. state of Illinois after failing to find another automaker willing to buy the facility and take on its workers.
The Illinois plant produced Outlander Sport SUVs but capacity utilization has been low, contributing to the facility’s ongoing unprofitability. Outlander Sport production was halted at the end of November, and 1,000 of the plant’s 1,250 workers were let go.
At present, only the parts manufacturing and supply lines are operating. Those will be shut down in May and the 250 workers manning them dismissed. Outlander Sport production is being consolidated at the company’s plant in Okazaki, Aichi Prefecture, and vehicles for the U.S. market will be exported from Japan.
The Japanese automaker is expected to book an extraordinary loss of 20 billion yen to 30 billion yen ($166 million to $250 million) in the year ending in March, covering severance pay and other charges tied to the Illinois facility’s partial shutdown. Another extraordinary loss is likely next fiscal year accompanying the dismissal of the remaining workers.
Net profit this fiscal year is projected at around 100 billion yen, down 15% from the prior year due to struggles in Thailand and other Southeast Asian markets, but the size of the decline could widen.
Opened in 1988 as a joint venture with U.S. automaker Chrysler (now Fiat Chrysler Automobiles), the Illinois plant is currently operated as a Mitsubishi Motors wholly owned subsidiary. The strong dollar has undermined export profitability, resulting in the plant operating at about half of capacity.
When Mitsubishi Motors decided to cease production at the site, it sought a buyer that could take the plant and workers. However, negotiations apparently faltered in part due to the workers’ relatively high pay.
Mitsubishi Motors is also withdrawing from European production, making it the first Japanese automaker to end production in both the U.S. and Europe. It aims to increase efficiency by consolidating production in Japan and Southeast Asia.