Automotive News - June 2, 2008 - (Page 30)

Exports help as Mitsubishi sorts things out Lindsay Chappell lchappell@crain.com While in Jeddah, Saudi Arabia, on business, Midwesterner Jerry Berwanger and one of his engineers popped into a store to buy a T-shirt. The store clerk was mildly alarmed at the presence of an American and questioned the engineer — who grew up in the region and speaks Arabic — about what they were doing there. “We’re from Mitsubishi in the United States,” Berwanger’s colleague explained. “Really?” said the clerk, suddenly intrigued. “Are you the guys who make the Eclipse?” “That wouldn’t have happened three years ago,” muses Berwanger, COO of the manufacturing division of Mitsubishi Motors North America Inc. The Normal, Ill., company makes the Eclipse and Eclipse Spyder sports cars, Galant sedan and Endeavor SUV. Three years ago, Berwanger wouldn’t have been in Saudi Arabia. His Jeddah business trip, like many others he takes these days, was to visit one of the expanding roster of markets to which the Illinois plant exports. So far this year, Mitsubishi’s U.S. exports are going to 17 world markets. Russia leads the list, followed by Ukraine, then the Persian Gulf region. The plant has just added Brazil and is preparing to put China on the list. Other markets are soon to follow. Exports in 2008 will total about 17,000 cars. Small numbers, big help That total might seem small to a major global auto producer. Some high-volume plants might even consider it an unwelcome nuisance. But for Mitsubishi’s U.S. operations, it is good news in an era of financial uncertainty. Exports are more than a temporary lifeline for Mitsubishi as it plans its long-range future in North American manufacturing. Exports also are its new strategic approach. Since its opening in 1988, the Normal plant was intended as a local production center supplying Mitsubishi dealers in the United States and Canada with what the Japanese automaker expected to be a growing demand for vehicles. The plant’s new role is as a world export center supplying global markets as the sole source for Eclipses, family-sized Galants and Endeavors. A smaller car, also called the Galant, is built in Japan. “The entire company is talking more about world cars,” Berwanger notes. “For us, it’s about volume. I’ll gladly do whatever is necessary to get the added volume. Volume is king.” To sell its U.S.-built cars abroad, Mitsubishi installs mirrors with the traditional “objects in the mirror may be closer than they appear” warning in Farsi. Above and beyond To export its Illinois-made cars, Mitsubishi engineers have Redesigned bumpers Re-created ashtrays Sourced new cigarette lighters and fire extinguishers Translated warning stickers into Farsi Installed new body holes for lighting to meet other nations’ regulations Learned to interpret problems from markets that have no warranty process Entertained distributors from around the world in Normal, Ill. Traveled abroad to meet and greet new customers company believes it has renewed opportunity as an exporter, especially as the dollar hovers at lower-than-normal exchange rates. In Japan, Mitsubishi Motors Corp. highlighted the Illinois exports as one of the pieces of its global turnaround plan, a multipart plan made public last year called “Step Up.” Step Up concedes that Mitsubishi’s sales outlook in the United States remains challenging, with another likely decline in sales volume this year in a soft market. But it assumes exports will continue to grow. Hobbled These are not Mitsubishi’s finest days as a North American automaker. The Illinois production subsidiary has been hobbled since 2003 when U.S. sales tanked, nearly wiping out the company. Today, 1,850 people work at the U.S. operation, down from about 3,000 at its peak in 2000. Originally built to turn out 240,000 cars a year, the plant will build 68,000 this year, including exports. For Berwanger and his team, 17,000 vehicles is hardly a small total. The our Russian distributor said he had to have them. In Russia, you have a lot of smokers. So we had to redesign the console to put in ashtrays and lighters.” Such alterations have become a never-ending part of the work. The rear bumper fascias had to be redesigned to allow for longer license plates. New holes had to go into the cars’ corners to accommodate different safety lighting. The Eclipse floorpan had to be altered to create space for a spare tire because export markets require a full-sized spare instead of the U.S. mini-spare. Persian Gulf markets require the installation of a fire extinguisher, a need that meant not only qualifying a U.S. fire extinguisher supplier but installing a bracket onto the front floorboard. Under-the-hood labeling had to be translated into Russian, Chinese, Arabic and other languages. Visiocorp., Mitsubishi’s U.S. supplier of sideview mirrors, had to create a run of mirrors that carried the usual “objects in the mirror may be smaller” message in Farsi. Just to be sure, Berwanger ran the resulting export-market mirror past Ali Odeh, his Arabic-speaking engineer who had traveled with him to Saudi Arabia. Odeh proofread the message and caught a language error. Deja vu “I’ve been through this before,” Berwanger says. He is referring to two different things. Before coming to Mitsubishi in 1999, Berwanger worked at Ford Motor Co.’s car assembly plant in Kansas City, Mo. In the 1980s, Ford dabbled in low-volume exports. Berwanger was part of the team that prepared a batch of compact Ford Tempos to be shipped to China, a market that at the time had not completely thawed in political terms. He also participated in shipping Mystiques to the Persian Gulf. But when he says he has “been through this before,” he also is referring to Mitsubishi’s downturn. “I was with Ford for 27 years,” he explains. “Business conditions change. I actually lost my job in 1976. Then I was recalled. Things were bad again in 1989. And they got better. “I know a lot of our people are nervous. But this is a cyclical business. We’re going to pull out of this. We’re weathering the storm.” c JUNE 2, 2008 On site Oddly enough, the Normal plant may be particularly well-suited for the new role. Although it gave up half of its hourly work force to reduce operating costs in recent years, it remains today as it was when created 20 years ago: a self-sufficient subsidiary with integrated support services. The Normal plant has its own purchasing department, engineering team, dedicated steel and plastics operations, quality engineers and other functions. Plant staffers negotiate to buy raw materials, ranging from steel to the metal for catalytic converters. Those in-house services now enable Normal to respond to far-flung export markets without relying on far-away engineering solutions from Japan. Case in point: cigarette lighters. “We don’t even put them into our cars anymore,” Berwanger says. “But 30 Automotive News http://www.actionim.com http://www.actionim.com

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Automotive News - June 2, 2008 Gas prices fuel industry's new era Chrysler faces tricky dealer mergers Honda may crank out more Civics in N.A. Mercedes will move into Chrysler Pacifica studio Ford to offer hatchback version of Fiesta Prestige Automotive sells stores but keeps Black Enterprise top spot Dealership marketers take to text messaging Senate to hear personal pleas on roof crush rule Magazine: Chrysler, Fiat are talking Former Fla. dealer gets jail for bilking bank That guy Alfred had possibilities Ford will make next Mustang look smaller Pontiac subcompact may come to U.S. GM: Battery glitch cuts hybrid sales Porsche exec: CAFE 'will not change our nature' Japanese rivals race for lithium batteries Jatco boosts CVT capacity in Mexico for N.A. vehicles Mercury deserves a better chance Rising gas prices have changed the U.S. market Marketing and sales: Context and content Mexico's Nemak grows beyond North America Buyers didn't quit GM; GM quit on its buyers Brand perceptions change slowly Bloggers are journalists, too Nice HQ, Nissan, but where's Nobe? Chrysler's Chernoby: Growing up gearhead Picture this Mitsubishi hopes new gearbox widens Evo's appeal Openlane gets funds Obituaries Survey: Going green can get your auto ad noticed Inrix: Router can reduce traffic delays Mazda6 gets own platform for U.S. ... sort of Mazda6 set to take on mid-sized sedan heavyweights Troubled or not, the United States still beckons What's next? More transplant models headed this way Exports help as Mitsubishi sorts things out Irma Elder: 'This is one of the toughest times we have had' Fitzgerald: Dealers, consumers need alliance Can Bertone design a comeback? Family-owned business struggles for survival Some design houses fall on tough times Hughes: Not a subscriber? No problem American Axle lines up new non-U.S. business GM think tank works to boost service business Toyota offers gas card as tire incentive VW turns to common software to develop products Continental's Calif. office targets Asian carmakers ZF sees chassis, axle opportunities in N.A. Flex: A new Ford image ... or just over the top? Ford targeted Flex interior quiet, ride Ex-dealership managers say firings were over religion Dealers Genesis in Toledo: It's a long story Back woes sideline Nardelli GM: 19,000 take buyouts Panama to head Nissan Mexicana Wilhite jumps to Jumpstart Dauch sons move up, out Kozyra leaves Continental Ford to lay off salaried staff More small cars to arrive in 2009-10 Even on used market, big trucks go begging Auto advertisers adopt mpg mantra Industry to motorists: We're here to help Diesel prices hit suppliers' Mexico sites Can Camry catch F series? Leno's words of wisdom for automakers Nissan's carbon credits ease global warming guilt Automotive CEOs' pay pales next to peers' Year of the Small Car can't come too soon Foreign suppliers adding capacity in Southeast From cows to kimchi: Making Alabama sweet home for Koreans After light-truck push, cars are king again Mexican suppliers expect sales record in '08

Automotive News - June 2, 2008

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