Bloomberg News

Mazda to Halt Sedan Assembly at U.S. Plant Shared With Ford

June 06, 2011

June 7 (Bloomberg) -- Mazda Motor Corp. plans to stop making sedans at a Michigan plant shared with Ford Motor Co. since 1992 as part of efforts to improve efficiency and cut costs.

Production of the next-generation Mazda6 sedan will be moved to Hofu, Japan, from the AutoAlliance International factory, or AAI, in Flat Rock, Michigan, Mazda said yesterday in a statement. It didn’t say when the change will take effect.

“The decision was made after carefully assessing all risks and opportunities, including global needs, changing demand in North America and exchange-rate exposure,” Chief Executive Officer Takashi Yamanouchi said in the statement. “We are committed to working with Ford, our joint venture partner in AAI, to identify potential future opportunities for the plant.”

The move comes as the yen’s 15 percent gain against the U.S. dollar in the past year has reduced Hiroshima, Japan-based Mazda’s profit from overseas sales. Ford has slashed its stake in Mazda to 3.5 percent from more than a third as the U.S. automaker worked to expand its own operations.

Marcey Evans, a Ford spokeswoman, said the factory, which builds the company’s Mustang sports car, is a “critical” plant and that the automaker is working with Mazda and the United Auto Workers union to explore options after Mazda6 production is halted.

“Our intent is to create a competitive business case for future production that also allows us to maximize our production efficiency,” Evans said in an e-mailed statement.

AutoAlliance

AutoAlliance is one of three Ford plants vulnerable to closing as part of contract talks with the UAW this year.

The factory has 1,763 workers, according to Ford. The facility has capacity to make 240,000 vehicles a year, Mazda Chief Financial Officer Kiyoshi Ozaki said in February. Mazda’s exit leaves the plant making only the Mustang, which had 73,716 deliveries in the U.S. last year.

“The real issue is, does Ford need the capacity?” said Bob Clark, president of RWC Consulting LLC, a labor-relations firm in Brighton, Michigan. “That’s an open question. With the current lineup, it would seem problematic to keep it open just for the Mustang.”

Jeremy Barnes, a spokesman for Mazda’s U.S. unit in Irvine, California, declined to elaborate on when production will end.

Japan’s NHK television network reported last week that Mazda would leave the Michigan plant after 2012.

Mazda fell 0.5 percent to 195 yen in Tokyo Stock Exchange trading as of 9 a.m. The shares have dropped 16 percent this year. Ford fell 10 cents to $13.91 yesterday in New York Stock Exchange composite trading.

--Editors: Kevin Orland, Terje Langeland

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net


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