Saturday, June 4, 2011

Mazda to leave Flat Rock plant it shares with Ford

Detroit News staff and wires
Mazda Motor Corp. will pull out of its manufacturing venture with Ford Motor Co. and stop making cars in Michigan, a Japanese newspaper reported Friday.

Ford and Mazda both declined to comment on the report.

But Mazda has been studying whether to keep making autos at the Flat Rock plant, and senior executives have said they expect to make a decision this year.

Mazda and Ford operate the AutoAlliance International plant as a 50-50 partnership. But the plant was running at less than half of its capacity last year, as its 1,700 workers produced just 36,000 Mazda6 cars and 78,000 Ford Mustangs on a single shift.

Citing unidentified company sources, the Nikkei business daily said Mazda was considering selling its stake to Ford as part of a restructuring of its global production operations.

Mazda would ship cars to the United States from Japan and from Mexico starting around 2013, according to the Nikkei.

The Japanese automaker said in a statement Friday that it had "nothing to announce at this time.

"Today's news report … is not based on information released by Mazda. We do not comment on speculation."

Several analysts expect Mazda to announce a decision soon.

"Mazda has signaled for months that it may be ending its U.S. manufacturing presence at the Flat Rock assembly plant, and although the company still hasn't confirmed the action, it seems circumstances are pointing in that direction," said Bill Visnic, senior analyst at online research firm

"Sales in the United States for the redesigned Mazda6 built at Flat Rock are running at about one-third of expectations," he said.

This year, Mazda has sold 103,072 vehicles in America, up 5.7 percent. But sales of Mazda6 cars, battling in the cutthroat midsize sedan segment, are down 8.9 percent at 13,604.

Ford has maintained employment at Flat Rock by increasing output of its vehicles at the plant, the Nikkei said.

But the ties binding the companies have loosened. Ford, once Mazda's controlling shareholder with a 33.4 percent stake, has reduced its holding to 3.5 percent.

In the meantime, Mazda is struggling financially. In the fiscal year ended March 31, its losses widened to 60 billion yen, or $742 million, from 6.5 billion yen, or $76 million, in the previous year.

The Hiroshima-based automaker attributed the deterioration in its results to lackluster sales in Japan, the initial impact of the massive March 11 earthquake and tsunami, and the strength of the yen. Mazda exports around 80 percent of the vehicles it makes in Japan.


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