Mitsubishi Shutdown to Further Streamline Production Utilization

Mitsubishi's announcement it will close its lone North American plant in Normal, IL, in November is not a surprise, based on the raw data.

The plant has been running one shift for several years and using roughly just a quarter of its annual capacity. Furthermore, WardsAuto’s forecasted demand for Mitsubishi’s models did not point to any improvement in the plant’s production outlook.

Albeit a small amount in a region set to build 17 million-plus light vehicles this year, the shutdown will cut annual North American production by about 60,000 units. Unless the facility is sold, the shutdown means an industrywide loss of capacity in a period when factories are running pretty tight.

Ironically, even though it is just one plant, closure of the Normal site, which currently builds the Mitsubishi Outlander Sport, will noticeably increase the industry's capacity utilization in 2016.

Forecasted capacity utilization – production vs. estimated 2-shift straight-time capacity -- for entire 2016 is 101.1%, highest on record and well above 2015’s revised outlook of 99.5%. Prior to the announced closing of the Normal plant, utilization for 2016 was pegged at 100.0%.

The closure also means North American production in Q4 2015 will be reduced an estimated 5,000 units, and output for the year has been revised to 17.413 million. Forecasted output for 2016 has been cut by 62,000 units and is projected at 17.776 million.

For the U.S. alone, the closure lowers forecasted 2016 production to 12.035 million units, still well above 2015’s revised 11.758 million. U.S. capacity utilization is forecast at 102.6% in 2016, also a record, and noticeably above 2015’s revised 97.9% -- although next year’s rise is more attributable to higher output at other plants than it is to the Mitsubishi shutdown.

Although the plant might never have been destined to pump out Mitsubishi models at volumes much higher than in recent years, the closure does eliminate a significant amount of available production – potentially even for another manufacturer -- from the North American manufacturing footprint. Based on two daily shifts, the lost available straight-time volume from the plant totals an estimated 236,000 units.

Future sourcing for the Outlander Sport, one of the few bright spots in the automaker’s lineup, will come from Japan.

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