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 Edmunds.com.

"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.

Source;
http://www.detnews.com/article/20110604/AUTO01/106040319/1148/AUTO01/Report--Mazda-to-leave-Flat-Rock-plant-it-shares-with-Ford

Mazda May Exit From U.S. Factory Operated With Ford

By Makiko Kitamura and Yuki Hagiwara - Feb 18, 2011

Mazda Motor Corp. may pull out from a U.S. factory it operates jointly with Ford Motor Co. after production turned unprofitable, Chief Financial Officer Kiyoshi Ozaki said.

The company will announce plans for the factory in Flat Rock, Michigan, by middle of this year, Ozaki told reporters in Tokyo today. Mazda may also consider overhauling the plant or changing the models built there, he said without elaboration.

Mazda, Japan’s second-largest auto exporter, has been hurt by the yen’s sustained rise against the U.S. dollar in recent months. The Hiroshima-based company’s U.S. sales fell 9 percent in January, as increased incentives on Toyota Motor Corp.’s Corolla compact, and demand for Hyundai Motor Co.’s Elantra sapped demand for the Mazda3, Ozaki said.

A decision by Mazda to leave the plant shared with Ford since the 1980s “wouldn’t catch Ford off guard,” said Kim Hill, an economist with the Center for Automotive Research in Ann Arbor, Michigan.

“Unlike several other Ford facilities, Flat Rock hasn’t had a major recent investment in flexibility,” Hill said. “If Mazda were to leave, Ford would probably want to look at putting something off its small-car platform in that facility.”

Marcey Evans, a Ford spokeswoman, declined to comment.

The Michigan plant needs to run at 70 percent of its full 240,000 annual capacity to make a profit, Ozaki said earlier today. Mazda aims to introduce a more fuel-efficient engine to spur demand and increase domestic production to improve economies of scale after slipping into a third-quarter loss.

Mazda will need to adjust U.S. inventory by 5,000 units through the end of March, he said.

Ford’s Stake
Mazda aims to increase domestic production 33 percent to 1.1 million units in the year ending in March 2016, compared with 827,910 units last fiscal year. The ratio of exports will also increase as demand for cars in Japan declines, he said.

Mazda’s Michigan plant produced about 54,000 units last year, Ozaki said.

Ford, the second-largest U.S. automaker, reduced its stake in Mazda to 3.5 percent from 11 percent last year, scaling back an alliance of more than 30 years. The Dearborn, Michigan-based automaker formed an automatic-transmission joint venture with Mazda in 1969 and acquired a 25 percent stake in the Japanese automaker in 1979.

The U.S. carmaker took effective control of the Japanese company in 1996, raising its stake to 33.4 percent. It reduced the stake to 13 percent in November 2008, and a share issue by Mazda in 2009 further shrank the holding to 11 percent.

New Powertrain
Mazda plans to introduce its new “Skyactiv” powertrain system across almost all models by 2015, starting with the domestic, U.S. and Australian markets this year. Earlier this month, the carmaker reported a third-quarter loss, citing the strength of the Japanese currency which reached a 15-year high in November.

The new Demio compact, the first model to use the system, will go on sale in Japan in the first half of 2011 and runs 30 kilometers per liter of gasoline under the Japanese testing system, Mazda said in October. The new car’s fuel-economy rating is the same as the hybrid version of Honda Motor Co.’s Fit and better than the current Demio’s 23 kilometers per liter.

Yen’s Impact
With exports making up 80 percent of Japan production in 2010, Mazda is more vulnerable to the yen’s impact than its domestic rivals. The strong yen against the dollar cut nine- month operating profit by 13.6 billion yen ($163 million), the company said this month.

Mazda posted a net loss of 2.7 billion yen for the three months ended Dec. 31. The company will still meet its full-year profit forecast of 6 billion yen as sales in Japan recover, Ozaki said.

While the strong yen erodes profitability of exports, Mazda needs to increase domestic output to boost economies of scale, the company has said. It aims to increase domestic production 33 percent to 1.1 million units in the year ending in March 2016, compared with 827,910 units last fiscal year, Ozaki said today.

Source;
http://www.bloomberg.com/news/print/2011-02-18/mazda-s-cash-position-won-t-improve-next-fiscal-year-cfo-says.html