Mitsubishi 2006 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2006 Mitsubishi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

10 MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
Q: What circumstances led to your decision to continue produc-
tion at the Okazaki Plant? And how is your production system
coping with growing demand for global strategic models?
<President Masuko>
Configuring an optimal global production system is an extremely important issue for the company. MMC’s
Mizushima Plant is operating at over full capacity to meet strong demand in Japan and overseas for models
produced there, whereas the Okazaki Plant and other production facilities have lower capacity utilization
rates. The decision to continue production at the Okazaki Plant reflected the need to redress this imbalance
in production levels in our domestic production network and avoid the loss of sales opportunities due to
production shortfalls. This decision entailed transferring production of the
Outlander
model for overseas
markets from the Mizushima Plant to the Okazaki Plant.
Q: Was this a costly move?
<Managing Director Ichikawa>
The transfer of
Outlander
production to the Okazaki Plant will not require a large capital investment, and will
not have a large impact on fiscal year 2006 operating results. Even with this investment, however, balancing
production levels in Japan remains an outstanding issue.
<President Masuko>
Capacity utilization will rise at production subsidiary Pajero Manufacturing Co., Ltd. due to full model changes
for
Pajero (Montero)
and
Delica
in fiscal year 2006.
Overseas, MMC will rationalize production levels at plants with excess capacity, while shipping vehicles to
other regions to improve capacity utilization. The Illinois Plant of U.S. subsidiary Mitsubishi Motors North
America, Inc. (MMNA) is striving to reduce costs and enhance productivity, while launching exports of
Galant
to the Middle East, Russia and the Ukraine. Netherlands Car B.V. (NedCar), a European subsidiary engaged in
the production of
Colt
, was contracted by DaimlerChrysler AG to produce a compact model. However, produc-
tion of this model was terminated at the end of June 2006 at the request of DaimlerChrysler. We are now
considering rationalization measures to ensure profitability at NedCar based on
Colt
production alone. To
further improve capacity utilization at NedCar, MMC is also currently considering exporting NedCar produced
Colt
models to Mexico and South Africa. By increasing shipments to other regions, we aim to effectively utilize
each production facility. Meanwhile, Mitsubishi Motors Australia, Ltd. (MMAL), an Australia-based subsid-
iary, is working to boost overall sales of the locally made
380
. However, MMAL continues to face greater-than-
expected difficulties, reflecting factors such as weakening demand for large sedans due to high oil prices and
intensifying price-based competition. In response, MMC continues to implement production cutbacks, cost
reductions and other measures in line with market conditions, as part of efforts to rationalize the company’s
local production operations.
Top Management Interview 1
Top Management Interview 1