Mitsubishi Motors Corp.’s announcement on Monday of the closure of a factory that manufactures its Pajero SUV came as a shock to the town of Sakahogi, Gifu Prefecture, where the plant is located.
There is growing concern over the impact of the closure of the factory — which hires around 1,200 workers, making it the largest local employer — on the town’s economy, employment and finances.
“I was shocked because it was so sudden,” said Sakahogi Mayor Yoshiya Shibayama at a news conference the same day. Shibayama was told about the plan from Mitsubishi Motors executives on July 22, he said.
According to the Sakahogi Municipal Government, the plant was partially closed around March following the COVID-19 outbreak.
“We had been told that they would have a clear idea by the end of the year (on fully resuming plant operation), so we are totally astonished (by the latest decision),” Shibayama said.
Mitsubishi Motors said Monday it is expecting a group net loss of ¥360 billion for the current business year through March due to sluggish sales as the coronavirus pandemic takes its toll.
It would be up from the ¥25.7 billion loss posted in the previous business year and the largest since a loss of ¥474.7 billion recorded in fiscal 2004, when the firm incurred massive recall costs.
As part of restructuring measures, the firm said it will stop producing its Pajero SUV at a plant run by its subsidiary Pajero Manufacturing Co. in Gifu in the first half of fiscal 2021 and close the plant.
Production of the Pajero for the domestic market ended last year, but the SUV has been manufactured for overseas markets. Mitsubishi Motors said it will halt the production of the Pajero completely and transfer production of other vehicles at the Gifu plant to its factory in Okazaki, Aichi Prefecture.
Pajero Manufacturing has a 44-year history in the town, after its predecessor Toyo Koki transferred its factory to Sakahogi in 1976. The town, with a population of 8,200, has promoted auto production as its main industry and took pride in the factory bearing the name of a legendary car that won the Paris-Dakar Rally a number of times.
According to the Sakahogi government, the town’s tax revenues related to Pajero Manufacturing made up 13 percent of total corporate tax revenues and 22 percent of real estate tax revenues in fiscal 2019, reaching 15 percent of the town’s overall tax revenues. As many as 12 companies in the town have direct transactions with the firm.
While expressing concern, Shibayama said new ways to develop the town will be explored. “We hope to attract a company of good standing to the town with the help of the Mitsubishi group,” he said.
Meanwhile, an official from the town’s association of commerce and industry said that after Mitsubishi Motors’ scandal involving the manipulation of fuel efficiency data emerged in 2016, some local firms doing business with the company shifted their focus to building relationships with other automakers.
“The impact (of the plant closure) would be limited,” said the official. “We are told that Pajero Manufacturing’s business will be transferred to Mitsubishi Motors’ factory in Okazaki. We hope the companies in the town will be able to continue doing business with the firm.”
The owner of an auto parts manufacturer with 10 to 20 percent of its business related to Pajero Manufacturing also said, “We won’t be affected that much.”
On the other hand, people involved in running apartments or restaurants used by the factory’s workers worry about the effects of the plant closure.
“We are already affected by the COVID-19 pandemic and now we will be hit doubly hard,” said a restaurant owner. “We will have to decide at some point whether to close the place.”
On Monday night, at the main gate of the factory, which bears a sign saying “the birthplace of Mitsubishi Pajero,” most workers leaving the plant refrained from commenting on Mitsubishi Motors’ announcement.
“We haven’t been given any explanation ourselves, so we don’t know,” said a man working in the manufacturing section. “I want to talk, but …” said another employee.
Gifu Gov. Hajime Furuta told reporters Monday that it is “extremely regrettable for the region” that Mitsubishi Motors made the decision.
He called on the firm to “give sufficient and careful consideration” to issues that come up with the plant closure, including the employment of some 1,000 workers, continuing business with auto parts suppliers and how to utilize the plant site.
The governor also said the prefectural government will set up a consultation counter at its branch office in the city of Minokamo for the factory’s workers and companies doing business with the firm.
This section features topics and issues from the Chubu region covered by the Chunichi Shimbun. The original article was published July 28.