Aug. 24, 2012 at 2:20 PM ET
Little Mazda Motors has long been known for doing things its own way, sticking with the rotary engine, for one thing, decades after other manufacturers gave up on the fuel-inefficient technology. And the step the maker is expected to take today again runs counter to general industry trends. But it leaves many industry observers wondering whether it will leave the Japanese maker at a serious competitive disadvantage.
Sometime today, the very last Mazda6 sedan will roll off the AutoAlliance International assembly line in Flat Rock, Michigan. Mazda has been building cars at the facility in suburban Detroit for the last quarter century, having set up AAI as a joint venture with long-time partner Ford Motor Co.
But Ford has all but completely walked away from that trans-Pacific partnership, selling off all but a small stake in Mazda in recent years and ending decades of product sharing programs. Mazda, in turn, has been looking for a new partner and, with sales of the Mazda6 on the decline, it decided to walk away from the assembly plant joint venture – turning to a factory in Japan for the soon-to-be-updated Mazda6 model.
The AutoAlliance plant will remain open – but now, solely under Ford’s control. In fact, the maker has big plans for the facility and will invest $550 million in it while adding 1,200 jobs to the 1,700 workers already there.
Mazda actually will retain its 50% stake, but has no plans to build anything there going forward.
Flat Rock actually began as a Ford casting plant in 1972, was closed nine years later and then purchased by Mazda, which followed Honda and Toyota, among other Japanese makers opening so-called transplant assembly plants in the U.S. The Japanese company initially turned to its own staff for much of the factory’s management team – even building one of Detroit’s first sushi bars nearby.
As Mazda’s finances faltered, Ford rapidly expanded its stake in the Hiroshima-based manufacturer – ultimately naming its own CEO to run the Japanese company. Ford also purchased a stake in the facility.
AutoAlliance has produced a wide range of products over the years, especially from the Ford perspective, including the little sporty Probe coupe and later the Mustang. Mazda has long focused on midsize models, known for a number of years as the Mazda6.
The problem, Mazda officials have explained, is that volumes have slipped so precipitously that it is no longer economically viable to continue at the plant – even though the next-generation Mazda6 coming next year will be hampered by lopsided exchange rates that have led most other Japanese manufacturers to rapidly shift production away from the home islands.
Japan’s Big Three, Toyota, Nissan and Honda, in fact, have announced significant expansion plans for North America in recent months.
And Honda, the first Japanese maker to open a transplant factory, is marking the 30th anniversary of its Marysville, Ohio assembly plant this month by launching production of its 9th-generation Accord. By mid-decade, announced John Mendel, the maker’s top American executive, about 85% of the vehicles the maker sells in North America will be built here.
Mazda isn’t retrenching entirely. It plans to set up a new factory in Salamanca, Mexico to build smaller products like the Mazda2 and Mazda3, but unless it reverses its stand on Flat Rock it appears unlikely it will build vehicles in the U.S. for the foreseeable future.
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