Will Mazda pull a NUMMI in Flat Rock?

Is history about to repeat itself in Flat Rock, Mich.?

When Mazda launched the redesigned Mazda6 sedan in 2008 in Flat Rock, Mich., the company planned to make 100,000 Mazda6s a year. Then the financial crisis hit.
When Mazda launched the redesigned Mazda6 sedan in 2008 in Flat Rock, Mich., the company planned to make 100,000 Mazda6s a year. Then the financial crisis hit. Automotive News

TOKYO--It has been a tough run for U.S.-Japan joint automaking ventures in North America.

They once were hailed as learning labs where ailing Detroit manufacturers could assimilate the wisdom of the East. But in recent years they have crumbled under financial stress and shifting alliances.

In 2009, General Motors walked out on its 25-year-old joint venture with Toyota, New United Motor Manufacturing, in Fremont, Calif. Later that year, Suzuki bailed on its CAMI joint plant with GM in Canada.

Now Mazda Motor seems poised to pull out of its longtime manufacturing partnership with Ford.

At issue is the AutoAlliance International 50-50 joint venture operated by the companies in Flat Rock, Mich., since 1985. Mazda said last week that it will stop making its Mazda6 midsized sedan at the money-losing plant when the car's life cycle ends, probably around 2012.

But it didn't say what happens next. Mazda and Ford Motor are discussing whether Mazda will move production of another vehicle there, sell its stake to Ford, or pursue some other course.

But Mazda's move seems to fit a pattern.

GM abandoned NUMMI as part of its bankruptcy overhaul. It said it would simply stop making cars there and left partner Toyota hanging. Toyota said it couldn't operate NUMMI profitably by itself and later closed shop, too.

Tesla Motors plans to start building its electric Model S at the NUMMI plant this year.
Tesla Motors plans to start building its electric Model S at the NUMMI plant this year. Tesla Motors

A year ago, EV manufacturer Tesla Motors acquired the NUMMI plant from Toyota and entered a battery development deal with the Japanese company. Tesla will begin building its Model S electric sedan at the plant starting later this year.

Next was Suzuki's turn. With U.S. sales plunging in 2008, Suzuki pulled the plug on its only North American assembly operation in Ingersoll, Ontario. It took another year for Suzuki to complete the sale of its stake in CAMI to GM, which kept the plant alive.

Mazda has a lot of reasons to fold up in Flat Rock. Mazda's North American operation is continually in the red, and the plant is a big reason. Mazda planned to produce 100,000 Mazda6s annually when the redesigned sedan was launched at Flat Rock in mid-2008. Then the financial crisis hit.

Last year the plant built only 45,168 Mazda6s. In late April, Mazda wrote off a loss of about $102.6 million for the plant in the fiscal year ended March 31.

Japanese media say Mazda is eyeing a new factory in Mexico, where costs are lower.

But just as GM's exit from NUMMI handed Toyota an excuse to close a costly plant, Mazda's retreat from Flat Rock may do the same for Ford.

Ford makes the Mustang at Flat Rock, but that output isn't stellar either. Mustang production at AutoAlliance fell 13 percent to 21,497 units through April. Mazda6 volume was down 8 percent to 12,574.

So what would Ford do if Mazda left it hanging?

Would it follow the NUMMI or the CAMI model? It's a situation worth watching.

(Source: Automotive News)

 

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