Mazda says it may pull out from Flat Rock factory jointly operated with Ford

Article by Christian A., on February 22, 2011

As production has become unprofitable, Kiyoshi Ozaki, Chief Financial Officer of Mazda Motor Corp., said that the company may pull out from a United States factory it operates jointly with longtime partner Ford Motor Co. Ozaki told reporters in Tokyo that plans for the Flat Rock, Mich., factory will be revealed by the middle of the year.

Ozaki said that Mazda, Japan's second-largest car exporter, will be considering overhauling the plant or change the models built there. However, Ozaki didn’t provide further details.

Currently, the Flat Rock assembly plant – officially known as AutoAlliance International -- assembles the Ford Mustang and Mazda6 sedan on one production shift. Ozaki said that for the plant to make a profit, it has to operate at 70 percent of its full 240,000-unit capacity.

Mazda seeks to present a more fuel-efficient engine to spur demand and boost domestic production to improve economies of scale after falling into a third-quarter loss.

In January 2011, Mazda’s sales in the US dropped 9 percent, as demand fell due to increased incentives on Toyota Motor Corp.'s Corolla compact, and as demand for Hyundai Motor Co.'s Elantra took away some of the demand for the Mazda3.

The Japanese carmaker has to adjust its inventory in the US by 5,000 units through the end of March. Mazda seeks 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 also said that the ratio of exports will also go up as demand for cars in Japan declines.

The assembly plant in Flat Rock opened in 1972 as the Michigan Casting Center (MCC), which was completed after three years of work. The Michigan Casting Center (MCC) was considered at the time as one of the most technologically advanced casting facilities in the world. However, union labor issues, work injuries and declining demand for the V8 engine blocks, the Michigan Casting Center was closed in 1981.

Soon, the facility fell into the hands of Mazda Motor Corp., which commenced construction of a new building on the site of the Michigan Casting Center in 1985. The plant was renamed as Mazda Motor Manufacturing USA, which commenced production in September 1987 with the Mazda MX-6 and Ford Probe coupes.

Ford repurchased 50 percent of the plant in April 1992, and the site officially became a joint venture between Ford and Mazda. It was then renamed as AutoAlliance International in July 1992. AutoAlliance International commenced production of Mazda 626 in 1993.

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