Mazda and Michigan Manufacturing Plant - Decisions, Decisions

2011 Mazda MAZDA6
Price Range $20,990.00 - $29,320.00	Fuel Economy 18 city / 27 highway Base Engine 170-horsepower L4	Value Rating Average Explore This Car More

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Located south of Detroit in Flat Rock, Michigan, the AutoAlliance plant — built from the remains of a former Ford stamping plant — has churned out Mazda products since 1987. Ford entered the project as a joint venture partner in 1992, allowing the plant to build Mazda and Ford models built from a similar platform (i.e. MX-6 and Probe).

Now the fate of its AutoAlliance factory hangs in the balance. Although Ford appears to be content with the Mustang’s sales figures, the 6’s slow sales rate has Mazda reconsidering their participation in what is panning out to be an unprofitable venture. In 2010, AAI not only cut 900 workers and a single production shift, but only cranked out 77,586 Mustangs and 45,000 Mazda6 sedans. Mazda CFO Kiyoshi Ozaki says in order to reach a profit, the plant needs to run at 70 percent of its capacity, and last year’s volume is roughly 40,000 vehicles shy of that goal.

Filling that gap with the 6, which faces increased competition in the U.S. midsize sedan segment, is certainly no easy task. As a result, Ozarki says the automaker is considering pulling out of the plant altogether, or perhaps retooling it for a different, more popular model (the 3 could be a good option). Although withdrawing from the venture is a possibility, it is widely seen as a last-ditch option, considering the rising strength of the Japanese yen. Since most Mazda models apart from the 6 and Tribute are built in Japan, the automaker is forced to import the majority of vehicles sold in North America. Subsequently, it attributed a $163 million loss over the last nine months to the exchange rate.

Should Mazda stop building its own products in Michigan, the company could investigate other means of producing vehicles in North America. Mazda hopes to increase domestic production by 33 percent by 2016, and according to Automotive News, is also investigating the option of opening an assembly plant in Mexico.