Subaru to own all of SIA in Indiana by year end?

[Jon [in CT]]

If the following story turns out to be true, then Subaru should soon have excess capacity at its Lafayette, Indiana plant. This might allow Subaru to add production of the Impreza platform cars (i.e. Imprezas and Foresters) there.

Isuzu Says It's Discussing the Reorganization of its U.S. Plant
By Alan Ohnsman

Tokyo, Oct. 8 (Bloomberg) -- Isuzu Motors Ltd. is discussing how to reorganize its portion of the U.S. auto plant it shares with Fuji Heavy Industries Ltd., said company spokesman Kouitsu Mabuchi.

The truckmaker, which is trying to return to profit, will end U.S. production of sport-utility vehicles this year at the plant, the Nihon Keizai newspaper said earlier today, without citing anyone.

``We are considering how to rationalize the plant but we haven't made any decisions yet,'' Mabuchi said. ``We'll make an announcement as soon as we can.''

Isuzu plans to end its partnership with Fuji Heavy, maker of Subaru autos, at the Subaru-Isuzu Automotive Inc. plant the companies opened in Lafayette, Indiana, in 1989, Nikkei said. Fuji Heavy, which now owns 51 percent of the plant, will acquire Isuzu's 49 percent share to become the factory's sole operator by the end of the year, the report said.

Richard Gillmore, a spokesman for Isuzu's U.S. unit, said he wasn't aware of plans by the Tokyo-based company to abandon North American production. Subaru-Isuzu plant spokeswoman Ann McConnell also said she hadn't received information about Isuzu pulling out of the joint venture.

Isuzu and Fuji Heavy have made no decision on the ``rationalization'' of Isuzu's production at their U.S. plant, Fuji Heavy said in a faxed statement.

Isuzu's U.S. sales of sport-utilities built in Indiana and imported from Japan plunged 38 percent in the first nine months of 2002. The company last month began a two-month shutdown of its Indiana production line amid weak sales and rising inventories.

The Indiana plant, with 3,100 workers, makes both Isuzu and Subaru vehicles and isn't represented by the United Auto Workers union. The Isuzu line has 705 employees. General Motors Corp. now has a 49 percent stake in Isuzu and a 21 percent stake in Fuji Heavy.

Before today, Isuzu shares had fallen 43 percent since the beginning of this month as investors worry government moves to speed up writing off bad loans will hurt the truckmaker. The shares dropped as much as 4.4 percent to 44 yen today, trading at 45 yen as of 9:30 a.m. in Tokyo.

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[natedawg]

We had a plant wide announcement saying this was not true. So unless they were lying to us then don't believe this.

[Jon [in CT]]

Let's just call it a rumor, then. Here's a link to a similar story at Reuters:
http://www.reuters.com/news_article....toryID=1545998

[Bamos]

How do you know when management's lying to you? Their mouths are moving. That the same kinda announcement we got a few years back when some rumors started.

"We are the only independent bank left in the region, and we are going to stay independent. We are not looking for a buyer."

Two months later..."Well...they made a good offer."

It was pretty funny when it finally happened. They were planning an announcement to everyone, but one of the news services got the info first. Everyone at the bank found out from Yahoo news.

[mhoward1]

Isuzu, Subaru considering cuts at Lafayette factory

October 9, 2002

ASSOCIATED PRESS

LAFAYETTE, Ind. (AP) -- Subaru-Isuzu Automotive Inc. said Tuesday it was considering further cuts in production of slow-selling Isuzu sport utility vehicles at the Japanese car makers' joint-venture plant.

In response to a published report in Japan that Isuzu Motors Ltd. would end SUV production in Lafayette, Subaru-Isuzu Automotive released a statement saying its parent companies were "involved in ongoing discussions concerning possible changes at SIA."

Without revealing its source, the Nihon Keizai Shimbun reported that Isuzu would end its 13-year partnership with Fuji Heavy Industries Ltd. Fuji makes Subaru vehicles at the Lafayette factory and owns 51 percent of the plant. Fuji would acquire Isuzu's 49 percent share to become the factory's sole operator, the Japanese report said.

Subaru-Isuzu spokesman Tom Easterday said no "definitive agreement" had been reached in the discussions.

The talks do not change plans to begin production Nov. 25 of the 2003 models of the Isuzu Rodeo, Rodeo Sport and Axiom, Easterday said.

On Sept. 16, Subaru-Isuzu shut down production of Isuzu models in Lafayette for two months, citing slow sales.

Subaru-Isuzu also laid off 215 workers from its Isuzu operations in Lafayette on Sept. 2.

The plant's Isuzu line now employs 705, with another 2,500 working on the Subaru production line making Legacy, Outback and Baja models, Isuzu-Subaru spokeswoman Ann McConnell said.

McConnell said it was too early to say how many of the Isuzu workers would be affected by any cuts that could result from the ongoing talks.

Isuzu's sales have recently struggled amid a global economic slowdown. Isuzu lost $367 million for the fiscal year ended in March on $13.6 billion in sales.

In an effort to avoid the recent Isuzu layoffs in Lafayette, Subaru-Isuzu began a cost-cutting program earlier this year that included offers of early retirement and unpaid leaves of absence for employees.

[go go go]

Japanese version of the same Nikkei newspaper article says Subaru will take over manufacturing IsuzuSUV in SIA plant and supply to Isuzu.

[kage]

If Isuzu's sales are suffering, and they need to lay off workers because there is no demand for their product, what advantage would it be to have Subaru manufacture the product for them (that nobody seems to be buying anyway)?

What does Subaru manufacture in that plant? I'm assuming Legacies and/or Outbacks right? So if this rumor is true, then I'd guess this would become a new Baja or Impreza/Forester plant, or they'll just expand the Legacy production.

[go go go]

Originally posted by kage
If Isuzu's sales are suffering, and they need to lay off workers because there is no demand for their product, what advantage would it be to have Subaru manufacture the product for them (that nobody seems to be buying anyway)?

What does Subaru manufacture in that plant? I'm assuming Legacies and/or Outbacks right? So if this rumor is true, then I'd guess this would become a new Baja or Impreza/Forester plant, or they'll just expand the Legacy production.

Subaru will benefit for getting paid making Isuzu.
If Isuzu completely quits, it'll actually hurt Subaru because they share stamping, painting, and inspecting process. Subaru needs volume to be efficient and building Isuzu will not be a bad thing. That's how I analize the news.

[KC]

It would be a great place for Subaru to build their 'Hypothetical' SUV.

--kC

[kage]

I'm sorry I guess I didn't say it clearly. What I meant was how does that scenario make sense for Isuzu? Okay here's a company that's hemhorraging money. They can't get anyone to buy their product. Inventory is building up at their dealerships and at the plant. So why on Earth would they lay off their own workers, only to have another company build their product for them? I can't imagine that Subaru could build Isuzus better or cheaper than Isuzu could.

[mhoward1]

Originally posted by kage
I'm sorry I guess I didn't say it clearly. What I meant was how does that scenario make sense for Isuzu? Okay here's a company that's hemhorraging money. They can't get anyone to buy their product. Inventory is building up at their dealerships and at the plant. So why on Earth would they lay off their own workers, only to have another company build their product for them? I can't imagine that Subaru could build Isuzus better or cheaper than Isuzu could.

It's the same reason most companies go to contractors...They don't have to pay for Benefits and such....

[natedawg]

Yes, they could very well be lying to us about this. However many of the parts for the 2003 Isuzu models have already been ordered.

If Isuzu pulls out of the market, I've already heard rumors about a 7 passenger Subaru vehicle being built here.

[Jon [in CT]]

Originally posted by natedawg
Yes, they could very well be lying to us about this. However many of the parts for the 2003 Isuzu models have already been ordered.

If Isuzu pulls out of the market, I've already heard rumors about a 7 passenger Subaru vehicle being built here.

Alright natedawg! Now you're getting the hang of this rumor-mongering forum.

And the next time you hear a plant-wide announcement, it's probably not considered "confidential" information. So feel free to tell us about it here, pronto.

[a2cpc]

The Indianapolis Star had an article in the paper this morning (10/11) saying that GM might be interested in using the SIA plant to produce a "Pontiac tall wagon concept of the Subaru Legacy".

It also says that there are other GM plants that could produce the car.

[Jon [in CT]]

Originally posted by a2cpc
The Indianapolis Star had an article in the paper this morning (10/11) saying that GM might be interested in using the SIA plant to produce a "Pontiac tall wagon concept of the Subaru Legacy".

It also says that there are other GM plants that could produce the car.

Here's a link to that Indy Star article:
http://www.indystar.com/article.php?isuzu11.html

Very interesting speculation in it:

Wall said he expects that much of the capacity vacated at Lafayette in the event Isuzu pulls out would be absorbed by Subaru or a Subaru-GM model.

IRN clients claim GM has explored a Pontiac tall wagon concept of the Subaru Legacy assembled at Lafayette, Wall said. GM also could make such a model at GM car plants near Detroit and Lordstown, Ohio.

Fuji has said it wants to produce 160,000 vehicles at Lafayette by 2006. That forecast has touched off speculation that Fuji will spend several hundred million dollars retooling Lafayette to make cars on what's known as unibody sections.

Fuji's half of the plant is set up to build cars on the easy-handling unibody platforms. Isuzu's line is geared for trucks built on heavy metal frames.

While there has been no sign that Fuji is going ahead with a retooling, analysts say the work could be awaiting a decision from GM on the Pontiac model.

"We have the possibility in our forecasts for that model, but it's just a possibility," said Jeff Brodoski, senior analyst in the research firm J.D. Power and Associates' suburban Detroit forecasting office.

Michael Robinet, a senior official at CSM Worldwide Inc., which also forecasts vehicle demand for clients, said GM has scrapped the Pontiac-Subaru wagon concept but could consider Lafayette for a future GM truck or car model.

Lafayette has the capacity to produce substantially more than the 103,000 Subarus and 30,000 Isuzus expected to come off its two assembly lines this year.

Equipment in the facility is scaled for 200,000 autos a year and a state air-pollution permit allows total annual capacity of 262,000 vehicles.