Money Matters, Simplified.
Mitsubishi gets tax incentive for Illinois plant
by Anter Prakash Singh - February 5, 2011 - comments
The 1,300 employees of the plant must have heaved a sigh of relief after hearing the announcements.
Mitsubishi Motors Corp. has announced that it will be investing $45 million to produce the new Outlander Sport crossover at its Normal plant in Illinois starting from 2012.
The state governor, Pat Quinn, who was present on the occasion on Friday, declared $30 million as tax incentives for keeping the plant functional. Before the Friday’s announcement, the plant was facing uncertainty.
Decision beneficial for all
The 1,300 employees of the plant must have heaved a sigh of relief after hearing the announcements.
The local employees union signed an agreement with the management worth millions for cuts and freezes in salaries till 2015.
President of the local Unite Auto Workers (UAW) 2488 termed this as a good investment for all the parties involved including the state, company and employees.
“We were faced with the prospect of future work or no work,” said Ralph Timan, the President. “Everybody’s got a stake in this, and every body’s getting a return on this.”
Illinois plant is the only Mitsubishi plant in the United States where workers are members of the UAW union.
Tax incentive induced the company to stay
Many are wondering weather Mitsubishi would have stayed in the state without the tax incentive and will the company would stay after the tax incentives go.
According to many analysts, Mitsubishi has a number of reasons to stay in the state even without the tax incentives.
One reason is that the emerging trends in global economy has made the United States a preferred destination for auto manufacturers as compared to Japan and Germany.
Mitsubishi is also planning a to expand its footprint in the U.S. auto market where it has only 0.48 percent market share.
But analysts like Michelle Krebs of Edmunds.com believed that the company could have left the state.
Mitsubishi Spokesman, Dan Irvin, said that the tax incentives were one of the several factors which convinced the company to invest in the Illinois Plant.
“All of these things have been critical parts of the decision, and (it is) very difficult to say it was one more than another,” he said.
The company will also get benefits as its Normal plant is situated in an enterprise zone.
Outlander Sport will be manufactured at plant
The Outlander Sport will be made at this plant in Illonis.
Shinichi Kurihara, president Mitsubishi Motors’ North America, expressed hope that the plant will be utilized with the new model and the efficiency will improve resulting in higher production volumes.
He estimated that half of the vehicles produced in this plant will be exported to Latin America, Russia and the Middle East.