Japan Press Weekly

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2016 August 24 - 30 [ECONOMY]

70% of Mitsubishi Motors subcontractors in Okayama suffer sales drop due to mileage data scandal

Since Mitsubishi Motors Corporation suspended its minicar production in the wake of the company admission of its falsification of fuel mileage data, more than 70% of Mitsubishi subcontractors in Okayama Prefecture have experienced a sales decline and more than 25% have had to carry out employment adjustment measures including layoffs, the prefectural government announced on August 24.

In April, Mitsubishi halted the production of minicars at its Mizushima factory in Okayama’s Kurashiki City for two and a half months after admitting that it had manipulated fuel economy test data on light vehicles. This has delivered a damaging blow not only to automobile-related businesses but also to retail, service, and other local businesses.

The Okayama Prefectural government in the first week of August conducted a survey regarding the economic impact caused by Mitsubishi Motors’ suspension of minicar production and sales within the prefecture.

The survey showed that the biggest problem for the local economy was a stop of trading on car-related products. In the survey, respondents also said that due to the Mitsubishi scandal, they need to close their businesses temporarily or arrange temporary transfers.

As urgent requests to the central and local governments, many local firms asked for public support to obtain new business connections, public subsidies for corporate efforts to maintain jobs, and financial assistance to develop new technology and products.

An automobile is composed of 20,000-30,000 parts, which means that there is a multi-layer subcontracting system in the automotive industry. In Okayama, the number of Mitsubishi subcontractors in the first and second tiers alone amounts to 509, employing 23,630 workers. Most of those subcontractors are concentrated in Kurashiki, Soja, and Okayama cities.

The Japanese Communist Party has been demanding that Mitsubishi Motors compensate small businesses affected by its emission-cheating scandal for their losses. The party also urged the central government to take necessary steps including job maintenance support.

JCP member of the Okayama Prefectural Assembly Sumasu Nobuko said, “Local business owners are still suffering from the aftermath of the Mitsubishi scandal. The JCP will continue pushing the automobile maker and the central government to help those business owners to overcome financial difficulties. In addition, it is necessary to put an end to the unequal relations between parent companies and their subcontractors in all industries.”

Past related articles:
> Mitsubishi fraud affects local jobs [May 25, 2016]
> Automakers’ ‘profit-first’ attitude leads to fuel efficiency fraud [ May 23, 2016]