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Mitsubishi and Diamond-Star Motors

by Judy McKay and David Zatz

Mitsubishis sold under the Plymouth, Dodge, Chrysler, and Eagle brands include the Arrow, Champ, Colt, Conquest, D-50/Arrow, Laser, and Talon. Chrysler used the Mitsubishi 2.5 (V6), 2.6 (I4), and 3.0 (V6) liter engines in its own cars, along with, briefly, a Mitsubishi diesel.

In 1870, Yataro Iwasaki, an independently-minded young entrepreneur who had been working for the Tosa clan, took his future in his own hands and founded Tsukumo Shokai, a shipping company, to take advantage of Japan's re-emergence onto the world stage after over two hundred years of isolation.

After Japan's feudal clan system was permanently abolished in 1871, Tsukomo Shokai acquired ships at a rapid pace. In 1873, Iwasaki chose a company crest and name based on the Iwasaki familial crest of three overlapping diamonds, and the Tosa Clan crest of three concentric oak leaves. He also adopted the name "Mitsubishi," meaning "Three Diamonds;" it evolved into the Mitsubishi logo, three concentrically joined diamonds.

Vehicle Line art

Mitsubishi prospered and expanded into other fields in the 1870s and 1880s, including mining, railroads, and foreign exchange. It became so successful, in fact, that its competitors complained to the Japanese government that Mitsubishi had an unfair advantage, and in 1882, Mitsubishi was ordered to divest itself of all its non-shipping related businesses. But little change occurred.

Mitsubishi was soon involved in industrial engineering, steel and oil production, and chemical research.

In 1917, as World War I was keeping the Americans and Europeans busy, Mitsubishi Heavy Industries introduced the Mitsubishi Model A, one of Japan's first passenger vehicles. Completely handmade, the seven-seat sedan was modeled after the Italian Fiat Tipo 3, the first car with a universal joint transmission.

The Model A could not complete in price with the mass-produced cars, and only twenty-two were made before Mitsubishi abandoned the effort in 1921. Mitsubishi's first truck, the T1 protoptype, appeared in 1918, and passed a 1,000 kilometer (620 mile) endurance test.

Over the next decades, Mitsubishi continued to experiment, and in 1931, they introduced the first Japanese-designed diesel engine for autos, the 450 AR. In 1934 they followed it with Japan's first commercial bus, the B46, the largest bus of its day, and the foundation of the Fuso Bus line. The 1930s, in fact, were responsible for many of Mitsubishi's innovations: Japan's first four-wheel drive automobile, diesel buses, and, in 1936, the TD45 diesel truck.

As Japan began ramping up to go to war, most of Mitsubishi's efforts were directed toward building ships and aircraft. By the time the war finally ended, Japan's industrial base was almost completely destroyed, and the victorious Allies ordered that Mitsubishi Heavy Industries be broken up into three smaller companies.

All three companies continued Mitsubishi's automotive development programs, and it wasn't long before Mitsubishi introduced its new and desperately-needed Mizushima, a 1946 three-wheeled cargo vehicle for short-distance hauling. Almost simultaneously, the "Silver Pigeon" scooter answered the need for highly efficient personal transportation.

Because of the fuel shortage which continued to plague Japan throughout the 1950s, Mitsubishi continued to direct its efforts at building commercial transportation, and created the B1 Bus, which could run on either gasoline or alternative fuel. In 1947, they had created their first electric bus; they moved on to launch Japan's first trucks with air suspension systems and tilt-cabs.

Matthew Parij wrote,

Mitsubishi acquired the rights to produce the Jeep CJ-3 in Japan around 1948, and did so for fifty years, finally ceasing production in 1998. They adapted the Willys Go-Devil and Hurricane engines into diesel engines for their Fuso medium-duty truck and bus line, and kept those going until at least 1965. The diesel version of the Go-Devil was the KE31, and the diesel version of Hurricane was KE36.

The standard gasoline Hurricane engine, produced under license by Mitsubishi, was designated JH4 ("Japanese Hurricane 4.") It was eventually replaced by the Mitsubishi 4G4 engine.
In 1960 the Macau Grand Prix class winner Mitsubishi 500 came to market. The 1962 micro-compact Minica, with four seats and an air-cooled two-stroke engine, and the somewhat larger Colt 600, were next. Mitsubishi added a sporty model in 1965 with the Colt 800 fastback. In 1969, Mitsubishi stretched beyond economy to the Colt Galant sedan, using a "dynawedge" shape.

In 1970, Mitsubishi Heavy Industries' motor vehicle operation was spun off under the name of Mitsubishi Motor Corporation (MMC). In 1972, when a Galant won Australia's long-distance Southern Cross rally, and a Mitsubishi Lancer won the same event for the next two years, Mitsubishi's reputation soared; the company created a network of international distributors just in time to meet the demands of consumers who wanted more efficient cars.

Profitability was another story. In 1971, Chrysler acquired a chunk of the company, with the long-term mutual plan of acquiring all of MMC; from 1983 to 1987 (when Lee Iaccoca announced his intention to sell all Mitsubishi assets), Chrysler's product planner, Burton Bouwkamp, was on the Mitsubishi Motors Board of Directors. He wrote:

Both Mitsubishi and Chrysler were looking for partners and found each
other. Lynn Townsend (Chrysler VP of International and later President)
wanted Chrysler to be a world wide company and Mitsubishi Heavy Industries
(MHI) wanted someone to teach its automotive subsidiary, Mitsubishi Motors
Corporation (MMC) how to make money in the car business. MMC was a wholly owned subsidiary of
MHI and had seldom - if ever - returned a profit to the parent company. (Read much more about Burton Bouwkamp's experiences with Mitsubishi)
In 1980, Mitsubishi captured a major asset, Chrysler's former Australian operations - all of them. Chrysler had already been selling Mitsubishis in Australia under the name Chrysler Sigma, but was mainly involved in bringing over European Chryslers and building locally-redesigned Valiants. Mitsubishi had purchased a half-interest in the operations in 1978, and completed the buyout in 1980. The Chrysler engineers who had created the exciting Valiant Chargers and Pacers (and plain local-production Valiants), and who had developed a powerful straight-six engine to power their local creations, now worked on the Sigma, enlarging it to form the Mitsubishi Magna, or, as it was sold around the world, the Diamonte.

The Mitsubishi Pajero, MMC's unique off-road vehicle, was seen by a global audience at the 1984 Sarajevo Olympics and the 1987 Zagreb Universiade games, and when it won the 1985 Paris-Dakar Paris Rally, became a world-wide bestseller.

Land vehicle Car Vehicle Motor vehicle Automotive exterior
The Mitsubishi L200 truck was transformed into the Dodge D50/Dodge Ram 50 and Plymouth Arrow, and was fairly successful for many years.

Chrysler sold its interest in DSM to Mitsubishi in 1991 and its equity stake in MMC in 1993, and in 1995 DSM's name was changed to Mitsubishi Motor Manufacturing of America. While sales of the Pajero had been surprisingly successful in Japan, the economic 1997 downturn in Southeast Asia forced MMC to close its Thailand factory, and when the Japanese economy also began a slide in 1998, Mitsubishi's market share began to plummet. Its U.S. operations were not significant enough to pick up the slack, and its 1997 losses were the greatest it had ever experienced - partly because it had fed its American growth with many low-quality loans to younger buyers who could not afford the payments.

As MMC's stock price collapsed, the company replaced its president, Takemune Kimura with Katsuhiko Kawasoe, who began a restructuring program. Even so, its debt, by 1999, was over 1.7 trillion yen.

MMC's reputation suffered a crippling blow when, in 2000 and in 2004, the company had to admit to covering up defects from as far back as 1977, and recall over 160,000 vehicles for free repair. When the Fuso commercial line also required a recall, the total of vehicles rose to over a million. Kawasoe and twenty-three other employees were eventually arrested, but three of them have since been acquitted.

DaimlerChrysler briefly held a controlling interest in MMC, and sent German executives to slash and burn Mitsubishi's domestic operations. The issue of whether to buy more of Mitsubishi led to the ouster of Juergen Schrempp from the leadership spot of DaimlerChrysler, putting Dieter Zetsche in his place. JP Morgan finally sold a controlling stake to members of the Mitsubishi keiretsu in 2005, leaving MMC's fate once again in Japanese hands - and possibly saving the life of the company.

One result of the temporary stay of Mitsubishi in the DaimlerChrysler realm was the use of Mitsubishi platforms - basic sets of dimensions - and joint MMC/Chrysler engineering for the Dodge Caliber/Jeep Compass/Jeep Patriot, Mitsubishi Galant, and Chrysler Sebring/Dodge Avenger. The two also share four-cylinder engines with Hyundai as a result of another attempt by Daimler to forge a world automaker.

Land vehicle Vehicle Car Luxury vehicle Mid-size car

MMC's current president, Osamu Masuko, led the introduction of MMC's first new model in over two years, the kei car; started cost-cutting; and, in 2005, saw the first profitable quarter in nearly three years.

Diamond-Star Motors

Chrysler Corporation was quite aware of its shortage of small cars in the 1960s and 1970s; the company tried bringing over "captive imports" from its European subsidiaries (Rootes Group and SIMCA), but the most popular car in France failed without trace in the United States and Canada.

In 1971, Chrysler purchased a 15% stake in Mitsubishi Motors (MMC), and began importing some of MMC's models to sell as the Plymouth and Dodge Colt compacts, and Dodge Ram 50 pickup. The intent was to eventually purchase Mitsubishi outright, the acquisition fell by the wayside as the cash disappeared.

Burton Bouwkamp, former Managing Director of Japan Operations for Chrysler, wrote in 2016: "In 1983-1984, I was head of the Chrysler study team which, working with a Mitsubishi study team, decided that a plant in the United States was feasible. Both study teams recommended building the plant. Both managements approved our recommendation. I guess we were wrong!"

The Japanese had been selling in very limited numbers in the US, but they were definitely niche players until the 1973 oil crisis. Starting just after the arrival of the first Chrysler answers to the imports - the import-based Horizon in 1979 and the Reliant in 1981 - Japanese automakers began to build or buy assembly plants in the United States, partly to avoid import quotas. Mitsubishi introduced their own brand in the United States.

The companies were still willing to collaborate; and their marriage as Diamond Star Motors produced some remarkable offspring. The October 7, 1985 selection of the Diamond-Star Motors Plant site was sealed with the blessing of a Shinto priest, and the commingling of Japanese soil and the prairie earth of Normal, Illinois. Chrysler had put up 50% of the $650 million necessary to build the Diamond-Star manufacturing plant, but left management to Mitsubishi.

Burton Bouwkamp, Chrysler's choice to join Mitsubishi's board of directors, wrote: "I was the Chrysler representative at the ceremonial groundbreaking, along with Senator Paul Simon (the guy with a bow tie), Congressman Rostenkowski (the guy that went to jail), Governor Jim Thompson, etc."

Glenn Gardner, a Chrysler engineer later to hit the executive ranks, was Chrysler's senior representative to Diamond Star to experience the Mitsubishi way of doing things. The company arranged for plant managers from all over the country to be flown into Normal on a regular basis. They viewed the Mitsubishi way of adapting, while its cars were being designed, the production machines and assembly methods to suit those designs.

DSM gave Chrysler's plant managers an alternative to having the designers', plants', and workers' roles disconnected during the car building process.

At the Diamond-Star Plant, workers were grouped in "cells" of four to eight members, and each member had to learn all of the jobs assigned to that cell, switching off to reduce injuries and boredom, and made sure the plant could operate smoothly when people were out.

The Diamond-Star Plant started with 1250 workers and 470 robots, eventually going to 2900 people; it could turn out 240,000 cars per year.

The first Diamond-Star cars, appearing in 1989, had different names, bodies, tuning, and packages: the Mitsubishi Eclipse, Plymouth Laser, and Eagle Talon. DSM could barely keep up with the demand, but these times would not last. DSM later saw the Dodge Avenger and Stratus coupes, and the Chrysler Sebring coupe - all essentially Mitsubishi Eclipses.

In 1991, Chrysler again found itself in dire financial straits; rather than give up their investment in new cars that would bring about a rennaissance, or the massive Chrysler Technical Center being built in Auburn Hills, they sold control to Mitsubishi for a reputed $200 and $300 million. Mitsubishi continued to manufacture the Chrysler vehicles under contract; but the joint venture had become a Mitsubishi subsidiary.

Burt Bouwkamp wrote: "Lee Iacocca didn't like the Japanese, especially MMC management, and in 1991 Chrysler sold their 50% equity in Diamond Star Motors; and in 1993 they sold their 24% equity in MMC."

In 1993, Chrysler, riding on a high, sold its Mitsubishi stock, and announced a goal of ending its habit of reselling Mitsubishis and using Mitsubishi engines. Later, Mitsubishi used Neon engines in the base Eclipse (BMW also considered it for the 3-series, dropping the plan when American owners objected). Mitsubishi continued to market Chrysler products outside the U.S.; and in 2014, Chrysler started marketing Mitsubishis in Mexico.

The Diamond-Star Motors experiment officially ended on July 1, 1995, when Mitsubishi changed the company's name to Mitsubishi Motor Manufacturing of America. In 2012, it still built the Eclipse, including the Eclipse Spyder convertibles, and the related Endeavor SUV and Galant sedan. Mitsubishi continued to have the issues with profitability which led it to tie up with Chrysler.

The plant built the last Mitsubishi car on November 30, 2015, and will make parts until closing in May 2016.

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