Saturday, September 09, 2000

Mitsubishi shake-up sends old management packing

By Yuri Kageyama
The Associated Press

        TOKYO — Mitsubishi Motors Corp. reshuffled its management Friday in an attempt to restore its credibility, battered by recent revelations of a cover-up of auto defects stretching over two decades.

        The appointment of a new president and a new second-in-command from DaimlerChrysler AG may be just what the Japan's fourth-largest automaker needs to resurrect its image and to underline a break with the failings of the old management that led to the serious problems in quality control and professional ethics.

Katsuhiko Kawasoe
        Takashi Sonobe, a vice president and former chairman of Mitsubishi Motors' U.S. manufacturing and sales operations, was picked to replace Katsuhiko Kawasoe as president, effective Nov.1.

        In a related move, Rolf Eckrodt, head of DaimlerChrysler AG's rail system subsidiary, will take over as chief operating officer. DaimlerChrysler also announced it had renegotiated the terms of its deal with Mitsubishi and will pay $200 million less for its 34 percent share than originally planned.

        Mr. Kawasoe made it clear Mr. Sonobe was chosen for his familiarity with Western management.

        “I chose him because he can tackle foreign culture without any hesitation,” Mr. Kawasoe told reporters. “During these changing times, raising consciousness about ethics is critical. But unfortunately my management vision did not penetrate the company's ranks.”

        Mr. Kawasoe has been under pressure to resign since the cover-up surfaced, prompting a recall of 620,000 vehicles and a police investigation.

        Mitsubishi Motors acknowledged last month it had been filing away consumer complaints about its cars for more than 20 years without reporting them to the authorities. The government filed a criminal complaint Friday, largely a formality since police have raided Mitsubishi offices twice in recent weeks in search of evidence for a criminal liability case.

        The scandal also forced Mitsubishi Motors to relinquish more managerial powers to DaimlerChrysler.

        The deal for DaimlerChrysler to take a 34 percent stake in Mitsubishi had been reached before the scandal broke. But under a new deal announced Friday, the German automaker will send over Mr. Eckrodt as COO as well as three executives for Mitsubishi's board of directors.

        “Japanese companies are quite capable in terms of technology,” said Takahiro Fujimoto, a Tokyo University professor of economics. “But they can't be called world-class in terms of its management strategy.”

        Mitsubishi has been having troubles in sales as well, posting $218 millionin losses for the fiscal year ending in March. Its debts total $14 billion.

        There had been speculation DaimlerChrysler would raise its stake in Mitsubishi Motors, but it ended up getting a 10 percent lower price on the same 34 percent stake — $3.84 per share instead of $4.27, lowering the price from $2.1 billion to $1.9 billion.

        Analysts said having DaimlerChrysler personnel on board should help Mitsubishi.

        “Handing over more management say to DaimlerChrysler is going to speed up decision-making,” said Kenji Tanaka, an analyst in Tokyo.


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