Chief of North American Unit of Mitsubishi Resigns
Finbarr O’Neill, the automotive turnaround whiz hired 16 months ago to work his magic on ailing Mitsubishi Motors North America Inc., has resigned after a yearlong plunge in the company’s sales.
The Cypress-based unit of Japan’s Mitsubishi Motors Corp. named Rich Gilligan, head of its North American manufacturing operation, to replace O’Neill as president and chief executive.
Industry analysts said O’Neill’s departure wasn’t likely to signal the demise of Mitsubishi in the U.S. A number of recent articles in Japanese newspapers have suggested the company is getting ready to withdraw from North America. Mitsubishi Motors executives in Japan have denied the reports.
Osamu Masuko, head of overseas operations for Mitsubishi, said in a statement Tuesday that O’Neill had helped lay “the groundwork for a successful turnaround in North America. We have great confidence in Rich Gilligan’s ability to keep the turnaround moving forward.”
Despite its problems, the company can stage a comeback, said James Hossack, an analyst at Tustin-based AutoPacific Inc. “But it will take five years, not 15 months, to fix things,” he said. “Its problems are such that no one could turn it around this fast.”
O’Neill, 52, said in an interview that his departure had little to do with the situation at Mitsubishi. He said he left to become chief executive of Reynolds & Reynolds Co., an Ohio software maker that serves the automotive dealership industry, and that he saw the new job as a “great growth opportunity.”
Before joining Mitsubishi in September 2003, O’Neill had been president of Hyundai Motor America Inc. He was credited with pulling that company out of a steep sales slide by persuading his South Korean bosses to improve product quality and to stand by their product with a 10-year warranty. At the time, that was the industry’s longest warranty on crucial engine and powertrain parts.
O’Neill has often been referred to as the auto industry’s unlikeliest CEO. He was a corporate attorney for Toyota Motor Sales U.S.A. Inc. in Torrance and then for Hyundai in Fountain Valley before being catapulted into the top seat at Hyundai’s U.S. unit in 1998 after a nationwide hunt failed to produce an outside candidate.
At Mitsubishi, O’Neill was grappling with a company that had relied on cheap financing and bargain-basement prices to woo customers. Although the tactics worked for several years, Mitsubishi’s sales started sliding in 2003 and its easy financing plans began backfiring: Losses from loan defaults grew to nearly $1 billion.
“His job was the definition of the impossible job,” said David Healy, auto industry analyst at Burnham Securities Inc.
As rebates made other brands cheaper, Mitsubishi lost its only marketing edge. O’Neill complained that the company had failed to build an image as a brand people would want to buy. Instead it was seen as a cheap alternative to cars they’d prefer but couldn’t afford.
Mitsubishi’s Japanese parent is in deep trouble as well. It is the only money-losing automaker in Japan, and its sales there are off more than 50% in 2004 compared with 2003. The company also is coping with a scandal over defect cover-ups that has landed 10 former company executives in jail. The defects weren’t in vehicles sold in the U.S.
Although a group of investors agreed last year to pump more than $4 billion into a rescue effort, analysts say Mitsubishi Motors needs at least $2 billion more to cut its debt load and free up capital for much-needed product development.
“I believe the fundamental groundwork has been laid,” O’Neill said Tuesday. “We have cut back on fleet sales [which produce little profit], cut operating costs dramatically, stepped away from high-risk financing and brought the focus back to product.
“It will take quite some time for the company to turn around, but there is some great new product in the pipeline to help.”
The man taking over for O’Neill is an auto industry veteran who put in 30 years with Ford Motor Co.’s manufacturing operations.
Gilligan joined Mitsubishi in December, 1998 as executive vice president and chief operating officer of manufacturing. He was promoted to president and chief operating officer in June, 2001. During his tenure, Mitsubishi’s factory in Normal, Ill., improved from last to first place in the annual auto assembly productivity rankings by Harbour & Associates.
