Obstacles to a U.S. Mazda Plant Removed
Plans of Mazda Motor Corp. to build its first American auto assembly plant appeared to be back on track Monday after the plant’s general contractor reached a tentative agreement on a new labor agreement with the unions representing the construction workers who will build the facility.
Mazda officials still refused Monday to say whether they will now definitely go ahead with plans to build the plant. But with the labor settlement, all the obstacles that they had earlier said threatened the future of the project now have been removed.
Late Sunday night, Kajima International Inc., Mazda’s Japanese construction firm, reached a tentative agreement on a contract with the Detroit building trades council, ending a bargaining dispute that Mazda had warned could threaten its plans to build an assembly plant in Flat Rock, Mich., near Detroit.
Auto Maker ‘Pleased’
A Mazda spokesman said the Japanese auto maker was “pleased” by the new pact but said Mazda would not comment further until the contract is reviewed by Mazda executives in Japan and ratified by the full building trades council.
The union council is expected to vote on the contract today. Mazda added that it will review the contract “as soon as possible” in order to make a final decision on whether to go ahead with the project.
Last November, Mazda announced that Flat Rock would be the site of its $450-million assembly plant and that the facility would employ 3,500 workers producing 240,000 cars a year beginning in 1987.
The plant is to be built on the site of a closed Ford Motor casting plant. Mazda is expected to share the assembly plant’s output with Ford, which owns 25% of the Japanese auto maker. Mazda has also agreed to allow the United Auto Workers to represent its workers, many of whom will be laid-off Ford workers.
But the project ran into trouble last week when Mazda officials said they were indefinitely postponing the start of construction on the plant. They also warned that they might abandon the project altogether because of snags in the labor negotiations, as well as the decision by the federal government to provide only $2.5 million out of a requested $20 million in urban development subsidies.
Mazda had originally planned to hold a formal ground-breaking ceremony at the Flat Rock plant April 24, but that ceremony also has been postponed.
Both Plans Crucial
Mazda insisted last Friday that its decision to postpone its plans for the project had nothing to do with last Thursday’s announcement by the Japanese government that it would allow exports of Japanese cars to the United States to rise by more than 24% over the next year.
Instead, Mazda officials said a favorable labor contract covering the plant’s 4,000 construction workers, and the $20 million in federal funding or its “equivalent,” were both crucial for the project to proceed. Later, Mazda said that a $6.5-million, interest-free, 20-year loan would be an acceptable alternative to the federal financing that it had requested.
Late Friday, Michigan Gov. James J. Blanchard announced that the state would match the federal government’s $2.5 million with $4 million of its own to provide Mazda with the $6.5- million interest-free loan it wanted.
While refusing to fully commit themselves to accepting the new labor agreement, Mazda officials did say Monday that they were confident that the financing package put together by Blanchard would meet their firm’s needs.
