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Subaru planning major expansion in Indiana

May 7, 2013

Subaru plans to expand its Indiana factory and add workers to build the Impreza small car there in 2016, a person briefed on the matter said.

The person spoke on the condition of anonymity because the announcement is scheduled to be made Wednesday in Japan.

The factory in Lafayette currently employs about 3,600 and builds the Legacy and Outback cars and the Tribeca SUV. It also builds the Camry midsize car under contract with Toyota.

The source said hundreds of jobs will be added, but the exact number was unknown. The person didn't know how much money would be invested in the factory.

The Indiana Economic Development Corp. said Gov. Mike Pence plans to be at the plant Wednesday morning for a major announcement.

An expansion at the plant has been expected.  Officials at Fuji Heavy Industries Ltd., the Japanese parent of of Subaru, said early this year that they intend to end a shortage of vehicles at U.S. dealerships soon by expanding capacity in the country, its largest market.

“We are finalizing plans to strengthen U.S. production,” CEO Yasuyuki Yoshinaga said in mid-April.

Fuji Heavy, which boosted U.S. sales 20 percent to a record last year, plans to increase annual global deliveries to 850,000 by March 2016.

The Lafayette plant opened in 1989, initially as a joint venture with truckmaker Isuzu Motors Ltd. The factory can produce a maximum of 310,000 vehicles annually, based on state air-pollution limits, according to the carmaker.

Subaru's U.S. sales have doubled in the past five years and are up 17 percent through April. Last year, the automaker sold more than 336,000 cars and trucks, a 26-percent increase. That's double the growth rate for the entire U.S. auto market.

Sales of the Impreza, now built in Gunma, Japan, have fallen 31 percent this year, due largely to a shortage of vehicles on dealer lots. Ward's Automotive says Subaru has only enough Imprezas on the ground to supply dealers for 29 days. A 60-day supply is considered optimal.

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