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Japanese Autoparts Suppliers in North America: Expand Manufacturing Structures Further as Contracts from GM etc. IncreaseThey also respond to Japanese automobile manufacturers that are increasing production volume by establishing their local joint ventures as wholly owned subsidiaries

Feb. 07, 2006 No.442

  Toyota will start operating its Texas plant in the USA with the annual production of 200,000 at the end of 2006 as well as the second Canadian plant with the annual production of 100,000 in 2008. Nissan also will expand the annual production capacity of its Aguascalientes plant in Mexico from the current 200,000 to 350,000 in 2007. Further, Toyota, Nissan and Honda have been pushing forward the localization of powertrain production.

  In order to respond to those Japanese automobile manufacturers expanding their North American productions, Japanese auto parts suppliers also carried out localization of their production including construction of new plants and new plant buildings, expansion of their existing bases as well as establishment of integrated production in North America in 2005.

  However, due to production reduction at and severe demand to reduce pricing from GM and Ford, some Japanese parts suppliers began seeing their profitability growing worse. On the other hand, new contracts from the Big Three have been on the increase due to the influence from struggling American parts suppliers such as Delphi and Visteon, which are highly depended on the Big Three.

  For instance, Sumitomo Electric Industries is believed to have won a large volume of wiring harnesses from GM for the first time amid Delphi facing a business slump. Diamond Electric Mfg., Bando Chemical Industries and Honda Elesys also won contracts from GM. KIRIU, DAIDO METAL and Fukoku, on the other hand, are building new operational bases to aim strengthening their sales activities to American automobile manufacturers.

  Further, in order to integrate decision-making processes, to respond to the demands from Japanese automobile manufacturers to increase production more smoothly and to promote efficiency, an increasing number of Japanese auto parts suppliers are dissolving joint ventures with Western parts suppliers and making their production sites as wholly owned subsidiaries. The following outlines movements of Japanese auto parts suppliers including the above in North America in 2005.

■Koito Mfg., Tachi-S, Toyoda Gosei and NHK Spring etc. build new plants

  Koito Manufacturing builds its fourth plant in North America in Alabama to manufacture signaling lights from 2007. Denso plans to construct a new plant building at its Tennessee plant to expand the ECU production to 16-20 million in 2010, which is more than double of the actual production of 2004. Tachi-S will jointly manufacture 130,000 seats annually with Lear to supply for Nissan's Smyrna plant from 2007.

  Toyoda Gosei, Toyota Iron Works and Futaba Industrial will construct new plants in Texas, respectively, to supply for Toyota's Texas plant.

  NHK Spring is to start operating a new plant building at its stabilizer plant in Ohio in January 2006, while it also starts manufacturing valve springs for engines and springs for ATs at a new plant in Kentucky in April 2006.

■Establishment of new bases and new plants by Japanese parts suppliers in North America
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Koito Manufacturing: Constructs its 4th plant in USA in Alabama to start manufacturing in June 2007
  Koito Manufacturing will build its fourth plant in Alabama, USA to start manufacturing signaling lights in June 2007. The Company plans to produce 1.8 million signaling lights in 2010 with a view to win contracts from Toyota (Texas), Nissan (Tennessee) and Honda (Alabama) sited in Southern parts of USA. The investment amount is approximately 2.5 billion JPY. The Company will reinforce the production capacity of signaling lights in USA, as the production of the Salem plant in Illinois, which manufactures signaling lights with an annual production capacity of 3.6 million, has nearly reached full capacity producing a little over 3 million in FY2005.
■Shiroki: Plans to start operating 3rd US plant in 2007 and to reconstruct the structure to have a single product item per one plant
  Shiroki, with its North American business, produces seat mechanism parts, body functioning parts and exterior parts at two plants. The Company plans to construct the third plant in 2007 and considers the possibility to assign the Tennessee plant to produce seat mechanism parts, the Georgia plant to produce exterior parts including doorframes and the new plant to produce window regulators of body functioning parts, upon start of the operation of the new plant.
■Sekisui Chemical: Considers building a new plant in USA for interlayer films that strengthen laminated glass
  Sekisui Chemical has a market share of approximately 40% in interlayer films, which reinforce laminated glass for automobiles. The Company plans to invest about 4 billion JPY into USA to construct a plant to produce films starting to operate in 2007. The annual production capacity is 12,000t, which is an amount equivalent to 12 million vehicles. The Company aims to have a broad range of product lineups including the newest types of products with sound insulation or heat shield functions, in addition to conventional films.
■Tachi-S: Manufactures seats jointly with Lear of USA from May 2007 to supply for Nissan Smyrna plant
  Tachi-S jointly established TACLE Seating USA in near Smyrna, Tennessee with Lear of USA. The new company will manufacture seats equivalent to 130,000 vehicles annually to supply for Nissan's Smyrna plant from May 2007 with expected sales of approximately 15 billion JPY in FY2009. The capital fund is 18 million USD which the US subsidiary of Tachi-S invested 51% and Lear invested 49%.
■Tsuda Industries: Starts considering business in North America in 2006 with a plan to enter into the market by FY2008
  Tsuda Industrial (funded by Toyota and Denso) that manufactures forged parts for drive systems and shift lever units has been manufacturing in Thailand and will also start the production in China at the end of 2006. The Company fully undertakes the feasibility study on entering into Western markets and considers manufacturing driving system parts in North America from 2006 to enter into those markets by FY2008.
■TBK: Starts manufacturing diesel engine pumps in March 2006
  TBK (the Company changed its name from Tokyo Buhin Kogyo in July 2005) will manufacture engine pumps in USA from around March 2006 to supply for DMAX, a manufacturing company of diesel engines jointly established by Isuzu and GM. The Company will rent a plant for the foreseeable future with an investment of less than 100 million JPY. The Company expects to have 1.5 billion JPY of sales in 2007. The Company's local operational site TBK America will run the plant.
■T. Rad: Manufactures EGR coolers for diesel engines from 2006
  T. Rad constructs a plant building exclusive for EGR coolers for diesel engines inside the compound of the plant of T.RAD North America in Kentucky, by investing 1.5 billion JPY to start the production in the Spring of 2006. The Company manufactures 330,000 products per year as it won a contract from one of the Big Three for SUVs. This is the first production of EGR coolers for T. Rad in USA, although the Company already manufactures EGR coolers in Japan and Italy and supplies them mainly to Toyota.
■Denso: Expands ECU production at the Tennessee plant to 16-20 million by 2010
  Denso reinforces the production capacity of electronic parts at DENSO Manufacturing Tennessee in Tennessee by investing 185 million USD (approximately 21 billion JPY). The Company plans to construct a new plant next to the existing plant compound in 2007 and to start the operation in 2008. The Company expands the production of ECU from 7.2 million, the actual volume of 2004, to 16-20 million in 2010.
■Toyo Tire & Rubber: Starts mass production at new plant in Georgia in 2006, plans to have the annual production of 6 million in 2010
  Toyo Tire & Rubber starts producing commercial tires for passenger cars and light trucks in 2006 at a newly built plant of Toyo Tire North America in Georgia, with an annual production of 2 million. The Company has already introduced a new method ATOM (Advanced Tire Operation Module), which features high-mix low-volume production and automated production. The Company plans to expand the annual production to 6 million by 2010 by expanding production in two phases in 2007 and 2009 as well as by producing OEM tires to be assembled at vehicle manufacturing lines.
■Toyoda Gosei: Starts production at a new exterior/interior parts plant in Indiana in early 2006
  Toyoda Gosei starts operating its plant newly built in Indiana in early 2006 to produce interior parts including center clusters and radiator grilles for the pickup Tundra or the SUV Sequoia manufactured at Toyota's Indiana plant. The total investment amount is 25 million USD with the sales target of 28 million USD for the initial year. The planned number of employees is 150 staff at the end of 2006.
■Toyoda Gosei: Builds a new plant inside Toyota's Texas plant and operates from Oct. 2006
  Toyoda Gosei established a new plant Toyoda Gosei Texas inside Toyota's Texas plant in January 2005. The capital amount is 22 million USD, which Toyoda Gosei's US subsidiary invested 100%, and the total investment amount is 3.2 billion JPY. The Company will manufacture interior and exterior parts such as console boxes from October 2006 with a plan to have around 170 staff and to generate sales of approximately 3.6 billion JPY.
■Toyota Iron Works: Texas plant to supply auto body pressed parts for Toyota starts operating in 2006
  Toyota Iron Works established TOYOTETSU TEXAS in November 2004. It will start operating in the winter of 2006 to supply auto body pressed parts for Toyota's Texas plant.
■NHK Spring: Constructs new plant building which operates starting Jan. 2006, at its stabilizer plant
  NHK Spring constructed a new plant building at its stabilizer plant New Mather Metals in Ohio by investing approximately 2.9 billion JPY to start production in January 2006. The new building has four lines to manufacture hollow parts for passenger cars and one line to manufacture solid core parts with which the Company manufactures to supply for Japanese automobile makers. The Company plans to expand the sales of New Mather Metals, which were 12 billion JPY in 2005, to 16.5 billion JPY in 2008.
■NHK Spring: Establishes a precision spring manufacturing company to supply to Nissan and Honda etc.
  NHK Spring established a manufacturing and sales company for precision springs NHK Spring Precision Components in Kentucky, USA to start manufacturing engine valve springs and AT springs. The investment amount is around 2.4 billion JPY and the capital fund is 1.2 billion JPY all of which NHK Spring invested. The new company supplies to companies like Nissan and Honda to aim generating 2.6 billion JPY of sales in 2010.
■Futaba Industrial: Establishes a new company in Texas to supply for Toyota's Texas plant
  Futaba Industrial established its fourth manufacturing site in North America, Futaba Industrial Texas in Texas in May 2005. The new site will start operating in October 2006 to supply auto body pressed parts mainly for full sized pickups manufactured at Toyota's Texas plant. The total investment is approximately 4 billion JPY. The capital amount is 1 million UDS (approximately 105 million JPY) all of which Futaba's North American subsidiary invests. The new company expects to have sales of 5 billion JPY and 120 staff in FY2007.
■Press Kogyo: Purchased a press plant from Nissan's Canton plant in Dec. 2005
  Press Kogyo in December 2005 purchased the Welding Operation from Nissan's Canton plant and took over the commercial rights while establishing PKUSA Mississippi plant, leading the Company to have four plants in North America. The production scale of the purchased plant, which manufactures frame parts such as pillars, is 38 million USD with around 75 staff. The purchasing amount is approximately 600 million JPY. This is believed to be measures to deal with the declining demand for trucks in Japan. (The plant used to be owned and run by a British parts maker, which had the Big Three as its major customers. However, Nissan tentatively took over after the maker filed for Chapter 11 bankruptcy-court protection in January 2005 and became difficult to operate the press plant.)
Sources: PR information from each company and media reports

■Production reinforcement at existing plants: Exedy/KYB/Teikoku Piston Ring plan to significantly increase production

  Production expansions at existing plants are also on the rise. Exedy plans to produce 1.9 million torque converters in FY2007, which is 2.4 times more production than FY2005. KYB will expand production of shock absorbers from 6 million in 2004 to 9.3 million in 2007. Teikoku Piston Ring expands the monthly productions of piston rings from 300,000 in 2005 to 1.5 million in 2007 and also cylinder liners from 400,000 in 2005 to 900,000 in 2006.

  Production localization has also progressed. Showa switched production of EPS from KD to full production. Nichirin will start in-house production of low-pressure hoses for hydraulic power steering systems, which have been ordered to outside suppliers, in April 2006. Nippon Piston Ring plans to produce valve seat inserts, which were produced using some of materials imported from Japan, under integrated local production from 2007.

  Those movements have backdrops of increased numbers of contracts acquired from US automobile manufacturers. Sumitomo Electric Industries, Diamond Electric Mfg., Bando Chemical Industries and Honda Elesys each won a contract from GM to supply wiring harnesses, engine ignition systems, driving belts and passenger detection systems, respectively. Exedy has been supplying torque converters for six-speed ATs that GM and Ford jointly developed.

■Japanese auto parts suppliers reinforcing their existing sites in North America
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Ahresty: Plans to expand sales of aluminum die casting parts to 130% in 3 years
  Ahresty manufactures aluminum die casting parts for engines as well as for transmissions at Ahresty Wilmington in Ohio and supplies products equivalent to 80% of its entire sales to Honda while also supplies to Tier 1 parts makers in Nissan/Toyota groups. The Company invested 2.8 billion JPY to install two casting machines to reinforce its facilities in FY2005 with a plan to increase sales from 11.5 billion JPY of FY2004 to 14.8 billion JPY in FY2007 by approximately 30%.
■Ikuyo: Wins first contract from Toyota in USA to supply pillars for Tundra
  Ikuyo won a contract from Toyota for the first time in USA to supply pillars for the next Tundra model through a Tier 1 supplier. Ikuyo's manufacturing base USi (Tennessee) produces lenses for headlamps, pillars, garnishes and so on and supplies them to GM, Ford, Nissan and Honda. Ikuyo plans to expand USi's sales by 50% in three years to 3 billion JPY.
■Exedy: Expands production of torque converters of FY2007 by 2.4 times
  Exedy increases the number of the production lines at the torque converter manufacturing base of Exedy America in Tennessee from three to five by investing 2-3 billion JPY in two years. The Company also increases the operating rate to expand the annual production volume from that of FY2005 to 1.9 million in FY2007 by 2.4 times. Exedy America supplies torque converters for six-speed ATs that GM and Ford jointly developed.
■KYB: Increases production of shock absorbers from 6 million of 2004 to 9.3 million in 2007
  KYB Manufacturing North America (Indiana) of KYB (Kayaba Industries) supplies shock absorbers to Japanese automobile makers and Ford, producing 6 million in 2004. The Company expands its facilities by investing 2 billion JPY in three years from 2005 to produce 7.6 million in 2005 and 9.3 million in 2007, aiming for 18 billion JPY sales.
■Showa: Advances localization of production of transmission parts and EPS
  Showa pushes forward the localization of production of transmission parts. The Company invested 250 million JPY in the summer of 2005 to install three units of titanium coating machines, localizing surface treatment processes, which had been done in Japan, to establish the structure to produce 50,000 per month. The Company also started the local production of electrically powered steering systems in 2005, which had been assembled using parts sent from Japan. The monthly productions are 2,000, all of which are supplied to Honda.
■Sumikin Precision Forge: Increases production of forged parts at its Indiana plant
  Sumikin Precision Forge of Handa city, Aichi prefecture, manufactures forged parts such as compressor parts at Indiana Precision Forge, Indiana. The Company also manufactures airbag components from the summer of 2005 and steering parts from the spring of 2006, expanding the production volume from around 200t of 2005 to around 300t in 2007.
■Sumitomo Electric Industries: Won a contract to supply wiring harnesses for GM's core passenger cars from 2007
  Sumitomo Electric Industries won a contract from GM to supply wiring harnesses for major passenger cars from Cadillac and Buick etc. from 2007. Manufacturing plants are not yet announced. Until now most of the wiring harnesses supplied to the Big Three were from US makers including Delphi and Visteon. It is believed that Sumitomo Electric Industries won the contract because its customer support system at the technical support company SEWS-DTC, Inc. (Michigan), which the Company had established in 2001 with GM in mind, was valued, together with its quality and costs.
■Diamond Electric Mfg.: Expands sales of engine ignition systems, doubles sales to \10 billion in FY2008
  Diamond Electric Mfg. increases the production of the second generation of ion sensing ignition systems, which are believed to create optimum combustion and to be good for fuel consumption improvement and for environmental protection, by investing 2 billion JPY into its West Virginia plant. The Company supplies the product to Toyota, Fuji Heavy Industries, Ford and DCX all in USA and aims to increase the supply volume. The Company also won a contract from GM to deliver from January 2008, with a plan to expand its sales in North America from 5.2 billion JPY of FY2004 to 7 billion JPY in FY2005 and 10 billion JPY in FY2008.
■Tachi-S: Invests \2.5 billion in FY2005 to deal with Honda's increased production
  Tachi-S invested 2.5 billion JPY in total into North America in FY2005, with 300 million JPY into its Canadian plant, 1 billion JPY into its Ohio plant in USA and 1.2 billion JPY into its Mexican plant to establish the structure to increase production by procuring dies and jigs in order to deal with contracts for new models mainly from Honda that production to be started in those areas. Tachi-S supplies seats to Toyota, Nissan, GM and Ford in North America through local parts makers, in addition to Honda.
■Teikoku Piston Ring: Significantly increases production of cylinder lines and piston rings
  Teikoku Piston Ring plans to expand the monthly production of piston rings at United Piston Ring, which the Company established in Wisconsin in 2001, from 300,000 in 2005 to 700,000 in 2006 and 1.5 million in 2007, reaching 3 million in 2010, in order to deal with rapid increases of contracts from Japanese automobile makers. The Company also increases the monthly production volume of cylinder lines at Federal-Mogul TP Liners in Minnesota established in 1999 from 400,000 in 2005 to 900,000 in 2006. The Company further plans to construct its second manufacturing site to have a structure to produce 2 million in 2010.
■Nichirin: Internally manufactures low-pressure hoses for hydraulic power steering systems from April 2006
  Nichirin starts internal production of low pressure hoses for hydraulic power steering systems, which production has been out-sourced, in April 2006 with a plan to have an internal manufacturing structure for 300,000 per month, which is equivalent to 70% of the out-sourced production volume, by the autumn. The Company aims to improve quality control and to offer stable supply (low-pressure hoses are the part that feeds oil back to pumps from gears).
■Nippon Piston Ring: Localizes the preprocess of valve seat inserts from 2007
  Nippon Piston Ring started the operation of NPR Manufacturing Michigan, a valve exclusive plant, in June 2005. Although sintered parts are currently sent from Japan and cut at the plant, the Company plans to establish a full scale local production structure by around 2007 by additionally investing into facilities for the preprocess. The investment amount is approximately 1.4 billion JPY.
■Piolax: Expands the production capacity of plastic fasteners by 10% in USA in 2005
  Piolax installed over 20 plastic molding machines and increased the production capacity of plastic fasteners by 10% by investing 150 million JPY into its local manufacturing subsidiary PIOLAX Corporation (Georgia) in 2005. This is to deal with the increased demand from the Big Three, in addition to Nissan and Honda. The sales at Piolax's American subsidiary were 48 million USD in 2004 and are expected to be 52.5 million USD with an increase of around 10% in 2005.
■Bando Chemical Industries: Increases production capacity of driving belts by 25% in USA, delivering to GM from 2005
  Bando Chemical Industries increased the number of production lines for driving belts to seven lines by adding one more line and expanded the monthly production capacity from 800,000 to 1 million in the summer of 2005 by investing approximately 500 million JPY into its US Kentucky plant. The increases are mainly for Serpentine Belts (V-ribbed belts for multi-axle driving), which operate all the auxiliary parts including engine's alternators only by itself. Although this is in order to deal with the increased demand from Japanese automobile makers, the Company also plans to deliver 500,000, mainly serpentine belts, by the end of FY2005 to GM from which the Company won a contract for the first time.
■Honda Elesys: Plans to fully localize the ECU production for passenger detection systems for North America
  Honda Elesys plans to transfer all of the ECU production for passenger detection systems for airbags, which the Company is currently supplying to the North American market, to its US local plant, the Georgia plant, during 2007-2008 (approximately 1.3 million of the annual production are shared between Japan and North America roughly in half). The Company will also consider fully localizing the production of ECU for Vehicle Stability Assist systems, which are currently partially implemented.
■Honda Elesys: Wins a contract from GM for passenger detection systems for 1 million vehicles
  Honda Elesys won a contract from GM to supply passenger detection systems and started the production at its Georgia plant. The Company expects sales of approximately 5 billion JPY by supplying the systems for 600,000 vehicles in 2005 and 8 billion JPY by supplying for 1 million vehicles in five models in two years. (There are two other suppliers, which are Delphi and IEE (headquartered in Luxembourg), that are delivering passenger detection systems to GM)
Sources: PR information from each company and media reports

■Developments on reinforcement of North American umbrella companies and sales structures, establishment of R&D bases

  In addition to establishment and expansion of manufacturing bases, there are developments such as reinforcement of functions of North American umbrella companies, reinforcement of sales structures and establishment of R&D bases.

■Calsonic Kansei consolidates back-office sections while Koito reinforces functions of an umbrella company

  Calsonic Kansei, as a part of its strategy implementing worldwide to consolidate and integrate its subsidiaries, plans to integrate its existing four manufacturing bases in North America, consolidating back-office sections into one company in order to promote efficiency. Koito Manufacturing strengthens the functions of umbrella companies in line with expansion of the size of the companies. Toyota Boshoku, which had been established through a merger of Toyoda Boshoku, Araco and Takanichi in October 2004, integrated subsidiaries of the three companies in Detroit.

■Japanese Autoparts suppliers promote reinforcement of umbrella company functions and consolidation of back-offices in North America
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Calsonic Kansei: Integrates four manufacturing bases in USA and consolidates back offices to promote efficiency
  Calsonic Kansei integrates four manufacturing subsidiaries in the USA. In September 2005, the Company consolidated manufacturing companies into two companies by integrating Kantus, which manufactures resin parts, with C K Electronics, which manufactures electric parts, (Kantus is the surviving company), while Calsonic North America (CNA), which manufactures heat exchangers, absorbed Calsonic Kansei Mississippi, which manufactures cockpit modules. Furthermore, the Company will integrate manufacturing functions into one company by merging Kantus into CAN by the end of 2006.
  The Company further consolidates indirect operations such as purchasing and accounting into its umbrella company in North America, Calsonic Kansei North America, while consolidating sales forces at its Detroit office. The Company plans to reduce the number of employees, which is currently around 4,000 throughout USA, by 10% by 2006 and to reduce more by 2007.
■Koito Manufacturing: Relocates US umbrella company and strengthens HQ functions in Autumn 2005
  Koito Manufacturing in the autumn of 2005 moved its headquarters operations from its American subsidiary North American Lighting located in Flora, Illinois to a new building inside its plant compound in Paris, Illinois, which is more convenient with better transport access etc. The construction cost for the new company building is approximately 500 million JPY. The new office, which has over 100 staff, is responsible for human resources and overseeing cost management/production planning.
  The Company also plans to increase the number of employees hired locally in order to expand back-offices such as production management etc. according to the business expansion, aiming to cultivate the management personnel. North American Lighting posted sales of 45.4 billion JPY and an operating profit of 1.7 billion JPY in the period ending March 2005 while expects to expand sales to 46.2 billion JPY and an operating profit to 2.3 billion JPY in the period ending March 2006.
■Toyota Boshoku: Integrates 3 companies for R&D and sales in Detroit to strengthen functions as an umbrella company
  In July 2005, Toyota Boshoku integrated its three subsidiaries in Detroit, ARACO AMERICA (undertakes research and development of interior parts), Takanichi USA (research and development of interior parts and sales of door trims) and TOYODABO America (sales of automobile parts). The surviving company is ARACO AMERICA and changed the name to TOYOTA BOSHOKU AMERICA (TBA). This is to improve functions as an umbrella company through strengthening sales capacity and consolidating development structures in North America.
  Toyota Boshoku changed TOYODABO MANUFACTURING KENTUCKY (manufacturing of molded ceilings), which used to be the Company's wholly owned subsidiary, to TBA's wholly owned subsidiary in order to strengthen the coordination.
Sources: PR information from each company and media reports

■Kiriu/Daido Metal/Fukoku establish sales bases to strengthen their businesses with US automobile manufacturers

  Kiriu, Daido Metal and Fukoku established new sales bases in 2005 and plans to reinforce approaches to US automobile manufacturers. Daido Metal and Fukoku established sales bases in Detroit while Kiriu also established a sales-base inside its Kentucky plant, in addition to its existing Detroit base, in order to strengthen their businesses with manufacturing divisions of makers.

■Strengthening sales structures by establishing new operational bases (Japanese auto-parts suppliers' trends in North America)
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Kiriu: Establishes a sales division at Kentucky plant in addition to the Detroit operational base
  Kiriu established its operation base KIRIU USA Detroit Office in Detroit in April 2004. Although Detroit is convenient for communicating with the development teams from the Big Three and for collecting information, it is far from manufacturing bases of those makers. So the Company also established another operation base at KIRIU USA, a manufacturing base for brake parts in Kentucky in 2005 with the intention to strengthen relationships with manufacturing bases of those makers. Specifically, the Company plans to enhance the training structure for local staff in order to expand the business with makers other than Japanese makers.
■Daido Metal: Reinforces sales of engine bearings for Big 3, aiming to acquire 50% of share
  Daido Metal strengthens sales of bearings for engines towards the Big Three in North America. The Company established the Detroit office as its operational base and started the full-scale operation in October 2005. The share that Daido Metal's engine bearings account in the Big Three was 30% in 2005, which was the second place in the industry (Federal-Mogul had the top slot). The Company aims to account 50% of the share in 2010.
■Toyo Tire & Rubber: Restructures its US sales subsidiary, spinning off Nitto Tire brand sales division
  In July 2005, Toyo Tire & Rubber span off the Nitto Tire brand division from its American tire sales company Toyo Tire (USA) Corp and established a new company Nitto Tire North America. The capital fund is 7 million USD. The Company aims to expand sales of Nitto Tire brand products, which are said to have a good reputation as tires for high performance passenger cars/SUVs.
■Fukoku: Established its first overseas sales base in Detroit in 2005, expanding brake parts
  In August 2005, Fukoku set up a sales exclusive base in Detroit and started the operation with five Japanese sales representatives. Sales from Fukoku's American business are approximately 2 billion JPY. Although the Company mainly supplies to Japanese suppliers, it plans to strengthen the sales activities towards American Tier 1 suppliers.
Sources: PR information from each company and media reports

■Aisin Seiki establishes a proving ground while Showa and Yamashita Rubber establish R&D centers

  Aisin Seiki established a proving ground in USA as the first Japanese automobile parts supplier. Showa and Yamashita Rubber set up research and development facilities, as the number of development staff reached a certain size.

■Establishment of R&D centers or a proving ground (Japanese auto-parts suppliers' trends in North America)
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Aisin Seiki: Opens the first proving ground by a Japanese parts suppliers in North America
  Aisin Seiki in October 2005 opened Fowlerville Proving Ground as its first proving ground abroad in Michigan. The Company also built a 1.3 km long straight road in the compound of 3.61 million square meters by investing about 24.8 million USD. This is the first time for a Japanese parts supplier to establish a proving ground in North America.
■Showa: Establishes a technical development center inside its Ohio plant
  Showa established a center with full-scale R&D facilities in 2005 as the number of R&D staff working at the Ohio plant reached 30 and the working space became crowded.
■Yamashita Rubber: Establishes R&D center in its Ohio plant in May 2006
  Yamashita Rubber expands the R&D division of YUSA Corporation, an Ohio based manufacturing subsidiary, investing around 700 million JPY to complete R&D facilities in May 2006 to undertake prototype development and functional evaluation of anti-vibration rubber. The Company plans to increase the number of employees from around 20 of 2005 to 40 in five years. The Company aims for speedy development performed locally by collaborating with the development division and plants of Honda, which is the Company's main customer.
Sources: PR information from each company and media reports

■Some of Japanese parts suppliers suffer from worsened profitability in their North American business due to the effect from GM etc.

  Akebono Brake Industry, 60% of which North American business is from supply for American automobile manufacturers consolidates production of repair pads that the Company produced at two manufacturing bases until 2005 into Amtec Brake in 2006. The Company plans to expand sales of repair pads that have high profit rates and to increase the global market share from 5% of FY2005 to 10% in FY2007.

  NHK Spring's North American business has been suffering deficits since the Interim period of September 2004 due to price increases of steel products so the Company reorganizes a cross company organization to reduce costs. Further, the Company plans to expand the percentage to use steel products from Japan, which are cheaper than those from the USA, to 50% from the current 20% at an early stage. It is believed that the Company is considering terminating delivery to GM as the profitability has been worsened.

  Unipres terminates supplying to GM from the next model. Yorozu is reportedly poised for an uncompromising negotiation at the talk for contract renewal.

  U-Shin plans to switch all the key sets it is supplying to GM to Chinese imports and to withdraw its manufacturing operation from USA by the end of 2007.

  Ichikoh Industries has manufactured side mirrors for GM at Ichikoh Manufacturing established in 1988. However, the Company will liquidate the manufacturing company in March 2007 and withdraw from manufacturing in the USA, as there is no possibility to turn into profitability.

■Akebono Brake Industry consolidates manufacturing bases while U-Shin switches all volume to Chinese imports
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Akebono Brake Industry: Integrates manufacturing of repair pads to enhance product lineups to aim sales of $200 million in FY2008
  Akebono Brake Industry, among its four manufacturing bases, integrates ARC Brake (Kentucky), which manufactures repair pads, into Amtec Brake (Kentucky) by the end of 2006 in order to promote efficiency. The Company also invests 10 million USD into AMTEC Brake to install manufacturing lines for high-mix low-volume production to expand productions with a plan to increase sales of repair pads from 25 million USD of 2004 and 50 million USD in 2005, to 90 million UDS in 2007 and 200 million USD in 2008.
  The Company forecasts that the supply for American automobile manufacturers, which are the Company's major customers, will still be sluggish in 2006 as orders are declining and there are strong demands to reduce prices. So the Company plans to expand sales of repair pads that have high profitability to reinforce its profitability base.
■NHK Spring: Sets up a cross-company organization to improve profit due to continued deficits caused by increased steel prices
  The North American business of NHK Spring has been in operating deficits since the interim period in September 2004 because steel product prices increased by 10-20% compared to those in 2003. Although the sales increased to 20.6 billion JPY by 27% in the interim period of September 2005, the operating deficit expanded from 300 million JPY to 800 million JPY. The Company aims to turn profitabile within 12-18 months by setting up a project team to which divisions like purchasing, sales and manufacturing etc, participate.
  Prices of steel products in North America increase more severely compared to those in Japan and it is cheaper to import from Japan even when shipping fees are included. So the Company intends to expand the percentage of the imports from Japan to 50% from 20% of 2005 at an early stage.
  As for stabilizers, with which the Company generated sales of approximately 12 billion JPY in 2005 with 40% of them delivered to GM and Ford, the Company is believed to be considering halting the supply to GM as GM doesn't accept putting increased steel prices on to the prices for GM and the profitability seriously worsened.
■U-Shin: Terminates production in USA in 2-3 years and switches all volume to Chinese imports
  GM, one of which delivery conditions was to produce products in North America, changed its strategy to accept Chinese imports. So U-Shin intends to close the Missouri plant of YUHSHIN USA where manufactures key sets etc. by the end of 2007 to switch to Chinese imports that are around 40% cheaper in total including shipping costs. The Company's American subsidiary will be specialized in sales/marketing and quality assurance.
■Unipres: Terminates supply to GM for next models as the two did not agree on pricing
  Unipres will terminate supplying components for GM by 2007. The Company currently delivers frame parts for trucks equivalent to 600 million JPY annually to GM's plants in North America from its Mexican base. However, GM demanded over 10% of a price reduction per year for new models so the Company decided to terminate supplying products at the end of the current models as it was not profitable since price increases of steel products still continue.
  It is said that this implies the Company's intention to strengthen the cooperation with Nissan that is expanding Mexican production.
Sources: PR information from each company and media reports

■Akebono Brake/Sanoh Industrial/Daido Metal make their joint management bases as wholly owned subsidiaries, respectively

  There is an increased number of companies making their American bases into wholly owned subsidiaries by buying stocks from joint venture partners in order to promote efficiency through business reconstruction or to smoothly respond to the demands from Japanese automobile manufacturers to increase production.

  Among those companies, Sanoh Industrial says the objective to do so is to restructure/reinforce its North American business while Daido Metal says this is because it is difficult to sufficiently respond to automobile manufacturers' intention under a joint venture structure.

  Chuo Spring in June 2005 withdrew from the joint venture with Mubea of Germany, which is believed that there was no effect from rationalization, and will start manufacturing at its wholly owned subsidiary in July 2006.

  Kasai kogyo acquired the Alabama plant of ARKAY, aiming to secure suppliers.

■Making joint ventures into wholly owned subsidiaries and taking over of US plants progress (Japanese auto-parts suppliers' trends in North America)
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Akebono Brake Industry: Acquires all the stocks in the joint venture with Delphi and makes it a wholly owned subsidiary
  Akebono Brake Industry purchased all the stocks that Delphi held in Ambrake Corporation, a manufacturing company for friction materials for brakes, which the Company established jointly with Delphi through a 50-50 investment, and made it as its wholly owned subsidiary in August 2005. The purchasing amount was 36 million USD. Ambrake was established in 1986 through a 50-50 joint venture with GM, and then, after Delphi was spun off, Ambrake stocks were transferred to Delphi. The biggest customer is GM but the company also delivers to Toyota and Honda. Ambrake generated sales of 35.7 billion and a net profit of 2.66 billion JPY in 2004.
  In addition, Delphi sold 5.5 million of Akebono brake stocks (approximately 5.9% of issued stocks. Delphi was the fourth biggest shareholder of Akebono Brake Industry) and dissolved a capital alliance. The amount is believed to be approximately 3.7 billion JPY. The Company bought 3.5 million stocks out of 5.5 million stocks and Toyota, which is the biggest shareholder of Akebono Brake, acquires the rest, 2 million stocks.
■Kasai Kogyo: Purchases a resin parts plant in Alabama
  Kasai Kogyo took over the Alabama plant from ARKAY, which is an American resin parts molding maker. ARKAY is an independent parts maker in the USA, which seems that it approached Kasai Kogyo, with whom ARKAY does business, for acquisition as it suffered from a continued low operating rate due to sluggish business with the Big Three. The Company took on most of the manufacturing facilities and employees, with the total amount of investment including the take-over amount believed to reach 1 billion JPY. The new plant aims to post around 5 billion JPY of sales in 2006. It is believed that Kasai Kogyo purchased the plant to secure suppliers.
■Sanoh Industrial: Makes a joint venture HiSAN into a wholly owned subsidiary
  Sanoh Industrial in July 2005 acquired 100% of the stocks in HiSAN Inc., which the Company established jointly with ITT Industries through a 50-50 investment in 1986, and made it its wholly owned subsidiary. The price for acquisition is 1,717 million JPY. HiSAN manufactures piping products for fuel and brake related parts and posted sales of 15.8 billion JPY in 2004. Sanoh says this is to restructure/reinforce its North American business and to promote efficiency.
■Daido Metal: August 2005, puts an engine bearing plant that the Company operates jointly under its direct management
  In August 2005, Daido Metal disposed all the stocks it held in Glacier Daido America, a joint venture to manufacture industrial bearings that the Company established with Glacier Vandervell of Dana group, which is 30% of all the stocks, to Glacier Vendervell. Further, the Company additionally paid 1 million USD to acquire the automobile bearing plant in Ohio from Glacier Daido America in order for the Company to manage under its direct control. This is to supply products for Japanese automobile makers such as Toyota that are expanding their local production smoothly by building an integrated construction under Daido Metal's control. The Company plans to approximately double the sales of its North America business from the estimate of 2005 to 9.3 billion JPY in 2007.
■Chuo Spring: dissolves a joint venture in North America and restarts manufacturing of coil springs at its wholly owned subsidiary
  Chuo Spring constructs a new plant in Central Spring, a wholly owned sales company in California, to manufacture 55,000 heat coil springs monthly from July 2006 with expected sales of 21.5 million USD in 2007. The investment is 10 million USD.
  Chuo Spring established Chuo Mubea Suspension Components in August 2002 jointly with Mubea of Germany through a 50-50 investment and has manufactured coil springs for suspensions and supplied for Toyota's Kentucky plants. However, the Company dissolved the joint venture with Mubea in June 2005, as Mubea's environment for profitability worsened due to price increases of steel products for springs and rationalization that made no progress. The Company handled this with exports.
Sources: PR information from each company and media reports

■Mexico: Kasai Kogyo/Yorozu expand supply to respond to Nissan's production increase

  In Mexico, Nissan expands its annual production capacity of the Aguascalientes plant from 200,000 to 350,000 in 2007 following the commencement of the production of the new compact car model the Versa. To respond to this production increase, Kasai Kogyo and Yorozu expand their supply volumes of interior parts and suspension parts, respectively.

  Mitsuba will start manufacturing aluminum casting parts for electric components in Mexico, which are currently imported from Japan, to supply its own plant in North America. Piolax increases the production of plastic fasteners in Mexico while transfers most of the metal processing stages from American plants to Mexico where labor costs are cheaper in order to increase cost competitiveness.

■Japanese auto-parts suppliers' movements in Mexico
(Trends mainly in 2005. Originally in Japanese phonetic order.)
■Kasai Kogyo: Expects sales at Mexican plant to double thanks to increased production of interior parts for Nissan etc.
  Kasai Kogyo will increase the production of interior parts including door trims within 2-3 years by investing around 1.3 billion JPY into KASAI MEXICANA mainly for various molding machines in order to respond to Nissan's production increase at the Mexican plant. Further, the Company plans to transfer the processes, which need to be done by human hands such as covering armrests with leather, from the US plant to the Mexican plant. So the sales at KASAI MEXICANA plant are expected to double from approximately 3 billion JPY in FY2005 to 6 billion JPY in FY2007.
■Jatco: Started CVT production in Nov. 2005 with an aim for the local supply rate of 60%
  In November 2005, Jatco started the production of belt CVTs for medium FF vehicles at its new Mexican plant. The Company manufactures CVTs for the Dodge Caliber of DaimlerChrysler for the foreseeable future but will start manufacturing for Nissan vehicles. The annual production capacity is 300,000 for now but the Company plans to increase it to around 700,000. The Company also aims to increase the local supply rate, which is now 30%, to 60% at an early stage.
■Piolax: Doubles the size of the Mexican plant and transfers metalworking processes from the US plant
  Piolax will double the size of the plant in Monterrey, Mexico by May 2006. The Company will increase the number of plastic molding machines, which was 15 in 2005, by 30 in three years to increase production of fasteners. The Company also plans to transfer production of most of the metal processed parts currently manufactured in the USA including metal coils for transmissions to Mexico where labor charges are said to be one fourth of those in the USA to increase cost competitiveness. The Company aims to double the shipment from the Mexican plant from 7 million USD of 2005 to 15 million USD in 2007.
■Hiro Tec: Constructs 2nd plant and expands pressed parts supplies to GM
  AVENTEC, 33% of which is invested by Hiro Tec of Hiroshima, in Silao city, Mexico, supplies pressed parts for SUVs manufactured at GM's Silao plant in Mexico. AVENTEC won a contract from the Ramos plant of GM Mexico to supply large-sized pressed parts for new SUV models and established an assembly plant as its second plant in Ramos city. The Company transfers parts that are pressed at the Silao plant to the second plant in Ramos and assemblies them to doors or hoods and supplies them to GM's Ramos plant.
■Mitsuba: Starts local production of aluminum casting parts for electric components in 2006, which were imported from Japan
  Mitsuba established MITSUBA DIE CASTING DE MEXICO in October 2005 to manufacture aluminum casting parts for electric components, which are currently imported from Japan, from October 2006 to supply to its own plant in North America. This is to promote localization to increase cost competitiveness. The capital amount is 6 million USD all of which Mitsuba group invests. The Company invests 10 million USD in seven years in total and expects the shipment of 10 million USD in 2009.
■Yorozu: Doubles the production capacity in 2005-2006 to respond to Nissan's production increase
  Yorozu manufactures suspension related parts at Yorozu Mexicana and supplies them to Nissan, which accounts 90% of the sales in Mexico, and GM/Ford. The Company increases the number of stamping machines and welding robots by investing approximately 2 billion JPY in 2005-2006 to double the production capacity in order to respond to the demand from Nissan to increase the production and to reinforce the supply structure for GM/Ford.
Sources: PR information from each company and media reports

  In Canada, Toyota Iron Works establishes its fourth plant in North America in order to respond to the construction of Toyota's second plant.

■Toyota Iron Works: Builds its 4th plant in North America in Canada to supply for Toyota's Canadian plant from around 2007

  Toyota Iron Works constructs its fourth plant in North America in Canada to supply pressed parts to Toyota's Canadian plant from around 2007. The Company currently supplies from its second plant in Kentucky to Toyota's Canadian plant. However, in order to respond to the production increase due to the start of the operation of Toyota's second Canadian plant, planned to be in 2008, the Company plans to construct a new plant near Toyota's plant.

Sources: Media reports

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