Japanese suppliers in Latin America (Part 2): Trends in Brazil and Mexico

Investment by Kasai Kogyo, Kinugawa Rubber, Jatco, Tachi-S, Denso, F-Tech, and KYB

2014/03/10

Summary

  This report is the second part of the trend report on Japanese parts suppliers in Central and South America. It summarizes the trends of production capacity improvement in Mexico and the trends in Brazil (for nine months until early February 2014). For the trends of new business operations started in Mexico, please refer to the  Part 1.

 The automobile production volume in 2013 in Brazil was 3.71 million units (9.1% increase y/y), the sales volume was 3.77 million units (0.1% increase y/y), and the export volume was 560,000 units (26.5% increase y/y). In January 2014, the production volume was 290,000 units (18.7% decrease y/y). While the sales volume increased by 0.4% y/y to 310,000 units, the export volume decreased by 28.9% y/y to 36,000 units due to the influence of import regulations imposed by Argentina on Brazilian products. The automakers are adjusting their excessive inventories (the Argentine government announced at the end of 2012 that it would reduce the number of imported vehicles by 27.5% in 2013 to avoid the outflow of foreign currency). Most American and European automakers, however, are increasing their production capacity. Among Japanese automakers, Toyota and Nissan are preparing for the release of new models by constructing new plants.

[Expansion of production capacity and strengthening of business structures in Mexico]
Capacity addition to the existing plants  Kinugawa Rubber, Nippon Seiki, Hitachi Chemical, Unipres Corporation, Ryobi
Establishment of new companies/plants  Establishment of new firm: Bridgestone, Tachi-S
 Construction of second plant: Exedy, Kasai Kogyo, Jatco, Tachi-S
 Construction of third plant: Denso
 Construction of fourth plant: Mitsuba
Establishment of new business centers  R&D center: Kasai Kogyo (plan); Reorganization of production system: Hitachi Metals (plan), Sales company : Toyo Tire & Rubber

[New business development in Brazil]

Establishment of new companies (new plants)  Asahi Glass, Sumitomo Rubber, Nishikawa Rubber, Furukawa Electric
Production capacity enhancement  KYB, Toyobo (constructed a new plant), Nisshinbo (relocated to a new plant), Bridgestone

 Japanese Suppliers Related Reports:
Japanese suppliers in Central & South America (part 1): New plants in Mexico (Mar. 2014),
Thailand (1) (Jan. 2014), Thailand (2) (Jan. 2014), ASEAN (Nov. 2013),
Russia and Eastern Europe (Oct. 2013), India (Sep. 2013),
Northern/Northeastern/Southwestern China (Aug. 2013), Southern and Central China (Aug. 2013), Eastern China (Jul. 2013),
the U.S. (Jul. 2013), Mexico and Brazil (Jun. 2013)



Mexico: Production capacity enhancement in Guanajuato and Queretaro

Company's name Activities
Kasai Kogyo

Launched second plant in December 2013 to increase the production of interior parts; established Research and Development Center

Kasai Kogyo launched the second plant of Kasai Mexicana, S. A. de C.V (Guanajuato) at the end of December 2013. The company invested JPY 2.7 billion in the plant construction. The second plant will be brought to full operations in FY2014 to increase the production of interior parts for automobiles in accordance with the production increase plan of Nissan in Mexico. The plant also intends to meet the increase in large-sized vehicles production in the U.S. The company also plans to establish an R&D site in Mexico in FY2014 to deal with prototyping and experiments near customers.
Kinugawa Rubber

Increases production of body seals, starts production of anti-vibration parts and hoses

Kinugawa Rubber started production and delivery at Kinugawa Mexico, S. A. de C.V (Guanajuato) in January 2014 for the first orders it received for body seals for the new "Axela," of which Mazda will start production in Mexico. The company will expand the production capacity for the parts gradually and will also start production of anti-vibration parts and hoses in May 2014. Kinugawa Rubber intends to sell its products to new customers including Honda, in addition to its main customer, Nissan.
Denso

Third plant begins operations in October 2013; expects to make additional investment for business expansion

Denso began operations of a third plant (Guanajuato) of Denso Mexico, S.A. de C.V, which was constructed with an investment of JPY 5.6 billion, in October 2013 to start production of automotive air conditioners. Denso also started production of radiators and various washer systems in January 2014. Those products are supplied to GM, Ford, and Honda.
Denso will also expand the third plant by additionally investing JPY 5.1 billion. Denso intends to meet the new orders received from Toyota, Ford, and Chrysler for alternators with new buildings and new production lines prepared. The company plans to start production in October 2014.
Toyo Tire & Rubber

Established local sales company for vibration insulating rubbers in October 2013

Toyo Tire & Rubber established a sales company of vibration insulating rubber for automobile, TOYO AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V. (Guanajuato), in October 2013 and started operations in January 2014. The capital is JPY 30 million. The sales company was established as a part of the global growth and expansion plans in the auto parts business of the company. Toyo Tire & Rubber aims to sell JPY 1 billion in FY2016.
Hitachi Metals

Looking at producing automobile-related parts for Hitachi Metals at local plant of former Hitachi Cable

Hitachi Metals will reorganize the overseas production system of the former Hitachi Cable that was merged in July 2013. Hitachi Metals produces brake hoses and ABS sensors at a subsidiary of  the former Hitachi Cable in Mexico, HC Queretaro, S.A. de C.V. (Queretaro). Hitachi Metals is also looking at producing automobile-related parts for it at that plant. Hitachi Metals intends to strengthen the supply chain while controlling investment by effectively using existing assets.
Bridgestone

Newly built plant for urethane foam for automobile seats; plans to start mass production in 2015

Bridgestone Corporation established Bridgestone Automotive Products de Mexico S.A. de C.V. in Guanajuato in July 2013. The company built a new plant with total capital expenditure of JPY 1.4 billion with an eye on starting mass production of urethane foam for automobile seats in the first half of 2015. The annual production capacity is for  360,000 units of passenger cars at maximum. The plant will meet the local supply needs in Mexico.
Mitsuba

Built new plant for automobile motors expected to begin operations by autumn 2014

Mitsuba Corporation established the fourth plant of Corporation Mitsuba de Mexico, S. A. de C.V, the Silao Plant (Guanajuato), in March 2013. The company invested JPY 2 billion in the plant. The plant will be begin operations by the autumn of 2014 to produce front wiper systems and starter motors for automobiles mostly for the domestic markets in Mexico. The company will also enhance the production capacity of its motor parts plant in the Philippines to prepare for production expansion in Mexico.
Ryobi

Increases die-cast production capacity

Ryobi announced in May 2013 that it will increase die-cast production capacity of RDCM, S. de R.L. de C.V. in Guanajuato by 40% from the present level. The company invested JPY 2 billion to add three 2,500-ton casting machines expected to be brought to operations in June 2014. This plant produces transmission cases and converter housings. The production capacity will be increased to cope with an increase in received orders.

 

 



Mexico: Production capacity enhancement in Aguascalientes

 

Company's name Activities
Exedy

Started production of torque converters and MT clutches at second plant in February 2014

Exedy Corporation plans to construct a large plant for EXEDY DYNAX MEXICO, S.A. DE C.V. (Aguascalientes). It completed a building of 31,000 square meters on a site area of 130,000 square meters at the end of September 2013 as the Phase I construction. The company will start mass production (900,000 units per year) of torque converters, a component for AT and CVT, in February 2014 that had been formerly assembled at a lease plant since 2012. It will also start assembling production of its newly received orders for MT clutches. It plans to produce components for MT clutches in-house by introducing press machines in the future.
Jatco

Begins production of CVTs at newly established second plant in summer 2014

Jatco will start production at the second plant of JATCO Mexico, S.A. de C.V. (Aguascalientes) in the summer of 2014. The annual production capacity is 400,000 units. Jatco will supply the latest "CVT8" model to Nissan and other automakers. The second plant has been used only for one third of the site area. Jatco had announced that it would start production of ATs in 2016 under the license from Daimler but this plan seemed to have been canceled due to a policy change by Nissan.
Tachi-S

Constructed new plants for trim covers and seat frames

Tachi-S started production at the second trim cover plant of Industria De Assiento Superior, S.A. De.C.V (INSA; in Aguascalientes) in October 2013. The production scale plans to reach 730,000 units in FY2016. The trim covers will be transported to the second seat plant of INSA in Aguascalientes for assembly. The finished products will be supplied to a plant of a Japanese automaker in Mexico.
Tachi-S also plans to start production at the seat frame and mechanical part plants of Fujikiko Tachi-S Mexico (in Aguascalientes) in September 2014.
Unipres

Supplying body frame parts to Honda since the fiscal year ending March 2014 (FY2013)

A local subsidiary of Unipres Corporation, Nissan-affiliated company, Unipres Mexicana, S.A de C.V. (in Aguascalientes) has started to supply the upper body frame parts for the Fit for new orders received from Honda since FY2013. The supply volume will increase in FY2014 and the sales amount of the company in Mexico will reach JPY 2 billion, equivalent to one fourth of the entire sales to Honda. Unipres Corporation also received orders for parts for Mazda's "Axela." (Reported in May 2013)

 

 



Mexico: Trends in states along border with U.S.

 

Company's name Activities
Kamiita Sosei

Plans to increase supply quantity of cold-forged parts

Kamiita Sosei will introduce additional equipment in Kamimex S.A. DE C.V. (Baja California) in September 2014 to increase the supply quantities of cold-forged parts for local Tier-1 suppliers. The cold-forged parts include engine-related gears, solenoid parts, and metal fittings for vibration insulating rubber. The company plans to increase the annual sales from the estimated sales amount in 2014 of USD 6 million to a target sales amount in 2015 of USD 10 million. The company looks at constructing the second plant if the demand further increases in 2016 and beyond.
Nippon Seiki

Newly started production of finished automotive instruments

Nippon Seiki has centralized production of substrates to be incorporated into automotive instruments at Nippon Seiki De Mexico S.A. De C.V.V (Nuevo Leon). The company assembled them into finished products at its plant in the U.S., and supplied them to Mexico. However, the company will set up a new integrated production system to assemble the finished products in Mexico within 2013 to meet the expansion of location production in Mexico by its customers―Japanese automakers. Through the new production system, Nippon Seiki aims to increase the production of automotive instruments in North America from the conventional 2.5 million units to 5 million units.
NSK

Mexico chosen as candidate site for electric power steering plant

NSK will newly build a plant for electric power steering in the Central and South American region. The company will narrow down the candidates to Mexico and Brazil and determine the site within 2014. NSK intends to start production in 2016. (Reported in January 2014)
Hitachi Chemical

Enhances production capacity for brake friction materials and starts production of powder metallurgy in 2014

Hitachi Chemical Company will move up the production capacity enhancement for brake friction materials at Hitachi Chemical Mexico, S.A. de C.V. (Nuevo Leon) from 2015 in the original plan to as early as the summer of 2014. According to a report in May 2011, annual production capacity in North America will be enhanced from the conventional 5 million units to 10 million units by August 2012 and to 15 million units by 2015. The company will newly start production of powder metallurgy products at the plant in autumn 2014. It will also enhance the production capacity of the powder metallurgy products during the same period at its plants in the U.S. to double the annual production capacity in all of North America.

 

 



Brazil: Construction of new plants, increase of production capacity

 

Company's name Activities
Asahi Glass

Started commercial production of automobile glass in October 2013

Asahi Glass started commercial production of mirrors, automobile glass, and construction glass at AGC Vidros do Brasil in Sao Paulo in October 2013. The company invested JPY 40 billion in the new plant. It plans an annual production capacity of automobile for 500,000 automobiles in 2016.
F-tech

Alliance with local firms for local production

F-tech, which provides technical support to local firms, intends to explore alliance with local firms for future local production because constructing a new plant on its own entails ensuring a certain production volume. (Reported in September 2013)
KYB

Enhances production capacity of shock absorbers

KYB will enhance the production line for production model shock absorbers at KYB-Mando do Brasil Fabricante de Autopecas S.A. in Parana to double annual production capacity to 1 million units in the fiscal year ending March 2016 (FY2015) from the FY 2013 level. KYB started producing and supplying shock absorbers for Hyundai in December 2013.
Sumitomo Rubber

Radial passenger car tire plant begins operations in October 2013

Sumitomo Rubber Industries began operations at the radial automobile tire plant of Sumitomo Rubber do Brasil Ltda. (Parana) in October 2013. The company invested a total of JPY 35.3 billion in the plant. The plant is the company's first tire production site in Central and South America. The company intends to increase the production capacity from 2,000 units per day at the end of 2013 to 15,000 units per day at the end of 2015. The new year is one year earlier from the original schedule. The company plans to promote sales not only to Japanese automakers but also to European automakers.
Toyobo

Rolls out new business of highly functional resin for auto parts

Toyobo plans to construct a new plant for engineering plastics production within the site of Americana Plant of Toyobo Do Brasil Participacoes Ltda (Sao Paulo) to start production in August 2014. The investment amount is JPY 1 billion. The annual production capacity is 5,000 tons. The products will be supplied to local auto parts suppliers. This plant also plans to operate a compounds production business that meets various needs on contract basis.
Nishikawa Rubber

Establishes joint venture to produce rubber for automobiles

Nishikawa Rubber announced in August 2013 that it will establish a joint venture to produce rubber and resin products for automobiles such as weatherstrips (company name undetermined. Sao Paulo) with Cooper Standard Automotive, Inc. (CSA) in U.S. in December 2013 (provisional). The capital is USD 8.3 million. CSA has a 60% stake in the joint venture, with the remaining 40% owned by Nishikawa of America, Inc. The plant plans to start production in the first half of 2014. The company will supply products to Toyota and Honda for the time being, and then start supplying products to Fiat. It aims to achieve a sales amount of JPY 1.8 billion during the term ending December 2014.
Nisshinbo

Relocation and expansion of plant for automobile brake friction materials

Nisshinbo HD announced in November 2013 that it will relocate a consolidated subsidiary, TMD Friction do Brazil S.A. in Sao Paulo to a new site located 15 km southwest from the present site by the end of 2016. The total floor area of the new plant is 1.5 times larger than the existing plant. The production capacity will be doubled in 2016 from the 2013 level. The investment amount is JPY 6 billion. The plant expansion intends to meet demand from Japanese, U.S, and European automakers that are increasing the local procurement ratio to meet the requirement for import duty exemption.
Bridgestone

Production capacity enhancement of radial tire plant

Bridgestone Corporation will increase the production capacity of radial tires for passenger cars and light trucks at a plant (in Bahia) of Bridgestone do Brasil Industria e Comercio Ltda. in Sao Paulo. The plant will increase daily production capacity of the tires to 10,100 units, increasing by 1.4 times  from the 2,800 units in 2013. The total investment amount is expected to be JPY 6.5 billion. The company expects a medium-to-long term increase in demand for tires in the Central and South American markets.
Furukawa Electric

Production of air bag parts

Furukawa Electric will start assembly of an air bag part, steering connector, in the second half of 2014. The company plans to produce the products at a plant on an existing plant of the group. Production will start with an annual production capacity of 600,000 units. The annual capacity and in-house production will be gradualy increased. The company intends to meet the growing demand due to the Brazilian government's move for increasing the air bag penetration for new vehicles to 100% by FY2014.

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