Japanese suppliers in Vietnam, Malaysia, Laos, and Myanmar

Enhancements of export hubs in Vietnam and advanced part production plants in Malaysia

2014/06/30

Summary

 This report summarizes activities of Japanese automotive parts supplier in Vietnam, Malaysia, Laos, and Myanmar in the seven months to late May 2014. Please refer to the separate report for activities of Japanese suppliers in Indonesia.

 In Vietnam, several suppliers are expanding their production capacities to increase exports. Among them, TPR is enhancing its valve seat production capacity to meet increasing demand for fuel-efficient vehicles in ASEAN countries. Fujikura Rubber is constructing a second plant for diaphragms and sealing products. Nichirin is constructing a new plant to produce hoses for GM, while Yazaki Corporation plans to construct its sixth and seventh wire harness plants. Mabuchi Motor is enhancing its capacity to produce motors for electric equipment and is introducing laborsaving equipment. Yamashita Rubber is transferring its headquarters functions gradually to Vietnam and its R&D center for automotive anti-vibration components will be established in July 2014.

 In Malaysia, Elna introduced an additional production line to cope with an increase of hybrid vehicles (HVs) and vehicles equipped with multiple airbags. The new line will improve the quality of printed circuit boards (PCBs) for on-board devices and expand the company's production capacity. Keihin plans to start producing air conditioning units, which were newly developed in Japan.

 In Laos, Toyota Boshoku set up a satellite plant of its seat plant in Thailand and started producing seat covers. Moreover, in Myanmar, Toyoda Gosei is seeking a local sewing plant partner to reduce costs in preparing for increasing production of airbags in the ASEAN region. Activities of Japanese suppliers in Thailand will be provided in a different report.


Related Japanese Supplier Reports:
* Indonesia (Jun. 2014), the U.S. (Apr. 2014)
* China (Part 2): Northern, Northeastern & Southern regions (Mar. 2014),
  China (Part 1): Eastern and Central China (Mar. 2014)
* Latin America (Part 2) (Mar. 2014), Latin America(Part 1) (Mar. 2014)
* Thailand(Part 1) (Jan. 2014), Thailand(Part 2) (Jan. 2014), ASEAN (Nov. 2013)
* Europe (Oct. 2013), India (Sep. 2013)



Vietnam: Establishment of new bases and expansion of existing plants by TPR, Nichirin, and others

Company Activities
TPR
Enhancing valve seat production capacity to start exports to ASEAN countries
 By June 2014, TPR will develop a full-scale production capacity for valve seats at TPR Vietnam Co., Ltd. in Binh Duong. While demand for fuel-efficient vehicles is increasing, the company has received orders in large volume from Japanese automakers. In order to meet these orders, the company is increasing its monthly production capacity to 3 million units from the current 400,000 to 500,000 units. TPR intends to begin full-scale production by the latter half of 2015, estimating growing demand in Vietnam, Thailand, Indonesia, and other countries. To satisfy the demand, the sintering process is being transferred from its Japanese plant to the plant in Vietnam. At the Vietnamese plant, an integrated production system will be established to cover processes from mixing materials and sintering to finishing. JPY 500 million to JPY 600 million is expected to be invested in this project.
Tokai Rubber
New plant is completed for motorcycle and automotive hoses in January 2014
 In December 2013, Tokai Rubber Industries completed a new plant at its motorcycle and automobile plastic hose manufacturing and sales subsidiary in Ha Nam. The subsidiary, Tokai Rubber Hose Vietnam Co., Ltd, had been established in July 2012. JPY 320 million was invested in the new plant. Previously, the company had produced plastic hoses for motorcycles in a plant that was rented from the Sumitomo Electric Industries Group. To the new plant, the company has added manufacturing processes for automotive hoses as well. For the time being, Tokai Rubber will supply plastic hoses and their components to local Japanese motorcycle manufacturers as in the past. In the future, the company also plans to start supply to automakers. Tokai Rubber aims to achieve sales of JPY 930 million in the fiscal year ending in March 2019 (FY 2018).
Nichirin
Constructing new building at existing plant to enhance hose production capacity for motorcycles and automobiles
 In August 2014, Nichirin will complete a new building at a hose plant of Nichirin Vietnam Co., Ltd. in Bac Giang. With this expansion, its monthly hose production capacity for motorcycles will increase by 10% to 500,000 units while that for automobiles is doubled to 900,000 units. JPY 400 million will be invested in total. Regarding hoses for automobiles, the company reached an agreement with its Spanish joint venture partner, Palamos Hutchinson (parts supplier), on consigned production in Vietnam. Nichirin will start producing 100,000 brake hoses per month for GM within 2014. The company plans to increase the volume to 300,000 units by 2017. Nichirin intends to develop this plant as a hub for the U.S., China, and Asia. The company aims to increase the sales from USD 28.5 million in 2013 to USD 47 million in 2018.
Nittan Valve
To increase engine valve production capacity for motorcycles; to install production line for automobiles in 2016 or later
 In January 2014, Nittan Valve started producing engine valves for motorcycles at Nittan Vietnam Co., Ltd. in Bac Ninh. The company will increase the annual production capacity at this plant from 7 million units in 2014 to 8 million units in 2015. As for automotive valves, the company will introduce a new production line or make additional capacity enhancement in 2016 or later, in view of demand for exports.
Fujikura Rubber
Constructs second plant to increase production of diaphragms and sealing products
 Fujikura Rubber constructed the second plant within the premises of Fujikura Composites Haiphong, Inc. in Hai Phong. Full scale production will begin for diaphragms and sealing products in July 2014 to increase supply to Indonesia and Thailand. The company plans to increase this subsidiary's sales by 250% from the FY 2013 level to JPY 1.4 billion in FY 2016. As its production capacity in Vietnam may become short in FY 2017 and later, the company is prepared to consider constructing another plant in a neighboring country.
Mabuchi Motor
Enhancing capacity to produce motors for electric equipment; also making investment in labor-saving equipment
 In FY 2014, Mabuchi Motor will enhance the capacity to produce motors for electric equipment at Mabuchi Motor Vietnam Co., Ltd. in Dong Nai. Compared to capacity in FY 2013, the company plans to increase the production capacity for power window motors for European and American automakers by 10%. In the same comparison, production capacity for electric power brakes for Japanese and American automakers will be increased by 40%, and that for power seats by 20%. In addition, Mabuchi Motor will accelerate introduction of labor-saving equipment to counter rising labor cost. By 2016, the company aims to save human labor by 30% from the 2013 level.
Hiroshima Aluminum
Third plant to start operations in August 2014 to meet increase in new orders
 In August 2014, Hiroshima Aluminum Industry's subsidiary in Hanoi, HAL Vietnam Co., Ltd., will start operating its third plant in Bac Ninh to meet increasing new orders. Ten die-cast machines will be introduced to produce aluminum casted engine components for automobiles. USD 30 million will be invested in the first phase construction. As of the end of 2014, the monthly shipment volume is expected to reach 1,200 tons, with 400 tons at the third plant added to the total of 800 tons at the first and second plants.
Yazaki Corporation
To construct new wire harness plant in southern Vietnam
 In January 2014, Yazaki Corporation announced that the company will construct a new wire harness plant in Tra Vinh, a southern province in Vietnam. USD 48 million will be invested in the construction. The company plans to hire 4,000 employees. This is part of the company's project to enhance its production capacity in the entire ASEAN region. The plant will be operated by Yazaki EDS Vietnam, Ltd. in Binh Duong. Details are yet to be released, including the schedule for starting construction and operations as well as production volume. In December 2013, another local subsidiary, Yazaki Haiphong Vietnam Ltd. in Haiphong, started constructing a second branch plant in Quang Ninh. USD 35 million will be invested in the construction. After the plants are completed, Yazaki will have seven plants at two local subsidiaries.
Yamashita Rubber
R&D center to be completed in July 2014; to enhance basic research for anti-vibration rubber
 In July 2014, Yamashita Rubber will complete a research and development (R&D) center at Y-TEC Vietnam Ltd. in Hai Phong. The new center will start operations in 2015 and major R&D bases will be transferred from Japan to this site. The decision was made due to low overhead costs in Vietnam. Another reason is great difficulty to recruit excellent employees in Japan, partly because the company is not well known. In the next several years, Yamashita Rubber will enhance basic research and product development of rubber materials for anti-vibration, damping, and soundproofing as well as in new fields. Compared to in Japan, the number of researchers can be tripled in Vietnam with the same level of investment. Taking advantage of this low labor cost, the company will allocate its development resources equally between research and development (the conventional ratio is 20 to 80). In addition, a technical center will be completed in August 2014 to produce stamping parts and molds in-house.
Yokowo
To expand facilities at beginning of 2015; to increase exports with increased production lineup
 At the end of March 2014, Yokowo completed the second phase construction at Yokowo Vietnam Co., Ltd. in Ha Nam. This expansion triples its monthly production capacity to 1 million units. By the beginning of 2015, the company will increase the number of employees to 1,500 while tripling or quadrupling the productivity from the level at the beginning of 2014. So far, Yokowo has produced wire harnesses for on-board communication units and AM/FM micro antennas for the Japanese market. In the future, the company will expand its production lineup to gradually start shipping to ASEAN, the U.S., and Europe as well as to Japan.

 

 



Malaysia: Expansion of production capacities and production of new items by Elna and others

Company Activities
Elna
Expands production facilities to improve PCB quality and increase production capacity
 In 2013, Elna expanded a plant of Elna PCB (M) Sdn. Bhd. in Penang and added a new production line. The expansion was made to improve the quality of PCBs for on-board equipment and to increase its production capacity. JPY 1 billion was invested to renew conventional techniques and existing facilities to increase production efficiency. This included introduction of the latest solder resist processing methods for PCBs. As the numbers of HVs and vehicles equipped with multiple airbags are increasing on the market, the company intends to meet growing demand from manufacturers who produce heavily electronically controlled products.
Keihin
Starts production of newly developed air conditioning units also in Malaysia
 In January 2014, Keihin announced that it had developed a new heating, ventilation, and air conditioning (HVAC) unit and started its production in Japan. The HVAC unit can control the cabin temperature even when a start/stop system stops an engine. In the future, the company plans to produce this product also in Malaysia, Thailand, and China.
Toyo Rubber
To transfer production of passenger car tires from U.S. plant to Malaysian plant
 In May 2013, Toyo Rubber started operations at Toyo Tyre Malaysia Sdn Bhd in Ipoh, Perak. In 2014, the company will transfer production of passenger car tires from its U.S. plant to this new plant, which will re-export products to the U.S. plant. The decision was made as part of the company's initiative to enhance its tire supply capacity for the U.S. market. The U.S. plant will instead increase production of tires for sports utility vehicles, which are currently in short supply.

 

 



Laos and Myanmar: New plants of Toyota Boshoku and Toyoda Gosei

Laos

Company Activities
Toyota Boshoku
Starts production at seat cover plant in April 2014
 In late April 2014, Toyota Boshoku began producing seat covers at Toyota Boshoku Lao Co., Ltd. in Savannakhet. This is a satellite plant to supplement its own plant in Thailand. Production of seat covers was completely transferred from the Thai plant to this plant. The new plant can produce seat covers for 200,000 vehicles per year. JPY 500 million was invested to develop sufficient production capacity. Because Laotian is similar to Thai, the company is utilizing Thai managers and other personnel for on-site training and education for local employees in Laos.

 

Myanmar

Company Activities
Toyota Gosei
Seeking local plant partner for airbag sewing
 Toyoda Gosei plans to expand production of airbags in the ASEAN region. As part of this project, the company started seeking a local plant partner in Myanmar in spring 2014. The company intends to use the plant on a trial basis for the pre-assembly sewing process to reduce production cost.(Source: Press release in February 2014)

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