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No. 366, March 2000

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Japanese Companies in the US


TRANSPORTATION EQUIPMENT

Determined to cut procurement costs by 20 percent to get its business back in the black, NISSAN MOTOR CO., LTD. became the first Japanese automotive manufacturer to agree to join the Internet marketplace for parts that GENERAL MOTORS CORP., FORD MOTOR CO. and DAIMLERCHRYSLER AG just agreed to form. RENAULT S.A., the controlling owner of Japan's number-two vehicle builder, also will participate in the unnamed on-line B2B exchange. The Detroit-spearheaded venture will replace separate sites that GM, Ford and DaimlerChrysler had planned to operate. The trio expects to channel some $240 billion in annual parts spending through the exchange, which will be powered by technology from ORACLE CORP. and COMMERCE ONE, INC. The addition of some of the business that their suppliers do as well as purchases by Nissan, Renault and other future partners could boost the potential trading volume by several multiples. In the future, GM's three Japanese affiliates — FUJI HEAVY INDUSTRIES, LTD., ISUZU MOTORS LTD. and SUZUKI MOTOR CORP. — are likely to participate, as is Ford's MAZDA MOTOR CORP. unit. Analysts expect the Japanese participants to switch only a portion of their procurement to the Internet, primarily basic materials and commodity parts.

Although it has expressed qualified interest in joining this exchange, TOYOTA MOTOR CORP.'s initial venture into the world of B2B e-commerce in the United States will take a different direction. Its Torrance, California sales subsidiary is teaming up with I2 TECHNOLOGIES, INC. to pursue the $100 billion aftermarket for parts in this country. ISTARXCHANGE, in which TOYOTA MOTOR SALES U.S.A., INC. will have a majority interest, will be open to suppliers of everything from mufflers and spark plugs to accessories as well as distributors, independent retailers, dealerships and installers. Whether buyers or sellers, users of iStarXchange should be able to lower their transaction costs. The on-line marketplace could be up and running as soon as this spring. Irving, Texas-based i2 Technologies will provide the software and host and manage the service. iStarXchange will be located in Torrance and eventually will be staffed by 100 people.

Next year, HINO MOTORS, LTD. will broaden the lineup of commercial trucks it sells in the United States by introducing the cab-over Dutro. The 1,564 trucks that its Orangeburg, New York distribution unit sold in 1999 all were in the Class 4 to Class 7 segments, which run in gross vehicle weight from 14,000 pounds to 33,000 pounds. The Dutro, designed for deliveries in crowded cities, falls at the bottom of this range. To support the launch, HINO DIESEL TRUCKS (U.S.A), INC. is trying to sign up new dealers. It currently has marketing tie-ups with some 100 stores.

HONDA MOTOR CO., LTD., the first Japanese vehicle maker to build its products in the United States, has achieved another distinction. Its Marysville, Ohio factory has turned out 5 million Accord sedans. Production of this model, which ranks every year among the top-selling cars, began in 1982.

Few of its rivals at home have enjoyed the U.S. production and sales successes of this pioneering company. Certainly not MITSUBISHI MOTORS CORP. Its Normal, Illinois assembly plant, which currently produces the Galant sedan, Eclipse sports coupe and Eclipse Spy-der convertible, never has reached capacity operation of 240,000 vehicles a year. Japan's fourth-largest automotive firm is out to change that, however. It has made a $1 billion-plus commitment to plan, design, engineer and manufacture key products in the United States under the heading of Project America. These vehicles will be built on a common platform, the PA Series, that can accommodate powerplants, suspension systems and drivetrains adaptable to the demands of U.S. buyers. The first Project America model will be the next generation of the now made-in-Japan Montero Sport sport-utility vehicle. It will be the product of MITSUBISHI RESEARCH AND DESIGN AMERICA, INC.'s design studio in Cypress, California and engineering unit in Ann Arbor, Michigan and will be built by MITSUBISHI MOTOR MANUFACTURING OF AMERICA, INC. starting in 2003. Through 2005, the next generation of the Galant sedan, Eclipse sports coupe and Eclipse Spyder convertible will be planned, designed and engineered by MRDA and assembled by MMMA.

At a cost of $20 million, TOYODA GOSEI CO., LTD. acquired the Fluid Systems business of EAGLE- PICHER INDUSTRIES, INC. With plants in Brighton, Michigan and in England, this unit manufactures custom thermoplastic tubing assemblies for automative fuel, emission, brake, clutch and suspension systems. The renamed TG FLUID SYSTEMS USA CORP. employs 69 people and has annual sales of roughly $5.2 million. It joins two other wholly owned Toyoda Gosei production companies here: TG KENTUCKY CORP. of Lebanon, Kentucky and Perryville, Missouri-based TG MISSOURI CORP., both of which make such plastic interior and exterior parts as steering wheels and side molding. Toyoda Gosei also has a half interest in CALIFORNIA AUTOMOTIVE SEALING INC. of Hayward, California, a supplier of weather strip and trim (see Japan-U.S. Business Report No. 359, August 1999, p. 12).

Through an investment of $6.4 million to $7.3 million spread over this year and next, F.C.C. CO., LTD. hopes to be able to boost output of automatic transmission clutches at its JAYTEC, INC. subsidiary by enough that it can end the $27.5 million or so worth of parts that it now has to ship yearly from Japan to meet the requirements of HONDA TRANSMISSION MANUFACTURING OF AMERICA, INC. Portland, Indiana-based Jaytec currently can make 16,000 AT clutches daily for the Accord and Civic sedan and coupe and the Odyssey minivan. Once the additional capacity is fully operational in 2003, it will be able to turn out 23,000 units a day. By then, the local content of the clutches is expected to hit 95 percent from 70 percent. Last year, F.C.C. invested $9.2 million in 11-year-old Jaytec to increase production of AT segmented clutch friction disks (see Japan-U.S. Business Report No. 360, September 1999, p. 10).

KOYO SEIKO CO., LTD. has finalized plans for delivering 460,000 of its innovative column-type electric power-steering units to GENERAL MOTORS CORP. starting in 2001 for a sport-utility model (110,000 units) and a new Saturn model (350,000 units). Initial shipments will come from Japan. However, once the Roanoke, Virginia factory of KOYO STEERING SYSTEMS OF USA, INC. is operational toward mid-2001 (see Japan-U.S. Business Report No. 355, April 1999, pp. 10-11), it will be responsible for fulfillment of the roughly $91.7 million contract. Koyo Seiko's electric power-steering system has attracted attention because it improves fuel efficiency compared with today's dominant hydraulic unit.

An additional order from sole customer NEW UNITED MOTOR MANUFACTURING INC. is behind a $3.2 million expansion at SEKISO INDUSTRIES AMERICA INC. in Tracy, California. Within this year, the NIHON SEKISO INDUSTRIES LTD. subsidiary will expand its plant and install four more plastic blow-molding systems to turn out what is called a porous duct for engines and a dashboard air-conditioning duct for the 370,000 or so Toyota Corolla and Chevrolet Prizm sedans and Toyota Tacoma pickup trucks assembled annually by Fremont, California-headquartered NUMMI. SIA currently supplies the plant, equally owned by TOYOTA MOTOR CORP. and GENERAL MOTORS CORP., with wheel insulators and heat-shrinkable tubing. With the new product lineup, employment at SIA should rise to 30 from seven at present.

The combined floor space at NORTH AMERICAN LIGHTING, INC.'s already large plants in Flora, Illinois and Salem, Illinois will be expanded by more than 20 percent at a cost of around $27.5 million. Majority owner KOITO MANUFACTURING CO., LTD. expects the additional space to be ready by early 2001. It will house new process equipment to make lighting products for upcoming models built by FORD MOTOR CO., HONDA MOTOR CO., LTD., TOYOTA MOTOR CORP. and other customers. At the same time, NAL, which Koito set up in 1983 along with another Japanese company and a German partner, will divide product responsibility more clearly between its two factories. The original Flora plant will specialize in headlights, while the Salem factory, operational since 1987, will make rear combination lamps.

Increasingly stiff competition from a former partner forced CENTRAL MOTOR WHEEL CO., LTD. to reorganize its U.S. production operations. It merged CENTRAL MANUFACTURING CO., a Paris, Kentucky producer of steel and aluminum wheels, and wholly owned CENTRAL LIGHT ALLOY CO., a maker of aluminum wheels located in the same town, into CENTRAL MOTOR WHEEL OF AMERICA INC. In business since 1988, CMC initially was owned by Central Motor Wheel (40 percent), TOYOTA TSUSHO CORP. (20 percent) and what now is HAYES LEMMERZ INTERNATIONAL INC. The big Northville, Michigan wheel manufacturer eventually sold its shares in CMC to Central Motor Wheel, freeing it to go head-to-head with that company. The new Central Motor Wheel of America expects to produce 550 million wheels this year, including 520 million steel products, and to generate revenues of $168.6 million. For 2003, it is projecting output of more than 580 million wheels.

OHI SEISAKUSHO CO., LTD., which is trying to lessen its dependence on business from majority shareholder NISSAN MOTOR CO., LTD., has in hand its first order from GENERAL MOTORS CORP. Other than saying that the contract involved trunk latches and that shipments would start in 2001, Ohi released no details about the order. The parts will be made by OHI AUTOMOTIVE OF AMERICA CORP., which has manufactured such products as door hinges, hood, door and trunk latches, and seat adjusters for the last decade in Frankfort, Kentucky and, more recently, in Winchester, Kentucky.

Wholly owned SYNTEC, INC. of High Point, North Carolina is the latest U.S. manufacturing company set up by big automotive seating supplier TACHI-S CO., LTD. The venture was launched to fill an order from THOMAS BUILT BUSES, INC., headquartered as well in High Point, for seats for 15,000 school buses starting in January 2001. Tachi-S will spend $15 million on the Syntec factory, which will be located adjacent to Thomas Built Buses' plant. That will allow the major bus manufacturer to drive the buses next door after assembly for seat installation and then bring them back to its plant. The Syntec contract reportedly is the first time that Thomas Built Buses, which has about 30 percent of the school-bus market but also produces other types of buses, has outsourced any of its work. Syntec will have a work force of 60 when full-scale operations begin next year. For the year through March 2003, the company is forecasting sales of $20 million. Long established in the United States, Tachi-S is a partner in three separate production ventures that deliver seating systems to vehicle manufacturers and Tier 1 parts suppliers.

The decision by major bearing manufacturer NSK LTD. to sell its seatbelt unit to Sweden's AUTOLIV INC., already the number two in this field worldwide, affects operations in North America with an annual turnover of $70 million as well as businesses in Japan and Thailand. NSK has a seatbelt technical center in Bloomfield Hills, Michigan and a factory in Tijuana, Mexico. Autoliv is scheduled to take over these activities April 1. NSK and Autoliv have had a decade-long relationship on seatbelts in North America. In 1990, they opened an equally owned venture in San Diego, California to backstop the Tijuana factory.

KAWASAKI HEAVY INDUSTRIES, LTD. is projecting a significant expansion in FY 2000 in the volume of parts for aircraft auxiliary power units that it ships to HONEYWELL INTERNATIONAL INC. Through a long- standing partnership with the former AlliedSignal Inc., which in December merged with Honeywell Inc. to form Honeywell International, KHI is in charge of such APU parts as first-stage turbine blades for auxiliary power units installed on the A320 family of aircraft built by AIRBUS INDUSTRIE S.A. and on BOEING CO.'s current-generation 737 twin-jet series. In the year through March 2001, KHI expects to deliver to Honeywell International APU parts for 470 planes versus 330 planes in FY 1998.

An exchange rate of ¥109=$1.00 was used in this report.aaaaaa

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