Japan-US Business Report LogoJapan-U.S. Business Report

No. 340, January 1998

Issue Index

 Japanese Companies in the US


TRANSPORTATION EQUIPMENT

At the end of a record-breaking year for sales in North America, HONDA MOTOR CO., LTD. announced plans to boost production capacity in the United States and Canada to 1 million-plus cars and light trucks by the year 2001 from the current 790,000. This expansion is to be accomplished without adding a fourth North American plant. Through improved efficiencies, Honda expects to boost combined output at its Marysville and East Liberty, Ohio factories by 40,000 units a year, lifting aggregate annual capacity there to 680,000 vehicles. It will use the same strategy to squeeze another 60,000 units out of its Ontario complex after a previously announced 120,000- unit second line becomes operational in the fall. By the year 2001, therefore, that plant will be able to turn out 330,000 units. This fall, an all-new Acura sedan developed in the United States will be added to East Liberty's lineup. It will be exported to Japan as well as sold in North America. At the same time, production will start in Canada of a new full-size minivan for sale in the United States and Canada.

Work will start in April on TOYODA GOSEI CO., LTD.'s third American plant. The $65 million weatherstripping factory, located in Lebanon, Kentucky, will be run by TG KENTUCKY CORP. It expects the factory to be operational by the spring of 1999. The output will go to TOYOTA MOTOR CORP.'s nearby Georgetown, Kentucky complex for the Camry sedan and to the automotive maker's Princeton, Indiana facility, where production of the T100 full-size pickup is scheduled to start later this year. TG Kentucky expects to employ 200 people at start-up and 600 in the year 2005. By then, the company projects, it will be doing $100 million worth of business. Toyoda Gosei's other U.S. plants are located in Perryville, Missouri, where TG (U.S.A.) CORP. has made steering wheels and other plastic interior and exterior automotive parts since 1987, and in Hayward, California, where CALIFORNIA AUTOMOTIVE SEALING INC., a venture with BTR PLC, began production of weatherstripping in the fall of 1996.

Another TOYOTA MOTOR CORP. supplier has announced an expansion even though it only started production in July 1997. TOYOTETSU AMERICA, INC., a wholly owned subsidiary of TOYODA IRON WORKS CO., LTD., will spend about $11.5 million to add presses and welding equipment at its Somerset, Kentucky plant for stamped and welded automotive parts. This machinery should come on-line in June. To-yotetsu America's output goes to Toyota's Georgetown, Kentucky plant as well as to NEW UNITED MOTOR MANUFACTURING INC. in Fremont, California, a joint venture between Toyota and GENERAL MOTORS CORP. The company forecasts sales of $17.7 million in FY 1997 and $46.2 million in FY 2000.

In April, production of torque converters and catalytic converters will expand at CARDINGTON YUTAKA TECHNOLOGIES, INC., a Cardington, Ohio company owned by YUTAKA GIKEN CO., LTD. and HONDA MOTOR CO., LTD. The higher capacity will enable CYT to supply torque converters and catalytic converters for all the Accords and Civics that Honda builds in the United States. In the year through March 1999, the parts supplier expects sales of $153.8 million versus business of $59.2 in FY 1996. Since forming CYT in early 1995, Yutaka Giken and Honda have invested about $53.9 million in plant and equipment.

OGURA CLUTCH CO., LTD. has earmarked $7.7 million to expand production again at its Madison Heights, Michigan subsidiary, which makes compressor clutches for automotive air conditioners. The extra capacity will go onstream in the fall of this year. By the year 2000, OGURA CORP. will be able to turn out 6.5 million units a year versus 5.5 million compressor clutches now. These parts go to North American transplant manufacturers, although Ogura is trying to expand exports.

Capacity boosts also are in store for two wheel plants in Paris, Kentucky owned by CENTRAL MOTOR WHEEL CO., LTD. Starting this summer, CENTRAL MANUFACTURING CO., will be able to make 5.5 million steel wheels a year, up from 4.7 million units now. To achieve this gain, $4.1 million is being spent on a new forming line and an extra welding line. Meanwhile, a $2.4 million paint line will be installed at some point in 1998 at CENTRAL LIGHT ALLOY CO., a manufacturer of aluminum wheels. Annual capacity also will be raised to 600,000 units from the current 370,000.

With an order for three types of bushings for bearings from GENERAL MOTORS CORP.'s Allison Transmission division, the Tiffin, Ohio subsidiary of TAIHO KOGYO CO., LTD. now has contracts from all of the Big Three U.S. automotive makers. TAIHO CORP. OF AMERICA will start filling the GM order in the fall. It will ship 40,000 units of each type of bushing a year.

An April 1 reorganization is set for MATSUSHITA COMMUNICATION INDUSTRIAL CORP. OF AMERICA, a Peachtree City, Georgia manufacturer of automotive audio equipment, cellular telephones and other products. On that date, the company will be split into two separate operations and production of cellular phones will end. MATSUSHITA COMMUNICATION INDUSTRIAL CORP. OF U.S.A. will remain in Peachtree City and continue to make audio products, demand for which is said to be strong. Like its predecessor, this firm will be owned by MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD. (60 percent) and MA-TSUSHITA ELECTRIC INDUSTRIAL CO., LTD. (40 percent). The other new company, MATSUSHITA MOBILE COMMUNICATION DEVELOPMENT CORP. U.S.A., to be based in Suwanee, Georgia, will focus on the development of digital mobile communications devices. It will be a wholly owned subsidiary of Matsushita Communication Industrial. About 900 of the current company's 950 employees will stay in Peachtree City; the rest will join the development unit.

NIFCO INC. has acquired the 50 percent share of ILLINOIS TOOL WORKS, INC. in what had been equally owned ITW-NIFCO INC. The Hilliard, Ohio company has made plastic automotive fasteners since 1988. The Japanese parent hopes that its sole ownership will enable ITW-Nifco to respond more quickly to changing market conditions.

Less than a year after AKEBONO BRAKE SYSTEMS ENGINEERING CENTER, INC. opened in Farmington Hills, Michigan, parent AKEBONO BRAKE INDUSTRY CO., LTD. decided that it needed a bigger U.S. research center to secure its position in the American marketplace. The company was able to buy land next to the existing facility. It expects to spend $30.8 million to build and equip the new facility, which could open later in 1998.

MITSUBISHI HEAVY INDUSTRIES, LTD., KAWASAKI HEAVY INDUSTRIES, LTD. and FUJI HEAVY INDUSTRIES, LTD., which together are responsible for about 15 percent of the airframe for BOEING CO.'s 767 aircraft and 20 percent of the airframe for the 777, will adopt a new design and production system developed by the aerospace giant to shorten development time and reduce production costs. The Japanese trio initially will use DCAC/MRM (define and control airplane configuration and manufacturing resource management) for their work on the 767-400ER, which now is in the development phase.

The first nose landing gear doors built by JAPAN AIRCRAFT MANUFACTURING CO., LTD. for BOEING CO. 777s are scheduled for delivery in March. The doors, formed from four parts, are made from composite materials. This is the first direct order that Nippi, as the company generally is known, has received from Boeing' Commercial Airplane Group since a 1989 contract for 757 elevators. However, through subcontract arrangements with both Japanese and American suppliers to Boeing, the company builds parts used in the 747 (fuselage panels), the 767 (in-spar ribs) and the 777 (in- spar ribs). .....Meanwhile, JAPAN AIRCRAFT MANUFACTURING CO., LTD. has delivered to NORTHROP GRUMMAN CORP. the first fuselage panels for two sections of BOEING CO.'s 747-400. Starting in April, Nippi expects to build panels for five aircraft every month.

Hoping to boost its lagging share of the American commercial tire market, BRIDGESTONE CORP. will add six tires this year to its line of products for BOEING CO. aircraft. The tires are designed for the 747-400 (four types of tires) and the upcoming 767-400ER (two types). The move follows Bridgestone's acquisition of THOMPSON AEROSPACE INC., a Miami-based seller of new airplane tires as well as a retreader of aircraft tires (see Japan-U.S. Business Report No. 339, December 1997, p. 8). Bridgestone ranks third in the U.S. commercial tire market with a 20 percent of sales.

JAPAN AIRLINES CO., LTD. now has 10 cargo planes in its international freighter fleet, having leased a second 747-200 and crew from SOUTHERN AIR TRANSPORT INC. of Miami. In 1995, JAL decided that it was more economical to wet-lease planes to meet seasonal increases in transpacific cargo demand than to own freighters that sat idle or were underutilized at other times of the year.

An exchange rate of ¥130=$1.00 was used in this report.
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