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

No. 345, June 1998

Issue Index

Japanese Companies in the US


TRANSPORTATION EQUIPMENT

Now in its tenth year of building Subaru cars and Isuzu sport-utility vehicles, SUBARU- ISUZU AUTOMOTIVE INC. finally is close to operating at capacity of 240,000 vehicles a year. One key to this change in fortunes is the start of Japan-bound exports of right- hand-drive versions of ISUZU MOTORS LTD.'s new four-door Rodeo, called the Wizard, and the redesigned two-door Amigo, which is sold as the Mu. Isuzu, which owns 51 percent of Lafayette, Indiana-based SIA versus the 49 percent share held by FUJI HEAVY INDUSTRIES, LTD., the maker of the Subaru Legacy, expects to ship between 13,000 and 18,000 SUVs to Japan this year. The plant started building right- hand-drive vehicles in 1994 when it won a contract from the United States Postal Service for Legacys. With current production limits in sight, SIA officials are weighing an expansion in capacity to 260,000 units a year.

In a major endorsement of MITSUBISHI MOTORS CORP.'s gasoline direct-injection engine technology, CHRYSLER CORP. reportedly will use the fuel-efficient, emissions-reducing engines in the cars that MMC builds for it starting in the 2002 model year. GENERAL MOTORS CORP. also is talking to Mitsubishi Motors about using GDI engines. According to current plans, the Chrysler engines will be built at MITSUBISHI MOTORS MANUFACTURING OF AMERICA INC. in Normal, Illinois where MMC today assembles the Chrysler Sebring coupe and the Dodge Avenger. The GDI engines will replace Chrysler-made engines. Engines that MMC supplies directly to Chrysler, now 300,000 or so 3,000 cubic centimeter engines, gradually will be switched over to the GDI technology beginning in 2001. The new engines are 30 percent more fuel-efficient than conventional gasoline engines, and they cut carbon dioxide emissions by nearly one-third.

NISSAN MOTOR CO., LTD. affiliate KANSEI CORP. tentatively has agreed with TRW INC. to set up an equally owned manufacturing facility in North America to supply air- bag and other automotive electronics to the number-two Japanese vehicle maker's plants in Smyrna, Tennessee and in Mexico. The $15 million plant is expected to be completed in 2000 and to be operational the following year, turning out $45 million worth of products annually. The prospective partners reportedly are thinking about factory sites near Nissan's Tennessee complex. TRW already is a leading supplier of air-bag electronics to Nissan, while from its Lewisburg, Tennessee plant Kansei ships instrument panels, other molded plastic products, instrument clusters and additional parts to the Smyrna complex.

Before the end of 1998, KOYO SEIKO CO., LTD. -- Japan's top manufacturer of power steering systems as well as one of its top three producers of bearings -- expects to decide on a site somewhere in the Ohio-Tennessee section of "automotive alley" for a plant to make its newly developed electric power steering systems and hydraulic electric power steering systems. Koyo Seiko believes that the Big Three U.S. automotive builders will adopt this equipment after 2000. Factory construction now is scheduled to begin sometime in 1999. Through TRW KOYO STEERING SYSTEMS CO., a Vonore, Tennessee joint venture with TRW INC. (51 percent), the company supplies components for power steering systems to transplant producers.

A year after production started, the grand opening finally was held at DIAMOND ELECTRIC MANUFACTURING CORP.'s ignition coil plant in Eleanor, West Virginia. The factory, which employs more than 100 people, has the capacity to make 250,000 units a month for such customers as CHRYSLER CORP. and TOYOTA MOTOR CORP.'s North American operations. The celebration coincided with the inauguration of additional capacity at DIAMOND ELECTRIC MANUFACTURING CO., LTD.'s original plant in Dundee, Michigan. It now is equipped to turn out monthly 400,000 ignition coils. The work force numbers 120.

Through an investment of $6.8 million, PRESS KOGYO CO., LTD., Japan's top supplier of stamped metal parts for cars and trucks, has launched its second U.S. manufacturing subsidiary. Like PK U.S.A., INC., which has been in operation since 1990, BLUE RIVER STAMPING, INC. is located in Shelbyville, Indiana. Its 80 employees turn out pedals and other small stamped metal parts and subassemblies. The plant has a 300-ton press, a 200-ton press with a coil feeder, eight regular 200-ton presses, a 110-ton press and 16 projection welders. Blue River Stamping is projecting 1998 sales of $7 million. Directly or indirectly, Press Kogyo owns 95 percent of the company; the rest of the capital was put up by a MITSUI & CO., LTD. affiliate.

Stronger than expected demand for steel cord from BRIDGESTONE/FIRESTONE, INC. tire plants has prompted BRIDGESTONE METALPHA CORP. to revise future production requirements for its Clarksville, Tennessee plant. The BRIDGESTONE CORP. affiliate originally planned to have the capacity to make 30,000 tons of steel cord in 2001 versus its current annual capacity of 17,000 tons. Now, it will boost 2001 capacity to 47,000 tons through the investment of an additional $65 million. That will raise total plant spending to $195 million. With the higher projected output, employment will increase to 340 people from roughly 280 at present.

By early next year, all ISHIKAWA GASKET CO., LTD. engine gaskets sold in North America will come from its Bowling Green, Ohio plant. Capacity will be expanded from 700,000 units a year to 2.3 million through the addition of nine manufacturing lines. Staffing, now at 110, will increase as a result of the extra capacity. About half of ISHIKAWA GASKET AMERICA, INC.'s output goes to FORD MOTOR CO. The U.S. expansion is central to plans by Japan's top manufacturer of gaskets to double offshore sales to $55.6 million by FY 2001.

Additional orders in hand from the Big Three U.S. automotive makers, NORTH AMERICAN LIGHTING, INC., an affiliate of KOITO MANUFACTURING CO., LTD., is projecting FY 1998 sales of more than $296.3 million from $259.3 million in the year through March 1997. The lighting equipment supplier, which has plants in Flora and Salem, Illinois, expects to fill the new contracts by boosting productivity rather than investing in more capacity.

With sales of pickup trucks in its dominant export market, Southeast Asia, in a tailspin, NISSAN DIESEL CO., LTD. plans to resume shipments to the United States this year. The truck maker stopped selling pickups here in 1994, concentrating instead on its Class 4 to Class 6 vehicles, or trucks with a gross vehicle weight of 14,000 pounds to 26,000 pounds. Its 1997 sales totaled 2,163 units. Nissan Diesel has not yet decided how many pickups it will export to this country.

KAWASAKI HEAVY INDUSTRIES, LTD. will help its U.S. rail car assembly operation meet early 1999 delivery dates for 200 double-decker rail cars ordered in 1995 by New York's Long Island Rail Road and by the Maryland Department of Transportation. Design modifications put Yonkers, New York KAWASAKI RAIL CAR, INC. behind schedule by delaying the start of procurement. The changes also drove up production costs. To help out, KHI will build more subassemblies than it originally planned. Among other contracts that Kawasaki Rail Car has pending is its biggest ever, a $540 million order for subway cars from New York City's Metropolitan Transportation Authority (see Japan-U.S. Business Report No. 336, September 1997, p. 9).

An exchange rate of ¥135=$1.00 was used in this report.
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