After 15 years, divergent business interests have led to a change in the ownership of NORTH AMERICAN LIGHTING, INC., the largest independent U.S. manufacturer of automotive lighting equipment. KOITO MANUFACTURING CO., LTD., which owned 40 percent of the maker of headlamps and tail lamps, bought the 50 percent share of HELLA KG HUECK & CO. for an undisclosed amount, reported to be $45 million. ICHIKOH INDUSTRIES, LTD. continues to own the remaining 10 percent of North American Lighting. Germany's Hella, itself a major producer of lighting equipment as well as automotive electronics, apparently felt that the joint venture limited its freedom to serve the company's primary customers in the United States and Canada. North American Lighting operates out of plants in Flora and Salem, Illinois. It employs some 2,000 people and had 1997 revenues of $280 million. TOYOTA MOTOR CORP.'s American and Canadian factories are North American Lighting's main customers, but the company ships parts to all the other Japanese transplant operations and to the Big Three U.S. automotive makers.
Ten months after KAYABA INDUSTRIES CO., LTD. and ARVIN INDUSTRIES, INC. worked out a production-sharing deal on suspension systems (see Japan-U.S. Business Report No. 339, December 1997, p. 8), the two have formalized the arrangement in a joint venture. The Japanese partner owns 49.9 percent of ARVIN- KAYABA LLC. It contributed to the new company its 10-year-old KYB INDUSTRIES, INC. plant in Franklin, Indiana, which specializes in struts. Arvin of Columbus, Indiana, also the joint venture's headquarters, is the majority owner. It spun off to Arvin-Kayaba its Pulaski, Tennessee shock absorber factory. Kayaba Industries hopes that the alliance with Arvin will enable it to gain market share in North America.
Increasing orders from CHRYSLER CORP. and from the U.S. operations of TOYOTA MOTOR CORP. and NISSAN MOTOR CO., LTD. are behind the announcement by competitor TOKICO, LTD. of another expansion of its Berea, Kentucky shock absorber plant. By 2000, TOKICO (USA), INC., which has been in business since 1988, will have the capacity to turn out 800,000 shock absorbers a month versus roughly 550,000 units now. The addition of two lines to the plant's current nine will cost about $20 million. The expansion will increase the 600-employee payroll by as many as 50 people. With the extra output, Tokico (USA) is projecting FY 2000 sales of $253 million compared with $220 million in FY 1997. Despite the new orders from Chrysler for shocks for the Neon subcompact and from the two transplants, FORD MOTOR CO. remains the company's primary customer.
Another Japanese-affiliated parts supplier has announced plans to expand to fill an order from CHRYSLER CORP. Bardstown, Kentucky-headquartered INTERTEC SYSTEMS, LLC, one of the biggest independ-ent makers of instrument panels in North America, will supply modular instrument panels for the 2002-model-year Jeep Cherokee. Because the equally owned joint venture between INOAC CORP. and JOHNSON CONTROLS, INC. is responsible for design, development, production, just- in-time delivery and quality assurance for the instrument panel modules, it will have to build a factory near the Jeep Cherokee assembly plant in Toledo, Ohio. Neither the facility's exact location nor any other details have been decided. Modular parts, still a relatively new concept in the automotive industry, shift to suppliers the job of building up sections of a vehicle rather than just delivering individual parts or even subassemblies to the car or truck manufacturer. Intertec Systems was formed in February 1996 from several existing Inoac and JCI plants in North America.
HONDA TRANSMISSION MANUFACTURING OF AMERICA, INC., which since early 1997 has been responsible for building all the automatic transmissions for HONDA MOTOR CO., LTD.'s North American-assembled cars, is producing the Sequential Sportshift for the 1999 Acura 3.2TL and Acura 3.5TL cars made in Marysville, Ohio. This automatic transmission gives the driver the option of selecting the gear, much like a manual transmission. HTM's Russells Point, Ohio plant expect to turn out 40,000 Sequential Sportshifts for the Acura TL in its first year of North American production. In the meantime, it is boosting automatic transmission capacity to 750,000 units this year from about 606,000 units in 1997.
Full-scale production has been reached at DENSO CORP.'s $40 million fuel injector plant in Athens, Tennessee. Although the second plant run by DENSO MANUFACTURING TENNESSEE, INC. opened only recently, the company already is thinking expansion. By 2003, it plans to boost capacity to 350,000 fuel injectors a month from the current 100,000 units. Moreover, today's work force of 60 people could climb to 260 by 2001. DMT's original plant, located in Marysville, Tennessee, produces starters, alternators, electronic engine control units and instrument clusters. It has been in business since 1990.
According to current planning, TAIHO KOGYO CO., LTD.'s Tiffin, Ohio plant will start to make engine bearings sometime in 2000. The TOYOTA MOTOR CORP. affiliate now outsources production of main and connecting rod engine bearings for Japanese- owned vehicle factories in North America to FEDERAL-MOGUL CORP., providing its technology to the big Southfield, Michigan-based bearing manufacturer. New orders for these parts will be filled by TAIHO CORP. OF AMERICA, although all the details have not yet been finalized. The subsidiary, which began production in mid-1996, now makes different types of bushings for bearings for the Big Three U.S. automotive manufacturers as well as an air-conditioning compressor component known as a hemisphere shoe.
CHUO SPRING CO., LTD. has earmarked $3.3 million to build a plant at its majority- owned ACK CONTROLS, INC. subsidiary in Glasgow, Kentucky for springs that open and close engine valves. Operations will start sometime in 1999, with full production of 500,000 to 600,000 engine valve springs a year scheduled for 2000. The new business is expected to produce revenues of $4.1 million a year from sales to the North American plants of TOYOTA MOTOR CORP., HONDA MOTOR CO., LTD. and, hopefully, the Big Three U.S. automotive manufacturers. For the last eight years, ACK Controls has made automotive control cables. Sales of that product now are running at $33.1 million a year.
Expanding capacity and building factories dedicated to specific processes and products are the primary means by which the Plymouth, Michigan-head-quartered partnership between NOK CORP. and Germany's FREUDENBERG & CO. plans to boost sales of sealing components to $1 billion in 2000 from $640 million in 1997. In that vein, FREUDENBERG-NOK is building a $5 million plant in Northfield, New Hampshire for axle seal production. When the facility opens in the spring of 1999, axle seals now made at the company's Bristol, New Hampshire factory will be shifted, and the older plant will be used exclusively to manufacture oil seals. The Northfield operation, which will employ as many as 240 people from within the Freudenberg- NOK group, will turn out axle seals for sport-utility vehicles, light trucks and heavy-duty trucks. Major customers include Detroit's AMERICAN AXLE & MANUFACTURING, INC., FORD MOTOR CO. and FREIGHTLINER CORP. of Portland, Oregon. Together, Freudenberg and NOK group companies have annual sales of more than $6 billion, including automotive-derived revenues of $3.5 billion. They are the world's largest manufacturers of sealing components and the producers of a variety of other precision-molded rubber and plastic components for automotive and nonautomotive industries alike.
Increasing demand for floor mats from transplanted Japanese vehicle manufacturers and Detroit is behind the bicoastal expansion of JAPAN VILENE CO., LTD.'s U.S. manufacturing operations. The company's 15-year-old Santa Fe Springs, California subsidiary, VIAM MANUFACTURING INC., not only is expanding its own capacity but also is overseeing the establishment of VIAM LP and its $8 million factory in Manchester, Tennessee. The new plant, scheduled to start up in July 1999 with 60 employees, will have the capacity to make floor mats for 600,000 vehicles in the first year of operations and 1 million sets in 2000. With the extra output from the California facility, Japan Vilene will be able to make floor mats for 2.1 million North American- built cars and trucks in 2000. That, it projects, should double U.S. sales to $60 million a year.
In an announcement that was long on possibilities but short on specifics, TOYOTA MOTOR CORP. and EXXON CORP. said that they had entered into a long-term relationship to "accelerate the pace of development" of advanced internal combustion engines and hybrids as well as the fuels and the lubricants that these technologies will require. To this end, the two industry heavyweights will share business and technical information, identify critical cross-industry factors affecting future vehicle technology and conduct joint research on new vehicle systems. Their short-term goal, Toyota and Exxon stated, is to reduce vehicle emissions. Over the longer run, they hope to develop more efficient power sources. For the last three years-plus, research teams from Toyota and Exxon have been collaborating to improve the performance of lean- burn gasoline engines and to reduce particulate emissions from advanced diesel engines.
An exchange rate of ¥121=$1.00 was used in this report.