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No. 352, January 1999

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Japanese Companies in the US


TRANSPORTATION EQUIPMENT

Capping off a record production year at its three existing North American plants, TOYOTA MOTOR CORP. officially opened its full-size pickup truck/sport-utility plant in Princeton, Indiana. Volume output of the new Tundra pickup truck will start in February at TOYOTA MOTOR MANUFACTURING INDIANA, INC. Production is expected to hit 45,000 units in 1999 and then jump to 100,000 Tundras in 2000. Late that year, TMMI will launch production of a full-size sport-utility vehicle at a full-capacity annual rate of 50,000 units. Toyota expects its investment in the plant, which eventually will employ 2,300 people, to total $1.2 billion (see Japan-U.S. Business Report No. 349, October 1998, p. 9). With the addition of the Tundra, Toyota will have the capacity to produce 1.2 million cars and trucks in North America in 1999.

Production has started at TOYOTA MOTOR CORP.'s engine plant in Buffalo, West Virginia. For now, TOYOTA MOTOR MANUFACTURING WEST VIRGINIA, INC. is building four-cylinder Corolla engines, working up to full-capacity operations of 300,000 units a year. Late this year, TMMWV will add V-6 engines for the Camry and Avalon sedans and the Sienna minivan made in Georgetown, Kentucky as well as for the Camry Solara coupe produced in Ontario, Canada. Then in 2001, the plant will start to produce automatic transmissions for U.S.-assembled Camrys. That expansion will boost Toyota's total investment in TMMWV to $900 million (see Japan-U.S. Business Report No. 349, October 1998, p. 9).

With the growing number of Toyota and Lexus vehicles on the road in the United States, TOYOTA MOTOR CORP.'s U.S. sales and marketing arm has decided to build an $85 million parts distribution center in Hebron, Kentucky, across the river from Cincinnati, Ohio. The Midwest Parts Center will stock North American-made replacement parts for delivery to dealers' service departments as well as aftermarket parts and port-installed components. Work on the facility will start in the spring of 1999, with operations scheduled for two years later. About 370 people will be employed at the 843,000-square-foot distribution center. Toyota has a relatively new national parts distribution center in Ontario, California, but it only handles parts brought in from Japan.

HONDA MOTOR CO., LTD. will be the first automotive manufacturer to sell a hybrid-powered vehicle in the United States. A version of the V V, a two- door, two-seat concept car, will go on sale in the fall of 1999, roughly a year before TOYOTA MOTOR CORP.'s Prius hybrid will be available at U.S. dealerships (see Japan-U.S. Business Report No. 347, August 1998, p. 8). Both the V V and the Prius use a small gasoline engine and an electric motor to drive the wheels, with the motor powered by onboard batteries recharged by the engine. The two vehicles also run on gasoline and have a fuel efficiency between 65 miles per gallon and 70 mpg. The mechanical similarities end there. The two vehicles differ in size and weight. The steel- bodied Prius is a four-door sedan designed to seat five people, while the two- seater V V is built from aluminum and plastic to cut its weight. Honda also says that the V V will be able to meet California's Ultra Low Emissions Vehicle standard proposed for 2001.

At a cost of some $100 million, AISIN AW CO., LTD. will construct a plant in Durham, North Carolina to make components for supply to TOYOTA MOTOR CORP.'s Buffalo, West Virginia engine and automatic transmission factory. Operations are slated to start in April 2001 at what eventually will be the 250-employee facility. It will make torque converters, oil pumps, clutches and stampings. For the last 10 years, Aisin AW has rebuilt automatic transmissions in Plymouth, Michigan. Its parent, AISIN SEIKI CO., LTD., has five U.S. manufacturing operations.

Starting in mid-2000, an equally owned joint venture between NISSAN MOTOR CO., LTD. affiliate KANSEI CORP. and TRW INC. will make air-bag crash sensors and other automotive electronics for supply to Nissan's factories in Smyrna, Tennessee and in Mexico (see Japan-U.S. Business Report No. 345, June 1998, p. 8). Manchester, Tennessee, which is not far from the Nissan plant or from Kansei's wholly owned, 14-year-old production facility in Lewisburg, will be home to the TRW KANSEI ELECTRONICS plant. The partners are looking for annual sales of $50 million at full-capacity operation.

In line to receive a contract from GENERAL MOTORS CORP. for a spring for one its high-end transmissions, AMERICAN MSC, INC. of Troy, Michigan is spending roughly $854,700 to install equipment to make this part. The MURATA SPRING CO., LTD. affiliate expects to start production in June at the rate of 600,000 units monthly. The order for the 4T65E transmission spring should enable American MSC to increase sales in FY 1999 beyond the $10 million estimated for the current fiscal year. The 11-year-old company hopes to keep revenues on an upward track by supplying a so-called bulb spring for the diesel engines that GM and ISUZU MOTORS LTD. will begin making in Moraine, Ohio in the fall of 2000 (see Japan-U.S.Business Report No. 349, October 1998, p. 9).

A Tier 1 supplier to FORD MOTOR CO. has awarded SAS RUBBER CO. a contract for power steering hosing for the Escort subcompact. Volume shipments were to start in January. Parent YOKOHAMA RUBBER CO., LTD. is weighing an investment of about $1.7 million to add a manufacturing line at the Painesville, Ohio company for this contract. SAS makes a variety of molded and extruded rubber products, primarily for other Japanese-affiliated manufacturers in the United States. It formerly was part of MOHAWK RUBBER CO., which Yokohama Rubber bought in 1989. SAS was spun off as an independent company in 1992.

The ownership of CT-SOUTH, INC., the second-largest producer of ductile iron thin-walled exhaust manifolds for cars and light trucks in North America, has changed hands. AUTOMOBILE FOUNDRY CO., LTD. and MITSUBISHI CORP., which bought the Marion, Alabama manufacturer in 1990 along with an American partner, sold the company to CITATION CORP. of Birmingham, Alabama for an undisclosed price. The 270-employee CT-South has annual sales of about $30 million but reportedly was not profitable, forcing majority owner Automobile Foundry (77 percent) to take a sizable loss on the transaction.

In a deal designed to accelerate the development and marketing of collision warning systems for cars, HITACHI, LTD. is collaborating with the Eaton VORAD unit of EATON CORP. on the microelectronics for a next-generation adaptive cruise control system. Hitachi brings to this job its work on radar- based microelectronics, while Eaton VORAD is contributing the experience it has gained from being the supplier of the only commercially available collision warning system for heavy-duty trucks in the United States. Its system, introduced in 1994, uses onboard radar to alert drivers to hazards that can cause accidents. Last June, Eaton VORAD began production of a monopulse radar system with adaptive cruise control for medium- and heavy-duty trucks. It can track up to 20 nearby vehicles. The cruise control feature automatically slows down or speeds up the truck based on traffic conditions.

The process of replacing the oldest subway cars in the New York City Transit fleet is developing into a big business for KAWASAKI RAIL CAR, INC. The Metropolitan Transportation Authority recently awarded the KAWASAKI HEAVY INDUSTRIES, LTD. subsidiary a contract worth $190 million to produce 100 subway cars for the L, or Canarsie, Line, with an option for up to 112 additional cars. The cars will be delivered in 2001. Final assembly will take place at Kawasaki Rail's Yonkers, New York plant. In July 1997, the company won a $540 million contract from MTA to supply 400 subway cars between 1999 and 2001. With the latest agreement, New York City Transit has ordered more than 1,000 subway cars from Kawasaki Rail going back 15-plus years; 553 of those have been delivered.

An exchange rate of ¥117=$1.00 was used in this report.aaaaaa

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