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No. 353, February 1999

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Japanese Companies in the US


TRANSPORTATION EQUIPMENT

The purchase by RENAULT S.A. of a 36.8 percent controlling interest in NISSAN MOTOR CO., LTD. and the French automotive maker's involvement in the management of Japan's struggling number-two car and light truck builder are expected to impact Nissan's North American operations in ways both large and small. One immediate result is the decision not to renew a minivan design, development and production agreement with FORD MOTOR CO. when the 12-year arrangement expires in 2004. The Nissan Quest and its twin, the Mercury Villager, have been built at Ford's Avon Lake, Ohio factory since July 1992 using some parts supplied by Nissan. However, sales of both minivans have been drooping despite a booming U.S. light truck market. In 1998, Nissan sold just 30,500 Quests, while only 38,500 Villagers went out the doors of Lincoln-Mercury dealerships. There is even talk of canceling the contract before 2004 if sales do not improve quickly and dramatically.

Implementing a decision made in the spring of 1998, NISSAN MOTOR CO., LTD. consolidated its American and Mexican parts procurement operations. The move is part of the automotive maker's plan to cut vehicle production costs in North America by $1,800 per unit over the next three years. The integration had no impact on staffing at the two businesses, which together employ about 160 people.

Starting in early 2001, a new subsidiary of KOYO SEIKO CO., LTD. will make energy-efficient power steering systems for American-badged vehicles at a factory near Roanoke, Virginia. KOYO STEERING SYSTEMS OF USA, INC. will invest as much as $37 million in the plant. Within three to five years, it could have 200 people on staff. Koyo Power Steering expects to make systems for 63,000 vehicles in the first year of operation and as many as 800,000 in FY 2003. Since 1990, Koyo Seiko has made power steering systems for Japanese nameplates assembled in the United States through a Vonore, Tennessee joint venture with TRW INC. The factory in southwest Virginia will be its first attempt to supply the Big Three.

Rising U.S. demand for automotive parts made from lighter aluminum has convinced TOYO RADIATOR CO., LTD. to commit $10 million to build a plant in Hopkinsville, Kentucky to produce aluminum radiators and oil coolers for cars and recreational vehicles. Production could begin by mid-2000, with a first-year output of parts for 300,000 vehicles. At full-capacity operations, the facility will employ close to 100 people. Toyo Radiator's COPAR INC. subsidiary, also located in Hopkinsville, has turned out radiators for heavy off-road equipment and industrial use since 1988.

YOKOHAMA RUBBER CO., LTD. is weighing the possibility of manufacturing radial heavy-duty truck and bus tires in the United States to capitalize on strong demand. The heavy-duty truck and bus tires that the company sells here are either imported or made by GTY TIRE CO. in Mount Vernon, Illinois. That firm, in which Yokohama Rubber has a one-third interest, is majority-owned by GENERAL TIRE CO. Wholly owned YOKOHAMA TIRE CORP., acquired in 1989, produces radial car and light truck tires in Salem, Virginia.

In a slight change of plans, the shock absorbers that TOKICO, LTD. supplies to FORD MOTOR CO. for a new sport-utility vehicle set to debut in the spring of 2000 will be in the form of modules. Such units, which the company has not made before, include the shock absorber itself as well as coil springs and the mount that connects the part to the chassis. Brea, Kentucky-based TOKICO (USA), INC. will source the springs and the mounts from Ford-designated suppliers (see Japan-U.S. Business Report No. 349, October 1998, p. 9).

Technology that eliminates the risk of a child being killed or injured when a side-impact airbag deploys is available from the Automotive Electronics Division of Itasca, Illinois-headquartered NEC TECHNOLOGIES, INC. The SeatSentry occupant-sensing system, which uses the electric field generated by antennas mounted in the seat to tell the occupant's size and proximity to the airbag, is based on technology licensed from the Massachusetts Institute of Technology. The SeatSentry system is standard equipment on HONDA MOTOR CO., LTD.'s 1999 Acura 3.5RL

Extending its manufacturing alliance with HONDA MOTOR CO., LTD.'s U.S. operations, YUTAKA GIKEN CO., LTD. will construct an $11.6 million plant in Lugoff, South Carolina to make parts for all-terrain vehicles built by HONDA OF SOUTH CAROLINA MANUFACTURING, INC. in Timmonsville, South Carolina and for motorcycles produced by HONDA OF AMERICA MANUFACTURING, INC. in Marysville, Ohio. Volume production at SOUTH CAROLINA YUTAKA TECHNOLOGIES INC., which will perform stamping, welding, painting and assembly operations, is scheduled for November. After about a year, the company is expected to employ 100 people. SCYT is projecting sales of $15.8 million in FY 2000 and $18.3 million the following fiscal year. CARDINGTON YUTAKA TECHNOLOGIES, INC. in Cardington, Ohio, which Yutaka Giken and Honda jointly own, supplies torque converters and catalytic converters for all the Hondas and Civics built in the United States.

The second of four JAPAN AIRLINE CO., LTD. 747-300 jetliners that will be modified for international passenger service from a domestic passenger configuration has arrived at BOEING CO.'s Wichita, Kansas modification center. The changes will give JAL the flexibility to configure the plane's passenger seating in four different arrangements to match its needs and the routes flown.

An exchange rate of ¥120=$1.00 was used in this report.

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