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Auto Parts Makers Go Global
Mergers and Partnerships Continue
Globalization of the auto industry is continuing to spread among Japanese and overseas parts makers as evidenced by the increasing number of foreign mergers, acquisitions and collaborative ventures.
Aichi Steel Corporation (which is one of the largest manufacturers of specialty steel products in the Toyota Group) recently received its first order from General Motors Corp. The order for up to 300,000 crankshaft units puts Aichi exactly where it had hoped to be. Until now, the primary customer of Aichi's U.S. subsidiary, Louisville Forge and Gear Works, had been Toyota's U.S. plants. With this new order, Aichi plans to double capacity to 100,000 tons annually and approach other automakers in North America.
Tsubakimoto Chain Co., the largest maker of timing chains in Japan, formed a business partnership with its former rival, the German-based Ibis. Although Tsubakimoto's market is more than 70 percent in Japan and 17 percent in the U.S., its share is only 5 percent in Europe. With this partnership, Tsubakimoto can ship chains from Ibis' German plants to European automobile makers. As soon as the company completed the business partnership, it received an order from Toyota Europe. Ibis will benefit from this partnership by using Tsubakimoto's Japanese facilities to expand into Asia.
Nifco, the largest producer of metal fasteners for Nissan, has formed a partnership with Illinois Tool Works, which exports fasteners from the U.S. to Nissan's equity partner, Renault. Hayashi Telempu, the largest Japanese manufacturer of automobile carpeting, has forged a partnership agreement with Forcia, an affiliate of the French Peugeot-Citroen Group.
When developing overseas marketing strategies, the majority of Japanese auto parts companies favor developing joint ventures and other partnerships with overseas parts producers over establishing their own wholly-owned subsidiaries abroad or exporting from Japan. According to a recent survey conducted by the Japan Auto Parts Industries Association, 57 percent of the organization's members said they preferred partnerships compared with 37 percent that preferred establishing their own subsidiary and only 5 percent that preferred exporting from Japan.
Meanwhile, overseas parts companies have been seeking Japanese partners to increase their sales in Japan. Last year, Tower, an American chassis and suspension maker, purchased a 30.8 percent equity stake in Yorozu, a Japanese suspension maker. Robert Bosch, one of Germany's largest parts makers, owns a 13.4 percent equity stake in Akebono and a 50 percent equity stake in Zexel, a Japanese engine and automotive systems maker. Visteon, an American maker of drivelines, steering systems and electronics modules, owns Naldec, a Japanese electronic control device manufacturer, which it purchased in 1999.
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