Making a bold statement in the automotive aftermarket, a major Taiwanese maker of plastic products plans to open its first plant in North America by June 1998.
The producer, Tong Yang Group Ltd. of Tainan, Taiwan, would become one of the first foreign-owned companies to go after U.S. auto aftermarket business, according to industry sources. Several large U.S. companies currently hold a major share of the aftermarket by selling parts to auto dealers and retailers.
Tong Yang plans to invest $38.9 million in a 140,000-square-foot injection molding plant in McKinney, Texas, located near Dallas, production manager Yen Chen said from the company's temporary, Dallas-based sales office.
That investment will include $10 million for the building and the rest to install two injection presses with clamping forces of 1,600 and 1,800 tons and a paint line.
The new plant will initially injection mold plastic bumper fascias from polypropylene or polycarbonate materials, Chen said. In the year 2000, the company plans to add metal sheet compressed stamping capabilities to make hood and fender parts.
The plant will employ about 130 and produce about 15,000 bumper fascias a month, Chen said. The parts will go to auto dealers served by the firm. Plant sales figures were not available.
Worldwide, the Asian parts maker commands a growing presence. The publicly held company recorded about $140 million in sales last year, close to a 10 percent increase from the prior year. About $22 million of that volume consists of parts exported to the United States and Canada, regions served by the company for a decade.
In Asia, Tong Yang makes parts — including bumpers, instrument panels, grilles and fenders — both for new vehicles and the aftermarket. Among the company's main customers are Ford Motor Co., Toyota Motor Corp., Nissan Motor Co. Ltd. and Mitsubishi Motors Corp., Chen said.
The shift from the Pacific Rim will help the supplier reduce shipping costs and escalate sales in North America, Chen said.
``It will be a lot easier to distribute our products to the entire United States from a manufacturing center in the middle of America,'' Chen said. ``With a totally new plant instead of just temporary offices [in North America], our hope is to really grow our aftermarket business.''
That might not be an easy chore. Several well-entrenched U.S. companies, including Wedgestone Automotive Inc. in New York and Smittybilt Inc. in Corona, Calif., sell a lion's share of aftermarket parts in North America, said James Spoonhower, director of market research for the Specialty Equipment Market Association in Diamond Bar, Calif.
Few foreign-owned companies have attempted to set up plants to compete, Spoonhower said. High tooling costs drive some of them away, he added.
``It can be expensive to set up an operation and difficult to tool up,'' Spoonhower said. ``We only see some foreign-owned companies starting distribution centers here. There's not a big trend toward foreign competition, but if one company is coming here, it could be the beginning of something.''
Tong Yang also operates a distribution center in Matawan, N.J., under its Summit Parts International subsidiary. The company's other parts plants are in Southeast Asia and mainland China.
The company will receive tax breaks from the state of Texas by opening its plant in an enterprise zone.
To qualify, the company must hire those who are economically disadvantaged or who live in the zone.
