Kariya, Japan-based Denso Corp. is launching a facility in China to assemble instrument clusters for South Korean carmakers.
Denso opened a new affiliate in Tianjin, China, in February. Investment in Tianjin Poon Sung Electronics Co. Ltd. totals $2.58 million.
The company has leased a production area of about 28,000 square feet, where $2 million worth of assembly and inspection equipment will be installed. ``There is no space for further expansion,'' Denso Corp. spokesman Goro Kanemasu said.
The company expects to employ 25 at the end of 2006, when production will begin. Jobs will grow to 80 in 2010. By then, sales are expected to reach $23 million.
Instrument cluster components injection molded of ABS and polypropylene will be sourced from China and Japan.
``Denso established this new company in response to the production needs of Korean automotive manufacturers in China,'' said Mitsuharu Kato, managing officer for Denso's Information and Safety Systems Business Group. Major customers will include Beijing Hyundai Motor Co. and Dongfeng Yueda Kia Motors Co. Ltd., according to Kanemasu.
This is Denso's second company to produce instrument clusters in China. The first, Tianjin Denso Electronics Co. Ltd., makes 300,000 instrument clusters per year. Since it opened in 1997, TDE has supplied mainly Toyota's and Honda's China operations.
Denso's South Korean subsidiary Denso PS Electronics Corp. is the holding company of the new China site. Denso's wholly owned China headquarters owns the remaining 22.4 percent.
Kanemasu said the Korean parent is localizing its businesses with Korean carmakers. Denso PS was founded in 1976 and has annual sales of $153 million.
Hyundai Motor Co.'s 2005 unit sales in China expanded 66.2 percent to 239,451; Toyota's rose 72 percent to 145,687; Kia Motors Ltd.'s soared 76.2 percent to 110,008, according to a report in Automotive News, a sister publication to Plastics News. Automotive News also ranks Denso fourth among the top 100 global suppliers of original equipment parts.
Toyota Motor Corp. owns 22.9 percent of Denso.