Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Videos
    • Podcasts
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Notable Leaders in Sustainability
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics Caps + Closures: A Global Online Event
    • Women Breaking the Mold Networking Forum
    • Bioplastics Live
    • Numbers that Matter Live
    • PFAS Live
    • Plastics in Politics Live
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Resin Prices Overview
    • Commodity Thermoplastics
    • High Temperature Thermoplastics
    • Engineering Thermoplastics
    • Recycled Plastics
    • Thermosets
    • Europe - Virgin
    • Europe - Recycled
    • Europe - Feedstock
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
News
September 29, 2014 02:00 AM

Japan's parts makers face challenges as carmakers expand supply base

Hans Greimel
AUTOMOTIVE NEWS
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Toyoda Gosei Co.
    Tadashi Arashima, president of Toyoda Gosei Co.

    TOKYO — For all their size and success, Japanese auto suppliers that rocketed to global dominance on the coattails of their No. 1 customer, Toyota Motor Corp., face a perilous new reality.

    Pressured by a shrinking home market and a sugar daddy looking further afield, Toyota-affiliated suppliers such as Denso Corp. and Aisin Seiki Co. are racing to diversify their customer bases or risk decline.

    And it's not just Toyota parts makers.

    Across the board, Japanese suppliers are struggling to adjust to a new business reality that threatens to undermine the country's keiretsu system of tightknit cooperation between carmakers and their favorite-son suppliers.

    Blame the unraveling on an immutable truth: Japan's carmakers have stopped expanding at home. Now, they are channeling new investment into overseas assembly plants, and Japanese suppliers that want a piece of the action are obliged to do the same.

    But not all Japanese suppliers are big enough to do so. And those that are — even giant, longtime Toyota suppliers — bump against a harsh reality that sales are anything but guaranteed.

    "In Japan, we can rely on Toyota very much. But if it's outside of Japan, except for maybe Indonesia or Thailand, Toyota's market share is still quite low and not so stable," says Tadashi Arashima, president of Toyoda Gosei Co., a Toyota-affiliated supplier that makes hourglass-shaped grilles for Lexus as well as steering wheels, airbags and sealing and interior components with extensive plastic production globally.

    "We have to have a broader customer base."

    Big turning point'

    The problem is especially acute for suppliers in which Toyota owns significant stakes, which include four of the world's top 30 suppliers.

    In 2012, Toyota R&D chief Mitsuhisa Kato rocked their world with a new product development push prioritizing common parts.

    The shift, which underpins a new platform called Toyota New Global Architecture set to debut in 2015, requires suppliers that can deliver millions of identical parts, from Kentucky to Kenya.

    "This is a big turning point for Toyota," he said at the time.

    Mass commonization puts pressure on supply chains and profit margins because carmakers expect it to drive down parts prices.

    The challenge goes beyond Toyota. Nissan Motor Corp. is rolling out a modular platform that also promises to potentially upend the traditional supplier network. And Honda Motor Co. is overhauling its product development to revolve around six global manufacturing centers.

    They will rely as much as possible on locally sourced parts.

    Japanese automakers' moves are partly a direct result of five years of export-crushing exchange rates. With the Japanese yen hitting all-time highs against such foreign currencies as the dollar after the global financial crisis, Japanese carmakers rushed to shield themselves from exchange rate losses by building factories overseas.

    When Japanese carmakers set up shop in new markets such as Mexico or India, they will give a first look to local suppliers and global non-Japanese giants already there.

    And American and European suppliers may be well established in places their Japanese rivals don't even have a toehold.

    The new approach is breaking old bonds of loyalty.

    Toyota Boshoku Corp., which used to coast on its locked-up seat-making business for its biggest shareholder, Toyota, learned the hard way. When the Camry sedan was redesigned in 2011, it lost the contract to U.S. rival Johnson Controls.

    The message to suppliers was clear: Broaden your customer base.

    Survival at stake

    Aisin, the Toyota-affiliated maker of transmissions, brakes, engine components and chassis systems, aims to do just that.

    "The profile of our customer base is changing," Aisin Executive Vice President Toshiyuki Mizushima said. "We cannot survive if we just stick to our conventional business style."

    Yet change comes slowly, even for a global giant such as Aisin, which ranks No. 5 on Automotive News' list of the top 100 global auto parts suppliers.

    Sales to the Toyota Group accounted for a whopping 65 percent of Aisin's revenue two years ago and 64.4 percent last year. Aisin expects Toyota's share to edge downward to 63.1 percent this year.

    In North America, it's even more lopsided. Toyota accounts for more than 80 percent of Aisin's sales. By 2020, Mizushima wants non-Toyota customers to chip in 30 to 35 percent of the supplier's total revenue from North and South America combined.

    But international megasuppliers will be stiff competition.

    Take German supplier Robert Bosch GmbH, the world's biggest parts maker. It aims to double its Asia-Pacific sales by 2020, largely by expanding sales to Japanese automakers.

    Sales to Japanese automakers will climb 10 percent this year, predicts Bosch Japan President Herbert Hemming. That would outpace the 3 to 5 percent overall growth Bosch predicts for 2014.

    Bosch expects the fastest growth with Japanese carmakers to come in emerging markets. The company can use its international factories to win business from traditional Japanese suppliers that lack the same overseas reach.

    The race to commonize parts puts Bosch on carmakers' lists.

    Udo Wolz, executive vice president for technology at Bosch Japan, cited one example in which Bosch consolidated the supply of 80 windshield wiper types to just 10 for one manufacturer.

    He declined to name that customer.

    Read the full story at Automotive News.

    RECOMMENDED FOR YOU
    US Merchants opens curtain on growing injection molding operations
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Ohio PET jar maker closes, auctioning off equipment
    2
    An 8,000-ton dream for Milacron, 20/20 Custom Molded Plastics
    3
    Nova declares force majeure for PE resin at second Ontario site
    4
    Preventing pellet pollution focus of expanded Operation Clean Sweep, congressional push
    5
    PS resin prices continue their climb
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Find more newsletters at plasticsnews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Notable Leaders in Sustainability
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Videos
      • Podcasts
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics Caps + Closures: A Global Online Event
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
      • Editorial Livestreams
        • Bioplastics Live
        • Numbers that Matter Live
        • PFAS Live
        • Plastics in Politics Live
        • PN Live: Mergers and Acquisitions
        • Polymer Points Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Resin Prices Overview
      • Commodity Thermoplastics
      • High Temperature Thermoplastics
      • Engineering Thermoplastics
      • Recycled Plastics
      • Thermosets
      • Europe - Virgin
      • Europe - Recycled
      • Europe - Feedstock
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified