Auto-Parts Makers Invest in Mexico, China on Production Strength
June 09 2016 - 4:50PM
Dow Jones News
Three top auto-industry suppliers are investing a combined
almost $500 million in two of the biggest vehicle production
hubs—China and Mexico—in new signs of confidence that global demand
for cars will continue to rise.
Milwaukee, Wis.-based Johnson Controls Inc. said Thursday it has
formed a joint-venture with a Chinese parts maker to build its
fourth automotive battery manufacturing plant in that country. The
$200 million facility, slated to open in 2019, will employ about
650 people. The plant will produce both traditional and stop-start
batteries. About 7.5 million batteries are expected to be produced
annually. Johnson Controls is working with Binzhou Bohai Piston
Co., an affiliate of Beijing Automotive Industry Group Co.
Nucor Corp. announced it has also reached a joint venture deal
with Japan's JFE Steel Corp. to build and operate a plant in
central Mexico to supply the needs of automotive manufactures
there. The $270 million facility will have the capacity to produce
400,000 tons of galvanized sheet steel a year. Nucor is based in
Charlotte, N.C.
Rounding out the investments, Robert Bosch GmbH completed the
expansion of its Aguascalientes, Mexico, plant which doubles the
output of automotive components such as anti-locking braking and
electronic stability systems. The company invested about $21
million into the expansion.
The three announcements come a day after automotive seat maker
Lear Corp. announced plans to build a new headquarters for its
Asia-Pacific operations in Shanghai. The new building will house
about 800 employees. Lear didn't disclose the size of the
investment.
The expansions are being made even as the U.S. market, one of
the biggest for new car sales, continues to show signs of slowing.
Sales fell 6% to 1.54 million cars in May compared with the same
period a year ago as the pent-up demand for new cars that had
pushed sales since the financial crisis continues to lose steam.
Full-year sales this year are expected to hit 17.7 million which
would break last year's record of 17.5 million but is a bit softer
than the original expectation of 17.8 million, according to
analysts at LMC Automotive.
But Mike Mansuetti, president of Bosch's North American
operations, said global automotive demand remains strong and many
parts suppliers are positioning themselves to meet the rising
demands from car makers to produce parts closer to their assembly
plants.
Global automotive light vehicle production is expected to
increase to 91.4 million this year, 93.5 million next year and 96
million in 2018, according to IHS Automotive statistics.
"We continue to see growth in the Asia-Pacific region and we are
also seeing some niche increases in North America," Mr. Mansuetti
said Thursday during an interview at the company's Farmington
Hills, Mich. location. "Our philosophy is also to build what we
sell locally and that is leading us to invest in the Southeast,
Midwest and the Mexico markets."
Bosch is already working on expanding a steering wheel
manufacturing plant in Florence, Ky. Bosch took over the plant last
year after acquiring ZF Friedrichshafen AG's steering unit. The
deal was cut so ZF could acquire TRW Automotive Holdings Corp. to
create the second-largest automotive supplier in the world.
Mr. Mansuetti added that new technologies, such as automatic
braking systems, are pushing parts makers to expand their product
portfolios and offer more components.
Write to Jeff Bennett at jeff.bennett@wsj.com
(END) Dow Jones Newswires
June 09, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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