1. Expansion of the thermal business

[5] Operations at Magneti Marelli DENSO and mutual complementation in South America

The plant Magneti Marelli DENSO purchased at the beginning of 1996 had a site area of 62,000 m2 and a floor area of 5,000 m2. Originally a PepsiCo soda bottling facility, the renovated plant was equipped with an assembly line shipped from Japan and many other pieces of plant equipment introduced from Italy.
In looking to locally produce seven parts, including air cleaners, Magneti Marelli DENSO leveraged MERCOSUR, which eliminates any customs duties within the region if the predetermined balance between local procurement rates and imports and exports is achieved. Specifically, Magneti Marelli DENSO established a mutual complementation system for air conditioner component parts in which compressors and condensers were imported from DENSO Brazil and heaters were exported from Argentina.
Along with the locally hired human resources director, President & CEO Osuka began recruitment activities to hire 120 associates. Córdoba, Argentina’s second largest city, is located nearly 700 km inland from the capital of Buenos Aires, and has a population of 1.2 million. Because many German manufacturers had entered the increasingly industrialized region, workers from Córdoba tend to be highly skilled. There are also two universities in the city, meaning Magneti Marelli DENSO had high hopes for securing engineers locally.
Although Magneti Marelli DENSO received a request through the Japanese Embassy from the local Japanese Association to hire those of Japanese ancestry, Mr. Osuka replied that Magneti Marelli DENSO is an Argentinian company, so it will hire associates according to the racial composition of Argentina. Accounting for only 0.1% of the population, there are far fewer people of Japanese ancestry in Argentina than in Brazil. So, only a tiny number of people of Japanese ancestry would be employed.
Mr. Osuka also turned down technical support from DENSO Headquarters, and left everything from die making to the installation of the manufacturing lines to local associates. Mr. Osuka took this approach because he felt that the skills of the local associates would not improve if they received support, and the engineers at DENSO Headquarters ultimately gave the new company’s prototype products a positive evaluation.

In March 1997, Magneti Marelli DENSO began operations at the plant and held an opening ceremony the following April. Along with invited guests including Argentinian government officials, the event was attended by Vice chairman Kazuhiro Ota from DENSO, President & CEO Manfred Nicolelli from MMCL as the joint venture partner, and President & CEO Domenico Bordone from Magneti Marelli.
DENSO subsequently acquired MMCL, and in 2002 Magneti Marelli DENSO was renamed DENSO MANUFACTURING ARGENTINA S.A. (DNAR), which remains the name to this day.