2. Business diversification (1) Motorcycles and electronics products

[2] Establishing DENSO INDUSTRIAL DA AMAZONIA LTDA. (DNAZ)

The bus A/Cs that DNBR had been producing since the 1980s were highly regarded in terms of quality and specifications. However, sales only expanded slowly due to problems with price, so strengthening cost competitiveness became an issue of top priority.
Consequently, DNBR established DENSO INDUSTRIAL DA AMAZONIA LTDA. (DNAZ) in Manaus as a fully-owned subsidiary in 1994 in order to take advantage of the tax incentives. This would be DENSO’s first full-scale foray into Manaus. Although DNAZ was an independent company, from the viewpoint of its small size and the need to minimize sales, general, administration, and other indirect division expenses, DENSO positioned it as a branch plant of DNBR in terms of management. Likewise, DNBR’s President & CEO and some staff members concurrently served at the new company, while DNBR also periodically provided support for other areas as well.
DNAZ began producing bus A/Cs in April 1997, but because it was unable to immediately purchase a plant site and buildings in Manaus, it initially converted a rental warehouse into a small-scale plant with a site area of 3,500 m2 and a building area of 2,000 m2. In response to a request from Moto Honda, DNAZ also relocated the production line Moto Honda had used for its own products to the rental plant, and began producing motorcycles magnetos in August 1997.
This transfer of production processes for magnetos was carried out with the support of DENSO Headquarters and DNBR. Since Moto Honda’s magneto production line had originally been installed within a fully air-conditioned plant, DNAZ also fully air-conditioned its plant to prevent equipment deterioration. DNAZ also installed a generator to prevent the adhesive curing process from being interrupted when power failures occurred. Although DNAZ had hired more than 10 new workers locally, it was unable to provide training for the work before the line was relocated, so Moto Honda switched to a three-shift arrangement to train the new associates.