2. Business diversification (1) Motorcycles and electronics products
[4] Evolving DNAZ as the South America electronics business group company
After establishing the new plant, along with magnetos for Moto Honda, DNAZ started producing products for Yamaha in September 2001. DNAZ also expanded its product line beyond magnetos with the addition of CDI regulators, DENSO’s first electronics product in South America. Moreover, in response to motorcycles emissions regulations and the shift to electronics control injection systems coinciding with these regulations, DNAZ also began manufacturing motorcycles engine ECUs starting in 2005.
Production of CDIs, ECUs, and other electronics products required a higher level of quality for manufacturing than ever before, however. Consequently, the need to learn production technologies specific to electronics products led DENSO Headquarters to dispatch engineers to provide training, while DNAZ engaged in efforts to transform the concept of quality and improve worker mentality. DNAZ also assigned many of its female associates, who were suited to delicate, precision work, to the production site in order to produce these electronics products, which required a higher level of precision and were more delicate than mechanical products.
Production of these electronics products for motorcycles also led to orders for automobile engine ECUs, and DNAZ began producing engine ECUs for Toyota Brazil in 2012.
Toyota Motor had already been producing the HILUX at its Zarate Plant in Argentina, which was completed in 1997, and the Corolla at its Indaiatuba Plant in Brazil since 1998. In July 2010, however, Toyota Motor set out to build a new plant to produce compact EFCs, and began construction in September of that year in Sorocaba, São Paulo. As Brazil grew to become an important market alongside China and India, local production needs for DENSO ECUs also increased.
São Paulo, where Toyota Motor’s plant was located, is far from Manaus, which increased logistics costs and led to parts storage expenses near areas where demand existed. Nevertheless, DENSO decided on manufacturing ECU production at DNAZ because of its track record for motorcycles and its advantages in terms of resources and M&E investment. Another reason was because of DNAZ’s ability to take advantage of multiple tax incentives [corporate taxes, customs duties, industrial taxes, service taxes, etc.] in the Manaus Free Zone.
Based on this production record, DNAZ had transformed into the core location in South America for engine ECUs, ECUs for air conditioners and EPS (electric power steering), and other electronics products. As of the end of FY 2021, DNAZ had grown to employ more than 400 associates.