4. Strengthening Global Operations
1986-
(1) Full-Scale Expansion of Overseas Production
- 1985
- Despite the sudden and dramatic appreciation of the yen, our company viewed this as an opportunity for business expansion. In 1985, we established the Overseas Division, proactively advancing production ventures in various global regions, anticipating the moves of Japanese automakers.
During the late 1980s, marked by a rapid appreciation of the yen, Japanese auto parts manufacturers faced significant strategic decisions regarding their overseas operations. The necessity for full-scale local production abroad became evident.
In the United States, the Big Three automakers accelerated their shift from in-house parts production to outsourcing from Japanese auto parts manufacturers in response to the growing popularity of fuel-efficient Japanese cars. Consequently, our exports to the U.S. surged. However, the sharp appreciation of the yen, which began in 1985, severely impacted export profitability, compelling us to undertake substantial local production in the U.S. to mitigate exchange rate risks.
In Asia, motorization led to a sharp increase in automobile production across major countries, consequently driving up the demand for auto parts. We adopted a new perspective, considering Asia as a broad region and began exploring optimal production systems across the entire area.
In Europe, responding to market integration, Japanese automakers commenced local production. Thus, it became urgent for us to establish supply strategies and local production systems in Europe.
Our company promptly reacted to these changing circumstances. In 1985, we merged the overseas business and sales departments to form the “Overseas Center,” the central hub for our overseas strategy. This integration facilitated smooth communication between the two departments and incorporated a sales-oriented approach to our overseas ventures, accelerating business expansion.
Our company had traditionally adhered to a “forestalling sales” approach. During this period, Japanese automakers began considering local production overseas. In response, we decided to take a proactive step by initiating local production ahead of them, establishing supply systems in anticipated locations of their expansion. This proactive strategy, while aimed at mitigating exchange rate risks, was carefully tailored to leverage our strengths by considering the unique conditions and characteristics of each region. Thus, from the late 1980s, we boldly expanded our overseas presence in North America, Asia-Pacific, and Europe, capitalizing on our strengths and addressing regional nuances.