TOKYO -- Iris Ohyama, the Japanese manufacturer of household products, will spend a total of 35.5 billion yen ($314 million) by 2019 to boost its production capacity overseas in a bid to expand business with local online retailers.
The company's fourth factory in the U.S., costing 12 billion yen, will be located in eastern Pennsylvania. Iris Ohyama will break ground in February, and the factory will start making plastic containers and pet products in April 2019.
The Hazleton plant will have an automated warehouse designed to aid the rapid shipment of online orders. The site will join a network of factories in Arizona, Texas and Wisconsin that will deliver products efficiently to the regions they cover in the country.
In addition to Amazon.com, Iris Ohyama will also ship goods to mass retail outlets. The Japanese company aims to deliver 5 billion yen worth of product from the Pennsylvania plant during the location's initial year.
In South Korea, Iris Ohyama will fire up an 8 billion-yen plant in October 2018. The Incheon factory will put out futon dryers, air circulators and other small home appliances.
The French city of Lieusaint will be home to an 8 billion-yen plastic container facility slated to start operating in December next year. The output will be shipped inside France as well as to the U.K., Germany and other European markets.
In addition, Iris Ohyama is investing 7.5 billion yen to beef up capacity 3.5 times at its manufacturing base in Suzhou Province, China. The location will churn out more air circulators.
Plasticware like containers and pet products are cumbersome to deliver despite weighing little. The added logistics costs degrade profitability the farther the destination is from a production center. Iris Ohyama is looking at building more plants to go along with operational expansion.
Iris Ohyama made 346 billion yen in group sales in fiscal 2016, and foresees a 24% increase to 430 billion yen this fiscal year. The company is growing mainly by expanding shipments to Japanese e-commerce outfits. Iris Ohyama is scaling up by expanding its focus overseas.