OSAKA -- Japan's NTN will build a plant in the U.S. state of Indiana in April 2018 to manufacture parts for automobile axles.
The facility, which will cut and heat-treat iron for making axles, will be constructed next to an axle assembly plant slated to open next month. The company will initially invest some 5 billion yen ($44 million) in the new plant, with 6 billion yen in additional investment projected by fiscal 2021.
NTN, a major manufacturer of bearings, has a roughly 20% share of the global market for axles, trailing only British company GKN.
NTN's plan is ultimately to double its U.S. axle output capacity, enabling a switch to local production from imports from such locations as its Iwata works in Shizuoka Prefecture. Around 200 new hires are expected at the new plant.
The company just placed an axle plant into service in Mexico in 2016.
U.S. President Donald Trump has been calling on automakers to expand domestic production and increase hiring of Americans. After being criticized by Trump, Ford Motor withdrew plans for a new plant in Mexico and announced that it will invest in a facility in its home state of Michigan. Similarly, Toyota Motor has announced plans to invest $10 billion in the U.S. over the next five years.
As a result of such trends, NTN expects rising demand for its products, projecting axle sales in the U.S. to rise 30% from fiscal 2015 to some 120 billion yen in fiscal 2021.
New-car sales in the U.S. reached 17.55 million vehicles in 2016, the second straight record high.
While 70% of NTN's group revenue comes from outside Japan, its overseas production ratio is just 50%. The new U.S. plant will help improve an earnings structure that is heavily influenced by foreign exchange markets.