Asian manufacturers are shifting production work from China to Mexico and other countries as the trade war between the United States and China undercuts competitiveness of the latter, according to a report by the Nikkei Asian Review (subscription required).
Two of the companies cited in the report that are moving more operations into Mexico are Japanese motor supplier Nidec and consumer electronics manufacturer Panasonic.
“Kyoto-based Nidec will transfer production of power-steering motors for cars, in addition to components for household air conditioners, to Mexico, investing about 20 billion yen (US$ 178 million) to double its capacity in the country by March. These products are subject to 25% tariffs imposed by U.S. President Donald Trump's administration,” says the Nikkei, which cites as source Nidec’s CEO Shigenobu Nagamori, who said last week at an earnings conference they’re expecting the trade war to continue for a while.
“Chinese components are heavily used in the U.S. auto industry, and Nidec believes that supplying automakers from Mexico will help it wrestle away orders from rivals that continue to produce in China,” adds the Japanese news outlet. Nidec owns a plant that manufactures electric motors and actuators in Ciudad Juarez, Chihuahua, but is unclear where the new production capacity will be installed.
Meanwhile, Panasonic “is relocating production of car electronics like stereos to Thailand, Malaysia and Mexico,” says the report, without providing further details.
There are also Chinese manufacturers following steps of their Japanese competitors. According to the Nikkei, the consumer electronics group “TCL plans to boost production of liquid crystal display televisions at its Mexico plant to replace items exported from China. The company will boost the facility's output to between 3 million and 4 million units from 2 million in 2017”.
TCL bought a plant from Japan's Sanyo Electric, a Panasonic subsidiary, in 2014. The facility is located in the border city of Tijuana, Baja California. “LCD TVs were not subject to the Trump administration's additional duties on Chinese goods as of September, but TCL is preparing for the tariff list to expand,” says the report.
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