Akebono keeps up efforts to expand

Aftermarket success helps Tier 2 brake supplier grow in North America, Europe

At a glance
Akebono Brake Industry Co.

CEO: Hisataka Nobumoto

Headquarters: Tokyo

2001 sales: $1 billion

Products: Disc and drum brakes, pads and linings

Employees: 2,552

Sales by region

Japan 73%

North America 23%

Other 4%

Source: Akebono annual report, 2001 fiscal year that ended March 31.

DETROIT — Akebono Brake Industry Co. Ltd., one of Japan’s largest automotive brake companies, plans to continue its global expansion despite a cash shortage that is limiting its North American growth.

CEO Hisatake Nobumoto said three years of annual losses from Akebono’s home market would not shelve his three-continent “Tripolar” market strategy despite minimal progress in Europe.

“Capital is the limiting factor,” says Nobumoto, who was in the company’s North American headquarters in Farmington Hills, Mich., this month to review operations. “But Akebono is making efforts to penetrate the European market. We should be present in the major markets.”

For a company with just $1 billion in sales last year, Akebono’s push into the highly competitive North American and European markets might appear risky. But a decade of slow growth for the Japanese economy makes overseas growth necessary. Moreover, Akebono is reaping profits here by focusing on aftermarket sales while remaining a Tier 2 brake supplier to the automakers.

Akebono, No. 99 on the Automotive News list of Top 150 suppliers to North America, is a leading supplier of brakes and friction materials to General Motors, Ford Motor Co., Toyota, Nissan, Mitsubishi and others.

Early last year Akebono put an estimated $77 million in its Springfield, Ky., plant, its fourth in North America. The new plant, scheduled to open in March, is expected to help with its aftermarket business. The aftermarket tends to be more profitable than selling to the Big 3.

The Big 3’s pricing pressure is something Akebono has avoided to some degree, says consultant Scott Upham, president of Providata Automotive of Ann Arbor, Mich. Its Tier 2 strategy “has insulated it from the intense pricing pressure” the automakers have put on Tier 1 brake makers, he says.

Akebono recently won the contract to provide the front disc brakes for the 2003 Jeep Grand Cherokee, its first Chrysler group contract. Akebono will manufacture the caliper assembly and ship it to Dana Corp., the axle supplier.

Nobumoto said he expects GM to provide much of his future growth. Delphi Automotive Systems Corp. has a 6 percent stake in Akebono. Toyota Motor Corp. has a 14 percent stake, and Robert Bosch Corp. has a 13 percent interest.

Nobumoto said a lack of capital and a limited number of prospective employees for North America has restrained growth. But available cash declined sharply last year after Akebono’s investment in its Springfield plant, according to the company’s annual report.

New investment may go to Akebono’s European operations. Europe is a big target for Akebono’s largest stakeholder, Toyota. c

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