New boss shifts Jatco into growth gear
Industry outsider Hata aims to lead global expansion
Jatco President Takashi Hata: “Mr. Ghosn and Nissan management decided that this is Jatco’s growth era and that it needs a new leader that is not necessarily related to Nissan’s culture.”
TOKYO -- Shortly after taking the helm at Japanese transmission maker Jatco Ltd., new President Takashi Hata -- an outsider with no automotive experience -- dropped a bombshell on his r&d unit.
Develop a fuel-efficient transmission that costs half the current level and have the new product ready for market by 2018.
"In their eyes, the new guy came and was giving crazy demands," said Hata, who came to Nissan-affiliated Jatco last year after years in the plastics industry. "But we must do this."
Hata, 54, was handpicked by Nissan CEO Carlos Ghosn to shake things up at Jatco. His marching orders are to break down an insular, Japanese business culture, take the company global and spearhead a new growth phase independent of its biggest customer, Nissan.
In the past, the supplier's chief came directly from Nissan, which owns 75 percent of the company. But Ghosn wanted fresh blood to lead an international expansion that aims to boost sales 67 percent over seven years.
"Mr. Ghosn and Nissan management decided that this is Jatco's growth era and that it needs a new leader that is not necessarily related to Nissan's culture," Hata said.
Booming and ambitious
Jatco is booming thanks to brisk demand from Nissan for its continuously variable and regular automatic transmissions. Its newest CVT, which improves fuel efficiency by up to 10 percent, debuted in the redesigned Nissan Altima sedan that just went on sale.
Jatco is the world's largest producer of CVTs, which use a belt between two adjustable pulleys to change gear ratios. It ranks 23rd on the Automotive News list of the top 100 global suppliers for 2011. And Hata's plan could lift it higher.
His midterm plan aims to boost global sales to 1 trillion yen ($12.5 billion) in the fiscal year ending March 31, 2019.
That would be up 67 percent from $7.55 billion in the fiscal year that ended March 31, 2012.
To meet surging demand, Jatco will expand capacity at plants in China and Mexico and build a plant in Thailand -- all by 2016. And it will need further expansion beyond those already announced plans in the same period, Hata says.
As it ramps up overseas output, Jatco will be dialing down production in the home market of Japan, where the yen's appreciation against the dollar undermines export profitability.
Today, 80 percent of its production comes from Japan. By 2019, Japan will account for only 28 percent of its global output. CVTs account for 62 percent of its sales now, but that share will climb to more than 70 percent by 2019.
Piece of Datsun
Developing a new low-cost, automatic transmission is key to achieving the plan. Jatco prefers to call its products "two-pedal" transmissions because drivers need only an accelerator and a brake pedal. The term covers CVTs and traditional automatic transmissions, and the company has not decided which type it will produce for emerging markets.
In any case, the goal is to crack the booming emerging markets where today's CVTs and automatic transmissions are outsold by cheaper stick shifts.
"We need a unique, cheaper two-pedal solution. We need a new solution from scratch," Hata said in a recent interview. "We have to review every element, from belts to pulleys to controlling systems. We have huge room to reduce costs."
Nissan will relaunch Datsun as an entry-level brand in emerging countries. But most of those cars will be manuals.
Hata wants a new two-pedal product that costs half the current level by 2018 so Jatco can snag a piece of the Datsun pie.
Elsewhere, Jatco sees growth in North America and other mature markets thanks to increasing acceptance of CVTs.
Jatco's Mexico plant makes nothing but CVTs -- including the new CVT8 that goes into the Altima. Next year, it will make a version of that CVT that adds an electric motor and other parts. That transmission will be used in Nissan gasoline-electric hybrid vehicles, such as the upcoming Altima hybrid.
The Mexico factory has annual capacity for 700,000 units. But that will expand to 1.2 million next year. And Jatco will need to expand capacity again in Mexico before 2016, Hata said.
Other expansion will come in China. Next spring, Jatco will increase capacity there to 900,000 units from 730,000 units today.
Conversely, capacity in Japan will be trimmed 25 percent through 2019. Jatco is still determining whether plant closings or job cuts will be needed for that shift, Hata said.
All told, Jatco aims to boost global output to 10 million units a year by 2019 from about 5 million today.
But to get there, some things will have to change.
"Jatco is still a very Japan-oriented company, mind-setwise, culturewise and even languagewise. We need a dramatic shake," Hata said. "We need to manage this company not just as a subsidiary of Nissan but as an independent company."
Hata embodies the international outlook he aspires toward. Fluent in English, he received his MBA from Northwestern University and later worked for General Electric Co.
You can reach Hans Greimel at firstname.lastname@example.org. -- Follow Hans on