TOKYO Japanese piston ring maker Riken Corp. plans to consolidate its three U.S. operations into its St. Johns, Mich., plant next year and retool that factory with more modern equipment.
Under the plan, Riken will close operations in Muskegon, Mich., and Franklin, Ky., which are on lease from Dana Corp. By doing so, Riken aims to cut office and raw material costs and streamline its American operations.
Riken is trying to strengthen its overseas supply chain as a hedge against overreliance on Japanese production. The company was burned in July when an earthquake in northern Japan damaged its main factory and caused a temporary shutdown.
Riken controls half of Japans piston ring market. The shutdown forced all major Japanese automakers and some suppliers to suspend production for several days. The natural
disaster underlined a weakness in Japans just-in-time manufacturing system, in which automakers rely on prompt delivery of parts instead of maintaining inventory.
To avoid similar problems in the future, Riken wants to deepen its domestic and overseas supply chain.
The company employs about 120 at its three U.S. plants.
A company spokesman said Riken is deciding the staffing level for the expanded operation in St. Johns. Japans Nikkei Sangyo newspaper said the majority of workers at the Muskegon and Kentucky operations will be let go.
The company produces 3 million piston rings a month at its three U.S. plants. Those go to Japanese automakers based in the United States. Riken produces an additional 6 million components a month and ships them to Mahle GmbH, which completes the piston rings for the Detroit 3.
Fumiko Soda contributed to this report