Mitsubishi Electric Corp. is boosting North American production and shipping fewer products from Asia, part of an effort by many Japanese companies to reduce the risk of currency fluctuations.
The company is expanding production of starters and alternators in its plants in Mason, Ohio, and Maysville, Ky., and it has built a plant in Mexico.
Mike DeLano, 52, group president of sales at Mitsubishi Electric Automotive America, described the company's expansion to Mexico, production bottlenecks and prospects for growth.
DeLano spoke with Special Correspondent David Sedgwick.
Q: You have stop-start technology customers in Europe and Japan, and you recently opened a U.S. lab to test the technology. Do you hope to get a U.S. foothold in the segment?
A: Yes, we're growing there, and we have business in the U.S. That's a couple of years away. Most of our design engineers are in Japan. We like to have the engineers in the market where we will launch the product first.
Will you produce your stop-start system in the Mason plant?
I'd expect that we'll put it in Mason. But if we had a customer in Mexico that wanted us nearby, we might put it there.
Is Mitsubishi Electric close to full capacity?
We've got some bottlenecks at 100 percent of capacity, but they aren't nasty ones. We're expanding. We have to take some bottlenecks out of subcomponent production.
How hard are you running your plants?
Most of our lines are running six days a week.
Two shifts? Three shifts?
On some lines, we're running two shifts, and on some lines we're running three. We're not in bad shape. We are a conservative company. We don't bite off more than we can chew.
Are you hiring in Ohio and Kentucky?
We're always hiring. We're at 750 employees, and we'll get to 900. That will take care of some of those bottlenecks.
When North American vehicle production tops 16 million units, will parts shortages force some automakers to cut output?
I'm confident we won't be the first [to force a customer to halt production]. We're conservative, so I'm not losing sleep over it. There will be some plants that go down, but we won't cause them.
Last year, your U.S. sales were $1.5 billion. What is your sales target this year?
Our U.S. sales will probably grow 10 percent this year. We're a slow, steady company. That's our style: step by step.
Which automakers are your customers?
We have all the big ones, except Toyota. Denso [a Toyota supplier] is our competitor. The Detroit 3 are our biggest customers in the United States.
Mitsubishi Electric just opened a $33 million factory in Queretaro, Mexico, to make alternators and starters. What makes it a good location?
A lot of our customers are moving to Mexico, and they are really pushing for local support. All of our customers are localizing, localizing.
Will your Mexican plant produce components that you previously shipped from Japan to North America?
Some of it is, yes. And some of it is new business.
What do you ship from Japan?
Starters, alternators -- the same kinds of things we make here.
Have currency fluctuations made it impossible for Japanese plants to produce parts at competitive prices?
No, it's not impossible. But our customers really don't like the exchange rate risk.
Has Mitsubishi Electric asked its suppliers to move to North America?
Very few. It's because we are vertically integrated. We buy [raw materials such as] copper, steel and aluminum.
We die cast in-house, we stamp components in-house, we heat treat components in-house. We make stuff.
Clearly that's a company philosophy.
It is. You are responsible for your own parts. You know what the costs are. You know your raw materials. If we buy something from an outside supplier and have problems with it, we consider whether to make it in-house.
Mexican wages are low. How much of a factor was that for Mitsubishi Electric?
Not as much as people might think. In North America, our assembly lines are very automated, so it doesn't matter quite as much.
Do customers want you to localize to minimize international currency fluctuations?
That's what they say. But what they really want is to get the best overall cost without a lot of risk. We have to remember that's what they really want.
Companies built plants in Mexico because the country's trade treaties allowed the companies to export parts wherever they wanted. Now Brazil wants to renegotiate its treaty with Mexico. Is that a problem?
It blows up a lot of the advantage. But our customers are still committed to Mexico.
They won't close their Mexican plants because of the trade dispute with Brazil?