TOKYO — Mitsubishi Electric Corp. was planning to expand its parts factory in Mexico when it suddenly paused.
The problem? The auto supplier is troubled by the uncertain future of North American free trade.
With the changing winds of Washington politics, the Japanese maker of vehicle electronics realizes it might instead need to build a factory in the U.S.
The company, which has a growing business with the Detroit 3, had hoped to sign off last year on expanding its plant in Queretaro, Mexico. But the plans were thrown into limbo when the Trump administration began renegotiating the North American Free Trade Agreement.
"Due to such NAFTA discussions, we are a bit hesitant to go ahead," Tatsuya Ishikawa, senior general manager of the automotive equipment division, told Automotive News. "So we are wait-and-see."
As an alternative, Mitsubishi Electric is considering expanding its existing operations in the United States, Ishikawa said. It has two auto parts factories near Cincinnati, one to the north in Mason, Ohio, and the other to the south in Maysville, Ky. The supplier could expand one of those or build a new plant, he added.
Whatever path it chooses, the Mitsubishi Group affiliate needs to boost its North American manufacturing capacity to meet surging demand from U.S. customers for components such as starter motors, alternators and automotive multimedia systems.
Mitsubishi Electric counts Renault-Nissan-Mitsubishi as its top customer worldwide. But in the U.S., its biggest sales go to General Motors, Ford and Chrysler.
The company wants to sort out the dilemma this year on where to expand, but it is closely watching the NAFTA discussions for now.
"It's very difficult to predict," Ishikawa said. "We need to be very careful. It's a big investment. We don't want to make any mistakes."
As a temporary solution, Mitsubishi Electric has been shipping parts from Thailand to supply increased U.S. demand.
The company opened its Mexico plant two years ago. But the time required to get another plant up and running is considerable, he said. After deciding to open a plant, it usually takes another three years to build and ready it for production, he estimated.
Because of the political delay, the supplier would look to compress the construction and launch schedule down to about two years, Ishikawa said. But first it must decide on either Mexico or the U.S.