Tsubakimoto Chain Co., a Toyota supplier, expects sales of their auto parts to factories in China to double within the next four years as automakers seek to diversify their supply chains.
In an interview with Bloomberg earlier this week, Tsubakimoto managing executive officer Toru Fujiwara expects sales of his company’s line of chains and gears to surpass $116 million by March of 2018, more than double the $58 million Tsubakimoto aims to sell in 2014. This is due to General Motors and Volkswagen battling it out over China for the title of No. 1 in the largest global auto market, leading both automakers to diversify their supply chain to reduce the risk of having only one supplier per part.
VW and GM have plans to build new plants in China to help increase production capacity, with the Germans building seven plants to produce 4 million units by 2018 as the General opts to build four plants to produce 5 million annually; GM also plans to invest $11 billion in China by 2016 to further their cause.
Japanese manufacturers, including Toyota, are also expected to increase orders as the conflict over the Diaoyu Islands cools down, allowing demand for Japanese cars to recover.
As for Tsubakimoto, Fujiwara recently approved plans to build a factory in China as early as 2014, and may either choose to increase capacity of his company’s plant in Tennessee or build a new plant within the next three years based on increased sales in the United States, which are expected to reach $172.3 million by March, then expand 15 percent by the same time in 2017. Overall sales in North America account for 17 percent of the Japanese chain company’s total revenue in the previous fiscal year.