Diversify Or Die: Auto Parts Makers Seeking Salvation From Non-Auto Parts

Bertel Schmitt
by Bertel Schmitt

Battered auto parts makers in Japan are surviving on a diet of non-auto parts.

Today’s Nikkei [sub] has it that companies like Toyoda Gosei,. NHK Spring Co. and other auto parts makers are earning an ever greater proportion of profits from electronics components and other businesses not related to cars.

Operating profit at Toyoda Gosei’s non-auto-related business is seen skyrocketing 230 percent on the year to 3.5 billion yen in fiscal 2009, thanks to surging demand for LED lights used in laptop backlights. Their auto-related operations are down 56 percent in operating profit.

Stanley Electric Co. sees a growing demand for LED products for personal computers. Demand for precision equipment parts for hard disk drives is brisk at NHK Spring. At NOK Corp., sales of flexible printed circuits for hard disk drives and cellular phones are picking up. So if you don’t buy a car: Help a parts maker out. Buy a laptop.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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5 of 9 comments
  • John Horner John Horner on Dec 26, 2009

    Indeed, the "core business" mantra is one of the many dumb idea which has taken hold in so many management circles. I really think that the MBA educators have a lot of 'splainin to do for their role in fracking things up.

  • Panzerfaust Panzerfaust on Dec 26, 2009

    Out in the garage of my second property is a huge chest type freezer, made by of all companies International Harvester. It was built just after World War two and still runs as well as the day it was delivered. Diversification isn't new, and it doesn't hurt a bit.

  • Dastanley Dastanley on Dec 26, 2009

    Auto parts manufacturers either could go with medical supplies or adult toys - two fast growing markets.

  • John Horner John Horner on Dec 27, 2009

    BTW, Robert Bosch is one of the world's largest auto parts suppliers and is a very diversified industrial company. The semiconductors which make up a large part of the value add in modern automobiles come from companies which by and large make semiconductors for a vast array of end markets. The steel, aluminum, plastics, rubber and paint companies which supply so much of the inputs to auto manufacturing also generally serve a diversified customer base. In many ways, the odd men out in this game are the pure-play automotive materials, parts and component suppliers.