U.S. Suppliers Seeking Deeper Understanding of Japanese Supply Chain

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CAR Management Briefing Seminars

TRAVERSE CITY, MI – The devastating earthquake and tsunami that struck Japan in March has not stopped foreign investment in the country, but did postpone the spring visits of U.S. automotive suppliers.

The parts makers generally visit Japan in spring and fall to align production schedules, says Ralph Inforzato, director-business development for the Japan External Trade Organization headquartered in Chicago.

This year’s trips were postponed as Japanese companies worked seven days a week to catch up, and JETRO was kept busy communicating the realities of the island’s auto industry to global players.

Problems resulting from the earthquake, tsunami and nuclear plant disaster have focused industry attention on lower-tier suppliers that affect global production of some key items, such as paint pigments and electronic chips, Inforzato says.

“Now, U.S. suppliers want a deeper understanding of the Japanese supply chain.

They want to know the suppliers to their Tier 1 suppliers,” he tells attendees at this year’s Center for Automotive Research’s Management Briefing Seminars being held here.

Vehicle production in Japan is dropping for a number of reasons, including currency exchange rates, but “what the market is telling us is that five or six years from now, (suppliers) will have to have engineers in Japan to get onto global platforms,” Inforzato says.

Paradoxically, the situation is giving foreign suppliers new opportunities to win business.

Ford ran short of Japanese metallic paint additive for some vehicle colors.

The key is to have competent Japanese engineers who can work with the OEMs, he says.

That’s easier now than in the past, because good people are being asked to retire early as a cost-saving measure, and they still have a decade of work life ahead of them.

Suppliers that set up in Japan generally start with an engineering-sales office of one or two people, says Inforzato. He points to Cooper Standard, which started that way five years ago and now has 10-12 employees in Japan.