Automotive: Koyo Corporation of USA, Nakatetsu Machining Technologies

The downturn in the automotive industry in the last two years is a major factor in the current recession. Two local automotive parts plants that had flat sales for several months in 2009 are now experiencing good business. Both are Japanese plants that began operations in the Washington County Industrial Park just 18 months ago after completing construction on new plants in 2007.

Koyo Corporation, USA and Nakatetsu Machining Technologies, LLC, moved into their new facilities in January ’08. The plants produce tapered roller bearings used in vehicle axel and transmission systems. The plants are closely linked as Koyo has part ownership in the Nakatetsu plant in Washington County and does finishing on product supplied by the Nakatetsu plant just up the hill from it. “The proximity of the two plants saves transportation costs, improves communications, facilitates ‘just in time’ inventory control and overall is very efficient and cost effective,” said Koyo vice President Tom Wada.

Koyo- “We experienced a slowdown a few months ago, but are completely maxed out on two shifts and can add another shift in short turnaround if the market demands more,” said Assistant Plant Manager at Koyo in Washington County Jon Crites. “Since GM, Chrysler and others began a higher level of production recently (not full yet), our business picked up. The economy seems to be turning around, but we are being cautious watching production hour to hour.”

Management at Koyo attributes their survival in this recession to the company’s flexibility, diversified customer base and corporate philosophy. When GM and other companies were quick to close down, the Japanese and other foreign owned companies did not. Toyota builds more vehicles in the U.S. than anywhere else so there was still demand for components manufacturers to supply.

“Our company philosophy is ‘Kaizen’ which means continuous improvement. We believe we can continue to be successful with this mindset. All employees learn to do jobs in all phases of production. We listen to them about suggestions to improve operations. Most employees are local, trained in the ‘Kaizen’ way and are committed to make us successful. We call them ‘visionary employees’ and are committed to help them advance in the company,” said Crites.

The 75,000 S.F. plant situated on 30 acres has 50 employees and can produce 30,000 finished bearings a day. “The Washington County plant is the pride and joy of JTEK (the parent company) and has ‘state of the art’ equipment and technology,” said Crites.

“Our goal is always to improve quality, customer service and capacity and be the leader in our field through taking good care of our people and customers.”

Nakatetsu Machining Technologies- In June of this year business in the Washington County plant was the slowest it’s been since production began here 18 months ago. In August production jumped 35-40% . “It took off like a rocket due to reduction in automotive dealer inventory. ‘Cash for Clunkers’ worked and GM and others began hiring in the 4th quarter to gear up for production,” said Nakatetsu Manufacturing Manager Bill Allison. “However, we are cautiously optimistic and wonder if this positive impact will last,” said Administration Manager Jeffrey Carter.

Nakatetsu begins production on the bearings it sends to Koyo and ultimately the customers are GM, Ford, BMW, and Toyota. (A similar program to ‘Cash for Clunkers’ took place in Japan... and the industry rebounded 25%. This had a positive impact on Nakatetsu plants in Japan.)

“The U.S. auto companies cleared out old models and are concentrating on bringing out 2010 models with emphasis on fuel economy. And fuel economy vehicles seem to be in demand, Toyota has a 4-month backlog on its Prius hybrid. And all dealers for all companies are offering incentives to reduce the larger models,” said Allison.

In addition, the plant is striving to diversify. “We are producing two new products (not bearings) for JTEK and will pick up 3 additional parts in December. We are purchasing new equipment for this line. Koyo was already diversifying the bearing customer base ... selling to John Deere and Catepillar.”

“This is the first Nakatetsu plant in the USA and we want to fill up this 72,000 s.f. plant. We are using 75% of that capacity now. As business grows we will hire locally."

The majority of the plant’s employees are local with a few exceptions in management. Bill Allison has a background in bearing manufacturing in the Philadelphia region. Jeffrey Carter, Administrative Manager graduated from ETSU and worked for Exide and Nuclear Fuel Services (local industries) before coming to Nakatetsu. Most production employees are local and were trained by Nakatetsu.

Vice President/Plant Manager Takeshi Kasai came from Nakatetsu in Japan, but has taken to his home in East Tennessee like a native. He likes the mountains, pace of life and golfing of the region. “This area looks a lot like the area of the Nakatetsu plant I worked for in Japan,” said Kasai. “It is beautiful and I hope to stay.”