Japanese Automotive Fastener and Parts Maker Piolax Moves Production Due to BREXIT Woes

Piolax, an automotive fastener and parts maker from Japan, is remapping is production in response to BREXIT, moving the production of automotive parts (which are sold to the U.S.) from the Dongguang (China) plant to the Georgia plant since the start of 2019.  Piolax is also increasing inventory of parts within the EU region which are exported from UK to EU. Furthermore, the company is considering consigning production to a partnering company starting the end of this March.

Formerly Piolax manufactured a large amount of hose clamps and other automotive parts from its China plant. The production cost was low and the volume of supply to the Chinese market was large. However, in recent years the growth of the Chinese automotive market slowed and The U.S. government started the imposition of tariff on Chinese products since last summer, to which the president of Piolax said: "If this keeps going, we are looking at a loose of JPN 100 million every year." Given that the U.S./China trade conflict could be a long battle, the president decided to move production to the U.S. plant. He invested hundreds of millions of Japanese yens in building a heat treatment furnace at the U.S. plant to process hose clamps and metal fasteners.

The UK plant is the main supply base for Piolax to the EU region, handling automotive fasteners and other parts, 60% of which are sold to the EU and 40% to UK. If anything, the customs clearance procedures and relevant regulations as a result of BREXIT could undesirably cast a heavy blow to Piolax's sales and logistics.

The president has ordered his operating bases to increase inventory. He is also considering consigning production to his partner ARaymond Japan at the end of this March to retain cost competitiveness. ARaymond, an industrial fastener maker like Piolax, works with Piolax on manufacture of products for untapped markets through bilateral production consignment.