Nhk Spring Co., Ltd. Business Information, Profile, and History

History of Nhk Spring Co., Ltd.

NHK Spring Co., Ltd. the world's largest maker of springs and related products, is made up of four main divisions: suspension springs, seating, precision springs and components, and industrial machinery and equipment. The latter group includes services and products related to power stations and petrochemical and natural gas plants, electronics, and chemical products. The company's performance is closely tied to the automotive industry, with 80% of its total sales represented by the many spring and seating products it supplies to carmakers. The remaining 20% is devoted to such products as parts for office and communications equipment, pipe supports, chemical products, machinery devices, and household furniture and space-saving multistory car parking structures for residential and commercial use. Known for its fierce independence, the company is proud that it is not tied to any one automaker or brand name. It has long acknowledged its vulnerability due to its close ties to the automotive industry and has sought to expand and gain greater stability through diversification. Like many other Japanese vehicle manufacturers and their parts suppliers, NHK has stepped up efforts to establish foreign subsidiaries, licensing agreements, and joint ventures, in an attempt to diversify and blunt the effects of the high value of the yen and protectionist trade policies.

The company was founded in 1939, two years after Japan began its invasion of China. Little information about the company's early decades is available. In 1940 NHK opened a manufacturing plant and established its headquarters in Yokohama. Three years later the company--whose initials stand for Nippon Hatsujo Kabushikikaisha--opened a plant in Ina.

Although information about the company's activities during World War II is not available, it is reasonable to infer that NHK was involved in military production, since most Japanese companies were expected to contribute to the war effort. By 1940 Japan's military expenditures were double those of just three years earlier.

Beginning in 1942, Yokohama, site of NHK's original plant and home office, was hit hard by U.S. air strikes. By mid-1945, Yokohama's port, which was Japan's largest, was closed because of damage caused by Allied air and sea attacks. By the end of the war, approximately 50% of Yokohama had been destroyed by U.S. air raids. It is unlikely that NHK emerged unscathed.

In 1958 NHK merged with Daido Spring Company, which had a manufacturing facility in Kawasaki. Three years later, the company constructed a plant in Toyota City to manufacture auto seating parts.

In 1961 NHK opened a liaison office in the United States to bolster its North American marketing efforts. It became the first Japanese spring maker to open an overseas operation when it formed a joint venture in 1963 with a Thai company to manufacture suspension springs, an operation that later branched out into seat and gasket production. This was the first of many joint ventures and licensing agreements that the company would establish.

NHK opened spring-production plants in Hiroshima in 1964, in Ohta in 1969, and in Atsugi in 1970. In 1969 the company established a joint venture known as Union & NHK Auto Parts in Taiwan to produce suspension springs and later added seat production. It obtained a technical license in 1970 from Donald Arthur Girard, a U.S. company, to manufacture pipe clamps, and the following year, NHK granted a technical license to Delta Motors in the Philippines to manufacture automotive seating.

Beginning in the latter part of the 1960s, the automobile industry emerged as one of the major forces in the Japanese economy. The Japanese auto-parts industry, in which NHK has long been a major player, had a 1965 output of ¥640 billion. By 1985 this figure grew to ¥13 trillion.

In 1973 NHK constructed its Shiga plant, for the manufacture of springs, torsion bars, and stabilizers and also established the joint venture NHK Gasket (Thailand) Company. The following year NHK granted a technical license to a Philippine company, UE Automotive Manufacturing, for suspension springs, and obtained a technical license from P.L. Porter Company, a U.S. company, for a mechanical lock.

In 1975 and 1976 NHK established two joint ventures in Brazil, NHK-Cimebra Industria de Molas and NHK-Fastener do Brasil Industrial e Comercio, to manufacture springs and fasteners. Also in 1976 the company established its first U.S. subsidiary, NHK International Corporation, in Schaumburg, Illinois, to market its products throughout North American.

Three years later, NHK obtained a technical license from Wickes Manufacturing Company in the United States to manufacture automotive seating, and it also established the joint venture NHK Gasket Singapore Company.

By the late 1970s the United States began to pressure Japan to open its markets to U.S. manufacturers and to take additional steps to narrow a serious trade imbalance. In 1981 Japan's Ministry of International Trade and Industry imposed a voluntary restraint agreement that limited the number of passenger cars that Japan could export to the United States.

Before 1980 there were only 18 Japanese automobile parts manufacturers doing business in the United States, but beginning in 1981, that figure began to increase rapidly. In 1987 alone, 46 new operations were established, and about 74 tooled up in 1988. By 1989 the U.S. Commerce Department reported that 232 Japanese auto-parts suppliers were producing or would soon be producing parts in the United States. Much of this increased presence can be attributed to the growing presence of Japanese auto and truck assembly plants in the United States, Canada, and Mexico. By 1990 most of the major Japanese vehicle manufacturers had at least one assembly plant in North America, with a combined U.S. production capability of just over two million units a year. By establishing manufacturing plants in North America, Japanese parts suppliers have been able to continue the relationship they had with Japanese vehicle producers and to respond to a growing demand that vehicles produced in the United States contain a certain percentage of locally produced parts.

On October 6, 1980, NHK chairman Kiyotoshi Fujioka told Asian Wall Street Journal Weekly, "We are no longer living in an age when we can just keep on exporting products. The thing to do now is go overseas and start production." That year NHK established a joint venture, EGUZKIA-NHK in Spain and signed a three-year agreement with Australia's Henderson's Industries to provide it with technical assistance to produce leaf, helical, and torsion bar springs and stabilizer bars. The company also constructed a plant in Komaki, to manufacture industrial machinery and electronics.

In 1981 NHK announced a new five-year plan known as Vision 80 that was designed to promote diversification and to move the company away from its heavy reliance on the volatile automobile market. The new strategy detailed plans to develop and market products to serve the nuclear power, construction, civil engineering, and electronic industries.

NHK constructed a plant in Komagane in 1981 to produce control cables, chemical products, and electronic components. The plant features a completely integrated production system, in which all aspects of production from research and development to completed products are handled at one location. Since 1962, when polyurethane resins were first developed, NHK had been developing and marketing products made of hard and soft urethane, which are among the chemical products it manufactures at the Komagane plant. The urethane parts are used in a wide range of products such as automobiles, consumer electronics, air conditioning pipeline, low-temperature pipe support systems, and housing for electrical equipment. Also in 1981 the company granted technical licenses to the Far East Machinery Company in Taiwan to manufacture pipe supports and to Compagnie Tunisienne de Ressorts a Lames in Tunisia for suspension springs.

In 1982 NHK granted a technical license to P.T. Muaratewe Spring in Indonesia to manufacture suspension springs. The company built a second plant in Ina to manufacture wire springs in 1983. The same year it granted a technical license to Auto Coil Springs in Malaysia for suspension springs and to the Bombay Company for precision springs. Also in 1983, NHK obtained a technical license from Gebrueder Ahle GmbH to produce suspension springs.

The company established the NHK Group Central Research Institute in 1983 for basic research and to produce engineering improvements that could be applied to NHK products worldwide. The institute was established to complement the efforts of NHK's product-development division, which researches and develops both automotive and nonautomotive products. That same year, NHK was recognized for its development of an automatic, micro-computerized machine that produces several different types of coiled springs.

In 1984 the company granted technical licenses to Jamna Auto Industries Pvt. Ltd. in India to produce suspension springs, to Dae Won Kang Up Company in Korea for stabilizers, and to Lear Siegler in the United States for automotive seating. Also that year it obtained licenses from Rota Bolt Limited in Great Britain to produce load-monitored fasteners and from JASCO Products in the United States for air support systems.

In 1985 NHK and General Motors (GM) announced they would set up a joint venture company known as NHK Inland Corporation in Japan to produce lightweight auto suspension springs made of fiber-reinforced plastic, which is half the weight of steel. GM agreed to provide the design and technology to NHK. The venture, which began operation in a plant near Yokohama in the fall of 1986, planned to sell its parts to vehicle manufacturers in Japan and other Asian countries.

The same year, NHK also granted a technical license to China National Automotive Industry Import and Export Corporation to produce suspension springs at the Liaoyang Automotive Spring Factory.

The company agreed in 1986 to form a joint venture with Suzuki Motor Company to manufacture seats for most of Suzuki's cars and motorcycles. Suzuki was reported to have asked NHK for help because its regular seating-components suppliers were lagging in new-product development and had proved unable to cut costs sufficiently to meet the rising value of the yen. At that time, NHK was already supplying auto seats to Fuji Heavy Industries and Isuzu Motors and producing seats in a joint arrangement with Toyota Motor Corporation.

Also that year NHK granted a technical license to Recticel S.A. in Belgium to produce its Super Seal products, foamed elastic sealing materials with a fixed shape. The company also announced it had agreed to provide technical assistance in suspension spring production to Rassini Rheem, part of the Sidermex Mexican steel complex and a leading producer of car springs through Sidermex, its parent firm.

The year 1987 was one of growth for NHK. The company established a joint production subsidiary for coil springs with Associated Spring, a division of Barnes Group, one of the leading U.S. spring companies. The new company was known as NHK-Associated Spring Suspension Components. NHK also formed two joint ventures with Lear Siegler Seating Corporation to make automotive seating in Canada and the United States. By 1989 the joint ventures had constructed manufacturing plants in Woodstock, Ontario, and Frankfort, Indiana, to supply car seats and related components to CAMI Automotive, a GM/Suzuki joint venture, and Subaru-Isuzu Automotive.

The company also announced the development of two important new products in 1987: a silicon nitride ceramic coil spring which maintains its elasticity at extraordinarily high temperatures, is corrosion-proof, and is four times more elastic than other ceramic springs; and a new air adjustable car seat. The seat can be reshaped by regulating the air inside it and can be adjusted for maximum safety and comfort at various travel speeds. NHK also began that year to manufacture seat cushions utilizing its newly introduced Neo-Curl, an extremely light and porous seat cushion material made of hardened, short-staple polyester fiber with a urethane binder.

NHK also granted technical licenses to two Taiwanese firms in 1987, to Champion Engineering Company to produce its multistory parking system and to Tsuang Hine Company for seat production.

The company purchased the stabilizer manufacturing operations of Mather Metals in 1987, and the following year, it established New Mather Metals in Toledo, Ohio. Also in 1988 NHK obtained a technical license for a seat reclining device from P.A. Rentrop-Hubbert & Wagner Fahrzeugausstattungen GmbH, and granted a technical license for suspension leaf springs to JAI Parabolic Spring Ltd. in India.

In 1989 NHK acquired a plot of land in Yokohama to relocate its office and existing Yokohama plant, which was forced to make way for a highway scheduled to open in 1994. The company's 1989 profits were adversely affected because it encountered larger than expected startup costs as it transferred its production facilities to the new headquarters plant.

NHK continued to diversify slowly. Despite the ambitious five-year diversification program it announced in 1981, the company entered the 1990s with the same 80% of its total sales devoted to the automotive industry as it had posted at the onset of the previous decade. This is due in part to the company's demonstrated ability to change and grow with the automotive industry and its growing presence on the international automotive scene. NHK has announced its plans to branch out into allied industries and introduce new products more aggressively than it has in the past. No doubt this will mean continued establishment of joint ventures and technical pacts and an expanded commitment to developing new products both in the automotive and nonautomotive segments of its business. Sales and profits in the coming years will continue to be affected by exchange rate fluctuations, protectionist trade policies, and inflation, both on the home and international fronts.

Principal Subsidiaries: NHK Sales Co., Ltd. (53%); Yokohama Kiko Co., Ltd. (60.3%); NHK Precision Co., Ltd. (74.1%); Nippon Reclining Seat Co., Ltd. (60%); NHK Transport Co., Ltd. (80%); NHK Spring (Thailand) Co., Ltd. (70%).