Tokyo: A top Japanese company said on Thursday it had dropped Mexico as a possible location for a new auto parts factory after Donald Trump rapped Toyota over a plant in the country — and economists warned more firms could follow suit.
The decision by Nikkei 225-listed Nisshinbo Holdings marked the first time a Japanese company has publicly abandoned a Mexican facility in response to the new US president’s protectionist outbursts, the Nikkei business daily said on Thursday.
The announcement comes as Japanese Prime Minister Shinzo Abe heads to Washington on Thursday for meetings with Trump aimed at cementing ties and underscoring Japan’s commitment to investing in the US.
Mexico was among the locations being considered for Nisshinbo’s vehicle brake parts plant, reportedly worth up to 10 billion yen ($89 million).
The firm is a leading maker of friction-reducing brake parts with about a 15 per cent share of the global market.
Nisshinbo, which also makes a range of other products including electronics and textiles, already has a US plant and is looking for a new facility to service the North American market.
Nisshinbo’s shares sank more than four per cent to close at 1,040 yen ($9) Thursday. Company spokesman Kiyohiro Kida said Mexico had been at the top of the list for possible sites.
“Mexico was the strongest candidate but we have taken a step back,” he said, confirming the decision was a response to Trump’s trade policies.
His comments came a day after Nisshinbo’s Executive Managing Officer Takayoshi Okugawa told an earnings briefing that the Central American country was off the list. “Regarding Mexico, we’ve dropped it,” he said. “We have to pick a site other than Mexico.”
The US is the most likely alternative for the plant, the Nikkei said, as Trump moves to renegotiate the North American Free Trade Agreement with Canada and Mexico.
More Japanese companies could follow Nisshinbo’s example and avoid Mexico, said Takeshi Minami, Chief Economist at Norinchukin Research Institute in Tokyo.
“It’s likely that we could see similar moves” by other firms, he said. Trump’s policies “could affect both companies which already have plants (in Mexico) and those planning to invest there”, he added. — AFP
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