Thai Transplants of Auto-Parts Makers to Use Steels from China, India

Thai transplants of Japanese automotive parts makers try to purchase special steel bar from India and China. They shift to global procurement under severe cost competition and strong cost cut request from automakers while actual purchase is rare due to quality issue. However, a source in Thai plant of Japanese major steering maker said parts makers have to use cheaper steel to survive. They also expect Japanese special steel makers’ attempt for alliance with Indian makers.

World transplants of Japanese automakers and automotive parts makers try to increase local procurement of materials for better cost and optimum delivery. However, their transplants in Thailand couldn’t buy special steel bar from local makers when no maker makes the product. The plants import all of the material from Japan.

Thai automobile production was world No.12 at 1.65 million units in 2010. Thai Ministry of Industry expects the production reaches 2.5 million units in 2015. Local transplants of Japanese parts makers try to increase the production to meet the growing demand. However, they seek lower priced material under higher cost for materials and labor and high yen rate.

Some of parts makers try to find special steel makers with certain quality level in China and India. A Japanese major steering maker tested Indian special steel bar and welded steel pipe in 2011. The source said the quality was poor but the firm tries to use the alternative materials in future.

Daido Steel agreed with Sunflag Iron & Steel of India for technical partnership in 2011. Sanyo Special Steel and Mitsui & Co. agreed with Mahindra Ugine Steel of India of Mahindra and Mahindra group of India for electric furnace based integrated steel joint venture in 2011. Mitsubishi Steel Mfg. decided to launch joint venture with Stamp Shure & Springs of India. The special steel makers provide Japanese technology into Indian makers for higher quality to meet the users’ requirement while the special steel makers develop emerging market. The steel users’ low cost requirement accelerates Japanese steel makers’ globalization.