Kyushu Lures Japan's Car Industry

   Kyushu, the mainly rural island forming the southern end of Japan, is becoming an automotive manufacturing base. So many carmakers and parts manufacturers are piling into the archipelago's third-largest island, lured by its abundant skilled labor and proximity to mainland East Asia, that it has earned the nickname 'car island.'

   A new plant built in Oita Prefecture by Daihatsu Motor Co., a maker of small and compact cars, has now started production. With the startup of other new facilities, car production in the region in the year through March 2006 is set to reach 900,000 units, an increase of 12.5% over the previous year and about 10% of total auto production in Japan. Toyota Motor Corporation is planning to raise annual production capacity at its Kyushu plant in Fukuoka Prefecture from the present 290,000 units to 430,000 in the near future. Combined with the 500,000-unit annual production capacity of Nissan Motor Co. Ltd., total production on the island is set to approach 1.2 million units in the year through March 2007.

Nearly 800 Automotive Firms in Kyushu

   Production increases at car makers have also spurred an inflow of parts makers into Kyushu. In the fall, Koito Manufacturing Co. , Ltd., the leading maker of headlights and other automobile lighting parts, decided to make its first venture into Kyushu, investing 10 billion yen in construction of a new plant in Saga Prefecture, with launch of operations scheduled for October 2006. Denso Corporation, one of the top makers of automotive electronic systems, has plans for a 20 billion yen engine-parts production plant in the northern industrial city of Kitakyushu, and plans to begin producing fuel injectors toward the end of next year. In all, more than 50 parts makers have set up operations in Kyushu since 2000. Including new local entrants into the business, industry sources say auto-related companies now total 213 in Fukuoka Prefecture alone. In all Kyushu, the number is estimated at close to 800.

   What draws automakers to this island far from the traditional heartlands of Japan's auto industry, the Tokai region (a stretch of Honshu's Pacific coast) and the Tokyo suburbs? The answer is manpower shortages. In Aichi Prefecture, where Toyota has most of its plants, the number of job offers is double that of job seekers. But although northern Kyushu has 32 universities and 23 engineering senior high schools, there are more job applicants than vacancies. The area is a treasure house for recruiting.

Proximity of East Asia

   The proximity of China, South Korea and other East Asian countries is another plus. For finished car producers in Kyushu, it is relatively easy to get supplies of car-audio equipment, electrical wiring systems, aluminium foil and other parts and materials from Japanese firms operating in China. At the same time, Kyushu-based parts makers are well positioned to supply Hyundai Motor Company and other automakers in the southeast of South Korea, which together produce 1.65 million vehicles a year, and firms in China's Jilin Province, which have an output of 640,000 vehicles per year. And Kyushu's track record in electronics-it has been called 'silicon island' because Toshiba, NEC and other semiconductor makers have long had facilities there-add another incentive. With electronics and automaking increasingly merging, an executive of Nissan Motor explained, Kyushu has become an ideal place to procure semiconductors and electronic units.
So far, 26% of parts makers affiliated with Toyota have moved into Kyushu. The figure is 31% for Nissan and 27% for Daihatsu. As growth in car production picks up pace, still more automotive companies will be drawn to the island, auto industry officials say.