Manufacturing News

Cost-cutting Nissan to buy cheaper parts in China

Nissan Motor Co. will buy more parts from China and South Korea for use in a Japanese plant as the strength of the yen makes imports of components cheaper.

Company CEO Carlos Ghosn said Tuesday that as much as 90 percent of parts for use in production in its Kyushu plant in southwest Japan will be sourced from nearby Asian countries and locally, compared with 70 percent now.

To cut costs, the automaker may buy components from Japanese suppliers that are producing in China, he said.

Nissan exports about 79 percent of the vehicles made at its Kyushu factory, including the Murano and Rogue, to North America, Europe, Southeast Asia and the Middle East, according to company spokesman Chris Keeffe.

"Nissan's Kyushu plant is one of the biggest in the world," Ghosn said. The company aims to make more than 500,000 vehicles there this fiscal year, he said.

The strength of the yen presents a "strong headwind" for the country and is "not sustainable," Ghosn said during a plant tour in Japan. The yen's "abnormal" strength will come to an end, said Ghosn, who said the Nissan is committed to maintain output of 1 million vehicles annually in Japan.

The minimum wage in Fukuoka prefecture, about 1,005 kilometers southwest of Tokyo, was 692 yen ($9) an hour last year, according to the Ministry of Labor. That compares with 821 yen in Tokyo and a national average of 730 yen.

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