Globe-trotters: Usui International Corporation

Tell me a bit about USUI.

Usui International Corporation is a subsidiary of our Japanese parent company, Usui Kokusai Sangyo Kaisha, Ltd. We provide high pressure injection tubes mostly for the automotive industry, but we also serve industrial, construction, and agricultural markets. USUI has subsidiaries all over the world.

Tell me about your international strategy.

Mexico is one of USUI’s most recent subsidiaries. What led to the decision to have a site there?

Nissan already had a major presence in Mexico, and Mazda and Honda had recently announced new assembly plants there. They invited Japanese Tier 1s to join and support them.

In Japan, it’s common for an OEM and its suppliers to be part of what’s called a “keiretsu”—a set of companies with interlocking business relationships and sometimes shareholdings. USUI is not part of any keiretsu, so we are well positioned to serve any of the Japanese OEMs.

Is it frowned upon by the Japanese OEMs that USUI hasn’t joined a keiretsu?

So you chose to go to Mexico because the Japanese OEMs were there.

Partly. To get any kind of economies of scale on the final product, USUI has to be close to its OEMs.

Second, the Fukushima earthquake and tsunami exposed vulnerability in Japan’s key supply chain and production continuity. One of the plans for Mexico is to expand USUI’s production capabilities’ footprint to the Americas, protecting the supply chain for the Western Hemisphere and serving as a back-up plan for the East.

Lastly, Mexico’s trade agreements with other countries are very attractive. We’ve wanted to go to Brazil, Argentina, and other sites in South America, but the tariff barriers have been prohibitive. Mexico opens up huge potential for us and the parent company in South America, Europe, and other locations.

What’s different about doing business in Mexico than in other countries?

What have been the biggest challenges of a Mexico subsidiary?

Adapting to this way of doing business and building those relationships. Being willing to consider local suppliers because communication between Mexico and Japan is difficult. Plante Moran Global Services assisted us with a variety of aspects of getting up and running, including providing us with a variety of local contacts. However, given the huge influx of Japanese businesses in Mexico, the tendency is to partner with another Japanese supplier who may be new here as well. In one example, we hired a Japanese company to assist with our computer systems only to realize they weren’t prepared to assist us yet. We had to cancel and find a local company instead.

In addition, there are a lot of concerns about security. We’re in the very center of the country in a beautiful part of Mexico, Guanajuato. It’s reasonably secure, but you do hear the occasional story about a robbery or assault. It’s been difficult for the Japanese ex-pats to feel secure. It’s improving as the community grows and with the attention of local and national authorities.

What advice would you give other companies contemplating a Mexico site?

What are USUI’s goals going forward?

The three Japanese OEMs are very pleased to see we’re in Mexico, so much so that we’ve bumped our next phase up two years from 2018 to 2016 to have the capability to do the plating in addition to final fabrication here.

We see Mexico as a significant launching point for expansion into other areas, and there’s been talk of focusing on more acquisitions as well. There will be many more international subsidiaries in USUI’s future.