Koyo Will Build Two Bearing Plants in Tennessee

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Aug 24,2006

Koyo Will Build Two Bearing Plants in Tennessee Koyo Corporation of USA (USA, a division of JTEKT Corp., formerly Koyo, Japan), riding a wave of U.S. domestic demand, has announced plans to build two greenfield bearing manufacturing facilities in Tennessee. The plants are Koyo's third and fourth bearing manufacturing plants in the United States. It has a ball and roller bearing plant in Orangeburg, South Carolina, opened in 1975; and Blythewood, South Carolina, has been home to a wheel bearing hub assembly plant since 1995. Koyo's U.S. headquarters is in Westlake, Ohio, and it has a sales office and technical center in Plymouth, Michigan. The new Tennessee plants will be built on adjacent lots in an industrial park midway between Johnson City and Jonesborough. Johnson City is home to NN Inc., a leading ball and roller manufacturer. The first plant, on a 31-acre lot, will be owned and operated by Koyo alone. Reportedly budgeted at USD $27 million, it will cover more than 75,000 square feet and initially be dedicated to producing only tapered roller bearings. When fully operational, it is intended to boost Koyo's U.S. tapered output to 1.5 million sets per year from the current 1.0 million. The second facility, on the adjacent 21-acre lot, is a new company -- Nakatetsu Machining Technologies -- a joint venture of Nakatetsu Company Ltd. (Japan) and Koyo Corporation of USA. The investment there is projected to be in the range of $10 - $12 million in a 68,000 square foot facility. The joint venture factory will supply "early-process" (lathed) inners and outers to the Koyo plant as well as other customers. Groundbreaking is set for late 2006, with the plants scheduled to come online in phases. Nakatetsu Machining is expected to be turning out sample inners and outers by late 2007 and be fully up and running by April 2008. The Koyo plant will produce sample bearings by late 2007 and be fully online by July 2008. Initial employment is expected to total approximately 150 workers, and 160 by the end of 2009. Both plants are expected to be at full operating capacity by 2012. Koyo parent JTEKT Corp. was created by the January 1, 2006 merger of Koyo Seiko Co. Ltd. and Toyoda Machine Works. Nakatetsu is a major supplier of forgings and turnings. Koyo commented the two companies, "have shared a long history in the bearing industry." Washington County Mayor, George Jaynes, said: "We look forward to welcoming Koyo and Nakatetsu as new corporate citizens in Washington County. We appreciate their confidence in our community and its work force. Also thanks should go out to numerous other parties, including Mark Williams of Strategic Development Group for recommending Washington County from an extensive site selection process that included five states. Additionally, the Tennessee Department of Economic and Community Development team were critical to the successful recruitment of these companies and the support received by the Washington County Commission." Nakatetsu Machining CEO, Syuji Nakano, said: "This joint venture fits with our corporate strategy of growth in the automotive market. After looking at many locations, we are excited about the possibility of locating our first manufacturing facility in Washington County. We appreciate the time and effort spent by the state, county, TVA and many local agencies. We are very confident that the work force surrounding Washington County will help us in establishing a world class operation and support our target for growth and expansion." Steve McCullogh, Koyo's General Manager, said: "Our preliminary selection of Washington County reflects our commitment to American manufacturing and the American worker. Increased consumer demand for our products requires increased manufacturing capabilities to compliment our other U.S. plants and relationships. Washington County meets our needs with an experienced work force and an ideal logistical location plus the outstanding commitment and cooperation from the state, county, TVA, regional utilities and the surrounding cities." Tennessee presented an aggressive incentive package which included $1.4 million via the FastTrack program to pay for necessary infrastructure improvements. The Tennessee Department of Transportation will shoulder $250,000 to cover new road construction, and the Tennessee Department of Labor and Workforce Development has agreed to pay up to $50,000 in new worker training expenses. For the property itself, the Washington County Industrial Board approved a leaseback arrangement where the Board owns both properties. In exchange for property tax waivers, the companies will lease from the Board for up to ten years with options to purchase the lease and/or expand the holdings.

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