OSAKA -- Japan's NTN will start manufacturing a key drive-shaft component in the U.S. in April, aiming to make better use of facilities there amid slumping demand for industrial equipment as resource prices sink.
The world's fourth-largest maker of ball bearings will install grinding machines and other equipment at Illinois facilities that produce parts for industrial machinery. The project is expected to cost about 3 billion yen ($26.4 million).
The new equipment will produce cassettes, which allow a car's axle to rotate smoothly. NTN currently imports these parts from Japan and China. It intends to transition to 70% local production by fiscal 2019.
NTN ranks second in the global drive-shaft market with a roughly 20% share. It hopes to improve efficiency in the U.S., where auto sales are brisk, in a bid to catch up to market leader GKN of the U.K.
NTN aims to boost global output by 40% between fiscal 2015 and fiscal 2019. It has brought axle factories in Mexico and China online in the fiscal year ending this month and will spend about 10 billion yen to build a plant in the U.S. state of Indiana.
The company is targeting an operating profit margin of about 5% for its axle business in fiscal 2017, up from just over 2% in fiscal 2014.