Nachi Launches Czech Manufacturing Venture

Nachi-Fujikoshi Corp. (Japan) has established Nachi Czech s.r.o., expanding its bearing manufacturing operations into eastern Europe for air conditioning bearings and CV joints. As the European market for automotive air conditioning units has grown, Nachi's business supplying bearings for those units has also grown. At the same time, many air conditioning manufacturers have been setting up new facilities in the Czech Republic, Hungary, and Poland. As those companies move to eastern Europe, they are asking key vendors to follow them and set up regional production facilities. If Nachi declined to set up regional production, it risked losing not only sales to the new plants, but potentially most of its air conditioning bearing sales as production gradually shifts to eastern Europe. At the same time, Nachi has experienced increasing demand for constant velocity joint roller bearings (CV joints, as used in automotive and light truck axle driveshafts). As eastern Europe hosts a growing volume of new car and four-wheel-drive light truck production, regional demand for CV joints is growing rapidly. Addressing this need to set up regional production for air conditioning bearings and CV joints, Nachi is building an all-new facility in Louny, North Bohemia region of the Czech Republic. The location chosen in Louny is an industrial zone dedicated to attracting Japanese manufacturers. Aisan, Fujikoki, and Takada have already built plants in the Louny industrial zone. Located 30 miles (50km) from Prague, the 5,000 square meter (54,000 square feet) plant will break ground in October, 2003. The first phase, employing 30 people, is scheduled for completion in July 2004, coming online with limited production shortly afterward. Construction phases two and three, along with full production capacity, will be in place by late 2005. By its 2006 completion, the Nachi Czech s.r.o. facility is expected to have cost €9.5 million (USD $10.3 million). When full production capacity is online after phase three, the plant is will be able to produce more than 2 million air conditioning bearings and 3 million CV joints per year. Nachi did not comment about the plant's ultimate capacity except to say it is more than 6 million. CzechInvest Project Manager, Bohuslav Frelich, commented, "Due to the high unemployment that northwestern Bohemia suffers, we tried from the start of negotiations to direct the investor right to this region. Besides Louny, sites in Kadan, Usti nad Labem, and Lovosice were also contenders. But Louny won in the end. The site of Louny has an adequate size and shape for Nachi with a good infrastructure, and the access is closer to Prague and Germany, which is essential for the Japanese company." Oiles recently announced plans to build a €7 million ($8.3 million) bearing plant in Kadan, for similar business reasons and in a similar industrial development area.