DENSO: Trump car tariffs would cost the company millions

Published August 2, 2018 in the Maryville Daily Times. Read the original web version with paywall here.

This article won the Associated Press of Tennessee’s 2nd Place Business Reporting Award in 2019.

DENSO Manufacturing Associates in the alternator division plant in Maryville.

Japanese auto parts manufacturer DENSO could face extra costs totaling roughly $716 million (80 billion yen) each year if potential U.S. tariff hikes on car parts are enacted, company executives in Japan said.

“It is a very worrying factor,” Yasushi Matsui, an executive director for DENSO, The Japan Times reported. “We hope that fair trade rules will be maintained.”

The Trump administration is considering additional tariffs of as much as 25 percent on automobile imports, The Washington Post reported last week. Currently, that rate is 2.5 percent.

If enacted, the tariffs would become the latest punch in a flurry of efforts under the Trump administration to bolster U.S. manufacturing.

For Blount County, tariffs could produce the opposite result. The Japanese company is the largest private employer in Blount County and the Knoxville metropolitan area. Its local division, DENSO Manufacturing Tennessee Inc., based in Maryville, currently employs more than 4,300 full-time DENSO workers, as well as more than 800 temporary employees and contractors.

DENSO has invested $2 billion in Maryville to date.

Requests for comment from local company leadership were directed to Bridgette Larose, the company’s spokeswoman for North America.

“Recent actions on trade and tariffs by the Trump administration will have a significant impact on our business and customers, as well as other auto suppliers and automakers,” Larose said in a statement emailed to The Daily Times on Wednesday.

“These tariffs will raise material and component costs, stifle job growth and slow innovation, which ultimately hurt the U.S. automotive industry, and American citizens. DENSO believes in free and fair trade. DENSO also believes in solving complex, real-world problems with constructive solutions. Inhibiting trade is not the answer.”

Last October, DENSO announced it would invest an additional $1 billion in its Maryville facilities, adding a 360,000-square-foot plant to the already existing four facilities.

The decision later was named one of the best business deals of 2017 by Site Selection Magazine.

Tennessee Gov. Bill Haslam said at the announcement, held on the site of the upcoming plant, that DENSO had made “the most capital investment of any company in the history of Blount County.”

The new plant is scheduled to be completed in January.

Once opened, it will make the Maryville facilities the largest DENSO site outside of Japan.

Jeff Muir, a spokesman for local development group Blount Partnership, said Wednesday that “DENSO’s importance can’t be overstated.”

In addition to paying the most in property taxes for Blount County, Muir said the company has taken a “leadership role” in the community through the events and projects it sponsors.

Production for DENSO in Maryville began in 1990 as a $200 million investment that created 550 jobs and has expanded several times.

DENSO already has absorbed extra costs from new tariffs on metals and Chinese goods under the Trump administration, although they are much lower.

At the Tuesday news conference in Japan, Matsui said U.S. import tariff hikes on steel and aluminum implemented earlier this year are expected to raise annual costs by some $18 million (2 billion yen).

Tariffs targeting Chinese high-tech components and other goods, stemming from that country’s alleged violation of intellectual property rights, could add costs of $18,000-$27,000. (2 million or 3 million yen).

“It’s an uncertain future,” Matsui said.

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