Casio Picks S.D.-Tijuana for N. American Assembly Plants
Casio Computer, the Japanese consumer electronics company, has announced plans to set up its first North American manufacturing complex in the San Diego-Tijuana area, becoming the latest of several Japanese companies to relocate operations here.
As reported earlier, Casio said it will build a major manufacturing plant in Tijuana on 14 acres in the Mesa de Otay section of Tijuana next to the Otay Mesa U.S.-Mexico border crossing.
The Tijuana plant will manufacture the Casiotone line of electronic musical instruments, including organs and synthesizers, mainly for the U. S. market. About 200 workers will be employed there at first, a total that could grow to 500 by 1993. The first phase of the Tijuana plant will be 162,000 square feet, which may be doubled later.
On Wednesday, Casio disclosed that it will also build a 77,600-square-foot facility on the San Diego side of the border to handle final assembly, quality control and distribution of the products made in Tijuana. When operations begin in October, 1989, the San Diego plant will employ about 50 workers. Casio’s payroll here could grow to 200 or more by 1993, the company said.
Casio said it will invest $40 million in the two plants and, initially, will buy about 20% of its parts and materials from local suppliers. That percentage of local content will grow to 50% by 1992, Casio said in a prepared statement.
The San Diego plant is to be situated on an 8.5-acre parcel that Casio is buying in the San Diego Business Park on Otay Mesa, on property next to plants owned by Sanyo E&E; and Maxell, two other Japanese manufacturers.
Casio’s operation here will be run by Takeshi Tsuda, 53, a member of Casio’s board of directors. In a recent interview, Tsuda said San Diego was selected over other locations along the U.S.-Mexico border because of good living conditions and “infrastructure,” including Japanese-language schools, that make the city attractive to executives moving their families here from Japan.
Unit to Manage 2 Plants
Tokyo-based Casio has set up a U. S. subsidiary called Casio Manufacturing to manage the two plants and will send about 14 employees here from Japan as staff. Casio may eventually expand the plants to make other products here, Tsuda said, including small televisions. Several Japanese television manufacturers, including Sony, Matsushita, Sanyo and Hitachi have moved plants to Tijuana in recent years.
Of Casio’s $1.9 billion in worldwide sales for the fiscal year ended March 20, $335 million, or 15%, came from the sale of electronic musical instruments. About 85% of Casio’s musical instrument output is sold in the United States. Besides keyboard instruments, Casio makes guitars and digital saxophones.
Casio is perhaps best known as a manufacturer of electronic calculators and watches. Calculators accounted for 35% of Casio’s worldwide 1988 sales. Watches and clocks contributed 17% of overall revenue. Casio derived an additional 15% of its revenue from sales of office equipment and small televisions.
Casio’s decision to open plants in Tijuana and San Diego, after concentrating virtually all its production in Japan, illustrates the growing “globalization” trend among worldwide consumer product manufacturers, Tsuda said. Mexico is particularly attractive because of the strength of the yen against the devalued Mexican peso, he said.
The company, whose founder Tadeo Kashio, 71, is still its chief executive, is considering opening manufacturing plants in Europe as well, Tsuda said.
Construction of the Tijuana and San Diego plants will be overseen by Mitsui Kensetsu, a construction management firm that recently opened an office in San Diego. The company is also directing the construction of Tijuana plants for Japan-based Canon and Pioneer.