Japanese electronics component giant, Kaga Electronics, is set to invest a significant 5 billion yen (approximately $34 million) in the construction of a cutting-edge manufacturing facility in Mexico. This strategic move is aimed at tapping into the surge of companies seeking North American alternatives amidst U.S.-China tensions.
Anticipating the steadfast demand in the North American market, especially from key Japanese clients expanding in Mexico, Ryoichi Kado, President of Kaga Electronics, highlighted the company’s vision behind this endeavor.
Scheduled to commence operations in the coming April, the state-of-the-art plant will focus on producing electronic devices for automobiles and air conditioners. Strategically situated adjacent to an existing facility in San Luis Potosi, this expansion showcases Kaga Electronics’ commitment to bolster their contract electronics manufacturing business.
The consolidation of operations, which involves the integration of the new plant and the phasing out of the old one, is a pivotal part of the company’s growth strategy. Encompassing an expansive 20,000 square meters, the upcoming facility will dwarf its predecessor, housing a workforce four times larger, totaling 2,000 employees.
This expansion drive is projected to elevate Kaga Electronics’ annual revenue from Mexico nearly sevenfold, targeting an impressive 50 billion yen by April 2029. This transformative leap is poised to establish the Mexican plant as the company’s largest overseas production unit in terms of sales.
Kaga Electronics, a prominent player in the electronics sector, initially ventured into Mexico in 2017, commencing operations with the assembly of automotive lighting components. With this fresh investment, the company underscores its ambition to substantially boost its manufacturing capabilities, leveraging Mexico’s strategic appeal as an alternative North American manufacturing hub.
In line with this trajectory, Kaga Electronics envisions generating 150 billion yen in revenue from the contract manufacturing segment by the fiscal year ending March 2025, reflecting a robust 7% increase from the present financial year.
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