Kubota Shifts Production to U.S. and India
Japanese farm equipment maker Kubota is bucking trends by moving production overseas despite a weak yen as it seeks to create a supply system not susceptible to currency market volatility, President Yuichi Kitao said.
Amid turmoil in supply chains and the weak yen, many Japanese manufacturers are bringing production back to Japan, but Kubota is increasing investments in countries like the U.S. and India. It seeks to raise its offshore production ratio to 50% from current 30%.
What is Kubota transferring production?
“Overseas accounts for more than 70% of our sales. We need to adopt local production for local consumption to cut the lead time for delivering products to customers. We want to shield our supply system from foreign exchange swing as much as possible,” said Kitao. “Even if we wanted to return production to Japan, there is a labor shortage to deal with, and labor costs are on the high side. The price of imported steel and energy costs are also rising. The weak yen is starting to have a negative impact on production.”