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Japan firm drops Mexico plant plan over Trump warnings

Thursday, February 9, 2017 - 12:14

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A top Japanese auto parts maker said on Thursday it had dropped Mexico as a possible location for a new factory after Donald Trump rapped Toyota over a plant south of the border.

[TOKYO] A top Japanese auto parts maker said on Thursday it had dropped Mexico as a possible location for a new factory after Donald Trump rapped Toyota over a plant south of the border.

The decision by Nikkei 225-listed Nisshinbo Holdings marked the first time a Japanese company has publicly abandoned a Mexico facility in response to Mr Trump's protectionist outbursts, the Nikkei business daily said on Thursday.

The announcement comes as Japanese Prime Minister Shinzo Abe heads to Washington Thursday for meetings with Mr Trump aimed at cementing ties and underscoring Japan's commitment to investing in the US.

Mexico was among the locations being considered for Nisshinbo's vehicle brake parts plant, reportedly worth up to 10 billion yen (S$126 million).

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The firm is a leading maker of friction-reducing brake parts and has about a 15 per cent share of the global market.

It already has a US plant and is looking for a new facility to service the North American market.

Nisshinbo's shares sank nearly four per cent to 1,045 yen by the lunch break Thursday.

Company spokesman Kiyohiro Kida said Mexico had been at the top of the list for possible sites.

"Mexico was the strongest candidate but we have taken a step back," he told AFP, confirming the decision was a response to Mr Trump's trade policies.

His comments came a day after Nisshinbo's executive managing officer Takayoshi Okugawa told an earnings briefing that Mexico was off the list.

"Regarding Mexico, we've dropped it," he said. "We have to pick a site other than Mexico."

The US is the most likely alternative, the Nikkei said, as Mr Trump moves to renegotiate the North American Free Trade Agreement with Canada and Mexico.

Ford last month abruptly cancelled plans to build a new factory in Mexico.

The new president has assailed Japan for allegedly devaluing the yen to boost exports, grouping it with other countries he says are taking "advantage" of the United States.

Mr Trump has targeted Toyota with strong criticism of its ongoing project to build a new factory in Mexico, threatening it with painful tariffs if its goes ahead.

The Japanese auto giant has stuck to its Mexico plans, but announced last month it intends to invest US$600 million and create 400 jobs at one of its US plants.

AFP

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