DETROIT – With its auto maker customers ramping up production to meet growing demand in North America, Denso is doing the same, planning to invest more than $1 billion to expand operations in the region over the next four years, adding 2,000 jobs.

Expansion is coming in multiple product sectors, particularly powertrain, thermal systems and electronics, for Japan’s No.1 supplier and one of the largest in the world.

“When our customers grow and expand, we too have the opportunity to grow and expand,” Terry Helgesen, Denso America’s senior vice president-industry and government affairs, says at a press conference on the floor of the North American International Auto Show here.

“We’re not done investing here yet – not even close.”

In the U.S., investments of nearly $750 million will be directed toward Michigan, Tennessee, Iowa, North Carolina and California.

Plans call for:

  • Expanding manufacturing operations and adding jobs at two Tennessee plants, in Athens and Maryville. In Athens alone, Denso plans to spend $50 million and add 130 jobs.
  • Adding 400 jobs in Michigan and investing more than $150 million in facilities, contingent on approval of local and state incentives.
  • Considering investments in North Carolina and other locations of up to $120 million and adding nearly 300 jobs.
  • Investing nearly $150 million to increase manufacturing capacity in Canada and Mexico.

In addition, Urbandale, IA, will receive a new assembly warehouse to support heavy-duty truck customers, an investment of more than $500,000 resulting in seven new jobs.

The rising value of the yen in its home market motivates Denso to boost its presence overseas, especially in North America, where the supplier employs more than 14,000 people and opened its first plant in Battle Creek, MI, in 1984.

Helgesen says currency valuation is not the primary driver behind the new investments. “While it may have sped up the process, this localization is part of Denso’s operating philosophy since our inception,” he says.

The investments show the North American industry on the upswing, but its historically cyclical nature suggests a downturn will be inevitable. Asked if these plans can accommodate the next trough, Helgesen says yes. The 25-year Denso veteran has endured several boom-and-bust periods.

“The OEMs have learned a lot. They’re keeping inventories down and managing production and capacity much more closely,” he tells WardsAuto. “If they see sales go down, they reduce their capacity and they won’t overbuild. That was the big problem we had in the early 2000s. At least in North America, it’s much more balanced now.”

Investments are extensive in Athens, where Denso will localize production of gasoline direct injectors and expand production lines to manufacture monolithic carriers, the ceramic substrates used in catalytic converters.

In Maryville, Denso has four plants, and one of them started manufacturing stop/start starters last June. Production totaled 30,000 units in 2012 and is forecast to reach 300,000 this year, the supplier tells WardsAuto.

Maryville also is adding production of high-output alternators, and in 2014 the plant will begin manufacturing inverters for hybrid-electric vehicles.

The electronics plant in Maryville is adding head-up displays for a North American customer. The vehicle is due in the market later this year, says Jack Helmboldt, executive vice president-Denso Manufacturing Tennessee. The plant also will deliver new memory seat modules and passive entry/passive start systems to another North American customer.

A 23-year Denso veteran, Helmboldt says news of Denso’s expansion in Tennessee is being well received.

“An article in the paper Sunday said Denso is the second largest employer behind Oak Ridge National Laboratory in the 8-county region around Knoxville,” he says. Oak Ridge employs 5,000 people there, while Denso has 3,000.

Also in Maryville, Denso builds proprietary manufacturing equipment and dies and now will become a regional hub for this “critical” equipment, Helmboldt says.

In Battle Creek, Denso is adding new lines and expanding existing ones to produce next- generation radiators, condensers and heating/ventilation/air-conditioning units.

tmurphy@wardsauto.com