The Spatial Organization of Nissan's Parts Suppliers in Japan

Abstract

This paper's aim is to clarify the spatial organization of Nissan Ltd and its parts suppliers, especially first-tier suppliers in Japan. Nissan has built up a more deconcentrated production region, unlike Toyota and Mazda. Nissan has five car assembly plants and four engine and transmission plants in Japan. Three old assemly plants are located in the Kanto Region, including the Tokyo Metropolitan Area, one in the North-Kanto Region, and the newest in the Kyushu Region 1, 000km distant from Tokyo.Nissan organized its subcontractors and part suppliers into cooperative groups, “Takara-kai” in 1954 and “Shoho-kai” in 1966. The latter consisted of a large number of large-sized suppliers. In accordance with the rapid increase in car production in Japan since the 1960's, Nissan's parts makers enlarged production capacity with Nissan's financial and technological support. Nissan had almost no need to do business with new parts suppliers while demand.Many of Nissan's suppliers constructed large-sized plants in the suburbs of Tokyo, because of increased production in the 1960s. Old parts plants in Tokyo have reduced and stopped operations with the urbanization of Tokyo. The opening of new assembly plants, The Tochigi plant in 1971 and the Kyushu plant in 1975, caused suppliers to move. Many parts plants were built near Nissan's new plants in order to deliver components under the JIT system. Nissan's subsidiary companies, especially, seem to set up plants close to Nissan's new plants.Generally, spatial proximity to an assembly plant depends on business and capital relations with Nissan, division of production between branch plants, and characteristics of the products in transportation. Bulky components, like seats and bumpers, required relative higher transportation cost. Firms producing them, are more likely to locate close to the assemblers. Small-parts suppliers, such as bolt or nut manufacturers, need not locate near the customer, because of lower transportation cost. They produce in a large-volume to increase scale merit, rather than build plants near assembly plants.A number of parts manufacturers entrust JIT delivery to the forwarding agents. Almost all parts are delivered to the assemblers by truck several times a day while bulky components manufacturers often posses subsidiaries created for transportation.Nissan is now undergoing restructuring of domestic production. It invested in the Kyushu plant being as important for the future, while the Zama assembly plant, established in the Kanto Region in 1965 is closing down. But most suppliers still have their main factories located in the old production region, Kanto or North-Kanto. There is a mismatch in the strategy of division of production in domestic plants between Nissan and its suppliers.