Commercial pickup demand in N.A. drives Sumitomo Riko's expansion in Mexico

QUERETARO, Mexico—Sumitomo Riko Co. Ltd. has seen demand rise in the North American commercial pickup truck market for anti-vibration rubber components, and the company is responding with an $18.8 million investment on the continent.

The multi-billion dollar Japanese manufacturer will expand its 129,167-sq.-ft. plant in central Mexico by another 107,640 square feet, increasing capacity by about 1.5 times its current annual production, Yu Hinatani, public relations and investor relations spokesperson at Sumitomo Riko, told Rubber News.

The expansion is "mostly for manufacturing, partly for warehousing," Hinatani said.

"Against the backdrop of strong demand for pickup trucks in North America, we have received new orders for anti-vibration rubber for automobiles," he said.

The Mexican factory, known as the O'Donnell Plant, employs about 780 and will look to start mass production of the anti-vibration rubber components at the end of this year in the "legacy" area of the plant.

"In addition to anti-vibration rubber products, urethane products—such as sound controlling and insulation products and interior equipment for automobiles—are produced there," Hinatani said.

Production, which uses mostly natural rubber for products in the automotive, infrastructure and housing markets, will increase to include the expanded area throughout 2024, with the full production in the expanded area realized by the end of 2024, according to Sumitomo.

Sumitomo did not disclose actual capacity numbers.

The nearly $19 million investment also will feature Industry 4.0 technology, as the factory will introduce a traceability system for defective products, via the use of Internet of Things tech.

"By doing so, we will improve productivity (and) introduce a new traceability system, which will allow us to further strengthen and build a system to prevent the outflow of mixed products," Hinatani said. "We will be able to prevent ... defective products from leaving the plant."

The Queretaro, Mexico, plant started operations in January 2017, according to Sumitomo Riko.

The company also has facilities in Michigan (Sumitomo Riko America headquarters and innovation center), Ohio and Tennessee, known as SumiRiko Ohio Inc. and SumiRiko Tennessee Inc., respectively.

With about 22,500 employees overall, Sumitomo Riko started in 1929 in Nakamura-ku, Nagoya, Japan.

The company became part of Sumitomo Group in 1937, changing its name that year to Tokai Rubber Industries Ltd.

The automotive anti-vibration business began in 1954, according to Sumitomo Riko.

The company rounded out its "first founding" with a research and development center in 1986 in Komaki-shi, Aichi, Japan.

Sumitomo Riko calls its initial expansion overseas its "second founding," as the company established DTR Industries Inc. in the U.S. in 1990.

In 1999, the company brought a manufacturing presence to Poland, and in 2001 developed damping devices for the housing market there.

Its "third founding" is related to more recent mergers and acquisitions, as Sumitomo Riko in 2013 acquired Dytech-Dynamic Fluid Technologies S.p.A., an Italian hose manufacturer.

The German automotive anti-vibration company Anvis Group GmbH joined the firm that same year.

And in 2014, the company began production of cell gaskets for fuel cell EVs, pulling the company into the new age of automotive manufacturing. Accompanying that, in June 2014 the company changed its corporate name from Tokai Rubber Industries to Sumitomo Riko to clarify that it is a part of the Sumitomo Group.

The pandemic hit Sumitomo Riko hard, with business profit-to-sales down 12.3 percent in the first quarter of 2020. Operating profit fell to $1.8 million in the first quarter of 2020, compared to nearly $8.6 million in the first quarter of 2021 (and $69.3 million in the first quarter of 2019).

Net sales were about $3 billion in fiscal year 2020, compared to $3.5 billion in 2021, according to company financial reports.

With a major market share in the automotive space, the shutdowns and reductions from auto makers negatively impacted Sumitomo Riko.

Business has improved, according to 2022 financial results, with net sales for the first six months of 2022 at nearly $2 billion, compared to about $1.6 billion for the first half of 2021, according to Sumitomo Riko financial reports.

That margin represents about a 22 percent year-over-year growth.