Yokohama expanding hose production in $6 million restructuring move

TOKYO—Yokohama Rubber Co. Ltd. has announced a series of measures to restructure its Multiple Business (MB) segment, as part of the Yokohama Transformation 2023 (YX2023) strategy, which was launched last year.

The strategy will see the Japanese group shift the MB segment's portfolio to products "with highly stable earnings and strong growth potential," said Yokohama in a series of announcements Feb. 17.

Accordingly, the segment is concentrating resources in its two strongest business domains—hose and couplings as well as industrial products.

As part of the move, the group will expand the production capacity for high-pressure hydraulic hoses at its manufacturing facility in Ibaraki, Japan.

The capacity addition will focus on installing a new line for spiral wire hoses used mainly in construction machinery and increase the production capacity of the Ibaraki Plant's continuous production lines by 1.5 times.

Construction will begin in May, with the new line expected to start operating in September 2023.

The $6 million (¥700 million) investment will expand the types of hoses manufactured on continuous production lines to large diameter hoses while also utilizing the capacity of the existing production line for other products, Yokohama said.

According to Yokohama, demand for construction machinery temporarily declined owing to the impact from the coronavirus pandemic, but it has since "recovered sharply, especially outside of Japan."

The Japanese group is also in the midst of expanding the spiral wire hose capacity at its facility in Hangzhou, China.

The investment there will see production capacity for high-pressure hydraulic hose production in China "nearly tripled" by September.

In addition to the capacity expansion, Yokohama also announced that it is reorganizing its production of automotive hoses and couplings in the U.S. and Mexico, as part of an effort to strengthen its hose and couplings business.

The restructuring will transfer the production of air conditioning hoses and transmission oil cooling hoses supplied to car makers from two U.S.-based subsidiaries—Yokohama Industries Americas Inc. (YIA) and Yokohama Industries Americas South Carolina L.L.C.—to Yokohama Industries Americas de Mexico, S. de R.L. de C.V.

The transfers will be carried out gradually from this February, with completion scheduled for June 2023.

Yokohama said the restructuring will enable YIA to concentrate on production of its specialty hose assemblies that require advanced technological capabilities.

The South Carolina subsidiary will focus on power steering hose assemblies, a product area where Yokohama said the unit "commands a high market share."

The Mexico base will expand sales of air conditioning and transmission oil cooling hose assemblies.

"Looking ahead to future demand growth, the reorganization will consolidate and optimize products manufactured and increase operating rates at each plant," the Japanese group said.

Elsewhere, in a separate statement, Yokohama Rubber said that at the end of March, its aerospace division will be merged into the industrial products division, as part of the MB transformation strategy.

With the aerospace products market facing "a challenging business environment," Yokohama said it will focus the business on "more highly specialized areas."

The product groups, it said, will be expected "to continuously generate a certain level of stable profits."

The merger with the industrial products division will create synergies to advance the technical capabilities of both product groups.

Along with the merger, Yokohama Rubber named board member Yasuo Nakayama, former head of aerospace division, as the new leader for its hose and couplings division.