INOAC mulls automotive component manufacture in Lanka

A top Japanese conglomerate is relocating selected foam operations to Sri Lanka from China.

Due to this new operation, Sri Lanka is now saving millions of rupees in forex that is otherwise sacrificed on import of soft foam which is used in the apparel industry.

The tier one global supplier said it was ready to set up a world-class automotive component production facility in Sri Lanka, with latest Japanese technology.

“Japanese giant INOAC’s new venture with a $ 20 million investment is one of the largest FDIs to come to Sri Lanka from Japan in our bilateral partnership history,” said Industry and Commerce Minister Rishad Bathiudeen at the launch of an advanced soft foam production plant of INOAC Polymer Lanka at the BOI Industrial Zone, Horana last week. INOAC is the only manufacturer of polyurethane in Sri Lanka. Polyurethane is a specialised type of plastic material widely used in automotives, comfort products and brassieres.

“INOAC, a global supplier to the automotive industry is a privately-held Japanese conglomerate set up in 1926, and operates in 20 countries including USA, Canada, Korea, Japan, South East Asia and Europe. It has 74 state-of-the-art factories across the world,” a company spokesman said.

Their history with Sri Lanka runs as far back as 1959 when they launched their first joint venture with Associated Motorways (AMW). INOAC is a tier one producer of automotive components for Toyota, Nissan, Honda, Mitsubishi, Yamaha and several other renowned global brands.

Within Japan, INOAC has almost 60-70% market share in selected tyres, tubes and specific automotive components. Minister Bathiudeen said, “There is no doubt that INOAC’s re-entry is a great boost for Sri Lanka’s competitiveness in the global market and export diversification efforts. Japan is Sri Lanka’s third largest foreign financier. And our bilateral trade with Japan is also increasing. In 2012, Japan was Sri Lanka’s third largest foreign financier, after China and India, committing $ 521 million as development partner.”

“Thirty nine Japanese private investment projects are in operation, the bulk of them entering in the immediate aftermath of the opening of our economy in 1977. INOAC however has been with us since 1959. Sri Lanka–Japan trade too has been growing, reaching US $ 770 million from 2002 to 2012 an increase of 56%,” he said.

INOAC Chairman and Group CEO, Soichi Inoue, who flew in to Colombo with his top management team, said, “If the Maruti Suzuki assembly project is launched here we will bring our Japanese automotive component manufacturing facility to Sri Lanka.”

“We are ready to set up a world-class automotive component production unit in Sri Lanka with latest Japanese technology. We hope that this will happen,” he said.

“About two years ago INOAC decided to transfer its production facility from China to Sri Lanka to produce and supply quality polyurethane foam to the giants of the apparel industry in Sri Lanka such as MAS, Brandix, Benji and Silueta,” said Executive Managing Director, INOAC Corp, Ken Miwa.

“We are shifting at least 20% of our production from China to Sri Lanka,” he said.“Soft foam is a must in making quality brassieres for export and Sri Lankan apparel suppliers have been importing the entire volumes to-date,” said CEO, Silueta Ltd, Rajiv Dharmendra. Silueta is an apparel producer at the Biyagama Export Zone.

“From today, there is no need to import soft foam. Sri Lanka produces at least 40 million brassieres for export regularly. Due to soft foam now being made in Sri Lanka, we believe the cost saving for Sri Lanka is at least $ 5 million annually in the apparel sector alone. And the total savings could be higher,” he said.

Director, INOAC Polymer Lanka, Tilak de Zoysa said, “From 1959 I have been involved with the INOAC team providing local support in marketing, human resources.

"To comply with INOAC’s vision of achieving quality products of world standard, the investment was increased from around US $ 10 million to 20 million,” he said.