Japan's Daiki Aluminium seeks cheaper production sites abroad

Japan's Daiki Aluminum is seeking cheaper production sites overseas following local car makers who have already been forced abroad by an increasingly strong yen, shrinking domestic output and competition from China and South East Asia.

The country's largest aluminium alloy producer, which produces about 85 percent of its ingots for motorcycle and car production, already has a presence in China and Southeast Asia.

"Our strategy is to move production overseas to Thailand and Indonesia and China among other countries," the company's director of purchasing, Shigenori Hayashi, told Reuters late on Wednesday on the sidelines of the BIR recycling conference.

The most promising country among these is Indonesia, according to the executive, due to its growing population and strong GDP growth.

"Right now motorcycles are booming in Indonesia and a car boom will follow," Hayashi said.

He added that Thailand was a very important country for its company too because many Japanese and European automotive companies have invested in the area and many auto parts suppliers operate there too.

Daiki's aluminium production is about 3 percent lower this year compared with last at about 20,000 tonnes a month, even though the government introduced incentives for car buyers this year. The company is also feeling the pinch as aggressive importers gain market share in Japan.

"Imported aluminium alloy is cheaper and more competitive. If we cannot maintain our current capacity in Japan we will have to downsize a bit," Hayashi said.