Japan’s leading asphalt plant maker Nikko to begin manufacture in Thailand

29, May. 2020

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BANGKOK, NNA – Nikko Co., a Japanese construction machinery maker, will set up an asphalt mixing plant manufacturing subsidiary in Thailand to fully make inroads in the country, cashing in on stable demand from local civil engineering firms.

The move comes as a number of potential clients have already used its second-hand asphalt plants shipped from Japan by third-party traders. Nikko, which holds a 70 percent share in this plant segment at home, intends to sell the plants directly to local customers, Hiroshi Fujii, chief financial officer, told NNA on Friday.

The new wholly owned subsidiary, Nikko Nilkhosol Co., is expected to be set up on June 25 with 120 million baht ($3.7 million) in capital, while construction of the factory is scheduled to commence in August and start operations in October 2021, the Japanese company said in a press release on Friday last week.

The total cost of the factory is around 350 million baht, it added.

In February this year, the Tokyo-listed company, based in Akashi, Hyogo Prefecture in western Japan, established its first office in the Southeast Asian nation, Nikko Asia (Thailand) Co., for sales and maintenance service. Thailand is the third overseas market Nikko has entered, following China and Taiwan.

The new Thai factory, to be built in the Pinton Industrial Park 4 in Chonburi Province, southeast of the capital, will have the capacity to manufacture 30 asphalt mixing plants and 900 tons of industrial machinery.

Nikko’s second-hand asphalt mixing plants have been exported to Thailand from Japan for decades, according to Fujii.

“Asphalt plant demand has remained flat in Thailand for the past several years. But we believe we can capture local demand as local firms’ purchasing power to buy our products has grown. Our brand is already well known,” he said in a phone interview.

Local production could pave the way to shorten lead times and cut costs, the company said.

Locally made products cost a little under 100 million yen ($933,000) compared to those with larger capacity sold in Japan at 500 million to 700 million yen, the CFO said.

Nikko will make the Thai manufacturing unit a joint venture with Nil Khosol Co., a local partner. Over the last five years, Nikko has assembled core parts of asphalt plants in Japan and exported them to Thailand to make complete plants, with the help of Nil Khosol, to supply price competitive products, Fujii told NNA.

Nikko, which will initially aim to manufacture about 10 plants a year and market them in Thailand, expects to expand that to 20 plants eventually, including those to be exported to neighboring countries, Yosuke Yamamoto, president of Nikko Asia (Thailand) , told NNA on Thursday.

“We have been planning entry into Thailand since more than a year ago,” Yamamoto said. “We happened to get caught up in the COVID-19 pandemic but things are going as planned,” he added.

Yamamoto said the company maintained its target for a fivefold increase in sales in Thailand in the next five years. Sales for the fiscal year ending March 2020 are projected to come in at 300 million yen.

In its mid-term business plan to be implemented from fiscal year 2019 to 2021, the Japanese plant maker group aims to grow overseas sales, excluding those in China, by 10 times to 6 billion yen in the next 10 years.