Trico Products Corp. said today it has signed a 12-year agreement with Nippon Wiper Blade Co. that will allow the Buffalo-based company to produce the Japanese firm's windshield wiper systems.
Chairman Richard L. Wolf said the agreement could have a major impact on the Buffalo company because it gives Trico the opportunity to supply wiper systems to U.S. automobile plants owned by Japanese car makers.
The deal also gives Trico the chance to sell replacement wiper parts for Japanese cars and trucks sold in the United States, since Nippon Wiper Blade is the leading supplier of wiper products for Japanese automakers.
"We see the Japanese carmakers as a growth business in the North American marketplace," Wolf said. "We see tremendous growth in the aftermarket. There's a tremendous amount of Japanese vehicles out there."
The wiper parts and systems produced under the agreement will be assembled at Trico's plant in Matamoros, Mexico, using parts made at its facilities in Buffalo and Brownsville, Texas, Wolf said.
Wolf said Trico does not expect to add any new facilities to accommodate the new products and probably will only add jobs "selectively." Instead, Trico hopes to adopt some Japanese production and management techniques that will help improve the company's productivity.
The deal comes at a time when the U.S. government is pressuring the Japanese automakers to use more American-made parts in the cars and trucks produced at their factories in the United States.
Nippon Wiper Blade currently supplies many of the windshield wiper systems used at the Japanese transplants, but those blades are made overseas. One of the selling points of the licensing agreement is that it gives the Japanese carmakers a way to use the same windshield wiper systems and, at the same time, have them built in North America.
Those Japanese-owned auto plants, known as "transplants," now account for more than two million cars and trucks sold in America and those sales are expected to reach 3.5 million by the mid-1990s.
Already, the share of the U.S. car market controlled by the transplants is growing rapidly. For example, car sales by General Motors Corp., Ford Motor Co. and Chrysler Corp. fell by 5.1 percent during the 1990 model year, while sales of cars made at the transplants rose 40.4 percent.
As a result, the cars and trucks produced in those transplants now account for about $30 million in windshield wiper system sales and that figure is expected to grow.
The licensing agreement will give Trico access to a new market that is equal to about one-third of all the company's current windshield wiper arm and wiper blade sales, Wolf said.
And by using Nippon Wiper Blade's technology and product designs, Trico will save time and a considerable amount of research, since the Buffalo company will not have to develop its own products for the Japanese cars.
"They've got the blades that are compatible with that kind of design," Wolf said. "This way, we won't have to reinvent the wheel."
Wolf said it will take about two years for Trico to complete all the preparation and retooling work that will be needed to produce the new blades. The production portion of the agreement will run for 10 years.
The agreement also helps reduce Trico's dependence on the Big Three U.S. automakers for its original equipment sales at a time when the Japanese are expanding their market share.
Given the weakening economy and the sluggish domestic car sales, Wolf said the licensing agreement could help Trico avoid layoffs that otherwise would have been prompted by the slow U.S. car market.
For the Japanese transplants, the licensing agreement would help smooth out some of the price fluctuations caused by the weak U.S. dollar. It also brings its supplier of wiper systems closer to its manufacturing plant -- an important factor as automakers try to cut down on their inventories through the use of the just-in-time management system, Wolf said.
"I'd like to think that, if there had been no (political) pressure, that this deal would have come about anyway," Wolf said.