Still a Rising Sun
By Bill Koenig - The Indianapolis Star
(June 1999)
SHELBYVILLE, Ind. - A decade ago, PK USA Inc. was among the first wave of Japanese-owned companies that set up shop in Indiana.
At the time, Shelby County was hungry for jobs; and PK, an auto-parts supplier, eventually planned to employ 250 to 400 workers.
Flash forward to today, PK USA now employs about 650 people who make brake components and other auto parts. Plus, the company has established a spin-off company, Blue River Stamping, which employs another 80 people fabricating metal parts for PK and other manufacturers.
PK's story has been repeated all across Indiana. In the late 1980s and early '90s, a surge of Japanese investment poured into the state as the number of Japanese-owned companies more than doubled.
That was part of a bigger influx of Japanese manufacturers into the Midwest. Such companies were attracted to the region's central location, which meant easier distribution of products.
At the time, tensions were high between the United States and Japan over trade matters. By investing in U.S. facilities, Japanese companies also could protect their access to U.S. markets.
While growth has tapered off since then, it hasn't plateaued.
According to a recent report by the Japanese Consulate General at Chicago, Japanese-owned companies in the state employed 35,730 people in 1998, up 5 percent from 1997 and 55 percent from 1993.
Nearly 70 percent of those employees are in manufacturing.
"It's really reinvigorated the manufacturing industry, certainly," Patrick Barkey, director of the Bureau of Business Research at Ball State University, said of Japanese investment in the state. "Few people in Indiana have an appreciation of how important it is."
In 1998, the greatest increase in hiring by a Japanese firm was in Gibson County, where Toyota Motor Corp. makes pickup trucks. Toyota hired 812 people in 1998 and currently has about 1,600 employees.
But experts on Japanese business say Totota is an exception.
"Much of it has been expansion of companies already here," said Larry Ingraham, a business consultant who was state government's representative in Tokyo during the 1980s.
PK is an example of that. The company, a joint venture between two Japanese companies, began operations in 1989. PK was built to supply the then-new Subaru-Isuzu Automotive Inc. plant near Lafayette.
Since then, PK has added U.S. plants owned by Nissan and Mitsubishi to its customer list as well as the General Motors Corp. Saturn factory in Tennessee.
When companies like PK first opened, unemployment was high. Since then, the job market has tightened, with many areas of enjoying single-digit unemployment rates. Nevertheless, PK, which pays up to $12 an hour on the factory floor, still draws applicants.
Lorrie Smith, 24, has worked at PK for about 60 days. Prior to that she worked a variety of jobs. "It wasn't too hard (to find work), but the pay wasn't great," Smith said.
PK is her first factory job, and she says she likes it. "I got trained very well."
Other Japanese companies haven't lacked for applicants, either. About 55,000 people applied for jobs at Toyota, where production of the new Tundra pickup truck began earlier this year.
The plant pays about $14 an hour, making it one of the better-paying employers in southwestern Indiana.
Toyota spokesman Mike Goss said workers have adapted to Toyota's production system, which stresses employee flexibility and product quality. "We've been very satisfied with the team members we've found."
The plant is preparing for its own expansion. The complex will begin assembling an as-yet unnamed sport-utility vehicle next year.
Morton Marcus, director of the Indiana Business Research Center at Indiana University, said there are no signs the growth in Japanese investment is ending.
"We keep hearing there's no more room for expansion, but it doesn't work out that way," he said. "I wouldn't say this is over by any means."
