Dive Brief:
- Auto parts manufacturer Exedy America is closing its torque converter plant in Mascot, Tennessee, next spring, according to an Aug. 5 Worker Adjustment and Retraining Notification Act letter.
- In addition to the shuttering, Exedy’s parent company, Japan-based Exedy Corp., made the decision to dissolve the U.S. subsidiary due to sluggish torque converter sales in North America, according to the conglomerate’s Aug. 5 financial filing.
- The closing of the factory will lead to 223 job cuts and the first round of layoffs will begin Oct. 31.
Dive Insight:
The stagnant sales are due to automakers shifting to electric vehicles in the North America market, Exedy stated in the filing.
A torque converter is connected to the gas-powered vehicle’s internal combustion engine and helps a vehicle’s automatic transmission move, according to a 2019 AAMCO blog post.
EVs, however, use an electric motor and do not need multiple gears to power or make the vehicle move, according to Kia’s website.
Now, Exedy is shuffling its global production capacity for its automatic transmission business. The conglomerate has production facilities in Roanoke, Virginia, and Mexico under its other auto parts subsidiary, Dynax America, according to its website. Exedy also has manufacturing facilities in Hungary, China, Malaysia, Indonesia, Thailand, Vietnam, Cambodia and India.
“In the process, it was evaluated that it would be difficult to secure the production volume of torque converters and improve the profitability of [Exedy America],” according to the company’s filing.
Other Japan-based auto conglomerates have decided to shutter their plants in the U.S. Toyota announced plans in May to close its truck and engine supplier Hino Motors’s factory in Marion, Arkansas, over the next three years. The closure is part of its plan to withdraw from the auto parts business.
