Japan's Hoya to build China factory amid power concerns

TOKYO, June 16 Thu Jun 16, 2011 9:53am BST

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TOKYO, June 16 (Reuters) - Hoya Corp , the world's second largest maker of optical glass used in cameras, said on Thursday it would open its first furnaces overseas by the end of the year, diversifying production away from Japan, where power shortages loom.

The firm, which competes with market leader Ohara Inc , will open a plant in Weihai in China, hoping to take advantage of burgeoning demand for cameras in China, and easier access to raw materials including rare earth lanthanum, a company spokeswoman said.

The plant is set to begin operations in December. Hoya said the cost of the factory is yet to be determined.

Hoya, a supplier to Canon , the world's largest maker of digital cameras, was forced to curtail production in March because of power cuts after the quake and tsunami knocked out nuclear and other power plants.

"We need to diversify production, because we currently only manufacture in one place," said the spokeswoman. Optical glass makers are particularly sensitive to power cuts, which force them to switch off furnaces, disrupting production for an extended period.

Some Japanese companies have tried to offset the effects of power shortages in the capital and northern Japan by increasing production in the west.

But this month western Japan's Kansai Electric joined Tokyo Electric Power in calling on its customers to cut consumption during the hot summer months.

Analysts say Chinese firms such as CDGM Glass Company Ltd and Hubei New Huaguang are expanding production of lower-grade optical glass. But they say makers of high end interchangeable lens cameras like Canon and Nikon will likely continue to source from Japanese makers to avoid compromising quality.

Hoya is confident it can maintain quality standards at its Chinese plant, the spokeswoman said. (Reporting by Isabel Reynolds; Editing by Edwina Gibbs)

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