Driverless Cars Spell Danger for One of World's Top Part Makers

Lexus GS450h

Self-driving Lexus GS450h.

Photographer: Yoshikazu Tsuno/AFP via Getty Images
  • Jtekt, maker of one-in-four power steering units, sees crisis
  • `We're going to go under if we fail to catch up,' CEO says

A Japanese company that once revolutionized the auto industry by inventing electric power-steering now finds itself on the wrong side of the latest technology innovation: driverless cars.

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Jtekt Corp.’s innovation almost three decades ago outperformed the traditional hydraulic technology and allowed the company to become one of the biggest suppliers to Toyota Motor Corp. and other carmakers. It’s now made more than 100 million of the units and claims a quarter of the global market.

Tetsuo Agata, president of the Osaka-based company, is afraid that if his company doesn’t come up with a product for cars with no steering wheel it could end up supplying no one.

“We’re going to lose the foundation of our business,” Agata, 62, said in an interview in Nagoya City. “We’re going to go under if we fail to catch up. I have a strong sense of crisis.”

Steering is one of the links in the vast auto-parts supply chain that’s having to adapt to survive the new technologies and companies that are upending the auto industry.

Traditional manufacturers like Toyota and Nissan Motor Co. now compete with new entrants such as Tesla Motors Inc., Google Inc. and Uber Technologies Inc. Toyota and Nissan are racing to develop limited hands-free expressway driving as early as next year, while Google and Uber are competing to put driverless autos on public roads.

“A lot of parts suppliers will be affected by the move to autonomous driving,” said Goro Tanamachi, an analyst with IHS Automotive. As well as steering, brakes, transmissions and other drive-train parts could all be shaken up, he said.

Agata expects steer-by-wire systems, where software sends signals to electric motors that move the wheels, will take over, and if Jtekt isn’t at the forefront of that software development, it may be left behind.

“What we can’t miss or lose is control software” for steering systems, he said. “If we lose here, we can’t continue.”

To that end, it is sending researchers to universities and laboratories update their knowledge and would consider acquiring companies with specialist technology, Agata said.

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He wants to triple his external research team, from fewer than 10 now to as many as 30, while boosting capital expenditure 17 percent to about 80 billion yen ($660 million) by fiscal 2016.

If the Japanese supplier fails to keep up, it may suffer the same fate that it once meted out to competitors almost 30 years ago.

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