Onkyo to bring down curtain on domestic speaker production

OSAKA (Nikkei) -- Onkyo Corp. (6628) has decided to end Japanese manufacturing of speakers by March and shift production to more affordable China, The Nikkei learned Wednesday.

The audio equipment manufacturer has just one domestic plant for speakers -- in Mie Prefecture -- and three abroad in Shanghai, Guangdong Province and Malaysia. Its speakers are used in other Onkyo audio products and supplied under OEM agreements to manufacturers of automobiles, personal computers and televisions. Featuring proprietary technology, they have a reputation for high sound quality.

Going forward, the Mie Prefecture facility will handle such tasks as assembly of LED lighting. The domestic plant now accounts for an estimated 30% of Onkyo's total speaker output.

Overseas, meanwhile, Onkyo is reorganizing speaker production. It intends to shutter the Guangdong Province facility, which processes speaker parts, and concentrate operations in Shanghai.

The firm has also reached basic agreements for subsidiaries running the Shanghai and Malaysian plants to accept investment from local electronics manufacturing service providers. Such specifics as stake sizes are still being worked out.

Amid intensifying competition, Onkyo aims to reduce costs by 10-30%.

The speaker business currently rings up sales of some 10 billion yen. With prices of PCs, TVs and other products tumbling, the business is likely bleeding red ink on the deteriorating profitability of speakers supplied as components for these items.

 (c) 2012 Nihon Keizai Shimbun America, Inc.