Omron Corp., the country's largest maker of laser radars for cars, will build an auto parts factory in Eastern Europe within three years as it seeks to win new customers in the region.
Kyoto-based Omron, which supplies carmakers, including Nissan Motor Co., will start making electric power-steering controllers in Poland or Hungary, Chief Executive Officer Hisao Sakuta said in an interview.
Carmakers including Volkswagen AG, PSA Peugeot Citroen and Toyota Motor Corp. have set up factories in Eastern Europe to take advantage of lower wages. Omron forecasts automotive components sales will rise 12 percent annually over the next three years on demand for fuel efficiency and safety.
"There is a lot of growth in technology in cars, and Omron has the kind of technology people want," said Robert Taylor, director of international equities at Chicago-based Harris Associates LP.
Volkswagen opened a factory in Russia in November, joining rivals Ford Motor Co. and Renault SA in producing in that country. Toyota and Peugeot set up a joint venture in the Czech Republic that started operations in February 2005.
Having a production facility in "Eastern Europe, where many companies are entering, is a must," Sakuta said. He declined to give an investment amount or production capacity.
Europe accounted for 16 percent of the company's sales in the last business year, compared with 56 percent in Japan.
Electric power-steering systems help drivers maneuver, improving fuel efficiency, as they use less engine power than conventional systems. Omron also makes laser radars for cruise control systems that measure a car's distance from the vehicle ahead to help prevent crashes.