June 29, 2018

VIA REGULATIONS.GOV PUBLIC VERSION

Hon. Wilbur L. Ross, Jr.

Secretary of Commerce
Attention: Section 232 Automobile and
Automotive Parts Imports Investigation
U.S. Department of Commerce
14th and Constitution Avenue, NW

Re: Docket No. DOC-2018-0002: Section 232 Investigation of Imports of Automobiles,

Including Cars, SUVs, Vans and Light Trucks, and Automotive Parts

Dear Secretary Ross:

JTEKT North America Corporation (“JTEKT America” or “JTEKT”) respectfully

submits these comments pursuant to the Department of Commerce’s (“the Department”)

investigation under section 232 of the Trade Expansion Act of 1962, as amended, to determine

the effects on the U.S. national security of imports of automobiles, including cars, SUVs, vans

and light trucks, and automotive parts. These comments are timely filed pursuant to the

Department’s instructions set forth in its Notice of Request for Public Comments and Public

Hearing on Section 232 National Security Investigation of Imports of Automobiles, Including

Cars, SUVs, Vans and Light Trucks, and Automotive Parts, 83 Fed. Reg. 24,735 (May 30, 2018)

(“Notice”).

I. INTRODUCTION

JTEKT America is a global manufacturer of automotive and industrial components,

bearing technologies, and machine tools. Globally, JTEKT owns one fourth of the market share

for automotive steering systems, and has a significant share of the automotive steering market in

the U.S., equipping nearly one of every four cars on America’s roads with a JTEKT steering

system.

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JTEKT America was founded in 2006 and is headquartered in Greenville, South

Carolina. JTEKT America has 14 manufacturing facilities spanning seven states that produce

millions of products each year, utilizing an American work force totaling more than 6,000

associates. Ten of those facilities depend on imports of automotive components, including

bearings, steering, driveline, engine, and pump components, primarily from JTEKT’s facilities

and supplier partners in Japan, Mexico, and Thailand. These automotive parts support

downstream manufacturing of more complex automotive systems and components in the United

States at JTEKT facilities in Tennessee, Texas, Georgia, and South Carolina.

JTEKT America’s imports may be included within the scope of the Department’s

investigation on automotive parts. These automotive parts, namely bearings, steering, driveline,

engine, and pump components, are manufactured using certain internally developed technologies

to ensure that they are produced to precise specifications. JTEKT sources these parts from

foreign manufacturers to best meet the stringent quality specifications required by JTEKT and

our customers to produce automotive systems. Use of anything less than top quality parts could

cause a safety hazard for American consumers, including the loss of assisted steering in

passenger vehicles. Certain customers therefore demand that we source from specific suppliers.

JTEKT America cannot readily make changes to its supply chain to source these parts

domestically. The bearings, steering, driveline, engine, and pump components are used in the

safety-critical steering and driveline systems of automobiles and other consumer vehicles.

Therefore, JTEKT and our customers abide by very strict safety standards that apply to the

finished product. The Automotive Industry Action Group (“AIAG”) guidelines and the Electric

Safety Standard, which apply to steering system components, require significant validation and

testing to approve new sources for automotive parts. This means JTEKT’s products undergo

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extensive testing and certification for a period of up to two years before they can obtain

approval.1 The Motor Vehicle Safety Standard further requires automotive OEMs to revalidate

sources annually and validate any new suppliers during sourcing changes. Any disruptions to

JTEKT’s certified supply of these parts would result in serious inefficiencies and increased costs.

JTEKT America urges the Department not to recommend the imposition of tariffs on

automotive parts as a result of this investigation. JTEKT imports certain automotive parts to best

meet the quality standards and safety specifications necessary for our business and demanded by

our customers. JTEKT’s customers, including large domestic auto manufacturers like GM,

Chrysler, Toyota, Nissan, Honda, and BMW, rely on our impeccable quality bearings, steering,

driveline, engine, and pump components, and other automotive parts made to precise

specifications. JTEKT America cannot afford to pose any risk to its business by sourcing parts

that could negatively impact the quality of JTEKT America’s products or the finished vehicles

produced by our customers. As the automotive sector is a consumer industry, use of inferior

quality parts poses threats to safety and such parts might not be approved for use on automotive

vehicles. JTEKT’s reliable supply of automotive parts protects the safety of American consumers

by ensuring the competiveness of high quality, American-made automotive systems and

components in the U.S. market.

The imposition of tariffs on bearings, steering, driveline, engine, and pump components,

in particular, would have a huge impact on JTEKT’s business and employees. The potential

financial impact totaling an estimated [ ] annually will have a negative effect on

future U.S. investment and JTEKT America employees, directly affecting those working in the

1
There are typically 12 months of development for new automotive parts sources to be approved by the AIAG and
an additional 12 months for application approval.
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plants listed in the chart below. The parts JTEKT sources to comply with the stringent quality

standards prescribed in our technical specifications are further manufactured in the United States

and incorporated into downstream systems, adding three to four times the value in domestic

manufacturing. JTEKT requests exclusions from any tariffs on the following automotive parts,

which support thousands of manufacturing jobs in the United States:

JTEKT North America Plant

Product Employees
Locations

Cairo, GA; Sylvania, GA

Bearings and Bearing Orangeburg, SC; Richland, SC;

2,634
Assemblies and Components Walhalla, SC;

Telford, TN

Steering Assemblies and Ennis, TX;

1,433
Systems Vonore, TN

Pumps, Aluminum
Morristown, TN 775
Automotive Components

Driveline Assemblies Piedmont, SC 194

JTEKT does not believe that the importation of bearings, steering, driveline, engine, and

pump components threatens the national security of the United States. By contrast, any trade

barriers, including those on the aforementioned automotive parts, are certain to have a

detrimental effect on JTEKT America’s workers, customers, and consumers, as well as the

automotive industry and the national economy overall. The following facts, provided in

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response to the criteria listed in § 705.4 of the National Security Industrial Base Regulations and

included by the Department in its Notice, support our position.2

• Nature of Imports:3 JTEKT imports bearings, steering, driveline, engine, and

pump components, and other automotive parts to produce complex automotive

systems and components in the United States. A significant portion of the volume

of imports of these automotive parts comes primarily from Japan, Mexico, and

Thailand, which are considered strong U.S. allies.

• National Defense Requirements:4 The very large U.S. automotive industry is

well-positioned to meet any national security defense requirements that may arise

for automobiles or automotive parts.5 The importation of bearings, steering,

driveline, engine, and pump components supports the downstream manufacturing

of more complex automotive systems and components at JTEKT’s U.S. facilities.

• No displacement:6 Imports are not displacing certain domestic products in any

meaningful way. U.S. manufacturers either do not produce or cannot produce the

automotive parts to the specifications that JTEKT America needs.

• Quality Problems; Inefficiencies; and Product Substitution:7 Tariffs will force

JTEKT America to risk supply disruption to our customers or limit the customers

that we can do business with. This would reduce the number of employees that

we could retain as business declines. The certification process required for

consumer safety reasons makes quick substitutions impossible due to the stringent

2
See Notice, 83 Fed. Reg. at 24,736.
3
The following addresses the first and sixth criteria listed in the Notice. Id.
4
The following addresses the first, second, third, fourth, and fifth criteria listed in the Notice. Id.
5
Needle roller bearing may be used in non-automotive related military applications.
6
The following addresses the sixth and seventh criteria listed in the Notice. Id.
7
The following addresses the eighth and eleventh criteria listed in the Notice. Id.
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quality certifications that must be obtained to ensure safety for the ultimate

consumers.

• Risk to Jobs and Markets:8 A significant increase in the cost of parts will

increase costs to our customers, which would potentially be passed along to

JTEKT America, resulting in potential loss of production. The overall financial

impact to JTEKT America from the potential tariff imposition may result in a

[ ] loss of employment of American workers at JTEKT America. The

substantial financial impact could affect the overall automotive supply chain and

cause other serious effects that will weaken our national economy. Independent

automotive repair shops, retail stores, warehouse distributors and others who

produce, distribute, install and repair motor vehicle parts would also be negatively

impacted as a result of lost sales.

• Curtailed Investments:9 Since 2014, JTEKT has invested half a billion dollars in

its U.S. facilities and currently has a five-year plan that could potentially include

an estimated $300 million investment in the U.S. Tariffs on imports of

automotive parts will threaten JTEKT’s continued investment in American

manufacturing and the research and development of new automotive technologies

necessary to meet projected national defense requirements.

• Higher costs to consumers:10 Punitive tariffs will increase the domestic price of

automotive components. The increased cost will be passed through the supply

chain to consumers that rely on these products to repair their vehicle, resulting in

8
The following addresses the seventh, eighth, and eleventh criteria listed in the Notice. Id.
9
The following addresses the fifth, seventh, and ninth criteria listed in the Notice. Id.
10
The following addresses the sixth, eighth, and eleventh criteria listed in the Notice. Id.
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higher prices for the finished product. To the extent that consumers forgo any

repairs due to the costs of the tariffs being passed on to them or substitute more

affordable, lower quality products, vehicles on the road could pose a safety

hazard.

In response to the other criteria listed in the Department’s Notice, we refer the

Department to the comments submitted by the Motor & Equipment Manufacturers Association.11

As detailed in MEMA’s comments, tariffs on automotive parts like bearings, steering, driveline

engine, and pump components are not needed to protect national security and would only

weaken our national economy and employment levels.

Reliance of a global supply chain model has enabled automotive parts suppliers like

JTEKT to play a critical and expanding role in the U.S. economy. A tariff on automotive parts

sourced internationally will make these American businesses less competitive, impacting their

ability to meet projected national defense requirements and to invest in research and

development to create innovative new automotive technologies. The result will be a constrained

automotive industry, substantial unemployment, and a weakening of our national economy and

defense industry. A thriving automotive industry will best contribute to the strength of our

national security and protect the safety of American consumers.

11
See Docket No. DOC-2018-0002: Motor & Equipment Manufacturers Association’s Comments on Section 232
Investigation of Automobiles and Automotive Parts Imports (Jun. 29, 2018).
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II. CONCLUSION

JTEKT strongly urges the government not to impose a tariff on imports of automotive

parts. We appreciate the Department’s consideration of these comments. Please contact the

undersigned should you have any questions regarding this submission.

Respectfully submitted,

___________________
Michael R. Davidson
Executive Vice President and Chief Operating
Officer
JTEKT North America Corporation

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