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Canon to close Asian camera factories?

Canon has flagged its intention to scale back overseas manufacturing in what a company spokesperson describes as a response to a decline in the value of the yen.

End of the line? The Canon 600D and kit lens were made in Taiwan.
End of the line? The Canon 600D and kit lens were made in Taiwan, but Canon has announced consolidation of manufacturing back to its Japanese factories

‘From now on, new copier, camera and printer products will be built at domestic factories and as they replace older products, the volume of goods made overseas will fall,’ said company spokesman Hirotomo Fujimori in a Reuters story on January 9.

The story quotes Canon as aiming for domestic production to return to 60 percent of overall output in three years, up from around 40 percent. This implies some kind of shift of manufacturing back to Japan from factories in Malaysia, China and elsewhere (see below), but with the slump in the camera market, and the dramatic collapse of the digital compact segment in particular (most digicams are manufactured in offshore factories), market leader Canon and other Japanese camera manufacturers must be facing massive overcapacity.

With global demand for cameras falling by more than 50 percent in just two years, Canon needs to reduce manufacturing capacity, and the exchange rate would appear to be a fig leaf to mask what would otherwise be the kind of story which may impact its share price negatively.

Exchange rate? Really? Canon needs to close factories due to overcapacity.
Exchange rates? Really? Canon needs to close factories due to overcapacity.

Global printer sales are also down, and with the increased use of digital communications, the photocopier market isn’t what it used to be, neither.

Canon makes cameras and lenses in two factories in China, one in Malaysia (including EF lenses), and one in Taiwan (including DSLRs and ‘EF and other’ lenses).

Canon manufactures EF lenses and pentaprism units at its Malaysian factory.
Canon manufactures EF lenses and pentaprism units at its Malaysian factory.

The Reuters story also made reference to Sharp ‘looking to lift the ratio of refrigerators and LCD televisions made in Japan to counter the yen’s weakness’ without pointing this too can be achieved in a climate of falling sales (lost to Chinese companies like Huawei and Hisense) by shutting down rather than shifting manufacturing capacity.

The story goes on to note, saliently, that ‘no companies…have yet to go so far as saying that yen weakness is a big enough factor to justify the large investment needed for new domestic plants or assembly lines.’

According to the Canon Asia website, Canon has 16 manufacturing facilities in Asia outside Japan:

Canon Dalian Business Machines, Inc: Toner cartridges, toner cartridge recycling, LBPs (laser printers).
Canon Zhuhai Inc: Compact cameras, digital cameras, LBPs, MFPs, image scanners, contact image sensors.
Guang-Dong United Optical Instrument Co Ltd: Compact cameras.
Tianjin Canon Co Ltd: Copying machines.
Canon Zhongshan Business Machines, Co Ltd: LBPs.
Canon (Suzhou) Inc: Colour and monochrome digital copying machines.
Canon Finetech Industries Development Co Ltd: Manufacturing and sales of printers and business machine peripherals.
Canon Finetech (Suzhou) Business Machines Inc: Digital printers, peripherals, service parts.

Lotte Canon Co Ltd: Copying machines, facsimile machines, chemical products.

Canon Opto (Malaysia) Sdn. Bhd: Optical lens parts, digital and compact cameras, EF lenses.
Canon Electronics (Malaysia) Sdn Bhd: Precision components.

Canon Inc Taiwan: SLR and compact cameras, EF and other lenses, precision-metal molds.

Canon Hi-Tech (Thailand) Ltd: Bubble Jet printers, personal-use copying machines, multifunction facsimile machines.
Canon Engineering (Thailand) Ltd: Plastic molds, molded parts.

Canon Vietnam Co. Ltd: Bubble Jet Printers.




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