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February 9, 1987

EPSON’s HATTORI SEES JAPANESE, US AND UK MANUFACTURING COSTS AT PAR BY 1997

By CBR Staff Writer

Seiko Epson Corp president Ichiro Hattori visited London last week to give details of his company’s UKP5m investment in a 55 acre site at Telford in the West Midlands. A 120,000 square foot permanent factory will be built on the site starting in April this year but a temporary facility will be ready in May for production of FX series dot matrix printers. Hattori says that Telford will produce 8,000 printers a month, for sale throughout Europe, in the initial stage. By the end of the first three years, he estimates Epson will have invested UKP11m in Telford, and the factory’s 250 staff will be producing over 30,000 printers a month, over half for export. Later, he hopes to quadruple the size of the factory – in its currently anticipated form it will occupy less than 10% of the site – to produce personal computers, printer components, and printed circuit boards. The investment is Epson’s second in the UK in recent months, following the recent opening of a research and development facility at Milton Keynes in Buckinghamshire and is part of a concerted move offshore by the Japanese company.

UK excellence in engineering

Last month, it announced that it would start sourcing computer and printer parts from South Korea, where the Seiko watch-making part of the business already has a joint venture with Samsung Electronics, and it already has manufacturing capacity in Oregon in the US, Australia, Singapore, Hong Kong, Canada, South America, China, and a 30-staff printer operation in France. Hattori says the geographical diversification is part of a long-term strategy motivated by the possibility of trade barriers for outsiders and cost. He expects the current high level of the Yen to remain for two or three more years but predicts that within 10 years manufacturing costs in Japan, the US and the UK will all be about the same. As a result, he is looking towards Thailand or Malaysia for further production capacity should that become necessary. The UK does, however, offer the most developed of the European, computer markets, a place where Epson has traditionally done well and has a long history for excellence in engineering that is hard to match anywhere else. Hattori says Epson’s target is to grow at 20% per annum in US and Europe, but he anticipates that, at least until 1990, Japan will be in recession. Epson move into personal computers, he admits, was an attempt to fuel sales of the company’s printers. So far, the PC, PC+ – the Equity and Equity Plus in the US – and the recently launched AT-compatible PC-AX have proved successful but in waves. After capturing an estimated 10.9% share of the the UK compatible market by last March, Epson’s sales dropped dramatically in the second half of the year. The PC-AX should help it recover, at least partly, from the hammering it took from Amstrad and ultra-cheap clones. In any case as the UK was turning down, the German sales were zooming ahead. Hattori admits that Epson made a mistake staying with the 8-bit CP/M portables, which still sell an astonishing 4,500 a year in the UK, and promises some new products in the lap-top arena soon. Epson also has a small portable TV ready to roll as soon as manufacturing costs can be brought down a little further.

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