Taiwanese Tesla supplier Hota retools supply chain with first US factory
By Sarah Wu
TAICHUNG, Taiwan (Reuters) — For years, Hota Industrial Mfg. Co has made gears, shafts and other auto parts in Taiwan and shipped them to large foreign carmakers such as Tesla (NASDAQ:TSLA), Ford Motor (NYSE:F) and General Motors (NYSE:GM).
But soaring shipping costs during the pandemic and escalating cross-strait tensions have forced some of Hota's customers to re-evaluate their reliance on Taiwan, a democratically governed island that China claims as its own and has not ruled out taking by force.
To address client concerns about supply chain security and to move closer to North America, which accounts for 70% of its sales, Hota in September announced a $99 million investment in a plant in New Mexico, its first outside Asia.
«Our choice of the United States is actually a very natural decision,» Hota CEO Holly Sheng told Reuters in an interview earlier this month. «But, in terms of cost, it is not very natural. That is why for so many years we chose not to leave Taiwan.»
Facing shortages of cargo containers and workers at ports throughout the pandemic, Hota, which was founded in 1966, resorted to expensive air freight to send heavy auto parts to North America.
«During COVID, even if your products were cheaper, they couldn't be shipped,» Sheng said. «Now, everyone can accept that 'If you're located closer to me, I'm willing to pay a bit more'.»
'THE NEXT DETROIT'
At one of Hota's plants in Taiwan, robotic arms move metal cylinders through a series of machines, each a step in shaping them into precise shafts that will combine with other powertrain components to make cars move.
The crates of shafts and gears at the factory contain some of the more than 20 million parts Hota produces each year.
Soon, Hota's
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