(JW Insights) Aug 16 -- Japanese component company Kaga Electronics will spend 5 billion yen (around $34 million) to build a plant in Mexico, as it aims to capture demand from companies moving to North America to sidestep tensions between the U.S. and China, reported Nikkei Asia.

"Consumption in the North American market will continue to be strong, and Japanese manufacturers, our key clients, are expanding their presence in Mexico," said Ryoichi Kado, Kaga Electronics' president.

The new factory, which will make electronic devices for automobiles and air conditioners, is slated to start operations next April. Kaga Electronics bought land adjacent to an existing plant the company operates in the central state of San Luis Potosi, said Nikkei Asia.

Recent years have seen companies moving to reorganize their supply chains that had centered on China in response to strained relations between Washington and the Beijing. Mexico has drawn attention as an alternative to locate capacity in the North American market.

Kaga Electronics' new plant is part of the company's plans to expand its contract electronics manufacturing business.

The company will shut down its old plant and integrate operations into the new plant. Covering 20,000 square meters, the newly constructed factory will be around 2.4 times as big as the existing plant, and will employ 2,000 workers, around quadruple the current number, according to Nikkei Asia.

(Gao J)