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5. Sumitomo Wiring Systems, Ltd. Business Report FY ended Mar. 2008-2015

Sumitomo Wiring Systems, Ltd. Business Report FY ended Mar. 2008-2015

Recent Years

Aluminum Wiring Harnesses

-The Company aims to increase the sales of lightweight aluminum wiring harnesses to 10% of its entire harness sales by the fiscal year to end in March 2018 (FY 2017). The aluminum wiring harness offers an approximately 50% reduction in weight compared to wiring harness made of copper wires. The Company began supplying its aluminum wiring harnesses to Toyota Motor Corporation in 2010. Initially, the aluminum wiring harnesses showed disadvantages in vibration resistance and corrosion resistance compared to copper-made products. The aluminum wiring harness now offers increased durability after many improvements have been made. Sumitomo Electric Industries, Ltd., the parent company of Sumitomo Wiring Systems, has also decided to increase the monthly production capacity of aluminum wires at its Thai plant to 300 tons, which is about five times the present capacity, by FY 2016. Sumitomo Wiring Systems will propose its product to manufacturers in Japan, the U.S. and Europe to achieve its sales target. (From an article in the Nikkan Jidosha Shimbun on November 25, 2014)


-In November 2010, the Company and Sumitomo Electric Industries announced that they have developed an automotive low-voltage wiring harness using lightweight, aluminum wires and that the product is used in the new "Ractis" manufactured by Toyota Motor Corporation. The heaviest set of conventional wiring harness using copper wires weighs as much as 20 kilograms per vehicle. The Sumitomo Group says lighter products are required from automakers, which are striving to reduce vehicle weight for improved fuel economy. In response to such demand, the two companies developed lightweight wiring harnesses using thin aluminum wires with a twisted wire structure by redesigning the terminal structure to ensure reliable electric connection. They will continue to develop further advanced technology, aiming to expand use of its aluminum wire harness. (From an article in the Nikkan Jidosha Shimbun on November 25, 2010)

Recent Development Outside Japan

-In October 2014, Sumitomo Electric Industries, Ltd. announced a JPY 7.3 billion investment project for its wholly owned subsidiary, SEI Thai Electric Conductor Co., Ltd., which manufactures aluminum wires and aluminum rod materials in Thailand. The Rayong-based subsidiary will install an aluminum casting and rolling machine in order to establish an integrated production system for automotive aluminum wires. The products will be supplied directly to Sumitomo Wiring Systems' wiring harness plant in Thailand, which is expected to improve the group's overall production efficiency. SEI Thai Electric Conductor also plans to increase its aluminum wire production capacity to meet growing demand from Japanese automakers. (From an article in the Nikkan Jidosha Shimbun on October 20, 2014)

-The Company and Sumitomo Electric Industries, Ltd. announced that they would establish a new facility to produce aluminum electric wires for automobiles in Thailand. For the two companies, which began mass production of automotive aluminum wire harnesses in 2010, this is the first time to set up a manufacturing base for the products outside Japan. Demand for lightweight aluminum wires has been steadily expanding, as automakers are striving to reduce vehicle weight as a means of achieving better fuel efficiency. Anticipating an increase in demand in ASEAN countries and China, the two companies decided to build the Thai plant, which will serve as the supply hub to the Sumitomo Electric Group's worldwide operations. The new facility will be owned and operated by SEI Thai Electric Conductor Co., Ltd. (STEC), a local subsidiary of the Sumitomo Electric Group. It will be located within the premises of STEC at the Amata City industrial Estate, Rayong Province and begin commercial operations at a pace of 100 tons/month in September 2014. (From an article in the Nikkan Jidosha Shimbun on Mar. 5, 2013)


-The Company will set up a new plant in Paraguay in the fiscal year ending in March 2016 (FY2015). The new plant will serve as a production base to supply wiring harnesses to Japanese and European automakers in Brazil. Labor costs in Brazil are relatively higher than those in other South American countries. Opening a production base in the country neighboring Brazil will allow the Company to keep its production costs lower and improve its cost competitiveness. This will be Sumitomo Wiring Systems' first plant in Paraguay and the sixth in South America. The plant will start operations in the first half of FY 2015. Its initial workforce is around 1,000 but the number will be expanded to around 4,000 in the medium term. (From an article in the Nikkan Jidosha Shimbun on November 11, 2014)


-Sumitomo Electric Industries, Ltd. (SEI) and the Company will start producing automotive wiring harnesses in Russia by the spring of 2014. SEI and the Company will establish a joint venture in August 2013 with OAO Zavod Radioapparatury (ZRA), a manufacturer of communication devices and wires in Russia. The new JV will utilize ZRA's existing manufacturing plants in Russia. SEI Group has been operating a sales subsidiary in Russia, but this will be the first production base for wire harnesses in the country. To expand sales, SEI and the Company will promote its products to automakers that have presence in the Russian market. (From an article in the Nikkan Jidosha Shimbun on July 6, 2013)


-In March 2011, the Company and Sumitomo Electric Industries announced that they would set up new plants in Indonesia to produce automotive wire harnesses, sintered parts, and cutting/machining tools, investing 5 billion yen. They plan to set up production facilities for each sector.

• Wire harnesses: Invested JPY 1.4 billion at the existing facilities of its joint-venture company with Sumitomo Electric Industries, PT. Sumi Indo Wiring Systems, in Purwakarta in western Java, to enlarge the plant building. Annual production capacity by FY2015 is planned to be increased to three times the current level.
• Sintered products: Set up a manufacturing and sales company as a joint venture with a local corporate group, in Bekasi in western Java. Commercial production is scheduled for launch in February 2013. Approximately JPY 2.5 billion is expected to be invested in the company.
• Cutting/machining tools: Sumitomo Electric Hardmetals, which is a Group company, and an Indonesian corporation, set up a manufacturing and sales company in Kawarang in eastern Java. Commercial operations are scheduled to be launched there in April 2013. Approximately JPY 1.2 billion is expected to be invested in the company.

-In 2008, Sumitomo Electric Wiring Systems (Europe) Limited (SEWS-E), a UK joint venture of Sumitomo Electric Industries, Ltd. (SEI) and Sumitomo Wiring Systems, Ltd. (SWS), announced the establishment of an automotive wiring harness manufacturer in Port Said, Egypt, in order to enhance the supply of automotive wiring harnesses in Europe. This is the first automotive wiring harness production base in Egypt for the SEI Group. The new company "SE Wiring Systems Egypt S.A.E.," established in July 2008, is capitalized at value in Egyptian pound equivalent to USD 10 million, wholly invested by SEWS-E.. With a workforce of approximately 1,400 and two Japanese representatives, the Egyptian company is slated to start operation in August 2009. It targets to generate annual sales of JPY 5 billion in 2010 from the automotive wiring harness business. (From an article in the Nikkan Jidosha Shimbun on Sep.9, 2008)


-In 2008, the Company announced that it will establish Sumi Vietnam Wiring Systems Co., Ltd., its third automotive wire harness production company in Vietnam. Under the aim of enhancing the Group's supply capacity in Southeast Asia, the new company will be created by the end of Feb. 2008 with a registered capital of USD 17 million (JPY 2 billion), which will be wholly provided by the Company. The new plant will be set up on 100,000 square meters of land in the Dong Van Industrial Complex in Ha Nam. Commercial operations are scheduled to begin in January, 2009 to make wire harnesses for use in Japan and North America. The Group is ready to spend JPY 1.9 billion in this project, expecting sales at the new facility to reach USD 90 million (approximately JPY 10.4 billion) in fiscal 2011, which ends in December, 2011. (From an article in the Nikkan Jidosha Shimbun on Feb. 12, 2008)

Joint Ventures

Electric Vehicle charging connector
-In 2012, the Company and Sumitomo Electric Industries, Ltd. announced that they will establish a joint venture company with REMA Lipprandt GmbH & Co., KG, a charging connector manufacturer based in Bonn, Germany. The joint venture called "SUMI REMA EV Solutions GmbH" will be set up in the middle of November to develop and design electric vehicle charging connectors conforming to the "Combined Charging System", which is referred to as "Combo", the EV quick charge standards recommended by European and U.S. auto manufacturers. The Sumitomo Electric Group now manufactures charging connectors for electric vehicles in compliance with ordinary and quick charge standards called "CHAdeMO", which is predominant in the Japanese market. By offering products compliant with both standards in Japan and other areas, the Sumitomo Group intends to expand the EV components business, and plans to commercialize Combo-based connectors as early as 2013. (From an article in the Nikkan Jidosha Shimbun on Oct. 25, 2012)

Restructuring

-In 2011, the Company announced that it will absorb Sumiden Electronics, Ltd. (SDEL) effective April 1, 2012. SDEL primarily manufactures connectors and terminals that compose a wiring harness as well as electronic components that control the automobile power supply systems and equipment. Although demand for wire harnesses is expected to increase steadily in emerging countries, global competition is likely to further intensify. By consolidating SDEL's management resources, the Company intends to establish a system where development, manufacture and human resources development can be promoted in an integrated manner. (From an article in the Nikkan Jidosha Shimbun on December 28, 2011)

-In 2011, the Company announced that it will consolidate its four manufacturing companies in eastern Japan effective October 1. As production of wiring harnesses has been increasingly shifted overseas, the Company aims to strengthen its competitiveness by increasing its efficiency in product manufacturing, making better use of human resources, and developing more agile production structure through introduction of a flexible worker exchange system beyond regional boundaries. The integration will help the Group clarify what it needs to do as a Japan-based "global mother plant". The four companies are Tohoku Sumidenso, Ltd. (Nanyo, Yamagata Prefecture); Kyohritsu Hiparts Co., Ltd. (Ichinoseki, Iwate Prefecture); Kyohritsu Harness, Ltd. (Ichinoseki, Iwate Prefecture), and Kanto Sumidenso, Ltd. (Oyama, Tochigi Prefecture). Tohoku Sumidenso will be the surviving company. The new company to be formed through the consolidation will be called SWS East Japan, Ltd. It will be headquartered in Ichinoseki, Iwate Prefecture. Sales are expected to reach JPY 15.6 billion in the year ending March 2013. (From an article in the Nikkan Jidosha Shimbun on August 9, 2011)

R&D Facilities

R&D Structure

Wire harnesses / In-vehicle electronic equipments
-R&D activities are mainly conducted at AutoNetworks Technologies, Ltd., which is jointly owned by the Company and Sumitomo Electric Industries, Ltd. R&D activities are mainly focused on developing new products meeting safety, comfort and environmental needs.

-Wire harnesses:

• The Company is building harness architectures that can be mounted in next-generation vehicles' onboard systems, conducting R&D activities on elemental technologies needed to meet this need.
• Also, in order to reduce vehicle weight and be environmental friendly, the Company is developing lighter weight harnesses. It has succeeded in this area, developing and starting mass-production of harnesses using aluminum, which is lighter in weight than copper.
• Moreover, the Company is continuing its R&D activities on high-voltage harnesses, connectors, battery wiring modules and so on for the growing EV/HEV sector.

-In-vehicle electronics devices:

• The Company is now developing electronics devices such as PDs (power distributors) and next-generation in-vehicle LAN (Local Area Network) units in order to respond to the rapid advances taking place in IT. The Company is also launching systems with advanced features and/or networking capabilities.

Product Development

-In November 2010, the Company and Sumitomo Electric Industries announced that they have developed an automotive low-voltage wiring harness using lightweight, aluminum wires and that the product is used in the new "Ractis" manufactured by Toyota Motor Corporation. The heaviest set of conventional wiring harness using copper wires weighs as much as 20 kilograms per vehicle. The Sumitomo Group says lighter products are required from automakers, which are striving to reduce vehicle weight for improved fuel economy. In response to such demand, the two companies developed lightweight wiring harnesses using thin aluminum wires with a twisted wire structure by redesigning the terminal structure to ensure reliable electric connection. They will continue to develop further advanced technology, aiming to expand use of its aluminum wire harness.(From an article in the Nikkan Jidosha Shimbun on November 25, 2010)

Investments in Japan

-In July 2014, the Company announced that it will construct a new experiment building, which has a radio wave darkroom with a chassis dynamometer, within the premises of its Suzuka Plant in Mie Prefecture, Japan. The testing facility will allow the Company to evaluate the control capability of on-board electronic systems in an actual vehicle running environment. JPY 1.9 billion (USD 18.5 million) will be invested in the new building with a floor area of 1,638 square meters. Construction work is scheduled to commence in March 2015. Operations are expected to start in October 2016. (From a press release on July 24, 2014)