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5. Keihin Corporation Business Report FY ended Mar. 2016

Keihin Corporation Business Report FY ended Mar. 2016

Recent Development in Japan

-The Company has developed a highly efficient production line for throttle bodies and will bring it on-stream at its Miyagi Prefecture plant in May. The new line features the robotization of assembly work, which has until now relied on elements like workers' expertise, and the introduction of camera inspection. As a result, the line's workforce operating efficiency will be enhanced by up to 400%. The work of skilled workers was thoroughly examined and quantified into numbers so robots can perform tasks that require subtle adjustment of force and difficult assembly operations. After introducing the new system into its plants in Japan, the Company will implement it in its North American and Chinese plants in 2017 to increase its global competitiveness. (From an article in the Nikkan Jidosha Shimbun on March 30, 2016)

Intelligent power modules (IPMs) for its power control units (PCUs) used in Honda's new hybrid vehicle (HV) with a 2-motor system
-The Company developed and began mass-producing intelligent power modules (IPMs) for its power control units (PCUs), which will be used in Honda's new hybrid vehicle (HV) with a 2-motor system. An IPM is a core component of PCU, and helps controls the motors and batteries of a hybrid car. The Company has used IPMs developed by Honda, and this is the first time that it developed IPMs in-house. For Honda's "Accord Hybrid" with a 2-motor system, the Company assembles PCUs at its Sayama Factory (Saitama Prefecture) by using IPMs and other components supplied from Honda. For the new Hybrid model, it developed and designed IPMs and aluminum casing for PCUs in-house. The Company also procured other components to create its original PCUs. The new IPMs and aluminum casing will be produced at the Company's Miyagi No.2 Plant, which held a line-off ceremony for the new operations on November 20. These products will be delivered to the Sayama Factory's PCU assembly line. The Company plans to increase its daily IPM production to 400 units by March 2017. (From an article in the Nikkan Jidosha Shimbun on November 21, 2015)

-In October and December of 2015 the Company reorganized its business operations in Japan, launching production of automotive electronically controlled throttle bodies and electronic control units (ECUs) on production lines relocated back from overseas, in working to raise productivity.

Recent Development outside Japan

-The Company announced that Keihin (Wuhan) Automotive Components Co., Ltd. (Xiantao, Hubei Province) started producing its new heating, ventilation, and air-conditioning (HVAC) unit for the new Honda "Civic" sold in China, and began full-scale production. The plant's annual production capacity is 350,000 units. The Company's total HVAC capacity in China, including 500,000 units/year at its Dongguan Plant (Guangdong Province), will thereby increase 70% to 850,000 units/year. Currently, all HVAC units produced at the Company's Chinese operations are supplied to Honda's joint venture facilities in China. (From an article in the Nikkan Jidosha Shimbun on March 25, 2016)


-Launched production of injectors used in direct-injection gasoline engines, which are predicted to be a growing market segment. The Company implemented initiatives to raise productivity by increasing its production capacity and installing automated production lines. The Company improved its business operations by transferring production operations to its plant in Mexico.

Major Supply Agreements received in FY ended Mar. 2016

Awards

-The Company announced that Honda Motor Co., Ltd. has honored the Company with four awards in the categories of development, environment, parts, and cost at its Suppliers Conference. This award in the Development category was given for the Company’s new power control unit (PCU) as well as new FI system for small motorcycles. (From a press release on January 8, 2016)

The 12th mid-term management plan (FY ended Mar. 2015 - FY ending Mar. 2017)

-“Creating new value based on aggregate worldwide strength”-
1. Innovating both “products” and “manufacturing” designed for the future
　Strengthen collaboration between R&D and production functions

• Work to strengthen collaboration among the advanced-engineering, R&D, and production functions, so as to speed up innovations in “products” and “manufacturing” by establishing a production-technology management office within the production function.
• Enhance R&D function and facilities to respond to greater electrification of automobiles

2.Building a solid organizational structure capable of surviving
　Improve operating efficiencies and improve operating structure on a global basis

• Improve operational efficiencies in both headquarters and regional operations through strengthening collaboration globally
• Build an operating structure capable of achieving improvement through raising production efficiencies at the local level.
• Improve operational efficiencies by 20% by reorganizing indirect functions in Japan

3. Build an organizational structure that allows autonomy and independence
　Enhance sales ability to sell to global OEMs

• Work to gather and share timely, global information about selling motorcycles, general-purpose equipment, and automobiles by assigning sections to be in-charge of sales collaboration globally, in order to enhance sales abilities to sell products to global OEMs.

Major initiatives for the FY ending March 2017

-By the end of 2016, added production lines in Miyagi No. 1 Plant (Kakuta-City, Miyagi Pref.) manufacturing injectors for direct-injection gasoline engines, which increased production capacity.
*Annual production capacity at end of March 2016: 3 million units
Targeted annual production capacity by end of March 2017: 6 million units

-By the end of 2016, increased production capacity of intelligent power modules (IPMs) that are mounted in power-control units installed on hybrid vehicles.
*Annual production capacity at end of March 2016: 50,000 units
Targeted annual production capacity by end of March 2017: 100,000 units

-The Company started preparing to launch production of a new, compact and light-weight climate-control unit for mini cars that will be released in Japan. (Scheduled for completion by end of FY2016 ending in March 2017).


-The Company is building its operating structure, aiming to have the capacity to deliver 4 million injectors a year. It aims to achieve this by increasing the production capacity of production lines manufacturing injectors used in direct-injection gasoline engines, as well as raise production efficiencies. It separated work responsibilities, placing Keihin de Mexico in charge of labor-intensive, upstream processing work on parts and Keihin IPT Manufacturing (Indiana, USA) in charge of downstream processing of parts that require precision. (Planned to be completed in the summer of 2016)

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

-The R&D Expenditure for FY ending March 31, 2017 is planned to be JPY 19,400 million.

R&D Facilities

Collaboration between industry and academy

-The Company will establish a new development division jointly with the Institute of Fluid Science, Tohoku University within the premises of the institute on April 1. The new division will develop future basic technologies for automobiles such as next-generation fuel injectors and air conditioning systems. The Company has already started collaborating with Tohoku University in the area of fuel injectors and aims to further enhance the collaboration by sending its representatives to the division. (From an article in the Nikkan Jidosha Shimbun on April 1, 2015)

R&D Activities

Four wheel vehicle business
The Company developed and commercialized;
-Fuel-supply systems and induction-systems for environmentally friendly engines
-Gasoline direct-injectors
-Products for hydraulically controlling transmissions
-Fuel-supply products and systems designed to handle alternative fuels
-ECUs for engines and transmissions
-Motor and battery control-units for hybrid vehicles
-Cell voltage sensors unit for lithium-ion batteries
-Development and commercialization of power-control units for hybrid vehicles.
-Development and commercialization of products for car air-conditioning systems.
-Development and commercialization of heat-exchangers for car air-conditioning systems.

Product Development

New Fuel Supply System for Natural Gas Vehicles
-The Company announced on March 25 that its high-pressure hydrogen valve for fuel cell vehicles (FCVs) is the world's first to comply with the United Nation's Global Technical Regulation (GTR) No. 13 concerning accessories for compressed hydrogen vehicle fuel devices. The Company has started producing the valves for Honda Motor Co., Ltd.'s "Clarity Fuel Cell" FCV. FCVs are fueled with hydrogen, which has a high pressure of up to 87.5 MPa (pressure at a high temperature of 85℃). High-pressure hydrogen valves seal the high-pressure hydrogen, and supply it safely and securely. The GTR No. 13 is the strictest standard in the world, and requires parts be airtight at a maximum pressure of 105 MPa, at temperatures between -40℃ and 80℃. The company developed the new high-pressure hydrogen valve by utilizing its high-pressure gas control technology for natural gas vehicles. (From an article in the Nikkan Jidosha Shimbun on March 26, 2016)

Capital investments in the FY that ended March 2016

-By investment type: Production (JPY 11,099 million), R&D (JPY 651 million), and Other (JPY 2,843 million)

-By investment type: Production (JPY 15,939 million), R&D (JPY 438 million), and Other (JPY 989 million)

-The Company is investing to improve its supply structure to meet the demand of advanced, environmentally friendly products such as injectors for direct-injection gasoline engines and intelligent power modules.