Hirata Technical CO., LTD. Business report FY2006

Business Highlights

Financial overview
In million JPY FY2006 Factors
Sales 151,542 Refer to the following:
Operating income 6,883
Ordinary income 6,679
Current net income 4,519

Note: Since fiscal year 2006 marks the first year for H-One Co., Ltd., which was established through the merger of Hirata Technical Co., Ltd. and Hongo Co., Ltd. in April 1, 2006, no comparison is given here between the financial results of the past fiscal year 2005 and those in 2006.

Production structure:
The Company set up a new welding line at its Kameyama Plant.

Introduction of synchronized manufacturing system
The Company will deploy, in its factories nationwide, the "synchronized manufacturing system," which adjusts production flexibly based completely on the vehicle assembly schedule of Honda, its major client. In 2007, it will start transferring knowhow of the system to Maebashi plant, Gunma Prefecture, and Kameyama plant, Mie Prefecture, which have not installed it yet. By 2009, it plans to complete the system introduction in the whole processes, including those at its cooperative suppliers. While improving its earning power, the company aims to strengthen its operating base by using the available capacity generated from these internal reform efforts for sales expansion to automakers other than the Honda Group. (From an article in the Nikkan Jidosha Shimbun on Nov. 10, 2006)

Overseas business
-The Company completed construction of and started operations both at QH Auto Parts in April 2006 and at WH Auto Parts Industries Inc. in December the same year.

Strengthening its network to supply dies in Asia
The Company will strengthen its die procurement system. In order to optimize and stabilize die supply and demand balance within the group, the company will increase die production capabilities of its group manufacturing bases in China, India and Thailand to improve its in-house die procurement ratio to 30%, and increase capability to procure dies from external die makers in Asia and other regions. In Thailand, where the company is producing dies since March 2006, it will double its yearly die production capacity to 200 by fiscal 2008. In India, where 60 dies a year are produced now, it will add facilities such as a machining center to raise the number to 100 in fiscal 2007. Also in China, where the company is to begin full-fledged operation in November 2006 to produce 30 dies a year, it will expand the die production facilities in fiscal 2007 to increase the production capacity to 60 dies a year by fiscal 2008. Domestically, the company has a plan to expand facilities at its die production plant in Koriyama, Tochigi prefecture. (From a story in the Nikkan Jidosha Shimbun on Jun, 16, 2006)

North America: The Company installed the newest 3,000-ton transfer press machine in order to cope with greater production volume at its main customer. It also set up a new welding line, improving its production structure.

The majority of Hirata Technical Co., Ltd's affiliates accounted for under the equity method was added to H-One's consolidated statements, as voting rights in these affiliates equally held by both Hirata Technical and Hongo Co., Ltd. were combined through the merger of the two companies.

New medium term business plan
The Company made an announcement of its mid-term business plan that targets sales of 150 billion yen and an operating profit of 7.2 billion yen in the fiscal year ending March 2009. To reach the targets, the company will strengthen its production capacities in Asia and the U.S. and establish a structure to mutually complement production dies among its plants on a global basis. Also, in order to respond to an increasing demand for high-tension materials supported by growing needs for lighter automotive bodies, the company is planning to strengthen its development capabilities, aiming to be the No.1 supplier of vehicle frame parts. In the future, it plans to expand its worldwide production of door beams, one of its main products. It will try to reduce the cost, promote development of lighter curvature pipe beams and increase the yearly production from current 8 million beams to 10 million by fiscal 2007. In its U.S., Indian and Thai plants, the company will add production facilities to expand their production capacities. In strengthening its development structure, the establishment of the structure to mutually complement dies worldwide will allow the company to improve its in-house production ratio. Starting from this fiscal year, its Thai and Chinese plants begin producing dies, and its Japanese and Indian plants expand their production capacities. The company intends to ensure its die supply capability based on the enhanced in-house production capabilities and its overseas plants' parts procurement capabilities. (From a story in the Nikkan Jidosha Shimbun on May, 15, 2006)


-In FY2006, the Company spent 650 million yen on R&D mainly in the automotive component segment.

Recent R&D Achievements (Automotive Component Division)
-Developed a welding/mating process
-Developed stamping process technology for high tensile materials and light weight materials
-Developed a class sheet metal components stamping process
-Developed material hardening technology.
-Developed functional parts by incorporating thick plate precision stamping technology and assembly technology.
-Developed an in-house information system based on CAD, CAM, and CAE technology; and trained engineers to use it.

Technological cooperation (as of March 2007)
Partner Country Contract Contract term
Midwest Stamping Corporation U.S.A. Automotive parts From Sep, 1987 to Oct. 1997 (Automatically renewed yearly)
UYT Ltd. UK Automotive parts From July. 2001 to July. 2006 (Automatically renewed yearly)
Yachiyo of Ontario Manufacturing Inc. Canada Automotive parts From Jul, 2006 to Jun, 2010 (Automatically renewed yearly)

Investment Activities

-In FY2006, the Company's total capital investment was 25,739 million yen, mainly spent on the automotive business.
Also, 9,136 million yen was spent in installing special manufacturing equipment to support mass production of components for new vehicle models; the remaining 1,663 million was spent in installing general production equipment and expanding production facilities.

Overseas investment
The Company plans to strengthen door-beam production overseas. It will introduce production facilities at its Chinese plant in 2007 and will also begin production in Thailand. Furthermore, it will build the second line for door-beams at its U.S. plant to increase the production capacity. As products of Chinese and Thai plants will be supplied to Honda's local production bases, the Company plans to establish operations to supply locally to Honda's overseas bases from its plants. The supplier positions its door-beams as its flagship products which can be expected of growth and plans to raise the production volume to 10 million units per year in 2007, up 25% from the current level. The Company's door-beam holds 72% share of those used for Honda's domestic models. The production volume in FY 2005 was approx. 8 million units. (From a story in the Nikkan Jidosha Shimbun on May, 30, 2006)

The Company will enhance its production operations in North America. A 3,000-ton transfer press machine will start operation in January 2007 at its main production site in North America, KTH Parts Industries Inc. (Ohio, U.S.A.) and several 2,500-ton class stamping machines and laser welding machines will be installed in North America sequentially by summer 2008. The company aims to establish the U.S. operations for increased production of light-weight automotive frame components using high-tensile steels and tailor welded blanks and to strengthen support for Honda Motor Co., Ltd. to start a new plant in Indiana. High-tensile steels of required specifications were hard to acquire in the U.S.A. and H-one gave up local production in some cases. The company, however, will install additional stamping machines as purchasing of the materials is possible now. (From an article in the Nikkan Jidosha Shimbun on Nov. 28, 2006)

New equipment installations
Company Name
Address Estimated total amount of investment
(in million yen)
Period of the project
From To
Kameyama Factory
Mie Pref. Japan 1,349 Nov. 2006 Oct. 2007
Maebashi Factory
Gunma Pref. Japan 1,802 Jul. 2006 Sep. 2008
Koriyama Factory Fukushima Pref. Japan 2,741 Mar. 2007 Feb. 2008
Technical Division No.1 Gunma Pref. Japan 5,439 Mar. 2007 Feb. 2008
Technical Division No. 2 Fukushima Pref. Japan 55 Mar. 2007 Aug. 2007
Consolidated Subsidiaries
KTH Parts Industries Inc. Ohio, USA 7,216 Apr. 2006 Mar. 2008
Kalida Manufacturing, Inc. Ohio, USA 1,612 Apr. 2006 Mar. 2008
KTH Leesburg Products, LLC. Alabama, USA 2,129 Apr. 2006 Mar. 2008
KTH Shelburne Manufacturing, Inc. Ontario, Canada 4,308 Apr. 2006 Mar. 2008
GH Auto Parts Industries Inc. Shandong, China 2,540 Jan. 2006 Dec. 2007
QH Auto Parts Industries Inc Guangdong, China 145 Jan. 2006 Dec. 2007
H-one Parts(Thailand)Co.,Ltd. Ayutthaya, Thailand 4,499 Jan. 2006 Dec. 2007
H-one India PVT.,Ltd. Uttar Pradesh, India 1,494 Apr. 2006 Mar. 2008