Hirata Technical CO., LTD. Business report FY2007

Business Highlights

Financial overview (in millions of JPY)
FY2007 FY2006 Rate of change(%) Factors
Sales 158,042 151,542 4.3 -Sales increased thanks to model changes of major vehicle models, increases in sales by major customers, and increases in sales of automotive frame components as a result of contribution by WH Auto Parts Industries Inc. throughout the year. This was despite decreased sales of trial production, dies and welding equipment.
Operating income 6,549 6,883 (4.9) -Operating income decreased due to increased investment and depreciation costs which resulted from corporate tax revision etc. in Japan.
Ordinary income 6,631 6,679 (0.7) -Ordinary income decreased as a result of paying interest as a non-operating expense.
Current net income 4,325 4,519 (4.3) -The Company had extraordinary losses including losses from sales of fixed assets and write-down of securities. Current net income decreased after deducting tax expenses, etc.

Enhancing production structure

In Japan
-New welding lines were completed at Kameyama and Maebashi (Ota) Factories. An improved integrated production system which handles all processes from stamping to welding, and a proprietary production management system are now successfully combined at both factories.

Outside Japan
-Plant expansion was completed at H-one India PVT., Ltd. The Company plans to install a 1,500t transfer stamping machine and a partly automated welding line in the future.

<North America>
-A new stamping machine was installed at KTH Shelburne Manufacturing, Inc. A second 2,500t transfer stamping machine was also installed to respond to increased production and production of new models by a major customer in Canada.

-Plant expansion was completed at H-one Parts (Thailand) Co., Ltd. The Company plans to install a 2,000t transfer stamping machine and reorganize a welding line in the future.

>>See Investment for more details


-In FY2007, the Company spent 667 million yen on R&D mainly in the automotive component segment.

R&D Structure
-R&D facility
Facility Location
Research and development center Tochigi pref. Japan

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 2008)
Partner Country Contract Contract term
Midwest Stamping Corporation U.S.A. Automotive parts From Sep.10, 1987 to Oct.3, 1997 (Automatically renewed yearly)
UYT Ltd. UK Automotive parts From July 17,2001 to July 16, 2006 (Automatically renewed yearly)
Yachiyo of Ontario Manufacturing Inc. Canada Automotive parts From July 1, 2006 to Jun.30, 2010 (Automatically renewed yearly)

Investment Activities

-In FY2007, the Company's total capital investment was 26,008 million yen, mainly spent on the automotive business.
Also, 9,719 million yen was spent on installing special manufacturing equipment to support mass production of components for new vehicle models; the remaining 16,289 million yen was spent in installing general production equipment and expanding production facilities.

Domestic Investments
-The Company, a Honda-affiliated body frame parts manufacturer, will rearrange its welding line in Kameyama plant located in Kameyama city, Mie prefecture. In time for the introduction of the "corporate renovation" lines with higher production efficiency, the Company will consolidate the current 5 production lines to 3. It will also fully deploy a simultaneous production system, which enables it to manufacture body frame parts according to Honda's vehicle assembly schedule, by completing the introduction of the new production control system in 2009, to improve the Company's profitability. The new production control system will be introduced into the welding and stamping shops in the Kameyama plant in fiscal 2007 and 2008, and then into the purchasing section in 2009, which is expected to usher in a full-scale simultaneous production scheme. (From an article in the Nikkan Jidosha Shimbun on Jun. 13, 2007)

Overseas investments
<North America>
-The Company which is a supplier of body frame parts, has decided to increase its profitability in North America by stepping up its initiatives to transfer its production technology from Japan. In order to support a growing number of models built by Honda Motor Co., Ltd. in the region, the supplier has expanded its product lineup there. As a result, its level of profitability dropped significantly; its ordinary income margin for the fiscal year ended in March 2007 went down only to one-fifth level of the result posted in the previous year. The Company, which aims to boost this ratio by around 2009 or 2010 to more than 5 percent - the same level as that in Japan, will start all-out efforts to establish a flexible and efficient production structure for a wide variety of products. The project will be led by a specialized team dispatched from Japan. (From an article in the Nikkan Jidosha Shimbun on May. 22, 2007)

-The Company, a body structural parts supplier of the Honda group, will expand production of dies in Asia. By the end of this fiscal year, the company plans to raise by 250 percent the total volume of dies it manufactures in-house in Thailand, India, and China; it will also increase the number of product variations it makes in these three countries to 260. In efforts to become more competitive in the die industry, the Company is working on extending its supply network in the global market through projects such as exports from the Thai plant to North America. In line with Honda Motor's drive to increase local procurement under its global strategy, the Company has been undergoing initiatives to transfer overseas die production technology including those for products that use ultra high-tensile steel sheets, which require a high level of press forming techniques. Highly focused training is conducted at local die manufacturers in Asia, by which the company intends to make its Asian operations a supply hub for the global market. The Company's Thai plant, which is supplying dies to Japan, China, and Europe, has also started exports to North America. Through its mutually complementary system in Asia, which the Company is committed to enhancing, the Thai plant will import dies from its facility in India. (From an article in the Nikkan Jidosha Shimbun on Jun. 21, 2007)

-The Company will reorganize its production system in Thailand. The auto body manufacturer will change its line layout at its local production facilities starting in the summer of 2008 in time for the operation launch at its new and second casting plant. The Company is constructing the second plant in order to respond to the expansion of local automotive production of its main customer, Honda Motor Corporation. The basic idea is to give the two plant distinct responsibilities, bringing all sub-lines and casting lines for customers other than Honda in the new plant and final assembly lines in the old casting plant. This will allow the company to optimize product flows in the two facilities, improve productivity and space efficiency by 10% and 30%, respectively, and boost its competitiveness. (From an article in the Nikkan Jidosha Shimbun on Nov. 15, 2007)

New equipment installations
Company Name Location Estimated total amount of investment
(in million yen)
Period of the project
From To
Kameyama Factory
Mie Pref. Japan 2,558 Nov. 2007 Dec. 2008
Maebashi Factory
Gunma Pref. Japan 2,165 Jul. 2006 Apr. 2010
Koriyama Factory Fukushima Pref. Japan 2,261 Dec. 2007 Jan. 2009
Consolidated Subsidiaries
KTH Parts Industries Inc. Ohio, USA 1,473 Oct. 2007 Mar. 2009
KTH Leesburg Products, LLC. Alabama, USA 1,424 Oct. 2007 Feb. 2009
QH Auto Parts Industries Inc Guangdong, China 1,645 Dec. 2007 Dec. 2008
H-one Parts(Thailand)Co.,Ltd. Ayutthaya, Thailand 2,451 Jul. 2007 Dec. 2008
H-one India PVT.,Ltd. Uttar Pradesh, India 1,902 Oct. 2007 Mar. 2009