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5. H-ONE Co., Ltd. Business Report FY ended Mar. 2016

H-ONE Co., Ltd. Business Report FY ended Mar. 2016

Business Developpment

Production

• North America: Installed a 3,000t servo-transfer press (cold stamping) at KTH Parts Industries Inc. (KTH), launching production in Sept. 2015. This increased production capacity and sales of ultra-high-tensile steel.
  
  
• China: A 3,000t servo transfer press (cold stamping) was installed at WH Auto Parts Industries Inc. in July 2016.
  
  
• India: A new stamping line is being installed at H-one India PVT., Ltd.’s No. 2 Plant in Rajasthan. This will enable the plant to carry out seamless production operations, from stamping to welding.
  
  
• Japan: The Company closed the Toda Plant in Toda, Saitama Pref., which ceased operating in March 2016. The operations were transferred to Maebashi Works.
  
  
• Japan: The Konan Plant in Konan, Shiga Pref. launched commercial operations in May 2015. The plant will conduct welding operations on framework parts for Daihatsu’s Shiga Plant.
  
  
• Japan: The operations at the Karasuyama Plant in Nasukarasuyama in Tochigi Pref. were transferred to the Koriyama Plant in Fukushima Pref. in April 2015. The Company consolidated R&D and testing functions into the Karasuyama Plant.

R&D Activities

• Japan: Launched production of metal separators for fuel cell stacks.
  
  
• North America: In responding to customers’ R&D activities in North America, the Company established a new R&D center in KTH Parts Industries Inc. (KTH).

Divestitures

-The Company and Yachiyo Industry Co., Ltd. announced that their equity-method affiliate, UYT Ltd., which produces and sells auto parts in the U.K., would transfer its entire business to a UK-based parts supplier. The transaction was completed on June 15. UYT was owned 35% each by Yachiyo and H-One, 25% by Honda of the UK Manufacturing Ltd., and 5% by Honda Trading Europe Ltd. UYT mainly supplied stamped parts to Honda's vehicle assembly plant in the U.K. It decided to transfer its operations to N Press Assembly Limited due to a changing business environment. N Press was established in February 2015. It is owned 75% by a Chinese chemical company. (From an article in the Nikkan Jidosha Shimbun on June 18, 2015)

Additional Investment

-The Company and G-TEKT Corporation announced that the two companies will make an additional investment of USD 30 million (approximately JPY 3.6 billion) in their equity-method affiliate, G-ONE Auto Parts de Mexico, S.A. de C.V., which manufactures and sells automotive parts. Each company will provide 50% of the total additional investment. After the capital injection, G-ONE Auto Parts de Mexico's capital will increase to USD 60 million (approximately JPY 7.2 billion). (From a press release on May 14, 2015)

Awards

-KTH Parts Industries Inc. (in Ohio, USA) and the Company were awarded the "Excellence in Innovation Award" from Honda R&D Americas, Inc. in the fiscal year that ended in March 2016, for an innovative technological advancement in working on the development of a new vehicle model.

-In the fiscal year that ended in March 2016, H-one India PVT., Ltd. (in Utter Pradesh, India) was award the “Supplier Quality Excellence Award” from GM India, for its high quality production operations. H-one India produces parts for the Chevrolet’s 3 models built by GM India.

Mid-term Business Plan (FY ended Mar. 2014 - FY ending Mar. 2017)

-Targets for fiscal year ending March 2017, under the 4th mid-term business plan, are as follows:
1) Sales: JPY 200 billion and more
2) Ordinary income rate: 4.5%

Management Policy: "Surpass the competition worldwide with H-ONE's superior competitive advantages and technology, to fully satisfying customer needs."

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

-Most of the Company's R&D expenditure was directed to automotive parts related businesses in Japan.

R&D Structure

-Centering on its development technology headquarters, the Company carried out R&D activities in cooperation with many research and development institutions including those of Honda Group.

R&D Facilities

Recent R&D Activities (Automotive Component Division)

-Developed a welding/mating process
-Developed stamping process technology for high tensile materials and light weight materials
-Developed a outer parts stamping process
-Developed functional parts by incorporating thick plate precision stamping technology and assembly technology
-Developed material hardening technology
-Developed an in-house information system based on CAD, CAM, and CAE technology; and trained engineers to use it
-Developed stamping process technology for precision metal parts

Product Development

Metal separators for fuel cell stack
-The Company has started production of fuel cell stack metal separators for use in the "Clarity Fuel Cell," Honda Motor Co., Ltd.'s new fuel cell vehicle (FCV). The production of the thin metal separator requires fine processing, and several hundred separators are used for a single fuel cell stack. The Company has used the fine blanking and precision mold manufacturing techniques it has cultivated for the production of automotive parts and developed a production method to produce precise shapes specific to the separator with press work, which has made stable mass production of high-quality stainless separators possible. (From an article in the Nikkan Jidosha Shimbun on March 17, 2016)

-Automotive Parts Division: JPY 6,732 million to launch production of new automotive parts, and JPY 9,948 million to increase/upgrade general-purpose production facilities to raise productivity and to extend and reconstruct buildings.

Investments in Japan

-The Company will optimize the production system at its production hub in its Kameyama Factory (Mie Prefecture). The Company will improve production efficiency in response to Honda Motor Co., Ltd., its main customer, reducing production volume and shifting product lines to mini vehicles. The Company aims to cut plant space in half by the end of March 2017. Kameyama Factory serves as a supply hub for Honda's Suzuka Factory (Mie Prefecture). The Company will optimize its organization in accordance with its outlook for production and sales volume, and increase the profitability of its Japanese business. The Company will make welding lines more compact and reduce plant space dramatically. It will also enhance automation by using robots that are idle to save manpower. The Company intends to raise profitability by reducing the size of the whole welding plant, and preparing for next generation car models. (From an article in the Nikkan Jidosha Shimbun on February 5, 2016)

-The Company has begun operations at its new welding plant in May 2015. The new plant was established in Konan-shi, Shiga Prefecture, with an investment of JPY 40 million. It's only three kilometers away from the Shiga Plant of Daihatsu Motor Co., Ltd., and supplies welded body frame parts to this Daihatsu plant nearby. The Company has set up a welding line in the 2,000-square-meter plant rented from a company. Previously, the supplier's Kameyama Factory in Kameyama-shi, Mie Prefecture, had been in charge of processes from stamping to welding of the body frame parts for the Shiga Plant of Daihatsu, which is 50 km away from the Kameyama Factory. Shifting the welding process from the Kameyama Factory to the new plant in Konan will allow the company to quadruple transport efficiency. (From an article in the Nikkan Jidosha Shimbun on May 19, 2015)