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5. G-TEKT Corporation Business Report FY ended Mar. 2018

G-TEKT Corporation Business Report FY ended Mar. 2018

Business Activities

-Believing that the growth of electric vehicles is the turning point and a great opportunity for the automotive industry, the Company set the following targets as its mid-term growth strategy to achieve sustainable and continued growth.
Sales: JPY 300 billion. Operating profit: JPY 20.0 billion.

-The Company is working on initiatives to achieve these objectives through three types of innovations, those based on “technology”, “sales”, and “human resources”.

Technological Innovations
-The Company is refining its analytical and technological capabilities on body performance as its core technology for developing and proposing complete automobiles as solutions to OEMs, focusing on expanding product orders for new models.
-In observing the rapid automation of vehicles in Europe and China, the Company is working on making vehicle bodies lighter and more rigid.
-Established the G-TEKT Tokyo Lab in April 2018, as the central, global R&D center for Japan, the USA, Germany, and China.

Sales Innovations
-The Company is conducting innovative sales activities targeting European luxury-car OEMs. In Slovakia, it is winning new orders from European luxury-car OEMs based in the UK, for aluminum parts.
-In order to respond to the above, the Company established G-TEKT Slovakia, s.r.o. that is scheduled to go on line in June 2019 and build aluminum bodies.
-G-TEKT Europe Manufacturing Ltd. based in the UK launched construction of its fourth production plant to perform aluminum processing operations. It is scheduled to go online in January 2019.
-G-TEKT Shanghai Representative Office, the new research office established in Shanghai, China, opened for business.
-Construction of new production plant in Changsha, Hunan Province to expand production capacity to respond to increased orders from Japanese OEMs.

Human-resource Innovations
The Company is focusing on creating a new program to enrich its human resources based in Japan, installing a support tool making use of cloud computing.

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

R&D Structure

-R&D activities involving new technologies and new products are conducted at the Company's main Technology Development Department.
-20 engineers work at the Product Development Section as of March 2018.
-The product development and R&D functions consists of the technology center’s stamping technology, joining-technology, precision-technology’s departments and the sales center’s product-development department, which work closely with customers

R&D Activities

-Major R&D activities and achievements in the FY, which ended Mar. 31, 2018

• Development of hot stamping technology
• Development of forming technology for ultra-high tensile steel sheets
• Development of stamping technology for transmission parts
• Development of forming-simulation technology
• Development of technology designed to reduce vehicle weight
• Technology for applying multi-materials
• Dissimilar welding technology

ｰThe Company will begin product development targeting electric vehicles (EVs). The company is studying the feasibility of developing parts such as battery cases for solid-state batteries and drivetrain components using its existing technologies. Going forward, the company will determine the direction of development by utilizing virtual EV data. G-TEKT produces stamped precision parts for continuously variable transmissions, for which demand is expected to decrease with the shift to EVs. To make up for expected decline in sales, the company will launch a new business targeting EVs to achieve sustainable growth. (From an article in the Nikkan Jidosha Shimbun on February 7, 2018)

Capital Investments in FY ended Mar. 31, 2017

-The Company invested the following amounts by region to switchover to launches of new models:
Japan: JPY 4,500 million
North America: JPY 300 million
Asia: JPY 1,900 million
China: JPY 2,700 million

-The Company made the following basic capital investments to increase production capacity.
Japan: JPY 3,600 million
North America: JPY 5,000 million
Europe: JPY 1,600 million
Asia: JPY 1,600 million
China: JPY 600 million
South America: 200 million

-The Company plans to spend JPY 28,200 million company-wide on capital investments during the fiscal year that ends in March 2019.

Investments in Japan and U.S.

-The Company announced that it will construct a production plant in Slovakia to manufacture aluminum body-parts. The Company is investing EUR 42 million (JPY 5.5 billion) in the plant that is scheduled to launch production in June 2019. The new company is named G-TEKT Slovakia, s.r.o., which will be capitalized at EUR 28 million (JPY 3.7 billion), with G-TEKT investing 80% and G-TEKT Europe Manufacturing, a subsidiary, investing the remaining 20%. It will deliver aluminum body-parts to Jaguar Land Rover that placed new orders, and which has an automobile plant in Slovakia. The new plant will have 15,000 sq. meters of floor space. Initially, one heavy-duty transfer press was going to be installed at the time production was scheduled to launch, but the Company decided to install two presses. The plant is being built to respond to the possibility of receiving new orders from European OEMs that have automobile plants in Slovakia. The Company is positioning the plant to manufacture aluminum body-parts, which are seen as a means to meet the growing need for reducing the weight of electric vehicles such as the Shift.

-The Company announced that its Chinese subsidiary, Wuhan Auto Parts Alliance Co., Ltd. (Wuhan Auto Parts Alliance), will construct a second plant for automotive parts welding and assembly in Changsha, Hunan Province. The new plant will be G-TEKT's fifth plant in China. It will start operations in April 2018. The total investment will be CNY 45 million (JPY 780 million). The subsidiary will deal with increasing orders from one of its main customers, GAC Mitsubishi-Motors Co., Ltd. (GMMC). GMMC assembles vehicles in Changsha, and will enhance production capacity. Wuhan Auto Parts Alliance has been supplying automotive parts from its plants in Wuhan, Hubei Province, and aims to reduce distribution costs and improve supply capacity. Since there are many European and Chinese automakers in the vicinity of Changsha, the company expects to develop new customers. (From an article in the Nikkan Jidosha Shimbun on December 5, 2017)

-The Company announced that G-Tekt Europe Manufacturing Ltd., its subsidiary in the U.K. will increase automotive parts production capacity to deal with new orders. The subsidiary will construct a new building on the site next to its existing plant in Gloucestershire with a total investment of about GBP 30 million (JPY 4.2 billion). The new facility will start operations in January 2019. It will have a building area of 12,000 square meters, and house equipment like a large transfer press machine capable of aluminum processing and a large blanking press machine. (From an article in the Nikkan Jidosha Shimbun on August 28, 2017)