JTEKT Corporation Business report FY2006

Business Highlights

Financial Overview
(in million JPY) FY2006 FY2005 Rate of
Sales 1,025,297 724,349 41.5 Sales increased due to the Company establishing an efficient production  structure and strengthening its quality control and sales structures too.  
Operating income 64,630 44,624 44.8 Total income increased due to  increased sales and the benefits gained from a merger, although it was partially offset by increases in materials prices .
Ordinary income 66,968 46,804 43.1
Current net income 44,900 27,285 64.6
Mechanical Components Division 
Sales 826,045 609,499 35.5 Sales increased, supported by increased sales of steering systems, drive-train components, and bearings in North America, Asia, Japan, and other regions.
Operating income 43,665 31,685 37.8 -

The Company won an order from Suzuki Motor Corporation for its i-AWD which will be installed on Suzuki's new "SX-4" in July 2006.

Business plan
The Company will fully promote the new tapered roller bearing with lower rotational friction, improved rigidity and longer service life. Taking the opportunity of starting supply this year for the large orders from major automakers including Toyota Motor Corp., the Company will make thorough efforts on development of new applications and cost reduction in automotive use. It will also promote research on large trucks and non-automotive applications such as construction equipment and machine tools to strengthen its proposal-development ability. While it aims to achieve annual sales of approx. six billion yen with this new tapered roller bearing by 2010, it will promote the product as it will lead to future innovation in elemental technology in the machine industry. This new bearing developed and commercialized by the Company is highly rigid, using a tapered roller. Although tapered roller bearings are generally superior in rigidity and wear resistance, its applications have been limited because of its high friction loss or high rotational torque. The new bearing has 80% less rotational torque and 40% less size and weight than conventional tapered roller bearings. It is expected to improve fuel efficiency by approx. 2% when applied in vehicle drivetrains. Overall upgrades in tapered roller bearings together with ball bearings are expected to improve vehicles' fuel efficiency by two digit percentage, according to the Company. (From an article in the Nikkan Jidosha Shimbun on Feb. 09, 2007)

The Company will consolidate its domestic lines producing hydraulic power steering systems to its Toyohashi plant (Toyohashi city, Aichi prefecture). It will terminate operations at one of the Nara plant's (Kashihara city, Nara Prefecture) hydraulic power steering lines, and will also reduce output of their components at the Okazaki plant (Okazaki city, Aichi prefecture) in March 2007. As the market of hydraulic power steering is projected to dwindle due to rising demand for electric power steering, which offers a higher level of fuel efficiencies, the Company intends to integrate hydraulic systems production, and employ more facilities and manpower for producing electric systems. The Company's steering division generates some 40 percent of the consolidated sales; it targets sales of 487.0 billion yen by fiscal 2008, an increase of 17 percent compared with the 2005 level. Sales of electric power steering systems are likely to exceed those of hydraulic systems in fiscal 2007 ; its portion in the steering market is projected to reach 60 percent in fiscal 2008. The Company is the world's largest supplier of steering systems with a 27 percent share of the overall market and a 45 percent share of the electric steering systems. With its capability to reduce fuel consumption by 2-3 percent compared with hydraulic system, electric power steering systems are expected to be mounted onto an increasing variety of models built at home and abroad. (From an article in the Nikkan Jidosha Shimbun on Mar. 20, 2007)


R&D Expenditure
The Company invested 29.957 billion JPY in research and development activities in fiscal year 2006 that ended March 2007.

Research and development activities (Fiscal year ending March 2007)

Steering division
The Company announced that it has jointly developed a rack type EPS, "Intelligent Front Steering (IFS) System" for Toyota Lexus LS460, with Toyota Motor Corp. (IFS) System, the successful integration of high power Rack Direct Drive Electric Power Steering (RD-EPS) and Electric Variable-Gear-Ratio Steering (E-VGR), will help improve fuel efficiency and driving stability. (From a press release on Mar. 5, 2006)

-The Company developed a column assist electric power steering system with a Hall IC torque sensor. This system meets the New European safety standards to be implemented in 2010 and after. The Company launched it in advance of impending regulation in Japan and overseas markets.

Drive-train components division
The Company has successfully developed and started marketing "CS Series" of small/medium-diameter driveshafts (200mm-350mm), which require less costs in operation, compared to other conventional driveshafts of this class, while perform with equal or better torque capacity. It has succeeded in lowering costs by reducing the size of the universal joint area by 10 percent. The Company has improved fatigue strength by adopting a process of thread rolling after heat treatment as a solution for possible bearing bolt problem. Also, the Company has prolonged cross flaking life by applying a type of plastic working called burnishing on the cross surface. (From a press release on Feb. 14, 2007)

-The Company commercialized a center differential torsen that is mounted on the most luxurious hybrid passenger cars in the domestic market in Japan; and a twin differential that integrates a center differential torsen and front differential nicely, making a compact package.

Bearing division
The Company has developed a new hub unit with integrated seal & built-in ABS sensor for drive wheels. ABS sensor, which prevents a brake from locking up, is usually located in the front & rear wheel bearing areas to detect wheel rotational speed. This newly developed hub unit, by positioning ABS sensor and magnetic pulsar closer to the inner side of bearings, protects sensor area from being exposed to muddy water or other contaminants and improve sensor reliability. Also, it eliminates several processes; drilling on thread knuckle arm holes to attach sensors, preventing metal chips from being bonded to magnetized pulsar, adjusting air gap, and so on. Furthermore, the product, being equipped with a labyrinth lip, leads to cost reduction by removing a deflector which has conventionally been attached to the CVJ. The Company aims to bring the product into the market in 2010 and achieve annual sales of seven billion yen by 2013. (From a press release on Mar. 29, 2006)

The Company announced that it has developed the "Rocker Roller" bearings for roller rocker arms, to which low-viscosity oil can be applied, and started supplying them to automakers. It aims to sell 1 million units per month in 2008 for automotive engines. The fatigue strength of the surface of the bearing, connecting the cam and the roller rocker arm, was improved by shot- blasting and the surface was barrel-polished. As this process still left the surface rough, it was possible to damage the cam when low-viscosity oil was applied. For the new product, the Company has developed a special barreling process, Tetratekt, for which the abrasive grain material and the material composition were changed and as a result, the shot-blasting became unnecessary. A lower torque has been achieved and possible cam damages have been prevented with this new technology. The Company will explore its new applications. (From an article in the Nikkan Jidosha Shimbun on Mar. 23, 2006)

The Company developed and launched a needle roller bearing used in the planetary gear system with eight times longer life than the previous products. It plans to market the product toward application in automatic transmissions and continuously variable transmissions of automobiles. While taking advantage of high-speed and low torque capabilities of a needle roller bearing with a cage, heat treatment and surface reforming treatment for higher fatigue strength were given in order to make up for the decreased load capability and achieve longer life of the product. (From an article in the Nikkan Jidosha Shimbun on Dec. 1, 2006)

-For automotive use, the Company developed a highly efficient CVT chain (J-IC JTEKT Involute Chain) that when compared to conventional metallic belts, successfully improves fuel consumption by 4 to 5% and lowers the level of noise.

-The Company developed needle bearings for long-life planetary gears. These bearing last eight times as long as conventional ones.

Investment Activities

Total capital spending for FY2006 was 60.303 billion yen.
Of the amount, 53.053 yen was invested in the Mechanical Components Division to replace production facilities and prepare for producing products with new model numbers.

Overseas Investment
The Company has decided to establish a third plant under its U.S. subsidiary Koyo Corporation of U.S.A. (KCU) in an industrial park located on the outskirts of Johnson City, Tennessee in order to meet the rising demand for bearings in the U.S. Plans are to start construction by the end of 2006 and begin production of high-functional tapered roller bearings (TRB) for automobiles in July 2008 with a total investment of $20 million (approx. 2.3 billion yen). The KCU monthly production capacity will then be raised from current 1 million sets to 1.5 million sets. In relation to this capacity increase, the Company and Nakatetsu Co., Ltd., its group company with 20% JTEKT holdings, will form a joint venture in the same industrial park, with the purpose of supplying early-process (lathed) TRB components to the new KCU plant as well as other customers. The new company, Nakatetsu Machining Technologies, LLC, will begin production in April 2008. (From an article in the Nikkan Jidosha Shimbun on Aug. 12, 2006)

New Equipment Installment
Type of facility Estimated amount of investment
(in million yen)
Project Period
From To
Kagawa Plant
(Kagawa, Japan)
Manufacturing facilities for mechanical components 3,900 Apr. 2007 Mar. 2008
Nara Plant
(Nara, Japan)
Manufacturing facilities for mechanical components 3,600 Apr. 2007 Mar. 2008
Tadomisaki Plant
(Aichi, Japan)
Manufacturing facilities for mechanical components 3,500 Apr. 2007 Mar. 2008
Daibea Co., Ltd.
Head Office & Sakai Plant
(Osaka, Japan)
Manufacturing facilities for mechanical components 2,900 Apr. 2007 Mar. 2008
Koyo Corporation Of the U.S.A.
(South Carolina, USA)
Manufacturing facilities for mechanical components 2,700 Jan. 2007 Dec. 2007