Sumitomo Rubber Business Report FY2007
Business Highlights
Financial
overview
Contracts
-The Company announced that its high-performance Dunlop SP SPORT MAXX A1 A/S, which are manufactured under a new production system called Taiyo, has been chosen by Toyota for its new Lexus models. Taiyo, a new and unique tire production method developed by the Company, achieves the highest levels of precision and efficiency and meets multiple requirements of world-class, premium cars. This is made possible by successfully controlling noise, vibration, and harshness as well as offering riding comfort and fuel efficiency. The Company expects the total number of tires produced based on this production method to top 5 million units in 2007. (From a press release on Mar. 9, 2007)
-The Company announced that its new Dunlop runflat tires are featured on the Nissan GT-R released this month. The SP Sport 600 DSST (DUNLOP Self-Supporting Technology) CTTs (Combined Technology Tire) are designed to maximize the vehicle dynamics of the GT-R, a vehicle developed under the concept of a multi-performance supercar for the next generation. (From an article in the Nikkan Jidosha Shimbun on Dec. 20, 2007)
| (in million JPY) | FY2007 | FY2006 | Increases | Factors |
| Overall | ||||
| Sales | 567,306 | 534,086 | 6.2% | As a measure to cope with soaring prices of materials, the Company further strengthened its total cost reduction initiatives. It also reviewed its product selling prices to optimize them; developed and launched high value-added products, which incorporate its proprietary technology; and conducted all-out marketing efforts to expand its global sales network. |
| Operating profit | 45,126 | 36,789 | 22.7% | |
| Tire business | ||||
| Sales | 478,482 | 430,886 | 11.1% |
Sales at the Tire Division increased year-on-year, supported by strong sales outside Japan. In addition, the rise was partly due to a profit generated by the weaker yen. |
| Operating profit | 35,892 | 26,381 | 36.1% | Although its profit was greatly hit by high materials prices, operating profit at the Tire Division improved year-on-year. The increase is attributed to a drop in the yen; and the Company's having shifted its focus to high value-added products, as well as its intensified efforts to reduce costs. |
Contracts
-The Company announced that its high-performance Dunlop SP SPORT MAXX A1 A/S, which are manufactured under a new production system called Taiyo, has been chosen by Toyota for its new Lexus models. Taiyo, a new and unique tire production method developed by the Company, achieves the highest levels of precision and efficiency and meets multiple requirements of world-class, premium cars. This is made possible by successfully controlling noise, vibration, and harshness as well as offering riding comfort and fuel efficiency. The Company expects the total number of tires produced based on this production method to top 5 million units in 2007. (From a press release on Mar. 9, 2007)
-The Company announced that its new Dunlop runflat tires are featured on the Nissan GT-R released this month. The SP Sport 600 DSST (DUNLOP Self-Supporting Technology) CTTs (Combined Technology Tire) are designed to maximize the vehicle dynamics of the GT-R, a vehicle developed under the concept of a multi-performance supercar for the next generation. (From an article in the Nikkan Jidosha Shimbun on Dec. 20, 2007)
R&D
R&D
Structure
-The Company's R&D activities are being conducted at SRI Research & Development Ltd. established in 2003.
-The Company is carrying out joint research with the Goodyear Tire and Rubber Company based on its ties with the U.S. tire supplier. Engineers of both companies work in teams for respective projects to exchange their technologies.
R&D Expenditure
New Product Development
-The Company introduced a new eco-friendly tire product "Enasave 97" at the Tokyo Motor Show. The new product features a high non-petroleum natural materials content ratio (97%), while that of its conventional eco-friendly tire "Enasave ES801" is 70%. The company succeeded in significantly reducing its dependence on fossil materials by stopping the use of some of the additives such as a rubber antioxidant. The manufacturer will start selling the new tires in four sizes in March 2008. The Enasave 97 is based on the company's ENR (Evolutional Natural Rubber) technology, which is developed and applied for the first time to ES801 and upgraded this time for the application to the new product. Its side walls and inner liners, in addition to tread, are made of natural rubber materials. Specifically, the company developed new highly-durable ENR for side walls and highly-airtight ENR for inner liners. In order to improve fuel economy, the new tire introduces new "tread patterns." Its rolling resistance is lower by 35% than the company's major product "DigiTire Eco." (From an article in the Nikkan Jidosha Shimbun on Oct. 26, 2007)
-The Company's R&D activities are being conducted at SRI Research & Development Ltd. established in 2003.
-The Company is carrying out joint research with the Goodyear Tire and Rubber Company based on its ties with the U.S. tire supplier. Engineers of both companies work in teams for respective projects to exchange their technologies.
R&D Expenditure
| (in million JPY) | FY2007 | FY2006 | FY2005 |
| Total | 18,223 | 17,291 | 16,259 |
| Tire Division | 15,105 | 14,215 | 13,157 |
| Ratio of R&D expenses at Tire Division | 82.9% | 82.2% | 80.9% |
New Product Development
-The Company introduced a new eco-friendly tire product "Enasave 97" at the Tokyo Motor Show. The new product features a high non-petroleum natural materials content ratio (97%), while that of its conventional eco-friendly tire "Enasave ES801" is 70%. The company succeeded in significantly reducing its dependence on fossil materials by stopping the use of some of the additives such as a rubber antioxidant. The manufacturer will start selling the new tires in four sizes in March 2008. The Enasave 97 is based on the company's ENR (Evolutional Natural Rubber) technology, which is developed and applied for the first time to ES801 and upgraded this time for the application to the new product. Its side walls and inner liners, in addition to tread, are made of natural rubber materials. Specifically, the company developed new highly-durable ENR for side walls and highly-airtight ENR for inner liners. In order to improve fuel economy, the new tire introduces new "tread patterns." Its rolling resistance is lower by 35% than the company's major product "DigiTire Eco." (From an article in the Nikkan Jidosha Shimbun on Oct. 26, 2007)
Investment Activities
Capital
investment
-The Company invested mainly in its tire business by increasing production capacities as well as reducing the number of employees needed. Targeted facilities include car tire production facilities in the Company's Nagoya Plant, Shirakawa Plant, Izumiohtsu Plant and Miyazaki Plant.
-The Company plans to introduce its highly-efficient production system named Taiyo on a full-scale to Nagoya Factory, one of its major factories in Toyoda City, Aichi Prefecture, Japan, as early as mid-2008. Approx. 1,000 passenger radials will be produced daily and the first fiscal year production is expected to total over 300,000 tires. The investment amount into Nagoya Factory has not yet been decided and details will be worked out by the end of this year. While needs for high-performance, high quality passenger car tires are rising, high-mix low-volume production is increasing as well. SRI aims to meet these needs by the Taiyo, its unique tire manufacturing system developed seven years ago. It features the "jointless method," which coils a rubber tape of several centimeters wide onto the mold spinning at high speed and forms treads and sidewalls with no joints. The system will require less space at the plant, decrease an initial investment, cut the production time and greatly improve tire quality through higher uniformity (or roundness). (From an article in the Nikkan Jidosha Shimbun on Jun. 12, 2007)
-The Company will build an additional R & D center at the site of its headquarters in Kobe prefecture, Japan. Since the current technical research center has become small along with its growing business, the new center will be constructed, scheduled for completion in October, 2008. It is aimed at accelerating research and development, together with the current facilities. The building, six story above the ground, will have a building area of 2,600 sq.m. and a total floor space of 10,000 sq.m. Total construction cost will be 5.5 billion yen. The company will also invest a total of 1. 2 billion yen in the new manufacturing research center at the site of its Shirakawa Factory, Shirakawa city, Fukushima prefecture. The three story building, with a building area of 2,100 sq.m. and a total floor area of 3,700 sq.m., will be completed in February 2009. This will serve as a center for training on tire manufacturing techniques and will receive workers here and abroad to improve the company's manufacturing quality on a global level. (From an article in the Nikkan Jidosha Shimbun on Aug. 21, 2007)
Overseas investment
-The Company held an opening ceremony at Sumitomo Rubber (Thailand) Co., Ltd. (SRT), its third tire production plant in Asia, following Indonesia and China. Construction of the plant that was founded as a wholly owned subsidiary of the Company, started in the Amata City Industrial Estate of Rayong in May 2005. The plant is 580,000 square meters and is the first plant to produce tires for passenger cars and SUVs. It started operations in late 2006. The opening ceremony was held in conjunction with the recent completion of the 2nd plant to produce mass-market radial tires for passenger cars. (From an article in the Nikkan Jidosha Shimbun on Mar. 12, 2007)
Major capital investment projects (automotive segment)
| (in million JPY) | FY2007 | FY2006 | FY2005 |
| Total | 53,205 | 45.308 | 40,415 |
| Tire Business | 49,796 | 42,253 | 37,041 |
| Ratio of capital investment at Tire Division | 93.6% | 93.3% | 91.7% |
-The Company invested mainly in its tire business by increasing production capacities as well as reducing the number of employees needed. Targeted facilities include car tire production facilities in the Company's Nagoya Plant, Shirakawa Plant, Izumiohtsu Plant and Miyazaki Plant.
-The Company plans to introduce its highly-efficient production system named Taiyo on a full-scale to Nagoya Factory, one of its major factories in Toyoda City, Aichi Prefecture, Japan, as early as mid-2008. Approx. 1,000 passenger radials will be produced daily and the first fiscal year production is expected to total over 300,000 tires. The investment amount into Nagoya Factory has not yet been decided and details will be worked out by the end of this year. While needs for high-performance, high quality passenger car tires are rising, high-mix low-volume production is increasing as well. SRI aims to meet these needs by the Taiyo, its unique tire manufacturing system developed seven years ago. It features the "jointless method," which coils a rubber tape of several centimeters wide onto the mold spinning at high speed and forms treads and sidewalls with no joints. The system will require less space at the plant, decrease an initial investment, cut the production time and greatly improve tire quality through higher uniformity (or roundness). (From an article in the Nikkan Jidosha Shimbun on Jun. 12, 2007)
-The Company will build an additional R & D center at the site of its headquarters in Kobe prefecture, Japan. Since the current technical research center has become small along with its growing business, the new center will be constructed, scheduled for completion in October, 2008. It is aimed at accelerating research and development, together with the current facilities. The building, six story above the ground, will have a building area of 2,600 sq.m. and a total floor space of 10,000 sq.m. Total construction cost will be 5.5 billion yen. The company will also invest a total of 1. 2 billion yen in the new manufacturing research center at the site of its Shirakawa Factory, Shirakawa city, Fukushima prefecture. The three story building, with a building area of 2,100 sq.m. and a total floor area of 3,700 sq.m., will be completed in February 2009. This will serve as a center for training on tire manufacturing techniques and will receive workers here and abroad to improve the company's manufacturing quality on a global level. (From an article in the Nikkan Jidosha Shimbun on Aug. 21, 2007)
Overseas investment
-The Company held an opening ceremony at Sumitomo Rubber (Thailand) Co., Ltd. (SRT), its third tire production plant in Asia, following Indonesia and China. Construction of the plant that was founded as a wholly owned subsidiary of the Company, started in the Amata City Industrial Estate of Rayong in May 2005. The plant is 580,000 square meters and is the first plant to produce tires for passenger cars and SUVs. It started operations in late 2006. The opening ceremony was held in conjunction with the recent completion of the 2nd plant to produce mass-market radial tires for passenger cars. (From an article in the Nikkan Jidosha Shimbun on Mar. 12, 2007)
Major capital investment projects (automotive segment)
| Company
name (Location) |
Project | Estimated
amount (million yen) |
Project Period | Increases in production capacity (%) | |
| From | To | ||||
| Sumitomo Rubber Industries Nagoya Plant (Aichi Pref., Japan) |
Production equipment for automotive tires | 9,440 | Jan. 2007 | Dec. 2008 | - |
| Sumitomo Rubber Industries Shirakawa Plant (Fukushima Pref., Japan) |
Production equipment for automotive tires | 9,169 | Jan. 2007 | Dec. 2008 | - |
| Sumitomo Rubber Industries Izumiotsu Plant (Osaka Pref., Japan) |
Production equipment for automotive tires | 3,973 | Jan. 2007 | Dec. 2008 | 9 |
| Sumitomo Rubber Industries Miyazaki Plant (Miyazaki Pref., Japan) |
Production equipment for automotive tires | 8,763 | Jan. 2007 | Dec. 2008 | 1 |
| Sumirubber (Changshu)
Co., Ltd. (Jiangsu Prov., China) |
Production equipment for automotive tires | 18,124 | Jan. 2007 | Dec. 2008 | 119 |
| Sumitomo Rubber (Thailand)
Co., Ltd. (Rayong, Thailand) |
Production equipment for automotive tires | 32,274 | Jan. 2007 | Dec. 2008 | 2,483 |