KASAI KOGYO CO., LTD. Business Report FY2007

Business Highlights

Financial overview
(in millions of JPY) FY2007 FY2006 Rate of
Change (%)
Factors
Sales 144,888 134,814 7.5 Sales rose year-on-year due to increased car production volumes at the Company's major customers in Japan and Asia. 
Operating income 3,894 3,272 19.0 Operating income and ordinary income increased year-on-year as a result of rationalization efforts, as well as increased sales. 
Ordinary income 3,465 2,912 19.0
Net income 1,302 2,138 (39.1) Net income decreased year-on-year due to decline in extraordinary profit.

Joint Ventures
In Jan. 2008, the Company announced that it and Sanwa Industry Co., Ltd., which manufactures automotive interior parts in Hiroshima City, Hiroshima, will establish joint venture companies to manufacture and sell automotive headlining products in Japan and China. The Company and Sanwa Industry intend to expand their ties to North America as well in the future. This move will allow the Company to increase its competitive edge in the global market by leveraging Sanwa's advanced technology in the area of car headlining materials. The joint venture company to be established in Ota City, Gunma Prefecture, Japan will be called SK Kogyo. SK Kogyo will be capitalized at 300 million yen, 51.0 percent of which will be provided by Sanwa Industry and the remaining 49.0 percent by the Company. The new entity in China will be located in Guangzhou City, Guangdong Province; it will hold a registered capital of 50 million dollars with 75.0 percent invested by Sanwa Industry and 25.0 by the Company.(From an article in the Nikkan Jidosha Shimbun on Jan. 29, 2008)

R&D

R&D
R&D spending was focused on the Development Division and the Production Division. 
The total R&D expenses in fiscal 2007 were 521 million yen. 

Major research challenges
-Reduction of weight and costs to win over the competition in the small car sector.
-Eliminate the use of solvent-based mediums and polyvinyl chloride; and switch to non-petroleum materials in response to greater demand for environmental conservation.
-Develop next generation Technology such as modules and crash safety analysis. 

Specific activities
(1) Reducing weight of products
The Company developed a new production process, called Kasai Synchro Press (KSP), that reduces weight and thereby contributes to reducing CO2 emissions and fuel consumption. The Company presented this as a solution for producing door trims used on mass-produced vehicles and started to supply the products to its customers. The KSP enabled the Company to reduce the weight of door trims by about 40% compared to door trims with the equivalent shape produced by a conventional process. Also, the Company developed a technology by applying its injection molding process, Kasai Press Molding (KPM) , that does not need any coating in the foam molding for reducing product weight and also ensures good external appearance quality. The Company used the technology in manufacturing doors and luggage trims of commercial vehicles and started to supply the products to its customers. With the foam molding process, the Company succeeded in reducing weight of the products by about 15%.


(2) Safety
2. The Company successfully created injection molded parts that are capable of absorbing energy, thus contributing to safety inside vehicles. These parts, which are characterized by their unique design structure, are being used in mass-produced vehicles. The accuracy of the Company's technology to analyze lateral collisions has reached the stage to where it can be put to practical use. This technology, which uses CAE (computer simulation),  was supported by validations conducted on bench tests.

(3) Global environmental protection
The Company is replacing glue and cleaning agents that contain VOC (Volatile Organic Compounds). The Company instead will use standard and water-based adhesives, in addition to materials, that are free of VOCs. As to the use of vinyl chloride materials, the Company is switching over to olefin-based thermoplastic elastomer (TPO) and urethane based thermoplastic elastomer (TPU). The Company also developed an alternative to mineral fiber in order to eliminate the use of glass fiber in ceiling trims, presenting the new fiber as a solution for use in mass-produced models. Also, the Company has been working on developing plant-based materials as alternatives to petroleum-based materials, and has reached a level that the Company can offer them to its customers .

(4) Comfortable interior space
The Company introduced CAE in its development activities to create cabin-interior products that improve anti-noise/soundproofing performance. These products offer a high degree of flexibility in their shape and come in a large selection of materials. They also are high precision, high quality products.  The Company is also making sales presentations of products that offer a high level of customer convenience, which were developed and planned based on benchmarking activities.

(5) Quality
The Company developed an applied technology that better stabilizes the final appearance of exterior surfaces of plastic molded products, thus reducing the number of defective products created while being manufactured. 

(6) Creating added values
The Company is in the process of developing designing, coloring, and decorating technology for decorative components such as door-waist embellishments. Also, the Company developed and offered the products with decorative touches such as soft and smooth door interior trims.

Investment Activities

Investment
8,640 million JPY in capital investments was made in FY2007,mainly going to automotive interior parts, research and development on new parts related to vehicle model changes, quality control and production related areas.

Breakdown of investment by business entity (FY2007 ended March 2008)
-The Company: 4,565 million yen was invested to prepare production facilities for manufacturing remodeled products.
-Mie Kasai Co., Ltd.: 1,635 million yen was invested to construct the Shiga Plant and enhance production facilities.
-KPK Co., Ltd.: 354 million yen was invested to enhance production facilities, etc.
-M-TEK INC. (USA): 1,221 billion yen was invested to enhance production facilities, etc.
-R-TEK Ltd. (UK): 207 million yen was invested.
-Kasai Mexicana S.A. de C. V. (Mexico): 361 million yen was invested.
-Kasai Teck See Co.,Ltd. (Thailand): 120 million yen was invested.

New facilities
Company name
Site name
Location Type of facility Planned investment
(million JPY)
Start Planned completion
Head Office Samukawa, Kanagawa, Japan Quality measurement instruments, inspection tools 305 2008.4 2009.3
Samukawa Division Samukawa, Kanagawa, Japan Facilities to assemble automotive interior parts, tools, and other items 94 2008.4 2009.3
Yorii Division Yorii machi, Saitama, Japan Land, Improvement of buildings 98 2008.4 2009.3
Facilities to assemble automotive interior parts, tools, and other items 298 2008.4 2009.3
Kyushu Division Usa City, Ohita, Japan W/J facilities 63 2008.4 2009.3
Facilities to assemble automotive interior parts, tools, and other items 401
APM Co., Ltd. Kanagawa, Japan Facilities to assemble automotive interior parts, tools, and other items 10 2008.4 2009.3
Mie Kasai Co., Ltd.
Head Plant
Hisai City, Mie, Japan Facilities to assemble automotive interior parts, tools, and other items 198 2008.4 2009.3
Mie Kasai Co., Ltd.
Shiga Plant
Shiga, Japan Facilities to assemble automotive interior parts, tools, and other items 30 2008.4 2009.3
Mikuni Seisakusyo Co., Ltd. Nitta machi, Gunma, Japan Facilities with urethane ceilings, Improvement of buildings 485 2008.4 2009.3
Facilities to assemble automotive interior parts, tools, and other items 50 2008.4 2009.3
KPK Co., Ltd. Oura gun, Gunma, Japan Facilities to assemble automotive interior parts, tools, and other items 360 2008.4 2009.3
Iwatekasai Kitami-shi, Iwate, Japan Facilities to assemble automotive interior parts, tools, and other items 4 2008.4 2009.3
Kasai-Tec Co., Ltd. Fujinomiya City, Shizuoka, Japan Facilities to assemble automotive interior parts, tools, and other items 195 2008.4 2009.3
M-TEK Inc. Tennessee State, USA Facilities to assemble automotive interior parts, tools, and other items 1,548 2008.4 2009.3
R-TEK Ltd. Tyne and Wear, UK Facilities to assemble automotive interior parts, tools, and other items 189 2008.4 2009.3
Kasai Mexicana S.A. de C. V. Guanajuato, Mexico Facilities to assemble automotive interior parts, tools, and other items 125 2008.4 2009.3
Guangzhou Kasai Automotive Interior Trim Parts Co., Ltd.
Guangzhou, China Addition of buildings 210 2008.4 2009.3
Facilities to assemble automotive interior parts, tools, and other items 50 2008.4 2009.3
Kasai Teck See Co.,Ltd.
Ayuttaya,
Thailand
Facilities to assemble automotive interior parts, tools, and other items 63 2008.4 2009.3