TOYOTA BOSHOKU CORPORATION Business Report FY2007
Business Highlights
(in millions of JPY) | FY2007 | FY2006 | Rate of Change |
Factors |
Overall | ||||
Sales | 1,233,789 | 1,082,755 | 13.9% | Sales improved year-on-year, thanks to increased production of seats and door trims. |
Operating income | 13,553 | 52,143 | 26.0% | Despite fluctuating product prices, higher labor costs, and negative currency-rate translation, operating income rose, as a result of increased production volume and sales. The Company's group-wide efforts to streamline operations also contributed to the rise. |
Current net income | 40,720 | 30,105 | 35.3% | Current net income increased, as a gain, which was realized when adjusting the purchase price of a subsidiary in China during the previous year, posted as an extraordinary profit this year. |
Automotive component business | ||||
Sales | 1,229,748 | 1,078,714 | 14.0% | Sales at the automotive business rose from what they'd been the previous year, as the Company increased production of interior parts (seats and trims) and filter and power train components (air filters, etc.). |
Business Performance by Geographic
Region
Japan
- Domestic sales were 718,287 million yen, a 9.6 percent (or 62,801
million yen) increase year-on-year, thanks to new vehicle model
launches such as the Voxy/Noa and Land Cruiser 200. The rise is
also attributed to the Company's increasing its production infrastructure
by making Co-Werk Co., Ltd. its subsidiary and establishing Toyota
Boshoku Shiga Corporation.
North, Central, and South America
- Sales in the region increased by 1.4 percent or 3,226 million
yen year-on-year, to 233,474 million yen, as as result of winning
new orders from GM for air filters, increasing capacity for producing
intake manifolds, and creating a difference in product mix.
Asia
- Sales in Asia totaled 212,228 million yen, a rise of 45.4 percent
or 66,233 million yen compared to what they were last year. Some
of the major factors contributing to the increase were strong sales
of the Toyota Camry (of which production started in Guangzhou,
China in the previous year) and oil filters (of which production
started in Foshan, China in the previous year); as well as to the
production launch the Corolla in Tianjin, China and an expansion
of the Company's infrastructure by making Toyota Boshoku Gateway
(Thailand) Co., Ltd. its subsidiary.
Other regions
- Sales in other regions increased by 36.8% or 18,772 million
yen year-on-year to 69,798 million yen, thanks to sales of the Camry,
which went into production in Australia in the previous year. Other
contributing factors include the launch of commercial operations
at subsidiaries in South Africa and France in the previous
year and the production launch of the Corolla in South Africa.
New Contracts
- The Company won a new contract to supply leather-trimmed instrument
panels to the Lexus LS600h.
- The Company won a new contract to supply one-touch-folding, third-row
seats to the Toyota Voxy/Noa.
- The Company won a new contract to supply large headliner lighting
to the Toyota Mark X Zio.
New Subsidiaries
<The U.S.A.>
- In September 2007, the Company established Toyota Boshoku Mississippi,
LLC, a subsidiary for producing seats and interior components such
as door trims; in Fulton, Mississippi, U.S.A.
- In November 2007, the Company established Toyota Boshoku Indiana,
LLC., a subsidiary for producing seat frames; in Princeton, Indiana,
U.S.A.
<Turkey>
- In July 2007, the Company announced that it held a grand opening
ceremony for the second plant of Toyota Boshoku Turkiye Otomotive
Sanayi Ve Ticaret A.S., its automotive seats and interior parts
production base in Adapazari, the Republic of Turkey. (From an article
in the Nikkan Jidosha Shimbun on Jul. 5)
>>See Investment for more
details
Recent Developments in Japan
Restructuring and Enhancing Its Production Structure
- In Jun. 2007, the Company announced that it will make a capital
participation in Kanto Seat Works, Ltd. (Kitakami City, Iwate Prefecture),
which is affiliated to Kanto Auto Works, Ltd. under the equity method.
By purchasing Kanto Seat's stock held by Tachi-S, Ltd., a leading
seat supplier, and by some private investors, the Company will become
the second largest shareholder of the seat manufacturer. This investment
will allow the Company to strengthen its procurement network for
its car seat and interior system business, enhancing its supply
structure to support the production expansion plan of Toyota Motor
Corporation. (From an article in the Nikkan Jidosha Shimbun on Jun.
26, 2007)
- In Dec. 2007, the Company has started discussions to begin operation
of a new automotive seating production plant by 2010 in Miyagi prefecture.
In response to the relocation of Central Motor Co., Ltd. that manufactures
Toyota cars to Miyagi, the company will build a new plant to assemble
car seats in the neighborhood. (From an article in the Nikkan Jidosha
Shimbun on Dec. 26, 2007)
>>See Investment for more
details
- In Dec. 2007, the Company announced that it will acquire additional
all 5,000 Co-Werk Co., Ltd. shares, which will be issued by Co-Werk
for allocation to a third party. Co-Werk manufactures car seats
in Kariya City, Aichi Prefecture with a workforce of 588. The acquisition
will increase the Company's ratio of shareholding in the seat supplier
from the current 40 percent to 52 percent, turning it into a subsidiary
of the Company. The share transaction is scheduled to be completed
on December 28, 2007. (From an article in the Nikkan Jidosha Shimbun
on Dec. 20, 2007)
Recent Developments Outside Japan
Starting Production of Seats in Russia
- In Dec. 2007, the Company announced that Toyota Boshoku Russia
(TBR) has started making automotive seats. These seats will be supplied
to Toyota's local facility, Toyota Motor Manufacturing Russia LLC
(TMMR). The Company established TBR in April, 2006, providing 95
percent of the capital. The remaining 5 percent is held by Toyota
Tsusho. TBR will manufacture yearly 20,000 seats for the Camry.
(From an article in the Nikkan Jidosha Shimbun on Dec. 25, 2007)
Restructuring and Enhancing Its Production Structure
<North America>
- In Apr. 2007, the Company announced that it will reorganize its
North American business. The head office of Toyota Boshoku America,
Inc. (TBA) in Michigan, a management company in North America, will
be transferred to Erlanger, Kentucky to improve efficiency of management
and production control, as well as to strengthen relationships among
group companies and with its major customer Toyota Motor Corporation.
At the same time, two development facilities now situated in two
separate locations in North America, will be consolidated to TBA's
Novi office in Michigan. Also engineers will be increased to reinforce
development capabilities and enhance competitiveness..(From an article
in the Nikkan Jidosha Shimbun on Apr. 11, 2007)
- In Dec. 2007, the Company announced that it will integrate its
two Mexican subsidiaries, namely Toyota Boshoku Monterrey, S.A.de
C.V. (TBMO) and Araco de Mexico, S.A. de C.V., on January 1, 2008.
By unifying these automotive interior production companies, the
group will reinforce its management structure and improve efficiency
in expanding its local business. TBMO, which will be the surviving
company, will adopt a new name, TB Mexico. TB Mexico will be capitalized
at 20,088,000 pesos (approximately 220 million yen) with 98 percent
of the shares held by Toyota Boshoku America, Inc. and the remaining
2 percent by Toyota Tsusho Corporation. TBMO manufactures seat covers
used in the Toyota Sienna; it generated sales of 167 million pesos
(approximately 1.8 billion yen) in fiscal year 2006 ended in December
2006. Sales at Araco de Mexico, which supplies seats to General
Motor's plants building Chevrolet HHR, Tahoe, and GMC Yukon, reached
1,290 million pesos (approximately 14.2 billion yen). (From an article
in the Nikkan Jidosha Shimbun on Dec. 26, 2007)
<Asia>
- In Jul. 2007, the Company announced a plan to make its affiliated
company in Thailand jointly established with NHK Springs Co., Ltd.
its wholly-owned subsidiary, in order to strengthen the Company's
production capability of automotive seats and interior parts in
the ASEAN region. The company will acquire all the shares now owned
by NHK Springs and its group company by August 1, 2007. The Company
and NHK Spring Group established Thai Automotive Seating & Interior
Co., Ltd. (TASI) jointly in Chachoengsao, Thailand in 1997, and
have been producing and selling automotive interior parts such as
car seats and door trims. The Thai company generated sales of approximately
12 billion yen in fiscal 2006 ended December 2006. After the acquisition
of the shares from NHK Springs Group, TASI will be renamed Toyota
Boshoku Gateway (Thailand) Co., Ltd. (From an article in the Nikkan
Jidosha Shimbun on Jul. 3, 2007)
- In Oct. 2007, the Company announced the plan to change the main
function of its Chinese subsidiary, Toyota Boshoku (Shanghai) Co.,
Ltd. from sales and marketing to management and investment in China
starting December. The reorganized local company, which will be
renamed Toyota Boshoku (China) Co., Ltd, will be assigned greater
management authority over the supplier's local manufacturing operations
in an effort to create the optimal business structure as the Company
is expanding business in China. In December 2007, the Company will
invest approximately 30 million dollars, or 3.45 billion yen, to
increase the capital of the local managing company that will also
continue its functions of designing, development and sales of seats
and interior parts. (From an article in the Nikkan Jidosha Shimbun
on Oct. 30, 2007)
Business Plan
- The Company announced it has upgraded the FY 2010 business targets.
Its sales target has been revised to 1.4 trillion yen, up 100 billion
yen from the previous target. The current profit is targeted at
70 billion yen and 5% current profit ratio is continued to be aimed
for. For FY 2010, the company expects production expansion of its
leading products including seats in North America and Asia, in response
to increasing Toyota vehicle production overseas. (From an article
in the Nikkan Jidosha Shimbun on Nov. 9, 2007)
R&D
R&D Expenditure
R&D costs totaled 31,717 million yen, all of which were for
the automotive business.
R&D Structure
In June 2007, the Company reorganized
its R&D structure in order to develop
new technologies and products for the next generation by establishing
a new advanced technology development center. Under the
aim of consolidating and enhancing departments engaged in advanced
development projects, the new tech. development center is comprised
of the Biotechnology Development Dept., Advanced Development Dept.,
and R&D Office.
- In May 2007, the Company announced that it will establish a new
technical center at the Sanage Plant in Toyota City, Aichi Prefecture.
The company says the Sanage Technical Center (tentative name) is
scheduled to start operations in June 2009, consolidating its development
functions for seats, door trims, and ceilings to strengthen the
company's capability to supply high-quality automotive interior
systems. A new seven-story building with one underground level will
have a total floor area of 38,000 square meters, and accommodate
2,000 employees. Toyota Boshoku is ready to invest approximately
7.2 billion yen in this construction project, which will begin in
January 2008. The company's development activities have been conducted
at three plants in Aichi: the Sanage Plant; the Fujioka Plant (Toyota
City); and Oguchi Plant (Niwa-gun). In addition to integrating all
the development processes from designing to production engineering,
the new Sanage Technical Center will have advanced equipment for
testing riding comfort and safety levels, allowing the company to
develop high-value added interior systems. (From an article in the
Nikkan Jidosha Shimbun on May. 22, 2007)
<Interior system supplier business>
- The Company developed leather-trimmed instrument panels
and supplies them to the
Lexus LS600h.
- The Company developed one-touch-folding, third-row seats that
enable users to perform operations such as folding and flipping
up third-row seats with a single touch of a button. The Company
supplies these seats to the Voxy/Noa.
- The Company developed large headliner lighting that reflect LED
lights onto the cabin
ceiling to provide indirect lighting in the vehicle interior.The
Company supplies these to the Mark X
Zio.
- The Company developed the world's first seat cover coated
with an agent that controls
dust-mite allergen. The company supplies this cover to the Crown.
- In Nov. 2007, the Company has developed injection molded parts
made from kenaf fiber, which will be marketed as early as 2009.
60 percent kenaf mixed to polypropylene (PP) has increased strength
of products and made them thinner and lighter than conventional
plastic products. While the company has commercialized pressed parts
including tire covers and door trim base materials made from kenaf,
it is the first kenaf application for injection molded parts. Increasing
items of automotive parts are made from plastics to reduce weight
and injection molded parts are expected to be used not only for
interior materials but for various purposes. Based on carbon neutrality,
Toyota Boshoku promotes replacement of all the interior parts by
those of plant origin. In June, a biotechnology development dept.
was formed to establish a full-scale development system. The company
plans to promote use of biomasses including sugarcane, corn and
soy oil as well as kenaf in making carpets, trim base materials,
ceilings, seat fabrics and seat pads. (From an article in the Nikkan
Jidosha Shimbun on Nov. 8, 2007)
<Filtration & Powertrain Components>
- For intake systems, the Company developed more
efficient products that are compatible with smaller and lighter
engines.
- The Company developed components for engine-lubrication systems.
These include element-replacement oil filters that significantly
reduce environmental impact.
- The Company developed automotive climate-control systems
such as high-performance dust-collecting and deodorizing filters
and pollen cabin air filters.
<Exterior
Components and Other Businesses>
-The Company developed
bags for large curtain shield airbags. These bags, which use environmentally
friendly, solvent-free materials, have silicon-coatings that enable
the bags to stay inflated longer, even in rollovers. The Company
won a contract to supply these bags to the Highlander being marketed
in North America (It is being marketed as the Kluger in Japan).
Investment Activities
In 2007, the Company invested 52,961 million yen in total for the construction of plants, expansion of manufacturing facilities, as well as development of new products.
- The Company invested 42,948 million yen in the interior component division, focusing on preparing production lines to manufacture new seats and door trims; and on increasing its production volume in China; and North, Central and South America.
- Investment in the Filter and Powertrain product division reached 5,120 million yen. Investments were focused on preparing production lines to manufacture new air filters and oil filters.
- Investment in the fabric goods, exterior components, and other businesses amounted to 4,893 million yen, with the focus on preparing production lines to manufacture new bumpers and fender liners.
Domestic Investments
- In Dec. 2007, the Company has started discussions to begin operation of a new automotive seating production plant by 2010 in Miyagi prefecture. In response to the relocation of Central Motor Co., Ltd. that manufactures Toyota cars to Miyagi, the company will build a new plant to assemble car seats in the neighborhood. The company considers to commission operation of the new plant to an interior parts manufacturer Kanto Seat Works, Ltd. in Kitakami city, Iwate prefecture, which is 38.3% funded by Toyota Boshoku. The new plant will be completed by 2010 to start assembly of seats, when Central Motor begins vehicle production at the new site in Miyagi. (From an article in the Nikkan Jidosha Shimbun on Dec. 26, 2007)
Overseas Investments
<North America>
- In Oct. 2007, the Company announced that it will establish a new subsidiary for manufacturing seat parts, Toyota Boshoku Indiana, LLC., in Princeton, Indiana, U.S.A. The new company will manufacture seat frames and seat urethane for the "Siena" which Toyota Motor Corporation is producing at its Indiana plant. It will become the 19th production facilities of Toyota Boshoku in North America. The new company will be established as a wholly-owned subsidiary of Toyota Boshoku America (TBA, based in Kentucky) in November 2007 on the site of 98,000 square meters with a plant having a floor space of 19,000 square meters. It is planned to start operation in 2010 to manufacture the parts for 170,000 vehicles per year. Total investment will be US$ 57 million (approximately 6.6 billion yen) and 230 people will be employed. (From an article in the Nikkan Jidosha Shimbun on Oct. 17, 2007)
- In Aug. 2007, the Company announced that it will establish a Toyota Boshoku Mississippi plant to manufacture car interior products in Mississippi, U.S.A. The new plant will provide seats, door trims, and floor carpets for the Highlander to be assembled at Toyota's new local facility. With operations slated to begin around 2010, the Toyota Boshoku Mississippi plant will become the group's fifth seat plant in the North American region. For the Highlander vehicles built in Japan, Nissin Kogyo supplies interior products it developed in-house to Toyota Motor Kyushu, Inc. In North America, the company will supply all the seats, door trims, and floor carpets required at the Toyota Highlander plant in Mississippi. With annual production expected to reach 150,000 sets, the new facility is projected to generate sales of 25 billion to 26 billion yen per year when the lines become fully operational. (From an article in the Nikkan Jidosha Shimbun on Aug. 30, 2007)
<Europe>
- In Jul. 2007, the Company announced that it held a grand opening ceremony for the second plant of Toyota Boshoku Turkiye Otomotive Sanayi Ve Ticaret A.S., its automotive seats and interior parts production base in Adapazari, the Republic of Turkey. The new plant is the first base of Toyota Boshoku Group plants in Europe and Turkey that manufactures seat frames from January 2007. The second plant is expected to generate sales of 4.2 billion yen with the workforce of approximately 540 in 2009. The purpose of the construction of the additional plant was to locally produce seat frames, which used to be imported from Japan. Seat frames and functional parts produced at the second plant are supplied to the fist plant in Turkey, located approximately 700 meters away, as well as to Toyota Boshoku South Africa (Pty) Ltd., Toyota Boshoku's seat production base in South Africa. (From an article in the Nikkan Jidosha Shimbun on Jul. 5, 2007)
Capital Investment Plan
The Company will invest over 50 billion yen in facilities every fiscal year from FY 2008 through FY 2010. Construction of new plants overseas and a technical center, a training center and other facilities in Japan is scheduled for the period and its capital spending for four years including FY 2007 will total 260 billion yen. While reinforcing its supply capacity overseas, it plans to establish product development capability and the foundation for personnel training at home to raise its global competitiveness. For FY 2007, the company plans to allocate 61 billion yen, up 28% from a year earlier. In the April-December period, more than 50% or 33.7 billion yen was spent. Its large capital investment is expected to continue in FY 2008 and after. Overseas and domestic spending will split the total capital spending through FY 2010 almost fifty-fifty. (From an article in the Nikkan Jidosha Shimbun on Feb. 22, 2008)
New Facilities | ( in millions of JPY ) |
Name | Location | Type of facility and activities | Planned investing amount | Start | Finish |
Sanage Plant | Aichi, Japan | Manufacture of new types of seats and door trims; maintenance and renewal of existing facilities | 8,970 | 2008.04 | 2009.03 |
Kariya Plant | Aichi, Japan | Manufacture of new types of air filters | 5,414 | 2008.04 | 2009.03 |
Toyohashi-minami Plant | Aichi, Japan |
Manufacture of new types of door trims and floor carpets; maintenance and renewal of existing facilities | 2,579 | 2008.04 | 2009.03 |
Takaoka Plant | Aichi, Japan |
Manufacture of new types of seat and door trims; maintenance and renewal of existing facilities | 2,238 | 2008.04 | 2009.03 |
Oguchi Plant | Aichi, Japan | Manufacture of new types of molded ceilings, silencers; maintenance and renewal of existing facilities | 2,181 | 2008.04 | 2009.03 |
Gifu Plant | Gifu, Japan | Manufacture of a new type of bumper; manufacture of new products | 2,093 | 2008.04 | 2009.03 |
Toyohashi-kita Plant | Aichi, Japan | Manufacture of new types of seats ; maintenance and renewal of existing facilities | 1,572 | 2008.04 | 2009.03 |
Gotenba Plant | Shizuoka, Japan | Manufacture of new types of seats ; maintenance and renewal of existing facilities | 1,120 | 2008.04 | 2009.03 |
Toyota Boshoku Mississippi, LLC. | Mississippi, USA |
Manufacture of new types of seat and door trims | 8,200 | 2008.04 | 2009.03 |
Toyota Boshoku Indiana, LLC. | Indiana, USA |
Manufacture of new types of seat frames | 5,303 | 2008.04 | 2009.03 |