TOYOTA BOSHOKU CORPORATION Business Report FY2007
|(in millions of JPY)||FY2007||FY2006|| Rate of
|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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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)
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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
- 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)
- 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)
- 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 costs totaled 31,717 million yen, all of which were for the automotive business.
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).
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.
- 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)
- 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)
- 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|
|Manufacture of new types of door trims and floor carpets; maintenance and renewal of existing facilities||2,579||2008.04||2009.03|
|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,
|Manufacture of new types of seat and door trims||8,200||2008.04||2009.03|
|Toyota Boshoku Indiana, LLC.||Indiana,
|Manufacture of new types of seat frames||5,303||2008.04||2009.03|