Top Interview

Accelerating Our Transformation with
the Aim of Realizing a Comfortable
Society and Enriched Lifestyles

Akira Onishi

President12

Top Interview

Top Interview

QFirst of all, could you provide an overview of Toyota Industries’
business results in fiscal 2015?

During fiscal 2015, although the Chinese economy decelerated, the world economy achieved a moderate
recovery on the whole underpinned by solid growth in the U.S. economy. Under these economic conditions,in addition to ongoing activities to strengthen our foundation, Toyota Industries accelerated initiatives for
attaining growth during the third year of its Medium-Term Management Plan.
In the core Materials Handling Equipment Business, we benefited from favorable markets in suchregions as Japan, North America, Europe and China and posted growth in unit sales by introducing new
products with enhanced environmental performance and undertaking sales expansion activities utilizing ourglobal sales network.
Additionally, Aichi Corporation, a top manufacturer of aerial work platforms, and Cascade Corporation, aU.S.-based manufacturer of lift truck attachments, also recorded solid business results.
Turning to automobile-related businesses, the Vehicle Business maintained strong sales of the RAV4,but overall unit sales declined from the previous fiscal year. The Engine Business posted a decrease in unit
sales mainly of KD diesel engines and AR gasoline engines. Alternatively, the Car Air-Conditioning Compressor
Business posted growth in sales in North America and China, achieving an all-time high in unit sales. TheCar Electronics Business attained an increase in sales, mainly to Toyota Motor Corporation (TMC).
The Logistics Business recorded growth in its business results, driven by increases in logistics
services and land transportation services for automotive-related parts.
The Textile Machinery Business posted lower sales of its mainstay air-jet looms amid continued
stagnant demand in China and other markets. Nevertheless, this business achieved higher sales in the fieldof yarn quality measurement instruments, which have been a new business domain since 2012.
As a result of these developments, in fiscal 2015 Toyota Industries posted net sales of ¥2,166.6 billion andoperating income of ¥117.5 billion, both representing record highs. Taking into consideration an array offactors such as our business results, future demand for funds and the payout ratio, Toyota Industries raised
cash dividends per share by ¥25 from the previous fiscal year to ¥110.

Q

Could you explain the future direction of your business operations?

Basically, we will continue executing the same business policies implemented to realize Vision 2020.
However, our business activities now span the entire globe, including emerging countries, while ourbusiness domains are also expanding. With this in mind, we believe that Toyota Industries must takeadditional steps to prepare for various risks and further solidify our foundation. On this basis, we plan toaccelerate the development of various themes we have implemented for future growth.

Among these themes, we have positioned human resources development andstrengthening monozukuri (manufacturing) as crucial elements of efforts to further
solidify our foundation.
n Human Resources Development
We believe the key word in human resources development is “global.” Presently, more than half theemployees in the Toyota Industries Group are non-Japanese, and local employees serve as topmanagement at more than 80% of the Group’s 176 overseas consolidated subsidiaries.
As we operate in various countries with different cultures and values, it is absolutely essential that allemployees share a source of inspiration as we move in the same direction on a global scale. Acting on thisbelief, Toyota Industries provides various opportunities to promote a global sharing of the spirit of “respect13

Toyota Industries Report 2015

for humanity” and “challenge”
advocated by the Toyoda Precepts,
which embody the spirit of founder
Sakichi Toyoda.
As our business activities become
increasingly globalized, the diversity ofour employees continues to advance.
As such, we believe diversity is not
something to which we must respond,
but something we should naturally
embrace and fully utilize.
Besides the number of employees,
more than half of the Toyota Industries
Group’s sales are also generated
outside Japan. As a global company,
we remain committed to respecting
diversity, leveraging this as our strength
for growth while linking diversity toinitiatives for attaining Vision 2020.

Global human resources conferencen Strengthening Monozukuri (Manufacturing)
As a manufacturing-based company, Toyota Industries will further strengthen its manufacturing capabilities
in Japan and push forward with initiatives to share them globally.
We will not only work to develop products based on the 3Es (Energy, Environmental protection andEcological thinking) and raise manufacturing quality and productivity but also promote the development of
new production engineering technologies and methods with the overarching aim of differentiating ourselvesfrom competitors in terms of manufacturing.
As part of these efforts, our plants in Japan will strengthen our foundation as mother plants by undertaking
a variety of key tasks, including developing human resources, passing on various skills and augmenting theToyota Production System (TPS) and overall production engineering. Using these areas as our basis, we will
make Company-wide efforts to build a structure that can support our plants outside Japan while at thesame time working to raise quality and productivity on a global basis. Ultimately, our plan is for eachproduction base to become autonomous, to mutually learn the various good qualities from each other acrossbusiness divisions and national boundaries and to maximize synergies among these production bases.
As a specific example, in the Car Air-Conditioning Compressor Business a mother plant in Japan is
accepting key human resources from production bases outside Japan, continuously providing them witheducation that not only covers proprietary skills but also places emphasis on instilling the thinking and spiritof manufacturing. Employees who learn at the mother plant then steadily spread the knowledge and skills
they acquired in Japan in their own countries.
Through this process, we aim to raise thelevel of manufacturing at each production
base around the world.
Also, in the Materials Handling Equipment
Business, when a new plant in Brazil wasestablished and began operations in 2013, aU.S.-based production team that previously
learned at another mother plant in Japan inturn played the role of mother plant andprovided essential support for the startup.
Going forward, our policy is to have
Teaching an employee from outside Japan
mother plants in Japan continue functioning

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Top Interview

as the core of each business while promoting initiatives that transcend business divisions and regions as we
further increase the level of our manufacturing capabilities globally.

While we firmly solidify our foundation, we will steadily execute initiatives for furthergrowth.
n Growing Each Business Unit Based on Vision 2020
The basis of our efforts will be to grow each business unit based on Vision 2020, which articulates
Toyota Industries’ aspired shape over the medium and long terms.
The first measure in these strategies is spurring technological innovation in environment and energy
areas based on the keywords of the 3Es. We aim to contribute to realizing a society with minimum
environmental impact by developing products in energy conservation and electrification fields. For thesecond measure, which is the expansion of our value chain, in businesses such as Materials Handling
Equipment, we will not only offer products but also support our customers by providing enhanced aftersales services that allow them to use our products with a sense of reassurance for many years to come. Interms of the third measure of pursuing business development in world markets, we will focus closely on theneeds of customers in each region and provide them with products and services they truly need.
By promoting these initiatives, we intend to grow each business unit. At the same time, we will strive tobroaden the base of our business domains, focus attention on overlapping areas and utilize our strengths
derived from operating diverse businesses to achieve sustained growth and realize Vision 2020.

n Responding Flexibly to Changes and Accelerating Our Transformation
In recent years, the business environment has become increasingly uncertain and complex while the speedof change is accelerating along with the advance of globalization. To respond flexibly to such changes
and realize our vision, we must accelerate our transformation in addition to further strengthening
our foundation.
Since 2000, Toyota Industries has implemented several initiatives for transformation and hasstrengthened its structure and competitiveness as well as progressed with globalization of business bases,
sales regions, employees and other areas of its operations.
Principal Initiatives for Transformation to the Present• Made BT Industries AB, a Europe-based manufacturer of materials handling equipment, into
a subsidiary• Took over TMC’s Industrial Equipment Sales Division (integrated manufacturing and sales)• Created a thoroughly lean business structure following the global recession triggered by the collapseof Lehman Brothers• Made Cascade Corporation, a U.S.-based manufacturer of lift truck attachments, into a subsidiary• Made Yantai Shougang TD Automotive Compressor Co., Ltd. (YST), a production base for car
air-conditioning compressors in China, into a subsidiary
We also implemented various initiatives for transformation in each business during fiscal 2015. Each ofthese is based on the three broad strategies of Vision 2020, namely the 3Es, expansion of our value chain
and business development in world markets. Some of the main measures we executed are as follows.

To contribute to a comfortable society and enriched lifestyles

Solution

Key Components

MobilityNewProductNewProductNewProductNewProductNew
Product<Technological innovation in environment/energy areas>

Value Chain<Expansion of value chain>

World Market<Business development in world markets>
Create new business value by
strengthening both hardware
and software development by
cultivating technology “seeds”

Develop businesses all over theworld and meticulously
respond to each region’s
customer needs

Maintain the world’s
highest-level SEQCD* by
improving our business basedon team strength and TPS

Strengthen growth potential byleveraging synergies amongdivisions, strategic M&As andalliances* Safety, the environment, quality, cost and delivery

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Toyota Industries Report 2015

S ervic es

Contribute to realizing a society
with minimum environmental
impact through technologicalinnovation in environment/
energy areas

oncti

De

3Es (Energy, Environmental protection and Ecological thinking)Principal Initiatives for Transformation Implemented in Fiscal 2015
In the Materials Handling Equipment Business, we launched a new lift truck in Japan, Europe and othermarkets following the introduction of this model in North America in 2013. This lift truck realizes a dramaticincrease in environmental performance by incorporating not only an internally developed engine but also ourfirst-ever turbocharger that we developed by leveraging our accumulated technologies in the Engine andCar Air-Conditioning
Compressor businesses.
We are also making
important strides in thedevelopment of fuel cell lift
trucks as next-generation
products. Currently, we arepromoting initiatives forcommercializing fuel cell lift
trucks such as undertaking
a feasibility test at Kansai
New internal-combustion lift truck
Fuel cell lift truck undergoing feasibility test
International Airport. [3Es]equipped with turbocharger
In sales finance for theMaterials Handling Equipment Business, we concluded an agreement with Toyota
Proment
dulopve
Motor Credit Corporation (TMCC), a U.S. finance subsidiary of TMC and one of
the world’s top-class sales finance companies, to acquire its materials handlingequipment sales finance operations. By acquiring these operations, we will
Customers
expand our structure capable of responding to a variety of customer demands
with integrated sales, service and finance functions. [Expansion of value chain]S ale s fi n a n c e
An increasingly important task on the sales front is to expand sales in rapidly
growing emerging countries. As one measure for attaining this objective, Toyota
Expanding the value chain
Industries reached an agreement to acquire the lift truck business of Tailift Co.,by strengthening sales financees

Support industries and social foundations around the world by continuously
supplying products/services that anticipate customers’ needs in order tocontribute to a comfortable society and enriched lifestyles

S alVision 202016Top Interview

Top Interview

measures, Toyota Industries aims to further raise the expertise of the Engine Business and develop andproduce more competitive diesel engines for automobiles and build an efficient business structure.
Additionally, we will strive to expand the scale of our business and enhance development efficiency byapplying technologies for automobile-use diesel engines to engines for Toyota Industries’ own lift trucks andindustrial machinery products. [3Es]Ltd., a Taiwan-based lift truck manufacturer with notedstrengths in undertaking business operations in emerging
countries, and made it into a consolidated subsidiary in August
2015. Going forward, we will enhance its lineup of mid- andlow-priced lift trucks and strive to realize synergies. [Businessdevelopment in world markets]
In automobile-related businesses, we leveraged thetechnologies nurtured in the Car Air-Conditioning Compressor
Business to develop an oxygen-supplying air compressor and ahydrogen circulation pump, both of which are core componentsof fuel cell vehicles. These have been fitted on TMC’s MIRAI, theworld’s first mass-produced fuel cell vehicles launched in 2014.
As the Japanese government and business community
team up to begin full-fledged initiatives toward the building of ahydrogen-oriented society, Toyota Industries will makeimportant contributions to these efforts by fully utilizing its
technologies and know-how in this field. [3Es]

Lift truck from Tailift Co., Ltd., which is strongin capturing business in emerging countries

Oxygen-supplying air compressor
for fuel cell vehicles

In the Vehicle Business, we are implementing ViRA activities targeting the Vitz (Yaris outside Japan) andRAV4, which are being manufactured by Toyota Industries. The ViRA activities aim at making proactive
proposals in anticipation of changes in customer expectations
based on the concept of “Taking the Lead in Making Our Cars
More Attractive.” In fiscal 2015, we commenced production of a
special-edition RAV4, which reflects the design created throughcollaboration with sales companies outside Japan. [Expansionof value chain]
In the Engine Business, in June 2015 we began producing a
new diesel engine that is being fitted on TMC’s Land Cruiser
Prado and other vehicles. This engine raises power
performance while at the same time significantly improves fueleconomy and other environmental performance features. A
turbocharger, for which we participated in the development
project and commenced production in-house, plays a majorrole in supporting this engine performance. This turbocharger
was developed by drawing on not only the technologies
accumulated in the development of engines but also ourcompression and machining technologies for car airconditioning compressors. We believe the development of thisturbocharger clearly demonstrates one example of how we areable to take advantage of the benefits derived from operating
a diversity of businesses.
Diesel engines are widely used in Europe and demand forthem is now rising in emerging nations and other countries. Inview of this situation, with the aim of strengthening thecompetitiveness of diesel engines for the entire Toyota Group,
Toyota Industries and TMC have agreed to consolidate diesel
engine development and production functions, which havebeen undertaken jointly by both companies, into the operationsof Toyota Industries. Through the implementation of these17

Toyota Industries Report 2015

In the Textile Machinery Business, we have consolidated production bases for spinning frames in India.
This consolidation was decided in keeping with the concept of local production for local consumption giventhat more than 70% of our customers for spinning frames are concentrated in India as well as neighboring
South and Southeast Asian countries. Looking ahead, we will promote cost reductions through suchinitiatives as undertaking optimal parts procurement and maximizing the benefits of mass production whileworking to raise quality and productivity. [Business development in world markets]
As illustrated by these examples, the various transformations implemented thus far are beginning to achieve
results in fiscal 2015. Promoting further efforts to steadily grow these initiatives for transformation will be
crucial for achieving sustainable growth toward the realization of Vision 2020. For this reason, we intend tocontinue to proactively allocate management resources.

Q

Finally, please give us your message to stakeholders.

First of all, I would like to thank our stakeholders for their loyal patronage and ongoing support.
Toyota Industries’ business activities are based on supporting the industrial and social foundations aroundthe world through our sustainable corporate growth, thereby contributing to a comfortable society andenriched lifestyles. We consider the actual undertaking of business as being integral to taking an importantrole in society.
In line with this basic stance, we will carry out business activities by keeping in mind that our company isbuilt on the support of all our stakeholders, including customers, business partners, shareholders andinvestors, members of local and global communities and Toyota Industries Group employees.
Going forward, the Toyota Industries Group will continue to work in unison to meet the expectations of ourstakeholders.

New diesel engine

New turbocharger

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