Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Top Message

Strategies and Businesses
Steadily Carry Out Growth Strategies
by Leveraging the Strengths ofEach Business Field

QTop Message

P 12 – 17

Special Features

P 18 – 25

1.	Strengths of Our Materials Handling Equipment Business
Aiming for Sustainable Growth
2.	Leveraging the Strengths of Diverse Businesses toAdapt to Changes and Seek Sustainable GrowthBusiness Activities

P 26 – 37

Top Message

Looking beyond the COVID-19
Pandemic and Seeking
Sustainable Growth inHarmony with Society
Toyota Industries will take on new challenges to ensuresustainable growth in a time of increasing uncertainty
while making Group-wide, concerted efforts to minimize
the impact of the COVID-19 pandemic.

Akira Onishi
President

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Toyota Industries Report 2020

Could you explain the impact of COVID-19 on Toyota Industries andits response to the pandemic?

COVID-19 is said to have a profound impact on the global economy— the largest in the post-WWII period, far greater than the impact of theglobal financial crisis in 2008 and comparable to the Great Depression
in the 1930s. Toyota Industries also has been heavily affected by thepandemic and has implemented a range of countermeasures.
On the production and sales fronts, most of our plants around theworld suspended operations for a certain period in and after February
2020. Even after lifting the suspension, some are still manufacturing ata reduced volume. For sales and after-sales service activities, customer
visits have been restricted in some countries and regions. While giving
due consideration to the prevention of infection, we are aiming to return
business activities to normal levels.
For back office employees and engineers, we have cancelledlarge meetings and events and encouraged working from home andteleconferencing to reduce the risk of infection. Using this opportunity,
we have been streamlining operations by examining how we holdmeetings and revising and eliminating certain business processes. As amanufacturer, Toyota Industries values the concept of genchi genbutsu(go and see for yourself) in its operations. In the future, we will determine
when to apply this concept by organizing operations into ones that
continue to require genchi genbutsu and ones that can be done more
efficiently online. Among the initiatives we are undertaking currently,
we plan to carry on those that lead to work style reforms and better
productivity. They have served to accelerate our rather slow efforts toimprove work-life balance.
As a response to a downturn in business, we have been
augmenting profit improvement activities. The plan is to substantiallyreduce capital investment and expenses by postponing nonurgent projects. I am spearheading a Company-wide organizationencompassing various subcommittees to promote these activities. Asfor research and development, we will prioritize projects and carry out
ones that are essential for our future growth. Anticipating a prolonged
period of market instability, we have also increased cash on hand fromthe amount of two months to three months of consolidated net sales.
At times like this, it is important to thoroughly reaffirm the basics and go
back to the origin of our business. Thus, we have been stepping up ourefforts to “create a workplace environment that places a top priority onsafety,” “thoroughly control quality and enforce compliance” and “coexist harmoniously with society and protect the global environment.”

Production of car air-conditioning compressors

Organization for Promoting Profit
Improvement Activities
Oversight: President
Chairman: Executive vice president
Admin: Corporate Planning
Dept. in the Head Office
Each business division andthe Head Office
Supporting

Subcommittees on labor costs, secondary
materials costs and depreciation costs, etc.

Production of lift trucks

13

Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Top Message

With regard to contributing to society, we have been carrying out
various support activities for medical institutions, which are becoming
overburdened by the spreading virus. As an example of support for
healthcare professionals utilizing our monozukuri (manufacturing)capabilities, our bases in Japan and the United States have
manufactured and delivered medical face shields to hospitals, medical
institutions and local governments. We are providing as much support
as possible to the dedicated healthcare professionals in this difficult
situation.

Q

Production of medical face shields

Given the impact of COVID-19,
what is your perspective on the future business direction?

It is difficult to foresee what the post-COVID-19 world will be like as
the situation keeps changing from day to day. Nevertheless, we donot think a drastic change is needed in our policy of promoting growththrough two business pillars, namely the Materials Handling Equipment
Business and the automobile-related businesses.
We do, however, have to take into account various factors, including
the impact on our businesses of the ongoing changes in various needs
caused by COVID-19. The following summarizes our planned efforts
over the near term.

L Efforts in Core Businesses
Materials Handling Equipment Business
There has been growing demand for higher logistics efficiencies andlower logistics costs driven by an increase in e-commerce demandand labor shortages. COVID-19 is expected to accelerate the trend.
Greater expectations are also placed on automation and autonomous
driving technologies for their potential important role in preventing
infection. We have already engaged in the development of automation
systems for better logistics efficiencies all around the world. In Japan,
we have developed an autonomous robot to automatically deliver drugs
and various test samples within a university hospital, thus contributing
to the reduced workload of healthcare professionals. In Europe, ourautomated lift trucks have been operating in a food manufacturing plant,
both ensuring good hygiene and successfully reducing the work doneby human workers under low temperatures. We have also provided
an advanced solution combining a logistics system and automatedlift trucks to a distribution center of a leading retailer and helped thecustomer increase its productivity.

14

Toyota Industries Report 2020

Robot transfer system (university hospital)

Automated lift truck(food manufacturing plant in the Netherlands)

In the materials handling equipment sector, market growth isexpected to continue well into the future. At Toyota Industries, thisbusiness is regarded as a stock-type business that provides support
to customers in various areas, such as after-sales services and sales
financing, along with equipment and systems.
We intend to encourage collaboration between the Lift TruckBusiness, for which we boast the world’s top share*, and the Logistics
Solutions Business, which we have been strengthening jointly with
two subsidiaries, namely Bastian Solutions LLC and Vanderlande
Industries Holding B.V., in response to the particularly growing needs inrecent years. By doing so, we aim to respond to the changing needs ofcustomers more accurately and achieve sustainable growth.
* Survey by Toyota Industries Corporation

Automobile-Related Businesses
With the idea of social distancing consciously beginning to take root,
the value of cars has been reconsidered as a means of mobility that
ensures personal space. We will continue to pursue growth in this field
by leveraging the strengths of engaging inbusinesses related to an entire automobile,from vehicle assembly to the manufactureof car air-conditioning compressors,
engines and electronics products.
• Car air-conditioning compressor: Even
though the automobile market may needsome time to recover, we will work toincrease sales over the medium to longterm on the back of an upward trend
in automobile sales and an increasein the number of vehicles fitted with an air conditioner. We expect
particularly strong growth in demand for electric compressors. We
have accordingly developed a large-capacity model used not only forvehicle interior air conditioning but also for cooling batteries and otherheat-emitting devices of electrified vehicles.
• Vehicle: Toyota Industries manufactures the new RAV4, which wasselected as the Car of the Year Japan 2019-2020 and became thefirst vehicle of Toyota Motor Corporation (TMC) to receive the award
in a decade. We also undertook the vehicle’s exterior design andupper-body development. Being involved in the production of a
globally popular model is a great morale booster for our plant workers.
In June 2020, we started manufacturing TMC’s new RAV4 plug-in
hybrid electric vehicle. The car is selling well, as it offers a long driving
range in the battery electric vehicle (BEV) mode and an external

New RAV4 winning the Car of the Year Japan
2019-2020 award

Feeding power at an evacuation shelter
Photo courtesy of Car & Leisure News15

Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Top Message

power supply function to feed power to home electric appliances
during disasters and other occasions. We completed renovations ofour vehicle assembly plant two years ago, transforming it into a plantwith even greater competitiveness. We will continue to advance ourproductivity and quality to increase our role within the Toyota Group.
• Engine: Diesel engines still have room for growth as an effectivemeans of mobility in inland China, Africa and other emerging
countries. We assume a significant role in improving the performanceof these engines in environmental and other aspects. Amid theprogress of car electrification, hybrid vehicles (HV) still require highperformance engines. We intend to leverage our strengths in this field
as well.
• On-board battery: With car electrification gaining momentum, wehave decided to start the development and production of a newbattery. Utilizing our technologies cultivated in the development ofbatteries for lift trucks, we will develop a high-output, compact, longlife and low-cost battery for adoption in TMC’s HVs. This is a fiercelycompetitive sector on a global scale, but we intend to prevail with ourstrong product appeal and turn it into a business that underpins thefuture of Toyota Industries.

Q

What about the future direction of management?

To be honest, the profound impact of the COVID-19 pandemic makes
it a challenge for me personally, and probably for many business
managers as well, to deliver a message this year. The situation keeps
changing, and we see different news every day. We thought the infection
began to subside at one point but then have to worry about a second
wave and the spread of the virus in the Southern Hemisphere. The
good news is that the development of vaccines is proceeding andFounder Sakichi Toyoda
Toyoda Precepts
economic activities are resuming; however, the bad news is that there(corporate creed)is growing concern about the pandemic becoming prolonged. Manyexperts are providing various views about
the post-COVID-19 world, but the truth isToyoda Precepts (Corporate Creed)
no one knows for sure, or perhaps, it is justCarrying out the spirit of founder Sakichi Toyoda,
meaningless to speculate at this point.
• Always be faithful to your duties, thereby contributing to the Company and tothe overall good.
What is important now is to uphold our•
Always be studious and creative, striving to stay ahead of the times.
basic sense of value and calmly and steadily• Always be practical and avoid frivolousness.
do what we can. As the situation changes,• Always strive to build a homelike atmosphere at work that is warm and friendly.
we have to think hard and find our own, right• Always have respect for God, and remember to be grateful at all times.
course of action.

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Toyota Industries Report 2020

The Toyoda Precepts (corporate creed), which embrace thespirit of founder Sakichi Toyoda, represent Toyota Industries’ basic
sense of value. Since our founding, we have always gone back toour philosophy encapsulated in these precepts and endeavored toprovide products and services truly needed by customers. I believe ourapproach aligns with the objective of the United Nations’ Sustainable
Development Goals (SDGs).
As shown in the “Efforts in Core Businesses” section of thismessage, our business structure is akin to a conglomerate. Among ourdiverse businesses, we have explored how we should prioritize themand allocate resources to each in the face of the ongoing pandemic
that is having an enormous impact on our society and economy.
We have come up with several ideas and options on how to do this.
However, it is now too early to decide on which idea or option toimplement, and we will need to make flexible responses as we see fit
toward the changing situation.
In Conclusion
Japan experienced a series of national crises over a period of about
25 years, including the Spanish flu epidemic in 1918, the Great Kanto
Earthquake in 1923 and its defeat in World War II in 1945. The country
has risen from the devastating damage of each crisis through thestrenuous efforts of the people of that time. The environment we live innow significantly differs from the one in the past, but I think we can learn
many lessons from how these people witnessed and recovered fromeach catastrophe.
Even though there is a common perspective that it will takeconsiderable time for COVID-19 to subside, cooperation is alreadyunderway in the healthcare field to develop vaccines and drugs. I believethat promoting such cooperation between countries, regions andbusinesses will be essential for our recovery in the future.
At Toyota Industries, we intend to overcome the current crisis bysharing best practices and making concerted efforts among our globallyoperating businesses.
In recent years, we have been witnessing growing uncertainty caused
by geopolitical issues, natural disasters, and of course, infectious
diseases including COVID-19. Amid this environment, we will continue
to pursue sustainable growth by leveraging our technologies, know-how
and experience cultivated in our diverse businesses to adapt to a varietyof changes and by working even more closely with other companies in
the Toyota Group.
We will meet the expectations of our stakeholders through acontinuous relationship built from a long-term perspective.

Major Events That Affected Japan
1918 –

Spanish flu epidemic

1923

Great Kanto Earthquake

1930 –

Great Depression– 1945World War II17