Top Message

To Our Stakeholders
Chairman Tetsuro Toyoda and President Akira Onishi, who were appointed to their respective positions after thegeneral shareholders’ meeting held in June 2013, explain our initiatives that have been implemented to build a firmbusiness foundation as well as our measures to attain growth over the medium to long term.

Tetsuro Toyoda

Akira Onishi

ChairmanPresident

9Top Message

Establishment of a Foundation for
Medium- to Long-Term Growth
Toyota Industries implemented profit improvement
activities early on prior to the full-blown global recessionthat was triggered following the collapse of Lehman
Brothers in 2008. We remained committed to improving
profits, and just as our efforts began to pay off, we werestruck with a series of serious events, including the Great
East Japan Earthquake and the flooding in Thailand. The
Toyota Industries Group prevailed against these hardships
and initiatives undertaken during this period have enabled
us to maintain a leaner business structure and gainstrengths to generate greater profits.
Together with solidifying our defenses, we have alsogone on the offensive to ensure that we capture business
opportunities and translate them into business results. We
have also been building a strong foothold in each businesssegment to achieve growth over the medium to long term.
In the Materials Handling Equipment Business, we
proceeded with the expansion of our value chain byreinforcing development, production, sales and services
operations. Our efforts in the Car Air-Conditioning
Compressor Business included setting up an optimum
supply structure less vulnerable to the impact of exchange
rate fluctuations and enhancing the appeal of our products
such as excellent fuel efficiency. In the Vehicle and Engine
businesses, our focus has been on achieving an evenhigher performance in terms of quality, cost and delivery(QCD).
We believe that by steadily promoting these efforts weare on track for sustainable growth.
Additionally, investments were directed toward theestablishment of optimum production and supply
structures in the Materials Handling Equipment Businessand the expansion of global production capacity in the Car
Air-Conditioning Compressor Business. With regard to
M&As, we are currently promoting an array of strategic
alliances for further growth. These include acquiring key
dealerships and welcoming Cascade Corporation,a U.S.-based manufacturer of lift truck attachments*,
as a consolidated subsidiary. In the Textile Machinery
Business, we acquired Uster Technologies AG,
a Swiss-based manufacturer of cotton classing
and yarn testing instruments. We expect that thesemeasures, which are designed to achieve growth overthe medium to long term, will begin to bear fruit in
fiscal 2014.
We anticipate that uncertainties will persist in thebusiness environment. As guidelines for achieving
medium- to long-term growth, we unveiled our Vision2020 and Medium-Term Management Plan in the fall of
2011. The Vision 2020 was formulated in line with ourdesire to contribute to a comfortable society and enriched
lifestyles by offering products and services that truly reflect
customers’ needs in a timely manner.
Under the vision, the “solution” business unit, including
materials handling equipment, and the “key components”
business unit centered around car air-conditioning

10

Toyota Industries Report 2013

Vision 2020

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

To contribute to a comfortable society and enriched lifestyles

Solution

Key Components
New
Product

New
Product

New
Product

compressors will facilitate global business development
and expand our value chain as the driving force for growthand greater profitability of the entire Toyota Industries
Group. The “mobility” business unit producing vehicles
and engines for Toyota Motor Corporation (TMC) willfurther increase its strengths in terms of quality and costs
to assume the dual role of contributing to enhancing thecompetitiveness of Toyota cars and supporting Toyota
Industries’ management foundation.
In order to ensure a leap forward in the future, we haveformulated the three “muscular” strategies of “3Es,”“Value Chain” and “World Market.”
The first strategy focuses on 3Es (Energy,
Environmental protection and Ecological thinking),
which are the keywords in promoting environment-friendly
manufacturing.
The second strategy concentrates on our Value
Chain. In businesses such as materials handlingequipment, we not only strive to offer high-quality
products but also seek to be of service in every aspect ofcustomer relations, for instance, through an after-sales
maintenance services structure to ensure our products arecontinuously used in optimal condition.
Our third strategy, which targets the World Market,
reflects our desire to extend our geographical coverage toinclude both developed countries and emerging countries
and to deliver our products and services to customers on
a truly global scale.
We aim to realize the Vision 2020 by deploying these

MobilityNew
Product

New
Product

3Es (Energy, Environmental protection and Ecological thinking)<Technological innovation in environment/energy areas>

Value Chain<Expansion of value chain>

World Market<Business development in world markets>

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

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

strategies across the three business units and achieving
growth in each business.
* Devices that are attached in place of forks of lift trucks for directly grabbing or rotating
goods for enhanced operability and logistics efficiency

Initiatives and Business Results for
Fiscal 2013
Overall, fiscal 2013 was marked by a modest economic
recovery underpinned by steady economic growth in the
United States and Southeast Asia, despite the European
debt crisis and the slowing of China’s economic growth.
For Toyota Industries, fiscal 2013 was the first year of our
Medium-Term Management Plan (fiscal 2013 to fiscal
2016), and we promoted various offensive measuresconcerning production and sales operations in respective
businesses. In addition, to realize growth over the medium
to long term, we actively engaged in research anddevelopment in the fields of environment- and energyrelated technologies, including electrification.
In the Materials Handling Equipment Business,aggressive sales expansion efforts were undertaken in

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

Strengthen growth potential byleveraging synergies among
divisions, strategic M&As andalliances

Europe and the United States through initiatives such asutilizing acquired key dealerships. In emerging countries,
we concentrated on bolstering our sales and service
capabilities. These efforts enabled us to achieve betteryear-on-year business results outperforming the market,
which remained on par with the previous year. In the faceof the persistently weak market in Europe, we madevarious efforts that included a reduction in production leadtime for lift trucks, resulting in successfully obtaining largefleet orders.
In March 2013, we acquired U.S.-based Cascade
Corporation and made the company into a consolidated
subsidiary. One of the world’s largest manufacturers of lift
truck attachments, Cascade is renowned for its excellent
capability in responding to customers’ diverse needs. By
adding their lift truck attachments to our lineup, we expect
to expand our business domain, which will enable us tomeet a broader range of customers’ logistics needs andachieve further growth of the Materials Handling
Equipment Business.
Among automobile-related businesses, the Car AirConditioning Compressor Business recorded anincrease in unit sales in North America and Asia, where car

11Top Message

sales showed strong growth. The Vehicle Businesssmoothly launched production of the new RAV4, which
underwent a full model change for the first time in sevenyears. The Engine Business posted higher unit sales ofdiesel engines for TMC’s Innovative International MultiPurpose Vehicle series that specifically targets emerging
countries, pushing up overall unit sales to a record high. In
addition to sales to TMC, the Car Electronics Businessexpanded sales of products for hybrid vehicles (HVs) andother types of vehicles to other automakers in and outside
Japan, thereby making a greater contribution to our overallbusiness performance.
The Logistics Business posted net sales on par withthe previous fiscal year. Although sales of logistics services
declined as a result of the sale of our shares in a
subsidiary, sales of land transportation services forautomotive parts increased. In the Textile Machinery
Business, slower economic growth in China, one of ourprimary markets, resulted in lower sales. Nevertheless, we
worked to revitalize the stagnant market by bolstering oursales activities primarily for air-jet looms, which boast theworld’s top share in unit sales*.
As a result of these efforts, Toyota Industries posted
net sales of ¥1,615.2 billion and operating income of¥77.0 billion in fiscal 2013, exceeding the previous fiscal
year’s results.
* Survey by Toyota Industries Corporation

Initiatives for Medium- to Long-Term
GrowthTo attain the goals of our Vision 2020 and corporate
growth over the medium to long term, we will further
accelerate efforts under the aforementioned three“muscular” strategies of “3Es,” “Value Chain” and “World
Market.”As for the 3Es strategy, the Materials Handling
Equipment Business and automobile-related businesses

12

Toyota Industries Report 2013

run during an idling stop, we will develop more compact
models with increased fuel efficiency and expand sales
to automakers in and outside Japan, which are actively
promoting sales of HVs and other electric-powered
vehicles.
To increase our competitiveness in the Car Electronics
Business, we will use our expertise gained on Toyota cars
to focus on compactness, weight reduction and increased
efficiency primarily for HV converters and inverters.
Although the ratio of the Car Electronics Business in our
total net sales still remains relatively small, we will takeadvantage of the upward trend in unit sales of electricpowered vehicles and seek to expand the scope of vehicle
models fitted with our products. This action should help us
achieve growth of this business and contribute to theare sharing an array of technologies and know-how
mutually accumulated over the years. In the future, we willhone these technologies and expertise and leverage themin both business sectors. For our mainstay lift trucks, we
intend to further enhance the appeal of our products byimproving the performance of our internally manufactured
key components such as motors and controllers.
As part of efforts to develop fuel cell lift trucks, we
initiated a feasibility test of a newly developed fuel cell lift
truck in December 2012 under the Kitakyushu Smart
Community Creation Project promoted by Japan’s Ministryof Economy, Trade and Industry and other organizations.
In the areas of reducing CO2 emissions and diversifying
energy sources, fuel cells are regarded as a new powersource option for materials handling equipment.
In the field of internal-combustion lift trucks, we areworking to enhance the performance of lift truck enginesdeveloped and manufactured by the Engine Division tooffer higher fuel efficiency and cleaner emissions in ourefforts to develop competitive products that combine thestrengths of the Materials Handling Equipment Division
and Engine Division. As part of these efforts, 3.5- to 8-ton
capacity lift trucks fitted with such new engines werereleased in North America in April 2013.
In this manner, we will work to improve energy-saving
and other environmental features of electric and internalcombustion lift trucks and facilitate the development offuel cell lift trucks. Our aim is to accelerate thedevelopment of eco-conscious products while helping
customers achieve higher efficiency in their logistics
operations.
One thing we must pay close attention to in thefield of automobile-related businesses is the future
implementation of increasingly stringent fuel efficiency
regulations across the world. In response, the Car
Air-Conditioning Compressor Business will concentrateon the development of next-generation models by
increasing the product appeal of already highly fuelefficient variable-displacement type compressors. For
emerging countries, emphasis will be placed on thedevelopment of models that achieve an optimum balance
between performance and prices. With regard to electriccompressors for HVs, which allow the air conditioner toelectrification of vehicles.
The second strategy involving our value chain is ofparticular importance primarily for the Materials Handling
Equipment Business. The business has been establishinga stronger structure by integrating sales channels that
separately existed for individual brands in Europe and byacquiring key dealerships in North America. Leveraging
this structure, we plan to make efforts to provide
customers with finely tuned after-sales services, which
comprise a crucial aspect of industrial goods; propose
solutions to improve logistics; and enhance financing
services. In emerging countries in Asia and other regions,
we seek to offer even higher levels of customer service
and expand sales through differentiated service quality.
The third strategy is centered on the world market.

Practical training for service instructors of distributors outside Japann Targetsn Management Targets for Fiscal 2016

■ Net sales: More than ¥3,000 billion■ Operating income: More than ¥200 billion (7%)
■ ROA*1: 5%■ ROE*1: 10%
More than ¥200 billion

Operating income(¥ Billion)

140

96.8
68.7

70.0

77.0

95

22.0

Net sales(¥ Billion)

Providing services at a customer’s site

More than

Solution¥1,500 billion

(6.6)

1,900
1,584
1,377

1,479

1,543

FY2016 targets

Net sales

1,615

1,900

More than 2,000

Operating income(Operating income
ratio)

77(4.8%)

95(5.0%)

140(7.0%)

ROA*1

2.8%

—

5.0%

ROE*1

8.7%

—

10.0%

100

Approx. 500*2
in total between
FY2013 andFY201689*1: Investment securities are calculated on the basis of their purchase prices.

Materials Handling*2: Includes M&A investments
Equipment, Logistics,
Textile Machinery, etc. *3: As of April 26, 2013

More than

2,000

FY2013 results

Capital expenditure¥3,000 billion(¥ Billion)

FY2014 plan*3¥2,000 billion

Key
components¥700 billion

1,615

Compressor,
Electronics, etc.

Mobility¥800 billion
Vehicle, Engine(FY) 2008 2009 2010 2011 2012 2013 2014

(Plan*3)

2016

2021

13

Top Message

The Materials Handling Equipment Business has beenstrengthening its production, sales and service operations
on a global scale. Our latest efforts involved theestablishment of a production base in Vietnam in April
2012. This new base manufactures motors, a key
component of electric lift trucks, and has already started
supplying products to our lift truck production plants
worldwide. As motor performance has a significant impact
on the overall appeal of our lift trucks, we intend toincrease the number of lift truck models fitted with these
motors. In Brazil, where market growth is expected in the
future, we plan to capture growing demand through thelaunch of a lift truck production plant in October 2013.

Lift truck production plant in Brazil (scheduled to commence operations in October 2013)

We believe that these initiatives undertaken by theMaterials Handling Equipment Business have put us on
track to build an unparalleled business structure in theindustry. We will continue to adequately respond tochanges in the marketplace and seek to realize optimum
production and supply structures on a global basis.
In the Car Air-Conditioning Compressor Business,while pushing ahead with production capacity increases atrespective bases around the world, we will expand
production of variable-displacement type compressors, forwhich demand is rising in North America in particular, torespond to customers’ needs for improved fuel efficiency.
In addition, we intend to increase the ratio of locallyprocured parts at respective overseas production bases tominimize the impact of exchange rate fluctuations.

Japan’s strengths in manufacturing lie in its ability to bring
together the wisdom of every function within an
organization, from development, production engineeringand manufacturing to sales and services, in order to create
excellent products at affordable prices through a processof repeated trial and error and constant improvements.
Based on these activities, we will further enhance the
manufacturing capabilities of our mother plants in Japanand thereafter transfer these capabilities to our production
bases around the world. The following three initiatives are
already underway to reinforce our manufacturing
operations.
1. H uman Resources Development at the Technical
Learning Center
Toyota Industries’ Technical Learning Center provides
education to young engineers and technicians inJapan. Based on the concept of genchi genbutsu(go and see for yourself), new employees in engineering
fields must first learn the basics of manufacturing
through a comprehensive, experience-oriented programthat covers everything from planning and designingto actual manufacturing before they are assigned toeach workplace. Our education programs for technicians
focus on individuals’ physical and mental development,
skills training and knowledge cultivation. These programs
are designed to develop human resources both capableof raising the skill levels of our entire workforce andserving as core staff at production sites. We also
participate in national and international skills competitions
as one way of passing on our advanced, highly
professional skills. Since winning a gold medal in theWorldSkills Competition 2007 for the first time, Toyota
Industries’ teams have accomplished excellent results
each year.

14

Toyota Industries Report 2013

machining and assembly, to achieve even higher levels of
quality and productivity and deliver products with greater
appeal to customers.

Spurring Innovation and Accelerating
Efforts to Realize the Vision 2020
In order to prevail over ever-intensifying global competition,
it is essential that we step up our efforts and engenderinnovation. For Toyota Industries, the word “innovation”
means more than just technological advancements usuallyseen in the area of development. The word encompasses
everything that entails a change that has never occurred
before, such as a new combination of existing things or a
new way of producing an existing product.
We will spur innovation in our respective fields ofoperations, from development to services, and accelerate
our strategies for growth and qualitative advancement.
To this end, we will work to enhance our competitive edgein each of the three business units by taking advantage of
our wide range of businesses. At the same time, we will
strive to augment horizontal alignment among thebusiness units to create synergies and maximize thecomprehensive strengths of the Toyota Industries Group.
By making steady progress in implementing strategies
under the Vision 2020 and driving the expansion of thethree business units, we aim to achieve overall corporate
growth and remain fully committed to contributing to acomfortable society and enriched lifestyles.
In closing, we ask stakeholders for their continued
cooperation and support.

GTCC training session

Initiatives to Enhance Monozukuri(Manufacturing) Capabilities
The Japanese manufacturing industry is laden with what isoften referred to as the “six burdens,” and is facing intensecompetition. There is a rising concern that manufacturing
in Japan may decline in line with the hollowing out of the
manufacturing industry, a brain drain of excellent humanresources and a loss of employment opportunities.
Amid this difficult environment, we are striving to bolster
our manufacturing capabilities in Japan even while
promoting global business development. We believe that

2. GTCC Initiative in the Car Air-Conditioning
Compressor BusinessOur car air-conditioning compressors are widely adopted
by major automakers in and outside Japan, and we have
responded to growing demand by expanding production
on a global basis. As our production expands worldwide,
it has become increasingly difficult to maintain a consistentlevel of manufacturing skills throughout the world.
To counter the situation, we established the Global
Training Center of Compressor (GTCC) in fiscal 2013 fortraining manufacturing personnel from production basesaround the world at a production base in Japan thatserves as a mother plant. The GTCC focuses not just on
teaching technical skills but also on instilling our thinking
on monozukuri based on the Toyota Production System(TPS). This initiative is aimed at honing the strengths of our
production bases in Japan that take the lead in Toyota
Industries’ manufacturing operations, while also having
trainees share the skills and knowledge they have gainedin Japan with local staff after returning to their homecountries. This will in turn raise the level of our skills on a
global scale.

Training technicians at the Technical Learning Center

3. Innovation in Production Engineering
Toyota Industries also strives to improve productionengineering capabilities through the development ofinnovative manufacturing methods. Products, no matter
how excellent they are, may be copied by othercompanies once they are released to the market.
Production engineering, on the other hand, allows us tomaintain and enhance our competitive edge if we keep
development results in a “black box” to differentiate
ourselves from competitors. Because textile machinery is
the origin of our business, we have strong advantages infoundry technologies, which are essential in manufacturing
not only textile machinery but also engines, lift trucks andcar air-conditioning compressors. In addition to thesetypes of materials processing technologies, we encourage
innovation in the field of production engineering, including15