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Toyota Industries in Focus

Passion for Future Growth—Medium-Term Management Vision—
To ensure future growth and achieve a stable increase in corporate value, Toyota Industries formulated a Medium-Term Management
Vision, introduced in May 2001. We set out the highly ambitious targets of consolidated net sales of more than ¥1.2 trillion andconsolidated ordinary income of ¥80.0 billion for fiscal 2006 (ending March 2006). Although we are not certain whether we will reachthese targets in the rapidly changing business environment, we are nonetheless doing our very best to achieve it.
Details of the thinking embodied in the business strategies that form the basis of our Medium-Term Management Vision are as follows.

Materials Handling Equipment andCar Air-Conditioning Compressor Fields: Strong
Competitive Edge and Global Strategies
Toyota Industries is striving to further consolidate its leading
share of the Japanese market as well as expand its top share ofthe global market for materials handling equipment. Highlighting
its determination to attain this objective, Toyota Industries
acquired BT Industries AB (“BT Industries”), a Swedish
warehouse truck manufacturer, and integrated the sales andservice functions of Toyota Motor Corporation’s (“TMC”) forklift
truck and logistics engineering businesses into its ownoperations. Through the mutual supply of products in addition toreciprocal transfers of production and sales know-how, theacquisition of BT Industries is steadily yielding synergies that we
expect will become even more apparent in the future.
Toyota Industries and BT Industries are supplying each otherto augment mutual product lineups. TOYOTA Material Handling
Company (“TMHC”) supplies its counterbalanced forklift trucks toBT Industries, while introducing various types of BT Industries’
warehouse trucks in its own markets in Europe, the U.S. andJapan. Also, we are making full-fledged efforts to introduce theToyota Production System (TPS), TMC’s manufacturing
technique that we also use, to BT Industries. Concurrently, weare incorporating BT Industries’ outstanding solution proposal-Medium-Term Sales and Income Targets (Consolidated Base)
Ordinary Income(¥ Billion)
80
47.9

51.4

59.0

100

60
60

44.5

20

Net Sales(¥ Billion)
1,400
Beyond 1,200
1,164.4

1,200

1,150

1,069.2
980.2

1,000800

767.4

Textile Machinery and Others

600

Vehicle & Engine
400

Electronics and Logistics Solutions
Car Air-Conditioning Compressor

200

Materials Handling Equipment
0FY

1201

02

03

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

0405
Target06
Targetwhite organic light-emitting diodes.
ST-LCD manufactures small and medium-sized lowtemperature poly-Si TFT-LCDs for use mainly in video cameras,
digital still cameras, personal digital assistants and mobilephones. ST-LCD’s products have such characteristics as highnumerical aperture, high resolution and reduced powerconsumption — features that are underpinning increased
demand for applications in digital cameras and mobile phones.
In fall 2001, ST-LCD invested approximately ¥75.0 billion andestablished a second production line, boosting its monthly
production capacity to 32,000 panels. Expecting further growthin demand, ST-LCD plans to make additional capital investmentof ¥10.0 billion in 2004, with the aim of raising monthly
production capacity to 40,000 panels (600 x 720 mm size) from
April 2005.
TIBC will focus on efficiently producing high-quality, cuttingedge technologies/products attuned to customer needs, such as
high-performance package substrates, while further raisingproductivity and strengthening competitiveness.
Toyota Industries has entered the Logistics Solutions
Business, which encompasses commissioned logistics
operations of warehouses and third party logistics, with the aimof addressing customer needs for cost reductions andimprovements in their logistics operations. Our entry into this
sector is being facilitated by our accumulated experiences in the
production and sales of materials handling equipment — such as
forklift trucks and automated storage and retrieval systems — aswell as our production know-how, as exemplified by the TPS.
Toyota Industries views the electronics and logistics solutions
markets as being highly attractive, with huge medium- to longterm growth potential. Accordingly, we will intensively invest
management resources in the Electronics and Logistics
Solutions businesses to position them as future core businesses,
and do our utmost to ensure the success of these businesses.
Toyota Industries will also aggressively explore and cultivate
promising new technologies and businesses to ensure stable
growth over the medium to long term.

Electronics and Logistics Solutions: Future CoreBusinesses

Our Vehicle Business, one of the manufacturing bases for theToyota Group’s small cars, will work to raise the value ofTOYOTA cars by further enhancing product quality and cost
efficiency. In addition, the Vehicle Business strives to contributeto car production by the Toyota Group by continually improving
its production technologies.
In the Engine Business, we will cooperate closely with TMC
while working to develop highly functional engines withoutstanding environment-friendly features.
With TMC determined to increase its presence in theEuropean market, it is especially crucial to meet needs related todiesel-engine vehicles. We expect that Toyota Motor Industries
Poland Sp.zo.o., established jointly with TMC, and our EngineBusiness will play a vital role in TMC’s Europe business strategy
by functioning as the bases for supplying diesel engines to TMC.

Although relatively small in scale at present, we believe ourElectronics Business has high potential to drive our growth overthe long term. The nucleus of our Electronics Business consistsof the Corporate Technical Center (an in-house organization);
ST Liquid Crystal Display Corp. (“ST-LCD”), a joint venture withSony Corporation that manufactures low-temperature polysilicon(poly-Si) TFT-LCD panels; and TIBC Corporation (“TIBC”), a jointventure with Ibiden Co., Ltd. that manufactures ball grid arrayplastic package substrates.
The Corporate Technical Center engages in the development
and commercialization of leading-edge technologies andproducts, including those related to power electronics parts forautomobiles as well as radio tuners, wireless LAN modules andToyota Industries in Focus

based sales techniques into our own sales activities. In particular,
we have begun offering BT Industries’ fleet management
program to customers in Japan. Additionally, we are promoting
personnel and technology exchanges as well as joint component
purchases and product development as part of our efforts togenerate further synergies as quickly as possible.
In another noteworthy development, in May 2003 Aichi
Corporation (“Aichi”) became a Toyota Industries subsidiary. Aichi
is a leading manufacturer of special-purpose vehicles,
commanding an approximately 66% share of the Japanesemarket for aerial work platforms in fiscal 2004. This consolidation
will allow the Materials Handling Equipment Segment to augment
its product line in sectors other than forklift trucks.
The Materials Handling Equipment Segment will carry out
strategic marketing on a global basis that will include its sales
and service activities and the development of products that meetcustomer/market needs, as we strive to maximize customer
satisfaction and business performance.
Determined to reinforce our position as the world’s leading
manufacturer of car air-conditioning compressors, we willcontinue to vigorously develop new products that ensure
customer satisfaction. In our Car Air-Conditioning Compressor
Business, we operate a global tri-polar production structure, withmanufacturing bases in the world’s three principal markets ofJapan, the U.S. and Europe (Germany). By manufacturing close
to our customers, we are well positioned to produce productsthat reflect market needs, reduce distribution costs and minimize
exchange rate risks. In view of an expected continued increasein the proportion of cars in Europe equipped with air-conditioning
systems, we will proceed with aggressive sales activities
targeting European automakers. At the same time, we will work
to expand sales in the North American market.
The Materials Handling Equipment Segment and the Car AirConditioning Compressor Business represent Toyota Industries’
core operations as well as strategic businesses driving ourefforts to achieve the objectives of our Medium-Term
Management Vision. Considering the dim prospects for a sharp
increase in demand in the mature Japanese market, we will strive
to further develop our operations globally as a means of securingongoing growth in the scale of our business.

Vehicle and Engine Businesses: Cost Reductionand Higher Productivity for Solid Business
Foundation

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Toyota Industries in Focus

Also, we started supplying aluminum die cast components fortransmissions to TMC’s Innovative International Multi-Purpose
Vehicle (IMV) Project through an Indian subsidiary. Whilecontributing to TMC’s overseas business development, we aim
to expand our own vehicle-related business through increased
production of foundry parts and commencement of productionof stamping dies for automobiles in China.
Our Vehicle and Engine businesses are dedicated mainly tocommissioned production for TMC. Our production is therefore
dependent on TMC’s production plans and outsourcing policies.
We seek to strengthen our sales link to TMC through ceaselessquality enhancement, cost-reduction activities and flexible
production. Our goal is for TMC to entrust us with the assemblyof, and employ our engines in, a wider range of models.
Our Vehicle and Engine businesses are a source of stablerevenues. We intend to improve cost competitiveness and build
stronger revenue foundations.

Implementing Cost-Reduction Measures
The wave of global mega-competition has triggered brutal pricecompetition. To ensure our survival in this environment, it isimperative that we continually enhance our revenue structure byintroducing appealing new products and implementing sustained
cost-reduction activities. We are taking measures to continually
reduce costs throughout the Company. A project team in eachdivision carries out systematic and well-planned cost-reduction
activities. Beside strengthening our ongoing value engineering(VE) and value analysis (VA) activities, our cost-reduction
activities also include optimized global procurement of materials
and components, and reductions in general expenses and head
office fixed costs.

In May 2002, we opened “e-Lab,” an information technology
research laboratory for various IT-related R&D activities, as abase station for the information system department. Its wide
range of research activities encompasses research on digital
simulation technologies to cut product development times andreduce production lead-times, from development to manufactureand shipment. E-lab is also engaged in the development of an
optimal network system for joint development of parts with
suppliers, and for parts procurement.

Cultivating Employee Skills
Toyota Industries manufactures a diverse range of products. Wemaintain our strong competitiveness by producing high-quality
products through efficient production. TPS is one vital source ofour competitiveness and represents know-how that supports
efficient production. The keys to further bolstering ourcompetitiveness are to continually refine TPS and cultivate staff
with a deep understanding of the system. To this end, we haveestablished a specialized section to foster the development ofqualified personnel. We are also actively promoting thedevelopment of excellent personnel through training courses
covering worker skills and quality control.

Developing Global Businesses
We realize that further business expansion cannot be achieved
by depending solely on the Japanese market. Toyota Industries
has therefore steadily globalized its operations. For example, weestablished production bases for forklift trucks and car airconditioning compressors in North America and Europe,commenced production of foundry parts and forklift trucks in
China, and acquired BT Industries. Guided by our belief that
globalization is paramount for expanding business and raising
corporate value, we will provide customers worldwide withexcellent products, procure high-quality, price-competitive partsfrom worldwide sources, and manufacture products close to ourcustomers around the world. We are also strengthening the sales
network for forklift trucks and other industrial vehicles.

Strengthening Approach to Information
TechnologyWe recognize that the deployment of information technology (IT)is a crucial strategic issue in determining corporate
competitiveness, and are thus pushing ahead with the strategic
utilization of IT. We have introduced the enterprise resource
planning (ERP) program into our corporate accounting system,
and are installing three-dimensional CAD systems. The greateruse of IT has already yielded reductions in development times
and enhanced productivity among non-manufacturing divisions.

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ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

Technical Training Center
The Technical Training Center opened on April 1, 2004 in order to strengthen education forworkers who engage in Toyota Industries’ production activities and to raise its international
competitiveness through higher levels of employee skills. A variety of employees taketraining courses at the Center to improve their skill levels.

Toyota Industries has cultivated new markets and achieved
growth in its businesses by pushing forward with technologicalinnovation based on its long-accumulated key technologies.
Today, Toyota Industries operates many divisions, each having its
own core technologies and markets. It will be necessary todevelop new technologies that will function as cores of new
business spheres and next-generation products. These

technologies must also create added value by strategically andorganically combining the technologies and markets of individual
divisions. We believe that such cooperation among divisions will
help raise the value of Toyota Industries as a whole and expand
our businesses.

Basic Philosophy

Respect for the Natural Environment

The following is a statement of Toyota Industries’ basic
philosophy. This basic philosophy constitutes the expressly
stated beliefs of the management and serves as a guide forcorporate behavior.

Toyota Industries believes that economic growth andconservation of the natural environment are compatible. Itstrives to offer products and services that are clean, safeand of high quality.

Respect for the Law

Respect for Customers

Toyota Industries is determined to comply with the letterand spirit of the law, in Japan and overseas, and to be fair
and transparent in all its dealings.

Toyota Industries conducts intensive product research andforward-looking development activities to create new value
for its customers.

Respect for Others

Respect for Employees

Toyota Industries is respectful of the people, culture andtraditions of each region and country in which it operates. It
also works to promote economic growth and prosperity inthose regions and countries.

Toyota Industries nurtures the inventiveness and otherabilities of its employees. It seeks to create a climate ofcooperation, so that both employees and the Company
can realize their full potential.

Toyota Industries in Focus

Maximizing Benefits of Synergy

Five Values
We also have Five Values that form an action guide for ouremployees to enforce our basic philosophy.

PROFESSIONAL
EXCELLENCE

Global Perspective
Learning from the best in the world, we aim tobecome the best in the world.

CUSTOMERORIENTATION

Customer FirstWe forge partnerships with our customers andstrive to exceed their expectations.

Welcoming New Challenges
Unbound by convention, we embrace thechallenge of creation.

CHALLENGE TO
CHANGEGLOBALIZATIONEncouraging Professional Excellence
We develop our strengths, and think and act
responsibly.

Encouraging Effective Teamwork

TEAMWORK

We recognize the human worth of each individualand collaborate to achieve goals.

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION15