Growth Strategy

The Source of Growth

Increasing Global Market Share withOutstanding, Unrivaled Technologies
will be essential for forklifts in the future. Forklifts are
Toyoda, a leading globalclassified on the basis of their drive system into engine andmanufacturer of car airelectric-powered models. Toyoda is the only manufacturer
conditioning compressors,
to independently develop and manufacture engines
produced more than 10
dedicated to forklifts. Based on this strength, Toyoda has
million units during thedeveloped engines with high output and low fuelfiscal year ended March
consumption to reduce their impact on the environment.
2000. The compressors
On the other hand, growing environmental awareness has
Toyoda develops and6SEU12
led to an increase in market demand for electric-powered
manufactures are distributed byCompressor
forklifts. Toyoda has therefore developed the GENEO-B
DENSO Corporation (DENSO) and are(7FB overseas), an electric-powered forklift that is the firstused not only by Toyota Motor Corporation (TMC) but
in the world to be equipped with a dedicated alternating
also by other leading automobile manufacturers worldwide.
current (AC) drive system as standard equipment.
As a result of its unsurpassed product development andIn the past, the conventional direct current (DC) drive
technologies, global automobile manufacturers continue tosystem could not deliver enough power for a forklift. In
use Toyoda’s products. Furthermore, Toyoda prepares fororder to overcome this problem, Toyoda has
the future by developing new products, thereby
independently developed a dedicated low
contributing to the innovative technology ofvoltage and large current semiconductor,
automobile manufacturers.
allowing forklifts with high output to operate
In the 1980s, Toyoda succeeded infor long hours on a single charge. As a result,developing a compact and lightweight tenToyoda has realized a system that othercylinder swash plate fixed displacement typeforklift manufacturers have found difficult tocompressor, which displays excellent
emulate.
reliability at high operating speeds. In theTo enhance safety, the engine-powered
1990s, as concerns about global
counterbalanced forklift GENEO (7 Series
environmental problems grew,
GENEO-B (7FB)
overseas), launched in 1998, was equipped
Toyoda developed a one-way swash platewith the “System of Active Stability” (SAS) and received
variable displacement type compressor that reduces thewide acclaim as the next-generation in forklift safety
burden on the engine, raises overall efficiency and lowers
technology. With an electronically controlled hydraulicfuel consumption. Furthermore, Toyoda developed andsystem, the SAS is an advanced safety system that enhancesmarketed a clutchless variable displacement typethe stability of the vehicle and prevents it from tipping over.
compressor offering excellent acceleration and low fuel
The GENEO-B won the Good Design Award in Japan,consumption. These products were developed andand is attracting great interest throughout the world.
manufactured several years ahead of the competition,
As a result of these technologies, Toyoda captured aindicating the competitive superiority of Toyoda in the
40 percent share of the Japanese forklift market for theglobal marketplace. Toyoda is also moving ahead with thefirst time.
technological development of new refrigerants to replace
chlorofluorocarbons (CFCs).
The forklift and car air-conditioning compressor
businesses are aiming to capture an appreciable share of
global markets by leveraging their technologicalsuperiority. Toyoda leads the world in developing andproducing counterbalanced forklifts, with development
The AC controller developed
efforts focused on the environmental and safety needs thatfor the GENEO-B

8TOYODA AUTOMATIC LOOM WORKS, LTD.

Global Development

Penetrating Global Markets by Analyzing
Market Characteristics and Developing
Optimum Strategies for Individual Markets
Toyoda analyzes market environments andcharacteristics throughout the world and establishes
production and development strategies for each businesssector, product and region. Furthermore, Toyoda plans,
develops and manufactures new products targeted atglobal markets.
The car air-conditioning compressor business has
already captured a substantial share of the global
compressor market, and production exceeded 10 million
units during the year ended March 2000. Of these, 81
percent were produced in Japan and the rest in the UnitedStates. For many years, Toyoda’s compressor production
bases were located only in Japan and the United States.
With production beginning in Germany from April 2000,
however, Toyoda now has production bases in the threemain global markets of Japan, North America, and Europe.
By placing manufacturing operations close to customers,
Toyoda will be able to tailor its products swiftly to reflect
the needs of local markets and minimize foreign exchangerisks. Both overseas production bases — Michigan
Automotive Compressor, Inc. (MACI) in the UnitedStates, and TD Deutsche Klimakompressor GmbH(TDDK) in Europe — are managed through joint ventureswith DENSO Corporation.
In the last fiscal year, about 4.3 million compressors
were sold to major automobile manufacturers in Japan,
establishing Toyoda as the market leader. In North

America, 3.7 million compressors were sold to Japanese
automobile manufacturers for locally manufactured cars
as well as to major American automobile manufacturers.
Sales in North America focused on fixed displacement
type compressors, which have excellent reliability at highoperating speeds. In Europe, Toyoda sold 2.7 million
units, mostly variable displacement type compressors forluxury cars.
In the future, Toyoda plans to increase compressor
sales in North America and Europe, which Toyoda believes
have good prospects for expanded sales.
Because the number of air conditioning systems
installed in cars, particularly in the European market, isexpected to rise steadily, Toyoda anticipates that demandfor compressors will increase accordingly. Therefore,
Toyoda will strive to expand sales by developing andexpediting the availability of products that meet themarket’s needs. Products such as compact variabledisplacement type compressors will attract new customers
and open up new markets.
The forklift business is experiencing severe market
competition as mergers, acquisitions and alliances takeplace on a global scale. The markets of advanced countries
are mature, so the demand for materials handlingequipment is cyclical. The demand for forklifts tends toreflect capital investment decisions of customers, which inturn follow economic trends.

Major Manufacturing Bases Outside Japan123645

1. Michigan Automotive Compressor, Inc. (MACI)/Compressor
2. Toyota Industrial Equipment Mfg., Inc. (TIEM)/Forklift
3. Toyota Industrial Equipment S.A. (TIESA)/Forklift

4. Toyota Industry Kunshan Co., Ltd. (TIK)/Foundry
5. Kirloskar Toyoda Textile Machinery, Ltd. (KTTM)/Textile Machinery
6. TD Deutsche Klimakompressor GmbH (TDDK)/Compressor(As of March 31, 2000)

TOYODA AUTOMATIC LOOM WORKS, LTD. 9

Growth Strategy
Toyoda has established production bases in Japan,North America and Europe to increase its presence inglobal markets. During the past fiscal year, Toyoda
manufactured about 64,000 forklifts worldwide. The
production base in the United States, Toyota Industrial
Equipment Mfg., Inc. (TIEM), is a joint venture with Toyota
Motor Corporation (TMC). In France, Toyota Industrial
Equipment S.A. (TIESA) is a joint venture with both TMCand Manitou BF S.A. About 38,000 forklifts aremanufactured in Japan, 18,000 in the United States and8,000 in Europe.
Toyoda holds a competitive advantage in themanufacture of counterbalanced forklifts, enjoying asubstantial share of world markets. However, Toyoda’s

focus on counterbalanced forklifts has hindered thepenetration of markets for warehouse equipment. The
warehouse equipment market is large in North America
and is especially important in Europe. To expand its sharein the North American and European markets, Toyoda
acquired distinguished forklift manufacturer BT Industries
AB of Sweden in June 2000.
BT Industries has a competitive edge in warehouseequipment. Developing its business on a global scale, BTIndustries has established firm bases, particularly in Europeand North America. Toyoda and BT Industries complement
each other in market and product lineup. With a view tobecoming the world’s leading forklift manufacturer, this is aperfect match of strategic importance.

Strengthening Toyoda’s Management Foundation

Accelerating Growth by Honing Production
Technologies for Automobiles and Engines
In the Automobile Segment,
the vehicle (automobile assembly)and engine businesses form
Toyoda’s foundation. As amember of the Toyota Group,
Toyoda is responsible forcontinuously improving quality
and reducing cost in thesebusinesses, as well as proposing
new areas to develop. Therefore,
these businesses play animportant role in expanding salesof the Toyota brand.
Assembly line for the Vitz (Yaris)
In the vehicle business, the Vitz
(exported to Europe as the Yaris) met with such anenthusiastic response that orders surpassed expectations. In
order to accommodate the increase in production of theVitz (Yaris), Toyoda raised the capacity of the production
line at the Nagakusa plant.
As a result, the annual production capacity of the Vitz(Yaris) increased from 170,000 to 220,000 units and makesa significant contribution to Toyota Motor Corporation’s(TMC’s) production plans.
Toyoda’s sophisticated production technologies thatenable efficient mixed production with the Sprinter Carib(exported as the Corolla Wagon), will be bolstered torespond quickly and flexibly to fluctuations in production

volume. In Toyoda’s role as a manufacturer of small cars
under the Toyota brand, Toyoda strives to enrichdevelopment functions further and reinforces its ability toproduce new models based on the same platform as that ofthe small cars that Toyoda already assembles.
As a member of the Toyota Group, Toyoda works hardto build trust and a reputation as a highly efficient
automobile production base by using advanced information
technologies to effectively link all processes fromdevelopment to production.
In the engine business, Toyoda currently manufactures
more than 10 types of engines for automobiles and forklifts
at the Hekinan plant, an engine production base of theToyota Group.
The automobile engines Toyoda produces range from1,500 cc to 4,500 cc gasoline engines. Toyoda also

Computer simulated virtual factories (V-Comm)

10TOYODA AUTOMATIC LOOM WORKS, LTD.

manufactures diesel engines with displacement volumes
from 2,000 cc to 4,200 cc, including direct injection types,
which are installed in a broad range of vehicles, including
passenger cars.
Toyoda also develops engines for forklifts, and iscurrently manufacturing 1,500 cc to 5,000 cc or larger
gasoline and diesel engines to power its forklifts. As theseengines were developed solely for our forklifts and Toyoda
is the only manufacturer to independently develop andmanufacture forklift engines, competitors find them very
difficult to imitate. This gives Toyoda a competitive edge inengines that deliver the performance forklifts require.
Another strength is Toyoda’s flexible production
technologies that allow the efficient manufacture of avariety of engines. Equipped with automatic guided vehicles,

Engine assembly line using automatic guided vehicle systems

Toyoda’s unique production line permits different types ofengines to be manufactured using the same assembly line.
Toyoda collaborates with TMC on a broad range ofdevelopment functions including design and evaluation. As a
supplier of engines to TMC, Toyoda’s engine business plays
an important role as the mainstay of its Automobile
Segment and contributes to the steady growth andexpanding sales of Toyoda.

New Businesses

A New Source of Growth

Low-temperaturepolysilicon thin filmtransistor liquid
crystal displays(Poly-Si TFT-LCDs)

To develop new businesses areas, Toyoda is focusing onelectronics. In 1997, Toyoda established ST Liquid Crystal
Display Corp. (ST-LCD), a joint venture with Sony
Corporation to manufacture low-temperature polysiliconthin film transistor LCD (poly-Si TFT-LCD)
panels. With Sony’s technical excellence andToyoda’s advantages in quality control andmanufacturing technology, Toyoda aims tobuild an optimal production system.
Toyoda completed one of theworld’s largest low-temperature poly-Si
TFT-LCD production plants and started productionin April 1999. The unique mass-production line
incorporating the Toyota Production System assures highquality and productivity. All poly-Si TFT-LCDs
manufactured by ST-LCD are sold to Sony Corporation
and used for Sony’s video cameras and other products.
Distinctive characteristics of the low-temperature polySi TFT-LCDs mass-produced by ST-LCD
include low electrical power
consumption, high definition, fast
response and compact size due to theunification of integrated circuits.
Because of its advantages over theprevailing amorphous silicon
TFT-LCD, the poly-Si TFT-LCD
is suited to small-sized digital
information devices. The poly-Si

TFT-LCD is expected to be used for personal digitalassistants (PDAs) and intelligent transport system (ITS)related equipment, for which demand is currently
increasing rapidly.
The LCD market is expanding, particularly for smallsized portable terminals. With outstanding characteristics,
low-temperature poly-Si TFT-LCDs are positioned tobecome a next-generation LCD, and Toyoda expects themarket to grow rapidly in the future. At present,
comparatively few businesses are engaged in commercial
production of low-temperature poly-Si TFT-LCDs. As apioneer in these technologies, Toyoda is confident ST-LCD
will have a bright future.
Toyoda has also begun
manufacturing plastic
package substrates forvarious types of IC
chipsets. In a joint venturewith Ibiden Co., Ltd.
(Ibiden), Toyoda launched
TIBC Corporation, which
ST Liquid Crystal Display Corp.
producescompact,lightweight ball grid array (BGA)-type plastic package
substrates that respond to high-function IC chipsets. The
plastic package substrates are distributed through Ibiden
to the world’s major semiconductor manufacturers foruse in electronic equipment such as PDAs, mobile phones
and personal computers.

Ball grid array-type plastic package substrates

TOYODA AUTOMATIC LOOM WORKS, LTD. 11