Top Management Interview
In fall 2011, Toyota Industries announced its Medium-Term
Management Plan that defines the direction we should
pursue for the period from fiscal 2013 to fiscal 2016.
Before getting into the details of the plan that just began
in April 2012, can you sum up the activities undertaken
under the previous plan (fiscal 2007 to fiscal 2011)?

great and we were unable to attain our numerical targets infiscal 2011. Nevertheless, we have significantly solidified our
corporate structure throughout the Group and added greater
profitability to our operations than before the global recession.

What initiatives were undertaken during fiscal 2012?

Tetsuro Toyoda
President

Setting Sail for 2020,
with the Compass thatGuides Us in an Age of Turmoil
The world is experiencing a succession of serious natural disasters and prevailing uncertainty about thefuture of the global economy. In an age of turmoil, we have to fight for survival amid ever-intensifying
global competition. What is needed is a clear vision, well-defined strategy and the energy to take onchallenges. President Tetsuro Toyoda explains Toyota Industries’ vision and the course we will follow
toward the year 2020.

12Toyota Industries Report 2012

Our previous medium-term management plan, which weannounced in the fall of 2005, commenced in fiscal 2007.
Under the plan, we carried out an array of proactive initiatives
in each business segment.
In the Materials Handling Equipment Business, we madeSweden-based lift truck manufacturer BT Industries AB into asubsidiary in 2000. Instead of going ahead with immediate
management integration, we set a certain waiting period toabsorb the differences in corporate cultures and learn thestrengths of each company. Later in 2006, we felt we wereready and moved on to full-scale consolidation of management
structures in respective regions across the world. While
working to achieve greater agility in management, wereorganized our sales network to enhance our sales andservice capabilities.
With regard to car-related businesses, in the Car AirConditioning Compressor Business we augmented ourstructure to produce car air-conditioning compressors byincreasing production capacity at plants in North America andestablishing new production bases in China. In the Vehicle
Business, we flexibly responded to a shift in production volume
and a change in vehicle composition. In the Engine Business,
we sought to increase our role in the development andproduction of diesel engines while enhancing our lineup of
power source devices and systems primarily for hybrid
vehicles in the Car Electronics Business.
In the Logistics Business, we channeled our resources
into high value-added logistics services and successfully
accelerated business growth.
Finally, in the Textile Machinery Business, we made efforts
to expand sales of air-jet looms, which constitute a mainstay
product of this business, and build a production structure lessvulnerable to market fluctuations.
As a result of these efforts, in fiscal 2008 we achieved thenet sales target of over ¥2,000 billion ahead of the mediumterm plan and posted an increase in ordinary income to¥126.4 billion.
At the beginning of fiscal 2009, however, sensing earlysigns of a global economic downturn, we set out swiftly toimplement profit improvement activities and streamline thebusiness structure prior to the financial crisis that started in
the United States and triggered a full-blown global recession.
Thereafter, we positioned fiscal 2011 as a year to go on theoffensive while also strengthening our defenses, with theaim of identifying signs of change in the marketplace andtranslating these business opportunities into better businessperformance. We undertook various offensive initiatives,
including aggressive sales expansion activities for materials
handling equipment.
Unfortunately, the impact of the global recession was too

Because fiscal 2011 was the final year of the previous
medium-term management plan, we originally planned toannounce a new plan at the beginning of fiscal 2012. The
timing almost coincided with the Great East Japan Earthquakethat occurred on March 11, 2011. Therefore, we had topostpone the announcement as we dealt with partial
suspension of plant operations due mainly to the disruptionof parts supply from suppliers. Following all-out efforts tonormalize production, we were able to quickly restore ourproduction operations in our mainstay Materials Handling
Equipment Business to a level that enabled us to make up
for the delay in production by drawing on the agility andresilience of our unique supply chain.
In this manner, the Materials Handling Equipment Businesswas a major driving force behind our recovery from theunprecedented disaster. This may be counted as yet anotherstrength of Toyota Industries, stemming from our involvement
in a wide range of businesses.
The earthquake struck when our Group-wide profit
improvement activities implemented after the so-called
Lehman Shock were just beginning to pay off. A subsequent
series of serious events, including the deepening of theEuropean debt crisis, the flooding in Thailand and thehistorically strong yen, caused the already difficult businessenvironment to continue. With many Japanese manufacturers
posting a decline in profits amid this environment, the Toyota
Industries Group worked together against these headwinds
and achieved increases in both sales and profits. These
recovery efforts undertaken during the period from fiscal 200913

Toyota Industries Report 2012

Top Management Interview

to 2012 made our management platform stronger than ever,and I believe we have forged a solid footing for future growth.

What is the aspired image laid out in the Vision 2020?
Since its founding by Sakichi Toyoda, Toyota Industries has
been operating under the philosophy of “contributing tosociety and the world through monozukuri (manufacturing).”
Many of our products may not be readily visible tocustomers, but they play a very important role connected
to people’s everyday lives. Our lift trucks, for example, areused to convey vegetables, fruits, fish, meat and otherfoodstuffs as well as convenient home electric appliancesalong their distribution routes. Towels and shirts, bothcommon in daily life, may use fabrics produced by our textile
machinery. Our car air-conditioning compressors are fitted innumerous vehicles across the world and operating to create
a comfortable atmosphere within an automobile even at theheight of summer. Our lift trucks, car air-conditioning
compressors and air-jet looms, for which we enjoy the top
share in the global market*, are just a few examples of ourproducts that are directly connected to people’s lives.
The Vision 2020 reflects our desire to contribute to acomfortable society and enriched lifestyles by offering
products and services truly needed in a timely manner.
Each and every one of the over 40,000 employees in theToyota Industries Group shares these common goals andworks toward realizing the vision.

Together with the Medium-Term Management Plan,
Toyota Industries also formulated and announced theVision 2020. What is the basic rationale behind the vision?
Currently, the Japanese manufacturing industry is laden withwhat is often referred to as the “six burdens,” including thestrong yen and high corporate taxes, and thus must compete
globally under extremely severe conditions. Given theincreasing speed of changes taking place in the businessenvironment, we must recognize that we are in an “age ofturmoil” in which major changes and crises are becoming
commonplace.
It is essential that we assume a change in the businessenvironment is always inevitable, and seek a higher degree ofindependence and clear a path on our own. We will enhance
our product and technological prowess to proceed fromrecovery to growth over the next decade. The Vision2020 is the compass that guides us to this goal.

* Surveys by Toyota Industries Corporation for car air-conditioning compressors and lift trucks;
statistics from the International Textile Manufacturers Federation (ITMF), 2011 for air-jet looms

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
NewProductNewProductNew
Product

Toyota Industries Report 2012

NewProductNew
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 societywith minimum environmental
impact through technologicalinnovation in environment/energy areas

14

Mobility

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 byimproving our business basedon team strength and TPS

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

How are our business segments categorized under theVision 2020?
Toyota Industries is like a general store, offering a diverse
range of products from textile machinery to materials handlingequipment, vehicles and automotive parts.
Based on the business models adopted by each segment,
we have divided these domains into three business units.
First, the “solution” business unit encompasses theareas of materials handling equipment, logistics and textile
machinery. It is a comprehensive business unit in which
Toyota Industries handles everything from development andproduction to sales and after-sales services. We aim toaccelerate growth of this unit as our specialty businessdomain.
The second business unit, “key components,” iscentered around the fields of car air-conditioning compressors
and car electronics. This unit capitalizes on our technologicalsuperiority to offer key components for a variety of products toa diverse range of customers worldwide, mainly automakers.
The third business unit is “mobility,” producing vehicles
and engines for Toyota Motor Corporation (TMC). Through thisunit, we will make the most of our production strengths tocontribute to significantly improving the competitive edge ofTOYOTA cars.
In this manner, we place no particular focus on one
business domain. Rather, we engage in a range of diverse
business fields to ensure stable management and generatesynergies among businesses. That, I believe, is where ourstrength lies.

What strategies have been formulated to achieve thetargets of the Medium-Term Management Plan and realize
the Vision 2020?
We have formulated three “muscular” strategies for
implementation across the aforementioned three business
units. Specifically, these entail the “3Es,” “Value Chain” and“World Market” strategies.
The first strategy focuses on 3Es (energy, environmental
protection and ecological thinking), which are the keywords inpromoting conservation of the global environment, to facilitate
the development of environment-friendly products.
We have accumulated various technologies through ourengagement in businesses related to an entire automobile
spanning from vehicle assembly to such automotive parts asengines and components. This, coupled with a pool oftechnologies and expertise accumulated in the field of electric
lift trucks, has enabled us to acquire a number of elemental
technologies that help us promote the 3Es. We are honing
these elemental technologies that contribute to energy
savings, electrification and lighter weight and applying thesetechnologies to new products in each field.
The second strategy concentrates on our value chain. In
the Materials Handling Equipment Business, for instance, it isimperative that we provide high-quality products. Anotherfactor that is of equal importance is meticulous customer
response, more specifically, the ability to provide fine-tuned
after-sales maintenance services and make proposals to help
customers improve their logistics operations. We seek to be ofservice in every aspect of customer relations.
Our third strategy targets the world market. Previously,
developed countries played a major role in economicactivities. In recent years, however, emerging countries havebeen driving global economic growth. In response, we aim toextend our geographical coverage to include both developedand emerging countries to deliver our products and services
to customers on a truly global scale.

What specific initiatives are planned?
Our specific initiatives focus on the following five points.
nC
 ontribute to the realization of a society withminimum environmental impact
This is an important theme, which is also specificallyrecognized as one of our strategies. From the perspectiveof protecting the global environment, we will push ahead
with technological innovation in the fields of the environment
and energy to contribute to the realization of a society withless environmental impact. We will bring together theknowledge and wisdom of the entire Toyota Industries
Group to encourage the speedy development of environmentconscious products.

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Toyota Industries Report 2012

Top Management Interview
within the Group including our subsidiaries. We will also
promote strategic M&As and alliances as necessary to further
bolster our strengths and compensate for our weaknesses toaccelerate growth in the future.

What are the numerical targets of the Vision 2020 and theMedium-Term Management Plan?
For fiscal 2021, we plan to achieve net sales of more than
¥3,000 billion (¥1,500 billion in the solution business unit,¥700 billion in the key components business unit and ¥800
billion in the mobility business unit). Our target for operating
income is more than ¥200 billion.
Also emphasizing our asset efficiency, the targets for
ROA*1 and ROE*1 ratios are set at 5% and 10%, respectively.
Under the Medium-Term Management Plan, we aim toachieve net sales of more than ¥2,000 billion and operating
income of ¥140 billion in fiscal 2016. Our plan for capital
expenditure for the next four years from fiscal 2013 to fiscal
2016 totals approximately ¥500 billion*2. We will proactively
invest in promising businesses that will serve to drive ourfuture growth.

Targets■ Net sales: More than ¥3,000 billion■ Operating income: More than ¥200 billion (7%)
■ ROA*1: 5%■ ROE*1: 10%
More than ¥200 billionn Strengthen our development activities in thesoftware domain
Our key development activities begin with cultivating our own
seeds of technology. Although our primary focus has been on
the development of hardware, we are now placing moreemphasis on the development of software to offer productsthat are truly satisfactory to our customers. For instance, ourair-jet looms, for which we hold the top market share, areused to produce fabrics for the highly esteemed Imabaribrand towels. In addition to hardware, we dedicate
considerable efforts to developing software programs
that precisely control these looms, and the produced fabrics
are highly recognized by our customers for their soft andexcellent texture.
n Respond to the distinctive needs in each region
In line with continued expansion of the global market, which
now includes emerging countries, customers’ needs for
products and services have become increasingly diverse.
We will work to enhance our products and services toaccurately satisfy regionally diverse needs, while taking steps
to establish an optimum production structure on a global
scale and reinforce our sales and service networks.

16

Toyota Industries Report 2012n Remain committed to the highest levels of safety,
environment, quality, cost and delivery standards
Under the belief that nurturing people forms the basis of
manufacturing operations, we have always emphasized thedevelopment of human resources and enhancement of teamstrength. Based on this team strength and the Toyota
Production System (TPS), which we have cultivated throughactual manufacturing operations, we strive to maintain thehighest levels of safety, environment, quality, cost and delivery(SEQCD) standards. Honing our proprietary production
technologies and processes, we intend to overwhelmingly
differentiate our products and services in terms of quality andcost. In addition, we will refine the strengths of our domestic
production bases that serve as mother plants, continue totransfer these skills and know-how to our overseas production
bases and ensure that the idea of nurturing people who
support monozukuri is firmly rooted in each country.
n Maximize synergies and promote strategic M&As/
alliances
Taking advantage of our wide range of businesses in thematerials handling equipment, automobile and other fields, wewill work to maximize synergies among business divisions andOperating income(¥ Billion) 96.8

Lastly, can you tell us about your resolution towardrealization of the Vision 2020?
As I mentioned earlier, we have prevailed over the global
economic downturn and other serious crises. We havereached the stage of recovery and are now setting sail forfurther growth. Nevertheless, I do not expect that we will
always enjoy smooth sailing. Author Nassim Nicholas Taleb*3
used a term called Black Swan*4 to refer to a virtuallyunpredictable event that has a massive impact when it occurs.
We have experienced a series of Black Swans for the past fewyears. We are determined to become more independent whileworking together for the realization of the vision to prevail overany Black Swan that may appear in the future and achieving
growth through crises that arise.

140
68.7

70.0

85
More than

22.0¥3,000 billion
Solution¥1,500 billion(6.6)

Net sales(¥ Billion) 2,000

More than¥2,000 billion
1,584
1,377

1,479

1,543

1,650

Management Targets for Fiscal 2016

Materials Handling
Equipment, Logistics,
Textile Machinery, etc.

Key components¥700 billion
Compressor,Electronics, etc.

Mobility¥800 billion(¥ Billion)

FY2012 results

FY2013 plan

FY 2016 targets

Net sales

1,543

1,650

More than 2,000

Operating income(operating income ratio)

70 (4.5%)

85 (5.2%)

140 (7.0%)

ROA*1

3.5%

—

5.0%

ROE*1

10.5%

—

10.0%

Capital expenditure

58100Approx. 500*2 intotal between
FY2013 and FY2016

Vehicle, Engine(FY) 2008 2009 2010 2011 2012 2013 2016 2021
(Results) (Results) (Results) (Results) (Results) (Plan)*1: Investment securities are calculated on the basis of their purchase prices.
*2: Includes M&A investments*3: Nassim Nicholas Taleb is a best-selling author and trader. Taleb serves as Distinguished Professor of Risk Engineering at Polytechnic Institute of New York University.
*4: The term was introduced by Nassim Nicholas Taleb in his book, The Black Swan (U.S. Random House 2007). Hundreds of years ago in the West, there was once an unshakable belief that allswans must be white based on observations of many millions of swans over several centuries. In 1697, however, this conventional belief was turned upside down with the discovery of blackswans in Australia. In this manner, a Black Swan refers to the overturning of traditional wisdom by just a single exceptional instance. It also means an extreme event unpredictable by probability
theory or previous knowledge and experiences, thereby having a massive impact on people when it occurs.

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Toyota Industries Report 2012