Lowering the Cost of Sales activities
Since FY2015, we have been working on “ZZZ200.”*1 This activity, under our management policies for FY2020, calls for us to achieve net sales of ¥250 billion and operating income of ¥20 billion.
Under this concept, cost of sales is the denominator. Important to this figure is the extent to which we can conduct production and sales efficiently without waste or loss.
The key to the numerator, which is sales and profits, is to strengthen our core business by working with development departments to continue cultivating of new business, new products and new markets, thereby bolstering our sales capabilities. In short, we are working to decrease the denominator (cost of sales) and increase the numerator (sales and profits). Under the company system started in FY2017, We will strengthen activities throughout the organization under the leadership of each company’s president.
*1 ZZZ (tri-zed) 200 Named to incorporate the ideas of zenin sanka (participation by all), zenryoku (full power) and zettai yarinuku (definitely prevail), this activity sets the target of achieving consolidated operating income of at least ¥20 billion by fiscal 2020.
Making Aichi Steel the Company of Choice Globally
The central initiatives for achieving Vision 2020 involve bolstering competitiveness in our core businesses and further reinforcing our unique capabilities. To respond to rising global automotive demand, we will need to reform our production process to bolster our competitiveness in the forging and steel materials segments. We will need to create a management structure that is robust in the face of changes in the operating environment.
Reinforcing the competitiveness of core businesses
Forging Category : Responding to TNGA*2 and Global Production Process Reform
We support TNGA*2, the new design concept put forth by our largest customer, Toyota Motors. To realize TNGA, we hold regular technical liaison meetings with our customers and are involved in collaborative manufacturing, working together from the initial development stages.
Also, Thailand has become an important supply base for IMV*3 products. In response we will strengthen our ASEAN forging locations through our Thai subsidiary. By introducing new forging equipment at AIT, we are augmenting our market competitiveness and establishing an optimal supply chain, including from the BCM*4 and BAP*5 perspectives. In this manner, we are creating a robust global manufacturing system and providing peace of mind to our customers.
*2 TNGA An acronym for Toyota New Global Architecture, TNGA is a new development method launched by Toyota in April 2012 that aims to achieve both stronger product development power and reduced development cost by using common parts and units for different models of cars from development stages.
*3 IMV An acronym for Innovative International Multi-purpose Vehicle, an IMV is a globally strategic vehicle aimed specifically at emerging markets that is produced to target diverse needs.
*4 BCM An acronym for business continuity management plan.
*5 BAP An acronym for backup action plan, a BAP allows for the securing of facilities, procedures and spare parts to allow for production at alternative locations if production at facilities becomes impossible.
Steel Category : Production Process and Energy Reforms
We are making steady inroads with 4S reengineering, with 4S being an acronym for simple, slim, short and straight. Currently, we are launching rolling process reforms aimed at augmenting productivity by 10% or more. We have also begun 4S reengineering on finishing (inspections) to steadily alleviate bottlenecked areas, putting in place a firm structure that we believe should be able to respond to customers' demands.
Another important focus is on reducing the amount of energy we use. Initiatives in this area include making visible the makeup of electric furnace exhaust gases and controlling them to avoid incomplete combustion. We have also completed a management system to optimize gas burner temperatures. We are starting to put this system in operation, aiming to achieve substantial improvements in combustion efficiency. Furthermore, we are collaborating with Usha Martin Ltd. of India in efforts to procure steel materials globally. We are currently able to procure in India the steel materials used at our bases in the ASEAN region. We are moving forward with this project with the objective of putting in place a globally integrated forging and steelmaking system.
Reinforcing our unique strengths
Providing Stainless Steel That Contributes to a Changing Infrastructure
we consider increasing our number of proprietary and distinctive technologies and projects to be essential. Specifically, we plan to further raise our number of stainless steel and electro-magnetic products.
Our stainless steel is used in the Mirai, an FCV produced by Toyota Motors. Going forward, we plan to expand our repertoire of technologies, including through the development of derivative products that are of good quality and moderately priced.
We are expecting to see reconstruction of aging infrastructure, disaster relief and toughening of territory all across Japan. We want to share the many characteristics and benefits of our stainless steel and see growing sales.
By Moving Steadily into the Black, Positioning Electro-Magnetic Products as Our Fourth Pillar of Earnings
Another category in which we are unique is electromagnetic products.
First, in the electro-magnetic business we plan to develop compact motors for use in home appliances and automobiles, expanding their application by leveraging features such as their freedom of configuration.
In the sensor business, we are reinforcing our development and sales of magnetic sensors, an area where we have historically been competitive, including through synergies based on an alliance with ROHM Co., Ltd. In the future, we plan to roll out products in high-value-added fields, including healthcare and foreign matter detection. As the IoT*6 concept becomes mainstream, we expect to develop our business in this area.
In the business of electronic components, we have a major share of the market for components for cooling the inverters on hybrid units. As hybrid vehicles, and plug-in hybrid vehicles(PHV) become more prevalent, we expect the need demand for these components to continue growing.
In the dental business, sales of mini implants in South Korea are favorable, and we are preparing for a global rollout, including in China and the United States.
*6 IoTAn acronym for the Internet of things, IoT describes a future in which diverse items are equipped with communication functions and can communicate with each other over the Internet, allowing for automatic recognition, automatic control and remote measurement.