3.Implementing Business Restructuring to Enhance Competiveness
The environment surrounding the AISIN Group in the auto industry is becoming ever-more severe due to the birth of new mega-suppliers through M&A, the rise of emerging country suppliers, fierce competition to develop next-generation technologies and intensifying price competition, and the entry of new participants from different industries. Competition to develop next-generation technologies such as autonomous driving, powertrain electrification and electronic platforms is likely to fundamentally alter the business model of the auto industry. To overcome such changes and achieve growth, we embarked on business restructuring in five areas in fiscal 2016. This reorganization was prompted by the recognition that we must share our directions toward the future across the entire Group and establish true competitiveness that will allow us to vie successfully in global markets.
Offering superb durability and pliability, our original material FINE REVO is used in our ASLEEP mattresses. This material realizes comfortable beds by allowing relaxing sleeping postures to be maintained over long periods. AISIN achieved a large increase in unit sales of these beds during the previous year by airing television and website commercials across Japan that emphasize the appealing features of this brand, and by innovating product displays at sales venues.
Business Restructuring Framework and State of Progress
To strengthen our technology development and global supply structure for manual transmissions, we consolidated the development and Japanese production functions of Toyota Motor Corporation(TMC) under Aisin AI Co., Ltd. and also concluded a basic agreement for investing in Toyota Autoparts Philippines Inc. (Philippines) and Toyota Kirloskar Auto Parts Private Ltd. (India). The integration of these domestic production functions into Aisin AI was completed in February 2016 and the investment in Toyota Autoparts Philippines was executed in January 2016. With these moves, we have virtually completed the consolidation of domestic development and production functions. From a global perspective, the market for manual transmissions is still huge. In view of this, I intend to quickly set up a structure that can respond globally in areas from development to production and establish a presence surpassing that of European manufacturers. Additionally, we are striding ahead with preparations for the management integration of Art Metal Mfg. Co., Ltd., a specialized manufacturer of engine pistons. This integration is just one initiative for concentrating the resources of Aisin Seiki’s engine components business in the field of energy management with a view toward future growth.
Chassis & Vehicle Safety System Domain
There are rising needs in preventive safety to eliminate accidents. In response, besides disc brakes and other basic brakes, controlled brakes that properly control basic brakes according to road surfaces and vehicle conditions are emerging as a key technology. Given this, we concluded a business transfer agreement to transfer the development, production and sales functions of the controlled brake production business of Aisin Seiki and DENSO Corporation to ADVICS Co., Ltd. Additionally, in January 2016, a new plantfor manufacturing controlled brakes was completed at ADVICS in Handa city, Aichi Prefecture. As these actions demonstrate, our efforts aimed at becoming the world’s number-one brake manufacturer have gotten off to running start.
Body Parts Domain
The body parts domain is facing intensifying cost competition. To strengthen competitiveness in this field, we have steadily integrated the management of Shiroki Corporation into Aisin Seiki. Accordingly, Aisin Seiki will now concentrate management resources into system products such as power sliding doors and sunroofs, and Shiroki will devote resources to external and functional parts, including door frames and window regulators. Through this reorganization, we expect to enhance the efficiency of development resources and mutually utilize both companies’ production hubs and customer bases. I believe this will also better enable us to leverage the competitiveness of the body parts business as a group.
Please refer to Group Dialogue on pages 12-15 for details.
In another strategic move, we transferred the development and sales of TMC’s seat frames, including recliners and slide rails, to Toyota Boshoku Corporation. Further, in January 2016,
Purpose of the Business Restructuring
Our business restructuring is not aimed simply at bringing together, as one, all the dispersed and overlapping business within the Group. Rather, this reorganization aims at attaining the top global shares for each product by more effectively concentrating our strengths in each company’s domain of expertise, raising competitiveness and prevailing against mega-suppliers and suppliers in rapidly growing emerging countries. In fiscal 2017, the Group will continue to work in unison and complete efforts to realize the benefits of business restructuring to secure true competitiveness and shift gears toward attaining continuous growth.