Background and Purpose of Management Integration
— To Prevail over Intensifying Global Competition —
The integration of management of Aisin Seiki and Shiroki took place on April 1, 2016.
First, let me explain what led to this decision. Anywhere in the world, the Japanese auto industry is now facing fiercer competition with the birth of mega-suppliers through M&A and the rise of emerging country suppliers. In the field of auto body parts, Aisin Seiki had managed to prevail in the competition with many European and U.S. manufacturers in the past. Recently, however, we have been forced into competition with manufacturers in emerging countries armed with low-cost production and begun to lose in more cases. In order to fight more effectively in this difficult battle with low-cost suppliers in emerging countries and mega-suppliers in Europe and the United States, we decided to team up with Shiroki, which had once been our competitor, and set up a new framework to compete in the global arena.
In the body parts field, we had often engaged in three-way competition involving Aisin Seki, Shiroki and other competitors, and each of us had prevailed in the world market.
My aim through the integration of management with Shiroki is to consolidate the resources and strengths of both companies and build a competitive force that is more resistant to changes in the business environment. There are considerable overlaps in parts manufactured by the two companies, and we believe it will be best to consolidate the development and production of external and functional parts that require a high level of cost competitiveness, including door frames, window regulators and moldings, into Shiroki in order for us to remain competitive in the world market.
Aisin Seiki, on the other hand, will concentrate on the development and production of its existing system and modular products, such as power sliding doors and sunroofs, and achieve even greater competitiveness. As Shiroki has an excellent capability to develop products, we hope to conduct development activities jointly in the future, while strategically assigning products thus developed to each company.
At Shiroki, we were having some difficulty in balancing lighter weight, a factor that is becoming the norm in the technology race and safety of products. We also needed to grow globally but did not have sufficient ability to accelerate overseas business development. Moreover, we had been losing some of our “established” cost competitiveness against manufacturers that have grown in emerging countries, becoming no match for them in their home countries. Even worse, we had a heightened sense of crisis that we might lose the battle in the future in our own country. These were the reasons behind our decision to integrate management with Aisin Seiki.