Toyota Boshoku : Management resources and strengthening them

Management resources and strengthening them

Toward sustainable growth

37 Management resources we have acquired

39 The identity of the Toyota Boshoku group (management resources)

R&D, MONOZUKURI, HITOZUKURI

43 Special feature: Management resources that generate new value44 Japan

47 The Americas

49 China

51 Asia & Oceania

53 Europe & Africa

55 Topics: Global Week 2023

TOYOTA BOSHOKU REPORT 2023		36

Management resources we have acquired

Drawing on the identity of the Toyota Boshoku group, cultivated along with our founding spirit, as a management resource

The Toyota Boshoku group has unique strengths cultivated over more than a century. While anticipating developments in CASE and MaaS even amid a challenging business environment, we aim to create new value that only the Toyota Boshoku group can deliver, drawing on the management resources we have acquired as the source of this value.

Research,

testing,

R&Dand

evaluation

Studious and creative

Ahead of the times

Seat

Interior and Exterior

Unit Components

Initiatives for new business

MONOZUKURI

Studious and creative

Ahead of the times

HITOZUKURI

Warm and friendly

Homelike atmosphere

Grateful

2000

2010

Installed R&D function

at each

Established Research Laboratories (now New Value

Regional Management &

Creation Center)

Established Milan Design Branch

Strengthening our

Collaboration Hub

R&D capabilities

Established Munich Office, Germany

Completed construction of the No.2

building of the Sanage Technical Center

Built up seat technology

Developed seat ventilation system,

that considers safety,

heated fabric seat

the environment, and

comfort

Developed the FHS

process1 for round recliner

Insourced seat components

production

Expanded business fields to

Received first order for railway seats

non-automotive seat development

Achieved both lightweighting and

Developed high impact-resistant plastic

improved rigidity

Built up

with Toyota Central R&D Labs., Inc.

environmentally

Started

Developed kenaf door trim

Simultaneous back-injection

sound technology

kenaf R&D

product

molding technology

Pursued a comfortable

automobile interior

Built up filtration technology

Developed air cleaner case using kenaf

Developed dual layer melt-blown method

Expanded business fields to

Developed separator for fuel cell stack

development of electric products

Developed motor cores

Expand business fields,

offer multi-dimensional value

Passing on skills

Launched Skills Competition

Established Toyota Boshoku

Started operation of

Technical Skills Academy

Technical Skills Training Center

MONOZUKURI competitiveness

Established a global production structure

Improving organizational

strength,

Introduced the One Hub per Region structure

diversity and inclusion

Human resource development

Introduced trainee, ICT scheme

Completed Global Training Center

37 TOYOTA BOSHOKU REPORT 2023

		Management resources and			Supplementary
Messages	Value creation story	strengthening them	Business portfolio	Governance	materials & data

Toward sustainable growth

For details of our R&D and innovation, please refer to our website. https://www.toyota-boshoku.com/global/development/

1. Fine Hold Stamping process: Our proprietary high-precision,high-speed stamping technology
2. Toyota Motor Corporation, Aisin Seiki Co., Ltd. (now Aisin Corporation) and Shiroki Corporation (now Aisin Shiroki Corporation)

2015

2020

Established Silicon Valley Office

Introduced a driving simulator

Global development

Completed Tajimi Technical

Established Gurgaon

Office,

Accelerated investment through

structure

Center proving ground

India

CVC (Corporate Venture Capital)

Jointly developed a new seat frame

Developed elements in lightweight frames, etc. for compact

that is both lighter and stiffer with

three companies2

cars in emerging countries

Developed motion sickness reduction system

Integrated structure

from development

to production

Consolidated the seat frame mechanism components business

Concluded an agreement to make

Toyota Auto Body Seiko Co., Ltd.

of Aisin Seiki Co., Ltd. (now Aisin Corporation) and

a subsidiary (insourced rear seat

Shiroki Corporation (now Aisin Shiroki Corporation)

Creator

frame and long slide rail business)

Jointly developed aircraft seats with All Nippon Airways Co., Ltd.

Foam injection molding

Developed high impact-resistant lightweight foam door trim (p. 63)

Space

Support for

Interior

technology

Developed expanded kenaf base material

electrification

an

Developed far-infrared reflective headliner

as

Noise and vibration (NV) evaluation and analysis of interior and exterior systems,

value

and advanced development, through establishment of

a new company with Autoneum and Nihon Tokushu Toryo Co., Ltd

Creating new

Response to

carbon neutrality,

Developed lithium-ion battery (high-rate battery)

circular economy

Announced MX191

Announced MOOX

Announced MX221

Started joint research with Nagoya

Developed a behavior and attribute visualization

University on the tide-generating force

system, and started providing data

Established Global Quality Learning Center

HITOZUKURI in support of

Established the Safety Health Environment

the work site

Started deployment of

connected factories (IoT)

fruitful Think and Act Center

Global production structure

Kariya Plant and Unit Production

Started construction of next-generation

MONOZUKURI

lines incorporating process innovation

Engineering Center won the Deming Prize

competitiveness in quality,

Completed the MONOZUKURI

Started construction of

cost and delivery (QCD)

Innovation Center

a new logistics relay site

Launched ENRG

Optimizing diverse

Held the first Global Week (p. 55)

Launched 100-Member

human resources

Workstyle innovation,

Committee (p. 42)

culture creation

Constructing a global

Launched application of

Started GSCT to discuss succession planning

common HR system

Global HR Platform

for executive management on a global level

Creating mechanisms/systems

Launched GEDP for global executive training

Launched Innovative Ability

that encourage challenges

and GLDP for next generation leader training

Enhancement Program (p. 46)

(p. 79)

TOYOTA BOSHOKU REPORT 2023		38

The identity of the Toyota Boshoku group (management resources)

Aggressive investment in management resources, the source of value creation

Strengths / Our identity (management resources)

Pursuing "comfort"

in mobility spaces based on "safety" and "environment"

R&D

(Figures are as of March 31, 2023)

In order to offer "Quality of time and space" in all forms of mobility, we take on the challenge of R&D with an insatiable curiosity and spirit of inquiry, while staying ahead of the current trends. We are committed to developing high-quality and safe products for our customers around the world with passion, a sense of mission, and tenacity.

R&D	Development bases		13 bases
foundation	R&D expenses	47.3 billion yen
		Japan	1,899
Intellectual	Number of
property	patents held	Outside	1,502
		of Japan

Cultivated over 100 years,

creating "affection" based on

"trust" and "reassurance"

MONOZUKURI

We place great value on customer first, continuous improvement, and Genchi-Genbutsu (go, see & study). We have set ourselves the challenge of developing environmentally sound production and manufacturing technologies for the next 100 years through a fusion of reasonable price, high-quality products with cutting-edge technology.

	Manufacturing sites	122 sites
Manufacturing	Capital investment	50.7 billion yen
foundation
	Total number of contestants	2,745
	in the All Toyota Boshoku
	Skills Competition (1st to
	16th competition total1)

1 First held in Japan in fiscal 2007. Held annually on a global basis since fiscal 2011. However, due to the coronavirus pandemic, the competition was canceled in fiscal 2021, and in fiscal 2022/2023 only one category was held online globally, while the other categories were held only in Japan.

Combining and maximizing

the power of 50,000 global members

to support future value creation

HITOZUKURI

The Toyota Boshoku group has a corporate culture that respects a diversity of values, where we learn and grow together; and teamwork that challenges us to unite our minds with honesty and sincerity. By fostering a challenging spirit, we aim to realize our vision of diverse human resources being drawn by the appeal of the Toyota Boshoku group, with company members working vibrantly in all regions worldwide.

Diverse	group members2	53,430
	Number of
human
resources	Proportion of members	72.4%
globally	working in regions
	outside Japan2
Collaboration	Number of companies that	164
participated in the Annual
with suppliers
Supplier Meeting

2 Including temporary company members

39 TOYOTA BOSHOKU REPORT 2023

		Management resources and			Supplementary
Messages	Value creation story	strengthening them	Business portfolio	Governance	materials & data

Toward sustainable growth

R&D

Officer's message

Enhancing R&D capability through the use of a technology roadmap

Hiroki Tsunoda

Chief Technology Officer

To realize "Create new value as an Interior Space Creator," our desired status for 2030, it is imperative that we improve our R&D capability and secure an advantage. In fiscal 2023, we drew up a technology roadmap and clarified the items to be developed and technologies to be strengthened. We will continue to make refinements in line with changes in society including CASE, MaaS, and the environment. We will also use our technology roadmap to accumulate technologies and create new businesses, as well as systematically acquire the technologies and development facilities we will need in the future. Furthermore, in order to secure an advantage, we will also focus on intellectual property strategy and aim to work closely with each business while utilizing our newly established Intellectual Property Strategy Meeting.

Issues and concrete measures

			Recognition of issues and strengths
			to be further acquired	Concrete measures/activities
			Strengthen proposals for the overall automobile	• Clarify and acquire the key technologies and
Global development	• interior space and increase recognition among
automakers	resources needed to continuously create and
strategy/structure	realize the technology roadmap items
Maintain and improve R&D capability in
			• Strengthen the R&D structure
			• response to changes in the environment
			• Create businesses for the MaaS market, etc.	• Strengthen space planning and system
			development capabilities in line with
Insatiable curiosity and	• Promote open innovation on a global scale	customer needs
inquisitiveness ahead	• Strengthen development capabilities for new	• Search for, invest in, and collaborate with
of the times		technologies and commercialize them at the	startup companies in North America, China, and
			earliest opportunity	other regions
				• Develop innovative human resources
			• Visualize intellectual property related to existing	• The Intellectual Property Strategy Division
			(newly established in 2023) will formulate and
			technologies and products	implement intellectual property strategies for
Intellectual property	• Develop a structure and strategic activities for
each business
strategy/structure	the utilization of intellectual property	• Develop IP strategic human resources
• Strengthen analytical capabilities by utilizing IP
			• Develop and expand research and analysis tools
			landscape*	• External collaboration
			Create and accelerate the development of	• Identify and clarify BEV-specific customer
changestoResponse environmentbusinessthein			• advanced technological items specific to the
	BEV	BEV interior space	expectations
		Make new proposals for advanced technological
			• Create advanced technological items with an
			• items and promote development
			eye toward the future
				• Reduce the volume of materials used in
			• Establish methods to achieve 30% reduction in	products (lightweighting)
			• R&D and product applications that utilize
		Carbon	CO2 emissions in product materials by 2030	material recycling and bio-derived materials
		neutrality,	(compared to 2019)	• Develop products that are easy to recycle (easy
		• Establish methods to achieve carbon neutrality
		circular	disassembly structure, material unification)
		economy	and a circular economy in product materials	p. 63
			by 2050	• Recycle difficult-to-recycle materials and apply
				them to products by acquiring chemical
				recycling technology

• Defined in the Intellectual Property Skill Standards published by the Japan Patent Office. Consists of ascertaining trends in individual technologies and patents, and performing in-house analysis, competition analysis, market analysis, etc., integrating intellectual property information and market information.

TOYOTA BOSHOKU REPORT 2023		40

The identity of the Toyota Boshoku group (management resources)

MONOZUKURI

Officer's message

Acquiring MONOZUKURI competitiveness to weave the future of Toyota Boshoku

Hiroshi Ioki

Chief Manufacturing Officer

We are working on setting the future direction of manufacturing and bringing it to fruition with a view to realizing our desired status in 2030. In fiscal 2023, we began formulating the 2030 MONOZUKURI Strategy. Taking a holistic view of manufacturing, from development through to production engineering and manufacturing, we linked our technology roadmap to the development of methods, clarified issues and arranged initiatives to resolve them.

In fiscal 2024, we will clarify our desired status of manufacturing with a view to 2030, and based on this, formulate manufacturing strategies for each process. At the same time, through robust benchmarking against other companies, we will ascertain where we stand in terms of competitiveness and establish a competitive advantage. By improving our MONOZUKURI competitiveness, we aim to become a trusted and chosen company.

Issues and concrete measures

		Recognition of issues and strengths
		to be further acquired	Concrete measures/activities
			• Develop production systems that can respond
		Build a production system that can flexibly	to increased production by customers
		• Accelerate local procurement on a global basis
		• respond to changes in the environment and a
Global production	structure that ensures profitability	• Reduce costs through reorganization of
• Establish a competitive next-generation	logistics sites
structure		• Clarify the desired status for plants/processes in
	manufacturing system that is trusted and
		chosen by customers	the 2030 MONOZUKURI Strategy
		• Make our plants carbon neutral	• Develop methods and clarify/acquire the
			resources needed to realize the technology
			roadmap items
		• Create a workplace in which a diverse range of
HITOZUKURI in support	human resources can work with enthusiasm and	• Build next-generation factories where everyone
maximize their potential
of the work site	• Establish innovative production lines centered	can play an active role, and deploy them globally
		on autonomation
			• Improve design and manufacturing quality by
			incorporating customer feedback into KPIs
competitiveness deliveryand (QCD)	Quality	• Enhance quality evaluation from end-users	• Create ideal systems and processes that
integrate design, production engineering, and
	• cost planning activities	costs and efficient management activities
			manufacturing
			• Create systematic mechanisms and a culture for
			preventing critical quality problems
		Strengthen profitability through highly accurate	• Promote Kaizen activities to reduce standard
MONOZUKURI quality,in cost	Cost	• Secure cost competitiveness that surpasses	by managers
Delivery	• Reduce the volume of materials used in products
that of competitors	digitalization
			• Clarify target values (e.g. marginal profit ratio)
		Create systems for short-term development	• Visualize design lead time as a base unit
		• Strengthen TPS* practices and plant
		• processes (shorten the lead time from planning
		and development to production and delivery to	• Identify where we stand through benchmarking
		meet the needs of a wide range of customers)
			against competitors

• Toyota Production System

41 TOYOTA BOSHOKU REPORT 2023

		Management resources and			Supplementary
Messages	Value creation story	strengthening them	Business portfolio	Governance	materials & data

Toward sustainable growth

HITOZUKURI

Officer's message

Bringing together diverse identities to enhance corporate value

Yasuhiro Fueta

Chief Human Resource Officer

The Toyota Boshoku group is working to promote the creation of workplaces where all company members can work with pride and aspiration, encourage the success of a diversity of human resources, and foster an open workplace culture. In fiscal 2023, training in harassment prevention and communication skills improvement was provided to all members at the Senior Specialist level and above, including officers, in order to reassess the nature of a workplace environment where members can work with peace of mind.

In fiscal 2024, we will launch a 100-Member Committee consisting of members with diverse identities, and will make use of the members' diverse ideas and perspectives in our HR strategy and personnel system reform. By energizing people and the organization, we will maximize the potential of each company member and enhance corporate value.

Issues and concrete measures

	Recognition of issues and strengths
	to be further acquired	Concrete measures/activities
	• Create an environment where a diversity of	• Utilize the diverse opinions of the Committee of
	company members can maximize their potential
	• Promote local human resources to top	100 in HR strategy and personnel system
	management at each site and develop human	reform
	resources who can flourish outside their	• Develop and promote human resources capable
Optimizing global and	home country	of leading reform of the culture and mentality
• Enhance systems that support the well-being of	• Develop and promote local human resources
diverse human resources
	company members	• Formulate the next mid-term business plan
	• Ensure the success of role models who lead the	reflecting HR strategy
	way in the reform of the culture and mentality	• Add diversity and inclusion and workplace
	• Develop next-generation leaders and encourage	culture reform to the evaluation items in training
	them to flourish without being bound by past	assessments, and review the evaluation method
	successes or conventional workstyles
		• Simplify the wage system to ensure that
	• Create a wage and bonus system that supports	compensation is commensurate with market
Common global	value
members who learn and grow	Consider bonus allocation based on the mid-term
	• Reform the HR system to be in line with global
HR system	• business plan, contribution to cross-divisional
	standards, rather than Japan-specific	projects, and taking on the challenge of
		innovative human resource development
	• Ensure that workstyle innovation and workplace	• Encourage officers and division general
	managers to lead by example
	culture creation spreads throughout the	• Strengthen communication of the President's
Workstyle innovation,	Company and group	message and convey messages through
• Promote workstyle innovation, correction of long	development assessments of candidates for
culture creation
	working hours, and joint participation in	executive positions
	housework and childcare	• Consider an incentive system for members who
	• Provide incentives to work more efficiently	reduce working hours and improve results by
		increasing efficiency
	• Realize the commercialization of ideas	• Build HR systems that encourage members to
	generated through innovative human resource
Creating mechanisms/	development programs (Re:act, We:ave)	take on challenges
• Create a system and culture in which chief	• Introduce a skills matrix for executives,
systems that encourage
officers, officers, and executives benchmark	self-assessment in development assessments,
challenges
themselves against the activities and systems of	and additional bonus according to the type/level
	competitors and leading companies, and make	of challenge taken on
	improvements

TOYOTA BOSHOKU REPORT 2023		42

Special feature: Management resources that generate new value

Creating new value with management resources amassed around the world as the source

With the founding spirit of "for the world and for people" as its starting point, the Toyota Boshoku group has 91 sites in 25 countries and regions worldwide, and is committed to advanced technological development and high-quality manufacturing. In our history spanning over a century, we have continued to grow while drawing on our strengths in R&D, MONOZUKURI and HITOZUKURI while overcoming various difficulties. We will continue to provide new value by maximizing our management resources centered on this identity of the Toyota Boshoku. The special feature introduces areas including our efforts to strengthen the identity of the Toyota Boshoku, which we are focusing on around the world to achieve the sustainable growth of the Toyota Boshoku group, and activities related to sustainability.

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

The symbols on the left indicate the relationship between each initiative and activity.

Five regions

TOYOTA BOSHOKU
	EUROPE
TOYOTA BOSHOKU	CHINA	JAPAN
AMERICA	EUROPE &	TOYOTA
	BOSHOKU
THE AMERICAS	AFRICA		TOYOTA BOSHOKU
	(CHINA)
		TOYOTA BOSHOKU ASIA
		ASIA &
Number of		OCEANIA
companies	Number of company members
91	53,430
(including Toyota Boshoku)	(including temporary company members)

	Japan	The Americas	China	Asia & Oceania
Affiliates	20 companies	20 companies	18 companies	22 companies

Number of

company 14,766 13,177 9,309 10,065

members

Revenue	700.6	732.9	317.7	388.7	212.1	244.6		249.6
(billion yen)					190.4
	2022	2023 (FY)	2022	2023 (FY)	2022	2023 (FY)	2022	2023 (FY)

Revenue of each region is before deduction of internal sales

Europe & Africa

10 companies

6,113

96.2 108.2

2022 2023 (FY)

43 TOYOTA BOSHOKU REPORT 2023

		Management resources and			Supplementary
Messages	Value creation story	strengthening them	Business portfolio	Governance	materials & data

Toward sustainable growth

R&D / MONOZUKURI	R&D / MONOZUKURI
Aiming to further	Promoting activities to win
strengthen competitiveness	orders from strategic OEMs

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

To strengthen the competitiveness of the automotive	We have positioned automakers that are partners
seat business and serve as "Home" as an interior	of Toyota Motor Corporation as strategic OEMs,
system supplier, since 2015 we have been progressively	and are promoting activities to win orders.
consolidating the development and production functions	Aiming to achieve a share of sales to customers
of seat frame mechanism components. In order for	other than Toyota Motor Corporation exceeding
the Toyota Boshoku group to implement all processes	20% in 2030, we have been promoting activities
from development to production, we have carried out	to increase orders for seats, primarily in the Asia
the transfer of production in Japan, including the transfer	region. In fiscal 2023, our activities began to bear
of commercial rights for OEMs other than Toyota	fruit with new orders for door trims and other
Motor Corporation from Aisin Corporation and Aisin	interior products received in Japan. Going forward,
Shiroki Corporation in fiscal 2023, and the launch of	we aim to win new orders, by utilizing the
Toyota Boshoku Hirose in fiscal 2024. By making Toyota	production sites acquired through the transfer of
Auto Body Seiko Co., Ltd. a subsidiary in October	commercial rights for the seat frame mechanism
2023, we will maximize synergies by leveraging our	components business.
knowledge gained from sales to other companies and

our expertise inseat frame mechanism components.

JAPAN

MONOZUKURI / HITOZUKURI

Construction of next-generation lines incorporating process innovation

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

We are strengthening our MONOZUKURI competitiveness in order to be trusted and chosen by customers.

1. next-generationmodel line utilizing AI and autonomation technologies has been installed at the Sanage Plant in Japan, and we are rolling out the next-generation line realized here at each of our production sites.
   The 1,200-ton pressing line, which we have promoted as a model line for autonomation since 2020, has been autonomated to 90% of its capacity, and currently we are working on autonomating the remaining transport portion. In the welding process, so-called "kankotsu" work (involving intuition and skills) and visual inspection work, which draw on human experience, have been autonomated using AI and sensing technologies, resulting in an autonomation rate of 40%.
   In addition to the above, we will promote manufacturing innovation utilizing digital engineering in order to realize our future vision for 2030, which we have elaborated for each process.

TOYOTA BOSHOKU REPORT 2023		44

Special feature: Management resources that generate new value (Japan) JAPAN

MONOZUKURI

Received highest rating in CDP survey

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

Toyota Boshoku Corporation was selected as an "A List Company," the highest rating in both the Climate Change and Water Security categories of the survey conducted by CDP (formerly the Carbon Disclosure Project), one of the most trusted rating organizations among investors. In addition, we were selected as a Supplier Engagement Leader, the highest rating in the Supplier Engagement Rating, which evaluates supply chain-wide efforts to address climate change issues. This is a result of the high rating given to our climate change and water security initiatives, as well as our efforts in collaboration with customers, suppliers, and other business partners.

HITOZUKURI

Initiation of human rights due diligence

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

The Toyota Boshoku group's Human Rights Policy specifies the implementation of human rights due diligence, and we began full-scale human rights due diligence initiatives in fiscal 2023. In fiscal 2023, we conducted a risk survey of Toyota Boshoku Corporation, and identified harassment and working hours as human rights risks. Going forward, we will promote measures to mitigate risks, focusing on the identified human rights risks, including the implementation of prevention and mitigation measures. In addition, we will expand the areas where human rights due diligence is implemented and strengthen our activities aimed at ensuring respect for human rights together with all members of our group and our suppliers.

HITOZUKURI

Diversity and inclusion

Environment	Social	Governance
Materiality	Mid-term Management Hoshin

The Toyota Boshoku group is promoting the creation of an open workplace culture where everyone can openly and freely express their ideas, regardless of gender, age, nationality, or physical ability.

In fiscal 2023, we established the Employee Network Resource Group (ENRG), a system for hearing direct feedback from company members and discussing measures to promote activities. Following the establishment of a women's ENRG and a young persons' ENRG in fiscal 2023, we are expanding our activities in fiscal 2024, with the establishment

of ENRGs for seniors and people with disabilities. We also believe that ensuring diversity is the

foundation for promoting innovation, and together with a diversity promotion plan, we will formulate the HR portfolio required for our future business operations and promote activities accordingly.

45 TOYOTA BOSHOKU REPORT 2023