Top Message

The automobile industry is presently in the midst of an unprecedented period of change that includes technological innovation and advancements in mobility. With this in mind, we at the TS TECH Group believe that embodying our vision to be a company dedicated to realizing people’s potential and a company sincerely appreciated by all is what is important in order to prevail in this time of change and continue to be a company whose presence is appreciated by society. The technological development, manufacturing initiatives, and promotion of corporate culture we have steadily pursued are all guided by this vision, and each step we take is linked to our ESG*1 management-related initiatives. As we continue to strengthen our existing foundation, we will work tirelessly to create new value that goes beyond the status quo through swift decision-making that gives us the capacity and flexibility to react and respond to a wide range of changes in the external environment.

*1 Management from an ESG standpoint comprises environmental (E), social (S) and governance (G) issues

Reviewing the fiscal year ended March 2019 (April 2018 - March 2019)

Trade friction between the U.S. and China and policy trends around the world resulted in uncertainty, and decelerated economic growth in China and other countries offset economic stability in the U.S. These factors cast a shadow on the business environment in which the Group operates and created a difficult operating climate in the world’s two largest automobile markets, with demand flat in the U.S. and down year-on-year in China. In Japan, automobile seats produced by the Group for major customers greatly exceeded the previous year’s total due primarily to new model launches. However, production declined in China, and combined with factors such as the end of compensation in conjunction with the completion of the Guangzhou Plant relocation, this led to a decrease in revenue and profits.

While there are concerns that business will be impacted by regional risks due to factors such as the ever-changing state of global affairs and policy trends around the world, we will strive to maintain business operations and a business structure that will not waver under any set of circumstances.

The progress of our creation of a foundation for ESG management

We have incorporated an ESG perspective effective our 13th Medium-Term Management Plan (fiscal year ended March 2018 – fiscal year ending March 2020), and we included the “Creation of a foundation for ESG management” in the Group’s management policy. We also designated “sustainable business growth,” “diversity management,” and “harmony with the social environment” as priority measures, and we aim to contribute to a sustainable society by improving our corporate value.

As part of our “sustainable business growth” measures, in the fiscal year ended March 2019 (hereinafter “the term under review”)—the middle stage of the current Medium-Term Management Plan—we took steps toward becoming a world leader in component competitiveness by focusing on promoting automation of production lines and securing new clients and commercial rights in order to establish a base for new customer relations.

Promoting automation is part of our proactive approach to anticipated issues such as the shrinking workforce in the manufacturing industry. In the term under review, we promoted automation in all regions, including the development and installation of loading robots with automatic shape recognition that can handle a wide range of seats; and lines with people and collaborative robots, where small robots operate alongside workers in an environment where high-performance sensors ensure safety.

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Loading robots with automatic shape recognition

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Lines with people and collaborative robots

With respect to securing new clients and commercial rights, in the term under review we began production of third-row seats for new SUVs for the Volkswagen Group’s SEAT, S.A. Also, as part of our global strategy, our sales (new business development) division in Japan coordinates with our Americas, China and Asia/Europe segments to continually deploy and conduct proactive sales initiatives. In particular, our U.S. office in Detroit, established in the fiscal year ended March 2018 with the goal of targeting the Big Three automakers (GM, Ford, Fiat-Chrysler), and our Chongqing office in China, which primarily targets local manufacturers, are working diligently to further initiatives to secure new clients and commercial rights.

Regarding diversity management, in line with our vision to be a company dedicated to realizing people’s potential, we strive to respect each and every employee’s unique characteristics and abilities, as well as to provide workplaces and opportunities where diverse values are accepted and all employees are able to thrive. We believe that higher levels of job satisfaction and motivation not only foster worker autonomy and increase productivity but also fuel the company’s growth. In Japan, we have adopted a flextime system with no core time, and we have expanded the system of shortened work hours for employees caring for children. Future plans include the introduction of an elective retirement system. We are also working outside of Japan to make work environment improvements suited to each location and to develop policies promoting diversity.

To ensure harmony with the social environment, we strive for eco-friendly manufacturing and business operations, and we have obtained ISO 50001*3 certification for all worksites in Japan. This certification promotes efficient use and reduced consumption of energy. Next, we plan to deploy effective energy management methods identified through this certification throughout the entire Group to reduce our environmental footprint on a global scale.

In the term under review, we also received the first third-party evaluation of our efforts to implement ESG-related initiatives. Based on the results, we are closely examining our policies and enhancing initiatives to bring us closer to the kind of ESG management to which we aspire. Merely raising our evaluation scores region by region is not our objective. Rather, it is our belief that what will lead to further sustainable business growth is having our Group evaluated objectively and providing an accurate response that takes into account our strengths and weaknesses as well as where we stand relative to other companies.

*3 ISO 50001: An international standard designed to support the management of energy (electricity, gas, gasoline) used by companies and ensure continuous improvement

Principal initiatives for the fiscal year ending March 2020

In the fiscal year ending March 2020, we will further bolster our efforts to become a world leader in component competitiveness, which will, in turn, support sustainable business growth.

To begin with, we will release our new global standard seat frame, a lighter version of our flagship seat frame—in the top class among mass-produced frames worldwide (according to our research)—which has long been in development.

Furthermore, to deliver future growth, we will focus on the development of innovative production technology to enable more efficient production as well as new product development to create unprecedented value. In terms of innovative production technology, we will press forward with automation that is not dependent upon expert skills or labor through means such as the development of new manufacturing technology and methods and the launch of a project to incorporate automated production lines that utilize AI.

Next, to give an example of our new product development, we are working through research and development toward the practical application of the Aisareru Seat®—the name “Aisareru,” which means “to be loved” in Japanese, was given to the seat as we are sure it will endear itself to users—which integrates automobile seat technology and the IoT. This is a seat that not only senses the movements of the person sitting in it and turns that data into output, it also provides new forms of enjoyment through the seat’s function as a controller that links with apps on smartphones or tablets. It also offers prospects for a range of new development potential via cloud aggregation of sensor-gathered data. We will also work to create new value by leveraging existing technology and knowledge.

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Aisareru Seat®

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An Aisareru Seat® demonstration

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Medium- and long-term issues in achieving sustainable growth

Product quality is the most important and persistent issue facing manufacturing companies. Stable production of high-quality products leads to higher profit margins and cost reductions through fewer defective items and labor hours needed for correction. This then facilitates the acquisition of new commercial rights through the confidence gained from automobile manufacturers—our clients—and leads to the expansion of business.

However, continually maintaining high quality is not easy. Even in our own Group, there was a time several years ago when we encountered trouble with a new model launch at a U.S. location. We experienced an increase in unsatisfactory product quality due to a combination of factors, including insufficient personnel and a lack of experienced personnel stemming from a high turnover rate. As a result, the cost of addressing the issue was a factor that constrained profits. Using the lessons learned from this experience, when a problem with product quality arises, we thoroughly implement countermeasures around the globe, such as easy-to-understand product quality education using case examples, to prevent reoccurrence. Also, we continually strive to maintain a stable supply of products that meet high quality standards by instilling among all employees a shared awareness that includes our earnest approach to manufacturing through education based upon the Group’s philosophy.

The number of necessary personnel and labor hours at manufacturing sites is expected to decrease as waste is eliminated through highly stable product quality. This is not merely a reduction of the workforce; we see opportunities for the redistribution of limited resources and the creation of new value. Moreover, what society seeks today is not just the pursuit of profits but new value creation, such as technological innovation and the application of one’s field of expertise to resolve social issues.

Beginning with the aforementioned Aisareru Seat®, the Group is striving diligently through research and development focused on “sensing,” which records the condition a seated occupant, to use biological data obtained through sensing to offer new value via the evolution of safety and the pursuit of the ultimate in comfort. The research on sitting we have undertaken since our establishment is a strength unique to the Group. We feel that no matter how mobility may evolve in the future, it is our long-term mission to continue to devise products that provide vehicle occupants with comfort and contribute to society.

To prevent medium- and long-term challenges from becoming empty words in the forthcoming 14th Medium-Term Management Plan, we will begin formulation of the plan by gathering public opinion and feedback at operation sites. Executive officers in charge of each division and region will then convene focused discussions to bring to light essential challenges and promote the formulation of a highly-effective plan.

To our stakeholders

At a time when there seems to be endless talk of scandals involving big corporations, strong, thorough governance in the form of proper internal control measures and the consistent operation thereof is essential for the construction and maintenance of a solid corporate groundwork to support sustainable business growth. Furthermore, we feel that what is most important is for all members of our team—from our executive officers to each one of our employees—to work together as a whole and share and embody the common values necessary for us to pursue the appropriate path. Based on the TS Philosophy (Vision Statement, Mission Statement, Operational Directive), the Group will update the contents of the TS Code of Conduct—our norms and ideals, the attitudes we must maintain, as well as guideposts for these values—and foster awareness among all employees.

The TS TECH Group, which will celebrate its 60th anniversary in 2020, will strengthen the foundation of its ESG-focused management and evolve into a company whose presence garners even more appreciation from all stakeholders in order to reach the 100-year mark. We will work vigorously to be a company that contributes to a sustainable world and delivers sustainable business growth, so we ask for your steadfast support for years to come.

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