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Toyoda Gosei wants to double global sales
Supplier seeks non-Toyota sales in North America
By Julie Armstrong
Automotive News, March 01, 2004
DETROIT -- Supplier Toyoda Gosei Co. Ltd., a former Toyota Motor Corp. division, plans to nearly double its North American and global sales in three to five years.
Toyoda Gosei expects to reach $1 billion in annual sales in North America and $5 billion globally within five years.
The company's biggest challenge will be maintaining quality and price competitiveness, said Kard Kadowaki, 56, president of Toyoda Gosei North America Corporation, a unit of the diverse Japanese supplier in Troy, Mich. Price is the tough one, he said.
"Our expertise is the value-added products," Kadowaki said. "But for the lower end of the products, we have severe competition on just price. We are struggling on how to reduce the costs."
Two years ago, Automotive News named Kadowaki a purchasing All Star. At the time, he was vice president of purchasing for Toyota Motor Manufacturing North America Inc.
After entering North America in 1986, Toyoda Gosei grew steadily as Toyota expanded production. Toyota remains the supplier's biggest customer. Toyota and other Japanese companies represent 85 percent of Toyoda Gosei's revenue.
The Big 3 account for most of Toyoda Gosei's remaining 15 percent of revenue. Kadowaki would like the Big 3 to represent 25 percent of revenue in three to five years. Toyoda Gosei runs 12 plants in North America and anticipates adding two if it wins additional contracts.
In January, Toyoda Gosei laid out its global strategy for the rest of the decade, called TG Vision 2010. The plan includes "reasonable" profits and a top three sales ranking by 2010 for each of the following products: safety systems, body sealing, fuel tank modules, cockpit modules, exterior molding, light-emitting diodes, fuel management components, powertrain and chassis.
"Globally, we'd like to have close to 8 percent profit," Kadowaki said. "Currently, we're between 4 and 5 percent, and we are losing that."
The company also hopes to achieve zero-defect production in its North American factories. Toyoda Gosei is almost there in Japan, Kadowaki said, but North America still generates as many as 50 problems per million parts.
The company's results for the quarter ending Dec. 31 were in line with goals, according to Morgan Stanley in Japan. Toyoda Gosei posted net income of $24 million on sales of $930 million.
"We think auto components did better than expected but LEDs worse," wrote analyst Shinji Kakichi in his most recent report for Morgan Stanley.
In addition to automobiles, Toyoda Gosei supplies light-emitting diodes for products including cellular phones and large signboards.
Morgan Stanley expects Toyoda Gosei's stock to perform in line with the industry in the next 12 to 18 months. But Kakichi warns that customer orders for light-emitting diodes could slow down.
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