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EPTE Newsletter from Japan - Toyota Will Be Number One in 2007

Topics of the Week

Toyota Will Be Number One in 2007

After decades of being king of the mountain, a claim held since 1931, General Motors' title as the number 1 automaker in the world will soon slip away, and Toyota Motors will be crowned the new king.  

Toyota expects to produce 9,285,000 cars worldwide this year, representing a 1.1% increase in production from the previous year.   Conversely, GM does not expect any significant growth this year due in part to a recent restructuring of their manufacturing facilities in North America.  Sales of Toyota vehicles surpassed 4,710,000 cars during the first half of 2007, 50,000 more than GM.   Toyota's management stands behind their forecast to produce over nine million cars this year, and assured analysts that any natural disaster or fluctuations in the global economy will not effect their prediction.  Furthermore, they expect their global car production will outrival GM's production this year.

Toyota recently reported income for fiscal year 2006 was over two trillion yens (over 19 billion measured in US dollars). Internationally, several companies reported income levels above Toyota's; however, they are predominantly finance and oil companies. Toyota is one of the few manufacturing companies reporting this remarkable income and they attribute their prosperity to an excellent balance between marketing and production.

It seems almost conflicting that one of Toyota's business strategies is "no long term business plan".  Of course, their management team does think about the long term; however, tomorrow's business is their first priority.  The company's approach is a very conservative one where they do not invest a lot of money on different or contrarian's ideas; rather, they prefer a safer "sure bet".  The marketing and sales methods within Toyota are not very unique, but very solid.  Can you think of any specialty models Toyota launched in the past? I cannot...their product lines are similar as well as safe and reliable.

The strength of Toyota lies within its manufacturing process.  The famous "Kamban System" is continuously enhanced every year in an effort to reduce costs even more, and their "Just In Time" production system eliminates surplus inventories throughout the pipeline and frees up warehouse space at the manufacturing facilities.  Outside analysts reported the inventory costs shifted to subcontractors; however, this is not true. Toyota worked with subcontractors to introduce the Kamban System.  Their subcontractors find the work is not easy for Toyota, but none are ready to loose them as a customer.  They do prosper as a subcontractor working for Toyota.

Nowadays, many major electronic companies outsource the production of various manufactured products.  It's a trend becoming more commonplace in the industry, and electronic companies are free from expenses associated with manufacturing such as labor and material costs.  These electronics companies negotiate prices for the identified outsourced item with EMS companies (defined as not owning the intellectual property for the products they produce).  Could these electronic companies have a loose reign on some important aspects of their business?  Some major Japanese electronics companies such as Matsushita maintain manufacturing as a basic business policy.

Toyota plans to produce 9.8 million cars in 2008 and 10.4 million cars in 1009. They could increase their lead over second place, unless GM adopts a practical and serious recovery plan.

Dominique Numakura, DKN Research (dnumakura@dknresearch.com)

Headlines of the week

(Please contact haverhill@dknreseach.comfor further information of the news.)

1.      Sharp (Major electronics company in Japan) 9/3

Has developed a new small & middle size system LCD device with optical sensors to add touch panel and scanner capabilities in the panels.

2.      Mitsubishi Gas Chemical (Major PWB material supplier in Japan) 9/1

Has developed a new polyimide film with a higher heat resistance.

3.      Showa Shell Petroleum (Major oil company in Japan) 9/4

Has developed a new solar cell power generation system with the highest conversion efficiency 13.1% based on the Cu/In/Se alloy layers on glass substrates.

4.      Fujikura (Major cable and flex circuit manufacturer in Japan) 9/4

Has developed a new super conductor cable with the highest IcL Value using yttrium alloy system.

5.      Kyocera (Major electronics and component supplier in Japan) 9/4

Will start the wafer micro bumping business utilizing a low cost process developed for the in-house use.

6.      Nippon Zeon (Major organic material supplier in Japan) 9/5

Has increased the manufacturing capacity of the optical films of LCD devices to 45 million square meters per year. It will increase another 15 million square meters per year in 2008.

7.      Samsung SDI (Major display device manufacturer in Korea) 9/4

Has unveiled several new organic EL panel products as the next generation display devices for consumer electronics.

8.      Saitama University (Japan) 9/4

Has co-developed a new UV ray LED device with the shortest wave length (227.5 nano meters) with Rikagaku Institute.

9.      Showa Denko (Major chemical company in Japan) 9/7

Has started the volume production of the new 1.89" hard discs (80 GB capacity) with the vertical recording system.10.  Panasonic Electronic Device (Major PWB manufacturer in Japan) 9/7

Will start the supply of new HDI multi-layer board with high toughness for the cellular phone applications, especially for overseas customers.

Interesting literatures about the packaging industry

Articles of DKN Research

1. "2006 Global Material Projection for Flex Circuit" DKN Research, October, 2006. http://www.dknresearch.com/Products.html

2. "Introduction for the Printed Circuit Boards of Car Electronics, Flexible Circuits", (Japanese only), Dominique Numakura, Nikkan Kogyo Shinbun, June, 2006, 2400 yens.

3.New "The latest electronics package, Part XXX, Cellular Phones", Dominique Numakura, Electronics Packaging Technology, September, 2007 

4. "Five Year Projection of the Global Flexible Circuit Market" Robert Turunen, Dominique Numakura and James J. Hickman, The Board Authority, Volume 7, August, 2006

5.New "Flexible Circuit Materials", (Japanese only) Dominique Numakura, Denshi Zairyo, April, 2007

6. "Leading Edge Material and Application of Polyimide (Materials for the Advance Flexible Circuits)", Dominique Numakura, CMC publication, August, 2006

7.  "Business Trends and Technology Trends of the HDI Flexible Circuits -

Roadmap for the Ultra High-Density Advanced Flexible Circuits", Dominique Numakura, KPCA, October 31, 2006

From the Major Industry Magazines

1. "Using Physics of Failure to identify Root Cause of Printed Board Failure", Craig Hillman, CircuiTree, August, 2007.

2. "The Real Lesson of the Xbox Failures", Mike Buetow, Circuits Assembly, August, 2007.

3. "Printing Miniaturized Components", Clive Ashmore and Jeff Schake, SMT, August, 2007

4. "BGA Escape/Routing Patterns for Fine-Pitch Devices", Syed Wasif Ali, Printed Circuit Design & Manufacturing, July, 2007.

5. "Optimizing the Wire Bond Process", Paul Reid, Advanced Packaging, July, 2007

7. "Under the Hood, How'd They Do That?", presented by EE Times and Techonline, May 2007