The emerging shift towards next-generation automobiles, such as electronic vehicles and autonomous vehicles, has posed both a major challenge and opportunity for auto-parts makers to develop lighter, better and more hi-tech components. One such company is Toyoda Gosei, once a subsidiary of Toyota that now employs 40,000 people in 17 countries around the world. We speak with president, Naoki Miyazaki, to learn more about the company’s products and activities, and new innovations such as its unique and groundbreaking e-Rubber technology. Mr. Miyazaki, also explains the company’s international expansion strategy, which focuses on China and India, and gives more insight into the companies R&D practices.
Could you please tell us more about Toyoda Gosei and its history?
Recently, we celebrated our 70th anniversary. Back in 1949, we were spun off from Toyota Motor. At that time, our name was Nagoya Rubber. As you can tell from our name, we originally produced rubber-related products. Later, we also got involved in plastics production. So in 1973, we changed our name to Toyoda Gosei because we wanted to showcase other products in addition to rubber. Ever since then, Toyoda Gosei has dealt with soft and non-metal materials like rubber and plastics.
Though we are not a subsidiary of Toyota Motor, our position is close to that, as they own 43% of our shares. We are one of the Toyota Group companies, under Toyota’s big umbrella along with Denso and Aisin Seiki.
The Toyoda Gosei Group has 64 affiliated companies in 17 countries, including the USA and China. The idea to go global came from Toyota Motor 30 years ago when they urged us to go abroad and localize our production overseas. Today we employ more than 40,000 people in the Toyoda Gosei group and 6,000 people in Toyoda Gosei itself. Our operating profit for FY2018 was around 800 billion Japanese yen. In 2025, we are aiming for 1 trillion Japanese yen in consolidated sales.
What is the strength of Toyoda Gosei?
Our main strength lies in rubber and plastic automotive parts. Many other companies are doing either rubber or plastics, but our company deals with both. Toyoda Gosei makes various soft and flexible parts for automobiles, from hoses to car interiors. We have also launched various types of automobile airbags and LED products. One of our products is emblems that allow millimeter-wave radar to pass through for use in preventive safety systems. A millimeter wave compatible emblem is attached to the radiator grills in the front of the vehicle. We have the largest share in this market.
At Toyoda Gosei, in addition to developing and improving our current products, we also focus on R&D for future products. Ever since the company was founded, our philosophy has been “Boundless creativity and Social contribution.” Our challenge is to create new things that will contribute to society. One of our current focuses is the development of e-Rubber, a novel rubber material that can act as both an actuator and sensor.
Previously we have interviewed the president of Honda; he discussed two trends in the automobile industry. It is EV and a shift to autonomous driving. The experts are expecting the EV market to reach 517 million US Dollars, which represent 22% CAGR growth by 2035. Could you please explain to us about this trend and how you are adapting to this shift?
We think the outlook for our products is good even in the EV era. We believe that our products will remain necessary in the automotive industry in the future, but should be supported with continuous development. The trends in the industry will be accompanied by a need for improved functionality of automotive parts because the specifications for certain automotive parts in the new era car are also going to become higher.
For example, EVs do not have engines and the need for parts that contribute to quieter cabins will increase. EVs will not need some parts that are used in gasoline-powered cars, but at the same time we also have to anticipate what new products will become needed: what kind of battery peripheral products should be introduced, which types of pipes will be modified to meet the requirements of EVs so they can run properly.
Electrification of vehicles offers significant business opportunities for us because automakers will want to replace heavy metal parts with lighter weight rubber and plastic products that can decrease the weight of the car.
Another trend is autonomous driving. In this era, vehicles will be equipped with many more sensors, such as radar, and cameras. One of the best places for these sensors is the radiator grill. Toyoda Gosei is working to integrate these sensors into our radiator grills and other exterior parts, so we are a step ahead. Our intention is to improve the functionality of automotive parts with advanced technology together with good design. Let’s take airbags as an example. In conventional (non-autonomous) models, airbags for frontal-collisions are normally attached to the dashboard. However, once mass-produced self-driven cars are introduced to the market, we could see situations where the car seats can be turned around to let passengers face backwards. At present, our R&D is developing an airbag that can function no matter what the position of the seat is. One of our ideas is to make the airbag pop up from the seat belt. We are planning to release it by around2025.
Could you please talk to us about the R&D in your company and the importance of co-creation?
There is a high level of collaboration among companies in the automobile industry. Other key players have their own R&D, and we are working with them to co-create specific products to meet automakers needs. Any automobile company can come to Toyoda Gosei and say, “please create this for us,” and we will listen.
Thanks to your famous R&D, you have successfully developed the e-Rubber. Could you please tell us more about the e-Rubber and your other upcoming products?
“Venture into Innovation” is one of the key pillars in our medium and long-term 2025 Business Plan. We are focusing efforts on the development of e-Rubber and other new technologies, taking advantage of the knowledge in rubber, plastics and other fields we have cultivated through development and production of automotive parts and LEDs.
The research and development process for e-Rubber took us 10 years, with lots of trial and error. E-Rubber is an innovative material that has unique characteristics. The essence of e-Rubber is that it can act both as an actuator and sensor. No material like e-Rubber can be found elsewhere.
Our company embraces the spirit of creation and challenging ourselves to find ways to make new things. With e-Rubber, we have combined the aspects of a dedicated workforce, outstanding capabilities and budget to produce this novel material. E-Rubber can be used in various different areas as a flexible sensor or actuator. It is one of several new ideas our R&D people are working on.
One of the advantages of e-Rubber is that it can function both as a soft, flexible and sensitive sensor and as an actuator capable of gentle, human-like movements. As an actuator, e-Rubber devices can simulate the tactile sensations felt when a person touches an object. It’s used in haptics devices and can provide a more realistic experience by adding the sense of touch to images and sound in augmented reality, which is expected to grow in use with the spread of 5G wireless technology. Users will experience life-like tactile sensations such as the softness of objects drawn with computer graphics.
We are eager to know more about your 2025 Business Plan, which is based on 3 pillars: Venture into Innovation, New Mobility; Strategy for Growing Markets/Fields; and Innovative Manufacturing at Production Sites.
Pillar number one is our focus on creating more new and innovative products. Pillar number two means the areas where we would like to expand in new fields that we haven’t yet reached. Pillar number three is to fully utilize IoT and IT technology to improve the efficiency of our production sites.
Could you elaborate more on pillar number two, strategy for Growing Markets/Fields?
We should enter expanding markets and fields based on a proper strategy. At present, we would like to focus on China and India. These markets are currently experiencing stagnation, but our prediction is that this will not last for long. We absolutely expect them to catch up and escalate in the near future. Currently, the Chinese market accounts for 25 million cars produced annually, and it is forecast to reach 40 million in 10 years. In India, the number is already 4 million and it is expected to grow 2.5-fold and hit 10 million in 10 years. Our company produces automotive parts and we have close relationships in China and India. Therefore, as their numbers of automobiles increase, we will have to increase our production as well.
I’m glad that you mentioned you’re not limited only to Japan, but you also look for opportunities overseas. I saw in your corporate profile that you have 67 companies worldwide, and 49 companies are overseas. If we combine all your sales overseas, it surpasses your sales in Japan. Could you please talk to us about the importance of the overseas market in your company?
In North America, we have a strong presence. About 30% of our group companies are there and 50% of group revenues originate from North America. Alongside the automobile business, America is the cradle of IT and we can learn from start-up companies there.
Besides the automotive industry, is there any specific market that you would like to enter? What are your strategies to keep up with the overseas market?
In January 2020, we exhibited e-Rubber at CES, America’s biggest consumer electronics show, which showcases technology and innovation. We wanted to show our commitment and dedication to the global market, not just the domestic Japanese market.
Another reason Toyoda Gosei produces e-Rubber is that making anything in the automotive industry takes time and money. An advantage of this new product is that it can be produced fast, ready to be supplied to the market with little delay. Therefore, there are many possibilities for the production of e-Rubber outside of Japan. We receive frequent inquiries from foreign customers who ask us to show some samples of e-Rubber and what it does, and are in ongoing communication with them.
When you go overseas, as you would like to expand your business further in China and India, are you looking for joint venture activities?
In India, we have a local partner. Therefore, our business expansion in India actually rests mainly on their shoulders. In China, it is impossible to conduct business on our own. We like to have local partners that understand and have deep knowledge about the market.
For example, in China, we have so far supplied mainly the leaders of the automotive industry, such as Toyota, Honda, or Nissan, because we already have supply relationships with those companies. However, we are looking forward to moving further and expanding our business in China. For that reason, we are looking for a local partner that can connect us to local automobile manufacturing companies.
You have been in the company for six years. In four years, if we were to come back and interview you again, what would like to say you have achieved after 10 years at Toyoda Gosei?
I worked for Toyota Motor Corporation for 34 years. At Toyoda Gosei, I was a VP for one year and have served as president for five years. Since the beginning, we have strived to reach established goals and continued to pursue the growth of the company. In line with our philosophy of “boundless creativity and social contribution,” we would like to continue contributing to society.
Today we have the potential to introduce new products like e-Rubber that go beyond the automotive industry, for example to the medical sphere. Even though profit is a key factor for us as a company, more than that we want to contribute to society by producing reliable and safe products. We deal directly with car parts such as steering wheels and airbags, which are safety products utilized by nearly all the people that live in the planet. To sum up, we want to take the company to the next level, providing products that contribute to the safety and well-being of people around the world.