Toyota Motor Corporation (Toyota)’s Hirose Plant was originally established in 1989. Up until recently, this Toyota plant was engaged in research and development and production of electronic control devices and IC (integrated circuits) as a way for Toyota to respond to the rapid expansion of electronic controls being used in vehicles.
One of its biggest competitors was another company within the broader Toyota Group – DENSO Corporation (Denso)
Almost three decades on from the plant’s establishment, Toyota and Denso reached an agreement to transfer Toyota’s core electronic component operations to Denso, which would result in the Hirose Plant’s consolidation within Denso. Yes, Toyota’s Hirose Plant would be freshly reborn as Denso’s new Hirose Plant.
The inauguration ceremony making this consolidation official was recently held at Denso Hirose Plant on April 1, 2020.
On inauguration day, another important guest was there – Akio Toyoda.
What brought him to the Hirose Plant? That’s where this untold story begins.
In order to survive in a ‘once-in-a-century period of profound transformation,’ Toyota decided to accelerate its efforts to enhance the competitiveness of overall Toyota Group companies by further strengthening coordination to more effectively apply the group’s limited resources.
As one part of that effort, dating back to about two years ago, Toyota and Denso announced consolidation of their core electronic component operations within Denso.
The intended effects of this consolidation of Toyota’s electronic component operations to Denso, another group company well-versed in electronic component operations, included improvement in productivity and further strengthening of the Toyota Group’s overall competitiveness, something that could not be achieved by operating this area of business individually.
Akio has called the concept ‘Home & Away.’
However, Toyota employees at the Hirose Plant had expressed their mixed feelings about becoming employees of Toyota’s competitor, Denso.
Approximately six months from when the decision was made to consolidate the electronic components business within Denso, Toyota held its annual company Ekiden, a running marathon event. One Hirose Plant employee asked in earnest: “Do we participate in the Ekiden competition as a Toyota member?”
The simple, honest question that was laid at Akio’s feet must have stirred something inside him.
His next step was to visit the Hirose Plant together with President Arima (Denso).
Akio wanted to solicit candid opinions from those most impacted by the decision to consolidate while having the chance to look them in the eyes and them to share their feelings. He then expressed his thoughts in the following way.
“The Hirose Plant produces electronic components, but is mostly known for its inverter. Previously, electronic components were called ‘auxiliaries’ within Toyota.The reason for calling them this is because mechanical parts, engines for example, were considered a core part of a vehicle, whereas electronic components had been positioned as accessories.
However, now, due to the so-called ”CASE (Connected, Autonomous, Shared, and Electrification) Revolution,” the automotive industry is, in addition to changing the very notion of what an automobile is, embarking on an era where all kinds of products and services designed to support human livelihood are being connected using information.
Electronic components hold a significant key to this technological innovation.
From now on, electronic components will no longer be ‘auxiliaries’ but will be a mainstream of car-making.
As we look to what ‘making mobility’ will mean, Toyota and Denso will each need to bring out their respective areas of strength, and we want them to offer the type of manufacturing to win out on the global stage.”
Now, about a year since that time, once again Akio Toyoda was at the Hirose Plant for the inauguration ceremony.
Below is Akio’s speech as delivered to the members of Hirose Plant at the inauguration ceremony.
<President Akio Toyoda’s Speech at Denso Hirose Plant Inauguration Ceremony>
Appreciation for all those involved in the project
I would like to express my sincere congratulations on inauguration of Denso Hirose Plant.
It has been almost two years from June 1, 2018, when Executive Vice President Kawai first explained our plan to ‘consolidate our electronic components operation within Denso’ to everyone here at Hirose Plant.
At first, many of you must have felt confused or anxious.
I would like to express my sincere gratitude for the efforts you all have made to this day. Thank you very much.
As I see your faces today, I can visibly see how your facial expressions have changed since President Arima and I visited the plant back in December 2018. There is a sense of ‘hardiness’ that is possessed by only those who have overcome hardship by themselves or those who have been continuously taking on challenges.
At the third labor-management negotiations, Branch Director Kazuhiro Takegahara and Deputy General Manager Nobuyuki Matsui told us about their thoughts and difficulties at a prior meeting. The below is an excerpt from that meeting.
At the venue, a video of the third labor-management negotiations held in March 2020 was shown.
<Kazuhiro Takegahara Branch Director>
In the course of working with Denso members and looking at Toyota with an outsider’s perspective for the first time, we came to realize that the notion that we (Toyota) had advantages over Denso may have been .
Until now, if any kind of issue or problem occurred, we were not really in fear of losing our jobs, to be honest, because we were all Toyota. But from their experience as a supplier, Denso knew that producing even one defective part can result in losing orders.
The workplace is a very diverse place. Many different ideas exist.
Some people feel sad about the ‘Denso’ signboard that replaced the ‘Toyota’ one during their daily commute. It would not be accurate to say that everyone understands their position or situation.
However, the plant team members are all working rigorously to prepare to switch to Denso’s production and part number systems.
We would like to produce electronic components together with friends like Denso that speak the same language and work in the same way so we are able to compete in the global market.
<Nobuyuki Matsui Deputy General Manager>
We worked so hard with each other to create a sense of brotherhood where we could learn from each other and be able to talk about anything with each other and many people, starting with the Plant General Manager of Denso by laying everything on the table and each of us getting involved in the other without hesitation.
We made mistakes and were criticized. Even still, we were sometimes reprimanded. However, I still felt happy.
I would like Toyota members to know and learn more about Denso.
This battle to become ‘the world’s top inverter producing plant’, I believe, has already begun. We look forward to working hard to achieve this together.
After the video ended, Akio continued:
I was very happy to take their comments as reflecting the voices from all who participated in this project. Thank you very much.
Why Akio Toyoda is a Member of the Board at Denso
In addition to my role as President of Toyota Motor Corporation, I am also concurrently a Member of the Board at Denso.
Finally, I would like to tell you about Denso.
Honorary Chairman Shoichiro Toyoda also served as a Member of the Board at Denso for 50 years from 1964 to 2015.
He said, “It is Denso that takes on new challenges. Denso was the first winner of the Deming Prize. There is an open-minded atmosphere within Denso.”
When Toyota announced a business and capital alliance with NTT Corporation the other day, I mentioned two changes that we are facing in the way we make cars.
One is ‘Software-first car-making,’ and the other is ‘Car-making as part of the social system.’
In both changes, electronic components hold a significant key.
Now more than ever the Toyota Group needs the ‘Denso that takes on new challenges.’
Previously in Toyota, electronic components were called ‘auxiliaries.’ They were positioned as accessories of the main mechanical parts that control the circuit.
Looking forward, software will determine whether we will win or lose against the competition, and electronic components will shift to become a mainstream of vehicle manufacturing rather than mere ‘auxiliaries.’
I think we will be able to pave the way for new vehicle manufacturing by giving Denso, which has been endeavoring with all their strength in electronic components, a ‘Home’ advantage.
‘Home & Away’ does not mean simply cutting off or consolidating business operations.
It means solidifying our group-wide efforts so we can survive in this era of profound transformation together. Then, we will be able to help create the future of Japan and the future of mobility.
‘Home & Away’ is a Toyota Group strategy to that end.
Therefore, it is not necessary to look at things as one leading and the other following or vice versa.
All we need is a shared ‘willingness’ to make ever-better cars.
Toyota and Denso will develop an equal relationship, and present it to the entire Toyota Group.
I hope Hirose Plant will spearhead this initiative.
What is ‘Home & Away’ really all about? The Hirose members who have been committing themselves to this initiative should know by now.
The future is a world without answers, an uncharted world.
Also, it will be a world where we need to develop ourselves.
As such, as Presidents of Denso and Toyota, President Arima and I will always need to be making changes for years to come.
At the same time, President Arima and I will take the lead, accept those changes, and continue endeavoring to be mindful of the feelings of employees who are fighting to change themselves as well as each individual working at the frontlines of the shop floor.
I would like to ask all members here at the Hirose Plant to feel reassured as you keep taking on new challenges for the sake of the Toyota Group.
Thank you very much.