As for Art, we have long faced three problems. One of these is with our manufacturing sites. As production expands globally, Art has expanded its sales with plants in China, Indonesia and Thailand. We have steadily increased our market share, but now we have come to see changes in procurement trends.
In the past, individually optimized procurement was the main approach, and Art has been manufacturing pistons in the places where automakers produce vehicles and delivering them to the automakers. Today, however, totally optimized procurement has become the norm, and in order to become the world's No. 1 piston manufacturer, I believe we have an urgent need for manufacturing sites in Europe and the United States. However, I am fully aware of the difficulty of newly entering an already crowded field in the mature European and US markets. Especially, we saw major challenges in terms of human resources and the required cost of investment.
A second issue is technological. These days powertrain systems are becoming widely diversified. In addition to the need to improve supercharging technologies that underpin downsizing, the variety of vehicles such as hybrids and plug-in hybrids is increasing, and people’s performance demands are also changing. Especially, we envision more stringent demands for lighter weight, lower friction, and further improvements in thermal efficiency.
Under these circumstances, Art needs considerable information-gathering, sales, and development capabilities in order to grasp the needs of the world market and offer products that take latent needs into consideration. This is very difficult for one company to do alone.
The third issue is the creation of new products. Some analyses predict that demand for internal combustion engines will peak in 2040. As a specialist manufacturer of pistons, this is a question of our very survival. We will not survive unless we prepare to offer a second product unrelated to internal combustion engines sooner or later.
With these three aspects of Art’s future in mind, we decided that business integration with Aisin was the right move for us.
What are the Roles of the Two Companies after Integration?Each company supplements what the other lacks, for truly effective synergy
After the merger, we would like to consolidate our piston operations in Art. In other words, we will ask Art to handle all aspects of piston development, production technology, and domestic production. Also, regarding overseas expansion, since Art has no plants in the United States, in the future we will be looking at how to share Aisin’s facilities. While it may take time, that does not change our goal of consolidating everything into Art including the global piston market.
Then, Aisin intends to focus on developing new technologies and products while taking into account future engine-related needs, building on the advantages of our product lineup that covers all parts of combustion engines including water pumps and oil pumps.
Art has production technologies that we have built so far as a specialized manufacturer of pistons. On this basis, I would like to share and utilize Aisin's extensive technical capabilities and powerful global network and develop synergies as soon as possible to enhance our competitiveness. I think this is the role Art needs to play.
Specifically, we are considering construction of a production line based on Aisin’s high-speed piston line and incorporating Art’s strengths in small-scale, in-house production, which we are provisionally calling the Aisin-Art Synergy Line.
Regarding casting, efforts are underway to realize unprecedented productivity utilizing the strong points of both companies’ ideas, and it is already producing effects.
Aisin is loaning out some of our team members, but we believe that in addition to personnel exchanges, it will be very meaningful if we can accelerate the fusion of our technologies.
I agree. We would like to broaden our horizons in the fields of materials development and functional parts for intake and exhaust systems, and to further strengthen our synergies.
Aisin now has 13 companies forming the core of the Aisin Group and carrying out respective business activities. We are happy to welcome Art as the 14th company in the Group, and look forward to seeing you proactively develop business as a core member. We will do our utmost to support you in that.
Thank you very much. 2017 was a landmark year for Art, marking the 100th anniversary of our foundation. We are delighted to be getting off to a fantastic new start at this time as a member of the Aisin Group.
The most important question from now on is how these two companies will demonstrate our competitiveness in the powertrain business, including pistons. To do this, we will continue to refine our powers as individuals and as organizations, and aim to be the global leader.