TMCA and the EEO Applying Toyota Business Practices to Energy Efficiency

Toyota Australia Overview REGIONAL OFFICES = Townsville Brisbane Sydney Melbourne Adelaide Darwin WA Distributor MELBOURNE Port Melbourne Corporate Head Quarters (CHQ) Altona Manufacturing Plant Engine, Foundry, Press, Paint and Assembly SYDNEY Sales & Marketing LOCAL SUPPLIERS 1,794 Purchase value: A$1.65 billion DEALERS Toyota: 210, Lexus: 19 Employees: 12,615 TMCA EMPLOYEES Total = 4,184 Nationalities = 60+

Toyota is Australia’s biggest manufacturer of cars

In 2012 nearly 100,000 Camry, Camry Hybrid and Aurion left our Altona factory.

Toyota considers Sustainability in all parts of our operation

Carbon Foot Print of a Camry Parts Manufacture (Suppliers) = 2.64 tonne/car Embedded energy in Materials = 5.98 tonne/car Vehicle Manufacture = 1.50 tonne/car Offices & Warehouses 0.13 tonne Per vehicle A/c gas = 0.65 tonne Lifetime use of vehicle = 44 tonne/car Parts and Vehicle Logistics = 0.093 tonne/car Sales Activities = 0.21 tonne/car

EEO as part of the response The EEO is a part of Toyota Australia’s response strategy to limit the impacts of the Clean Energy Future Scheme The EEO is used as a management tool in the overall response which also includes: Toyota’s Guiding Principles The Toyota Earth Charter The TMAP Regional Action Plan Toyota Australia’s Environmental Action Plan Annual Environmental KPI’s

TMCA Activity – “Axe the Tax” To encourage Energy Efficiency in manufacturing, TMCA had an ‘Axe the Tax’ campaign in 2012 to: Implement Actions to reduce the impact of the CEFS Offset additional cost through identified savings Encourage all Shops to put forward Energy Efficiency Initiatives

Challenges The key challenge with using the EEO processes for Toyota Australia is turning a legislative requirement into a useful business tool suitable to our industry. How do we reconcile: Data vs Information Legislative vs Company requirements (i.e Payback criteria) Energy vs Carbon Toyota systems vs Government systems

EEO and TEMS TMCA integrates EEO through our EMS Each shop has a multi disciplinary TEMS team Each TEMS team has access to support from engineering and Corporate groups Each TEMS team is tasked with finding and implementing improvement ideas

The PDCA Cycle TMCA uses the PDCA process to implement energy efficiency projects Plan – The TEMS teams look at identifying new projects and gather all relevant data (including baselines etc). Do – The projects are assessed, approved and implemented (taking account of EEO requirements) Check – the performance of the project is measured against expectation (daily, weekly, monthly) Act – The project is integrated, standardised and shared

Case Study: VSD Drives - Background Before Kaizen: The supply & exhaust fans in cavity wax are connected in direct online configuration They have a current 6 times the motor rated current at start-up This results in unnecessary energy being consumed. During Production time, the fans are running at full capacity and are being left on during non production time thus using excess energy (Gas & Electricity). Maintenance regularly have to change and repair motor belts & pulley. The conditions of these booths have changed as they are now dry booths.

Case Study: VSD Drives - Activity Activity – Install Variable Speed Drives: Undertake detailed analysis of current power consumption Install Inverter to be able to control speed of Fans Consult with all stakeholders regarding Quality concerns Maintenance issues OH&S concerns

Case Study: VSD Drives - Results After Kaizen – Supply Fan: Reduced frequency from 50 Hz to 45 Hz and then 40 Hz Power reduction from 50kW to 28 kW 50HZ 45HZ 40HZ

Case Study: VSD Drives - Results After Kaizen – 2 X Exhaust Fan: Reduced frequency from 50 Hz to 45 Hz and then 40 Hz Power reduction from 17 kW to 9 kW 50HZ 45HZ 40HZ

Case Study: VSD Drives - Results After Kaizen: Power savings: $23,294 Gas savings: $28,071 (reduced air flow) Maintenance: $2,128 (no need to repair the belts & pulleys on a regular basis) Equipment parts cost savings: $3,950 (motors are now ramped up slowly resulting in less stress on belts and pulleys) Total savings: $57,443 per year Implementation cost: $34,700 Pay back 7 Months

Case Study: VSD Drives - Yokoten Yokoten and Next steps: Roll out activity to other fan motors across the Paint Shop Identify potential applications in other shops such as: Black Out Spray Booth Paint Shop Torit exhaust system in Body Shop Weld exhaust system in Press Shop Emission test Laboratory ventilation system

Case Study: VSD Drives – Recognition TMCA acknowledges that the key knowledge about process improvements sits in the TEMS work teams and we hold an annual awards process to recognise their efforts. In 2013 there were 10 teams competing in the annual TEMS awards The combined savings of the projects put forward exceeded $1.4 million per year The 2013 Winner and submission for the Global Eco Award was the Paint Shop Maintenance VSD Drive project