1. Dr. Tony Walker Deputy Managing Director, TMUK Growing Your Manufacturing Business 2 nd October 2013

2. Agenda Introduction & Toyota’s Growth Demonstrating Growth Demonstrating Growth Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Driving Growth Advice to SMEs Developing Growth Toyota’s Story Growing Your Business

3. Agenda Introduction & Toyota’s Growth Demonstrating Growth Demonstrating Growth Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Driving Growth Advice to SMEs Developing Growth Toyota’s Story Growing Your Business

4. Toyota Manufacturing UK (TMUK) - Overview Deeside, North Wales engine manufacturing Start of production Sept 1992 581 employees (incl. 149 agency) £700 million investment Burnaston, Derbyshire vehicle manufacturing Start of production Dec 1992 3,199 employees (incl. 490 agency) £1.4 billion investment TMUK plants are the most experienced in Europe

5. Scale Of Our Operations Burnaston Plant: Vehicle Manufacturing Press Weld Paint PlasticsAssemblyQuality Assurance

6. Scale Of Our Operations Deeside Plant: Engine Manufacturing Casting & MachiningAssemblyQuality Assurance Toyota fully manufactures vehicles and engines in the UK

7. UK Production History [1992-2012] Vehicles (000s) Lehman Shock Tsunami, Typhoon Engines

8. Toyota History: Volume Expansion （ 10,000 vehicles ） Japan Productio n Global Production Japan sales Expor t ＋ 200K / year Reduce Japanese prod’n, Expand global ＋ 600K / year (400K in global plants) Japanese Bubble Lehman Shock Tsunami, Typhoon Phases of growth – rapid acceleration since 2000

9. Toyota History: Globalisation Japan Producti on Overseas Production Japan sales Expor t 2007: Overseas production > Japan production Overseas production exceeded Japan since 2007

10. Agenda Introduction & Toyota’s Growth Demonstrating Growth Demonstrating Growth Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Driving Growth Advice to SMEs Developing Growth Toyota’s Story Growing Your Business

11. Toyota’s Key Philosophies & Practices: Toyota Way CHALLENGE KAIZEN GENCHI GENBUTSU CONTINUOUS IMPROVEMENT TEAMWORK RESPECT FOR PEOPLE 5 elements 2 pillars

12. Toyota’s Key Philosophies & Practices: Continuous Improvement CHALLENGE We form a long-term vision, meeting challenges with courage and creativity to realise our dreams “We should never be able to achieve all our objectives” KAIZEN We improve our business operations continuously, always driving for innovation and evolution “If you do not have a problem you are a problem” GENCHI GENBUTSU We practice Genchi Genbutsu… go to the source to find the facts to make correct decisions, build consensus and achieve goals at our best speed “Your boss knows many details”

13. Toyota’s Key Philosophies & Practices: Respect For People RESPECT We respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust “Tackle the problem, not the person” TEAMWORK We stimulate personal and professional growth, share the opportunities for development and maximise individual and team performance “Every problem is a development opportunity”

14. (Implement Plan) Track Schedule Monitor Adjust Communicate Evaluate the Results Evaluate the Process Understand success/failure factors Communicate Grasp the Situation Set Target Create Plan Communicate Resolve Issues Standardize Kaizen Communicate ACT PLAN DO CHECK PDCA

15. Toyota’s Key Philosophies & Practices: Toyota Business Practice – Problem Solving Step 1. Clarify the Problem Step 2. Break down the Problem Step 3. Set a Target Step 4. Analyse the Root Cause Step 5. Develop Countermeasures Step 6. See Countermeasures through Step 7. Monitor Both Results and Processes Step 8. Standardise Successful Processes D C A P Basic approach to daily activity - Production Team Member to President - Taiichi Ohno “No one has more trouble than the person who claims to have no trouble”.

16. Toyota’s Key Philosophies & Practices: Toyota Production System (TPS)

17. Toyota’s Key Philosophies & Practices: Kaizen Members responsibility to improve their process Members understand and talk about the problem/issue Consult, then try it

18. Agenda Introduction & Toyota’s Growth Demonstrating Growth Demonstrating Growth Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Toyota’s Culture -Philosophies and practices Toyota Way, Toyota Production System, skills & systems Driving Growth Advice to SMEs Developing Growth Toyota’s Story Growing Your Business

19. SME Risk Management The Risks: “The Zurich SME Risk Index study, which surveyed more than 500 senior staff in SMEs from a range of sectors, found that 16% of small firms in the UK consider themselves to be at high risk of going out of business during 2013”. The business environment remains challenging

20. What SMEs May Look Like Owner managed / family business Loyal, but small ageing workforce Process based product, tier 2 / tier 3 Works focused…limited commercial / marketing presence Living off old investment “The Stereotype” Be aware of risk, but build on your strengths

21. Need For Vision / Strategy: Need ambitions (size, turnover, products & values) Take control of your own destiny – Products & services – Relations with customers – Financial sustainability – Talent, skills & succession planning No such thing as success by standing still !

22. Products & Services: How to make yourself indispensable to the market you serve Quality & price are not differentiators Avoid the commodity price war How to ensure service levels and product uniqueness are taken into consideration Avoid too much dependency on one customer or sector if possible What differentiates you from the crowd?

23. Relations With Customers: Your direct customer may be tier 1 / tier 2 supplier You need to educate the customer buyer Final customer…know them, meet them, confirm expectations Keep personal contact with commitment to performance

24. Financial Sustainability: Good relationship with bank Clear visibility of cash-flow forecast Relationship with customer should deliver on time payment to realistic payment terms (net monthly) Access to Funding: RGF R&D Tax Credits Trust and openness = support through short term challenges

25. Talent & Skills Update: Company reputation cannot rely on one person Avoid reliance on ageing workforce and irreplaceable / waning skills Youth employment / apprenticeships Get up-to-date advice, e.g. MAS Access to Training Industry support SMMT Industry Forum Engage all the members in your workforce

26. Our Vision: SME Stereotype o Owner managed o Family business o Loyal but small workforce o Process based product, tier 2 / tier 3 o Living off old investment o Works focused… limited commercial / marketing presence SME – The Ideal o Modern, professional management techniques o Family heritage & values survive o Dynamic workforce, new blood mixed with old o Varied product portfolio & customer profile. No over-reliance / risk o Sustainable investment / renewal programme o Business focus via vision, mission & involve workforce to enable improvement

27. Some Key Pointers Product & Planning Process & Productivity People & Performance ~ Identify your strengths to differentiate yourself ~ Know your vision & be flexible to achieve it ~ Sustainably invest & innovate ~ Identify your strengths to differentiate yourself ~ Know your vision & be flexible to achieve it ~ Sustainably invest & innovate Product & Planning: ~ Skilled & professional workforce (training) ~ Good communication & teamwork (bottom up & top down) ~ Skilled & professional workforce (training) ~ Good communication & teamwork (bottom up & top down) People & Performance: ~ Embrace continuous improvement ~ Welcome problems and solve them thoroughly Process & Productivity: This approach can result in growing your manufacturing business

28. Thank you