Tadaaki Jagawa is senior managing director and board member of Toyota's purchasing group in Tokyo. He was interviewed at a recent conference in Amsterdam involving Japanese manufacturers and European suppliers by Automotive News Europe's Diana T. Kurylko.
How important is this conference with European suppliers?
This is a great opportunity to meet the chief executives of major European suppliers. Toyota wants to be aggressive and positive in Europe, so this conference is very important to us.
What are you looking for from European suppliers?
Developments in both basic and sophisticated technology. Even though industrialized countries outside Europe have already abandoned basic technology like forging and casting, such technology is still advancing in Europe. In terms of cutting-edge technology, there is also a high degree of specialization in Europe. The module system is a European concept - and it is a system with substance. We are grateful for what Europe has to offer in this sector.
What do you think about the performance of European suppliers?
There are large variations in manufacturing quality in Europe. There must be improvements in quality among some suppliers.
Are there opportunities for European suppliers in Japan?
Car sales are declining in Japan. We do not need to use European suppliers in Japan unless they accelerate technological innovations. Japanese suppliers have superior quality. But if European companies want to form technological or capital tie-ups with Japanese suppliers, we would not reject that.
Can you give any examples?
Bosch is working with Zexco in Japan on braking systems and diesel equipment. We believe relationships like these will increase in the future. Through our experience of procuring in Europe, the idea of forming joint ventures in Japan is something we feel comfortable with.
How do you rate US suppliers in terms of quality?
Quality is still not very good in the USA. In terms of defects measured in parts per million, the better suppliers stand at 100ppm. Our target is 10ppm. The worst suppliers have a figure of 1,000ppm. As far as Europe is concerned, the better suppliers may have 100pmm. But there is a great variation in quality across Europe.
How can quality be improved?
The challenge is to improve communications, especially in terms of lead-time development. That would be a key point in bringing about overall improvement. The physical distance may not be that great between Japan and Europe, but we feel the USA is a neighboring country while Europe is on the other side of the world. Europe probably feels the same way. Distance is relative to cost and quality.
How long will it take before European suppliers become intimately involved with Toyota?
We are already seeing aggressive steps being taken by parts manufacturers in Japan. Offices for European suppliers have been established in Nagoya and Tokyo. Faurecia has a base for the development of seats. Valeo, Delphi, Bosch, Mannesmann, TRW and Michelin all have offices in Japan. And they transact with us in Japanese.
Is there anything you can do to help European suppliers improve quality?
We have done this in the past. We have visited suppliers' sites and worked together to make improvements. We intend to do this in the future, but this would be strictly at the request of the supplier. Perhaps we are too demanding in terms of quality. Maybe tougher negotiations are necessary.
How much local content is there in Toyota's European cars?
Eighty-five percent is the necessary level in the UK. In France, 60 percent will be the required level when we start production (at Valenciennes.) This will be gradually increased to 80 percent. However, if there were enough good quality supplier products available at realistic prices, then we would seek to raise local content even higher. European parts still cost too much. They tend to be more expensive than the parts we bring over from Japan. That issue has to be worked out.
To what do you attribute this price difference?
Maybe the volume factor has a part to play in this. The volume that Toyota produces in Europe is relatively small, and the volume of the orders we place is small. Therefore the suppliers feel they are able to quote higher prices. Maybe the gap comes from tooling or development costs. Maybe European suppliers are reluctant to produce different products on one production line - or maybe they're not good at doing this. These may all be contributing factors to the price difference.