Toyota Australia's

2013 Sustainability Highlights

Toyota is committed to contributing to society and the principles of sustainability. We understand our future success is dependent on a sustainable business model.

President's message

Toyota Australia has generated significant momentum in making business improvements to create a sustainable business in Australia. Our goals include: continuing to build cars in Australia; providing solutions to future mobility issues; and delivering vehicles that provide genuine 'excitement' to motorists.

Max Yasuda
President and CEO
Toyota Australia

President's message

Toyota Australia has generated significant momentum in making business improvements to create a sustainable business in Australia. Our goals include: continuing to build cars in Australia; providing solutions to future mobility issues; and delivering vehicles that provide genuine 'excitement' to motorists.

The past year has been challenging for Toyota and the Australian automotive manufacturing industry due to impacts including the persistent strength of the Australian currency and the high cost of raw materials.

Consistent with the company's long term growth strategy, we focused on important cost and efficiency initiatives. We undertook critical labour adjustments; aggressively enhanced purchasing operations; re-focused marketing efforts for locally built vehicles; and invested in a $330 million engine facility.

We are 18 months into a five year company transformation. Our aim is to have a local manufacturing operation that is sustainable, combined with improved performance of the broader distribution business to deal with intensifying competition in all market segments.

Our employees, suppliers and business partners are a vital part of the transformation journey. For instance, we are empowering our employees to make relevant changes in their work to support the transformation. At the same time, our critical supplier development activities have generated positive outcomes. Working together towards common goals ensured we met our targets in the first year of our transformation.

Recognising the important contribution of the Australian automotive manufacturing industry to the communities in which we are located, the broader manufacturing sector and the economy, we continue to work closely with relevant Government and Opposition stakeholders to develop suitable long term policy settings for our industry.

All of these activities are supported by the Toyota Way, our corporate philosophy that promotes continuous improvement and respect for people. We aim to design and produce more eco-friendly cars that tread more lightly on the earth, while also delivering a more exciting driving experience.

We also seek to enrich the lives of people in our communities through jobs, skill advancements and technological innovation.

We understand that we have a responsibility to respond to community expectations - regarding the environment and safety, people development and future mobility challenges, such as living in a carbon constrained world.

As the company's 4,000 employees continue on this shared journey, I am convinced that the fundamental business, environmental and social principles that we have introduced in the past years will help us to 'drive our future' to become even stronger and enable us to grow in harmony with the Australian community.

Max Yasuda
President and CEO
Toyota Australia

2012/13 Key facts

1 April 2012 - 31 march 2013

Australian awards and accolades (2012/13)

Australian awards and accolades (2012/13)

Why We Report

Toyota is committed to contributing to society and the principles of sustainability. We understand our future success is dependent on a sustainable business model.

We believe honest and transparent reporting helps build trust, motivate employees, and supports improving economic, environmental and social performance.

A central principle of sustainability reporting is to address issues of importance to stakeholders. To ensure we understand, manage and report on these issues, we undertook a materiality assessment prior to preparing this report.

Based on the findings, we identified nine key issues:

  • Innovative products
  • Sound governance
  • Economic performance
  • Manufacturing viability
  • Environmental impacts
  • Workforce engagement
  • Community enrichment
  • Supplier support
  • Customer expectations

Innovative Products

Toyota Australia is a manufacturer, distributor and exporter of vehicles under the Toyota and Lexus brands.

Therefore, it is appropriate that at the core of this sustainability report are our innovative products. When we asked stakeholders what they wanted included in this report, there was a significant emphasis on more product information.

With a global vision to lead the way in developing safe and responsible means of transport, the company is passionate about safety and the environment, and is a frontrunner in quality and innovation in both of these areas.

Cars of the future

Cars of the future

Our fleet of Plug-In Prius vehicles will be made available to the public to drive and trial through the GoGet Carshare scheme in Melbourne from July 2013.

This next generation vehicle features a battery that can be charged when parked, providing an enhanced all-electric driving range.

The Plug-In Prius has a larger battery than the standard Prius and has lower drive cycle carbon emissions.

Sound governance

Sound corporate governance is fundamental to Toyota's business. It is managed through a robust framework that includes a range of key policies, procedures and programs.

Risk management is one key program. We follow the principles of the international risk management standard ISO 31000 in applying enterprise risk management throughout the company.

A central policy is our code of ethics. It defines the company's position and guidelines regarding the ethical business standards required by Toyota employees. The code acknowledges that ethical behaviour extends beyond legal requirements and includes honesty, equity, social responsibility and complete integrity in everything we say or do.

Crisis management in action

Crisis management in action

Our emergency response was put to the test in March 2013 with a training exercise for the Toyota crisis management team. The exercise was designed following real world issues, such as the Japanese earthquake and Thailand floods, that have impacted Toyota in other countries.

The exercise was coordinated by an external provider who was able to independently assess areas where we had performed well and where improvements could be made.

The trial provided an opportunity for the crisis management team to test their skills. Each member of the team has been selected because of their expertise in several critical disciplines. Everyone is assigned specific responsibilities and is authorised and empowered to make decisions for the entire organisation in times of crisis.

Economic Performance

Toyota's contribution to the Australian economy is significant and includes direct and indirect employment, support of local suppliers and the dealer network, and our community contribution.

Toyota Australia reported a profit of $220.9 million (after tax $149.1 million) for the year ending 31 March 2013. Total revenue for 2012/13 was $8.9 billion, up almost 23 per cent on the previous year.

Toyota Australia's vehicle production was up almost seven per cent in 2012/13, with 99,441 vehicles built compared with 92,880 the previous year.

Domestic sales were 20 per cent higher compared with the previous year, buoyed by a strong model line-up. This included the introduction of three new vehicles - Prius c, Prius v and the 86 sports car - and a number of next generation vehicles including the Corolla, Camry, Camry Hybrid and Aurion.

Key Economic Performance Results

Economic Performance

Manufacturing Viability

Toyota Australia has a rich history of manufacturing in Australia. In 2012 we reached two significant milestones - our three millionth locally built vehicle rolled off the production line and we reached one million cumulative vehicle exports sales. In 2013 we also marked 50 years of building cars in this country.

We are committed to a future of building cars in Australia. Maintaining our local manufacturing presence is a key component of our transformation strategy which is aimed at creating a sustainable and profitable business.

However, we acknowledge that we are under intense market competition, while the high Australian dollar has affected our exports and increased the cost of raw materials.

Despite these challenges, we are taking control of the things we can influence and change in order to maintain that manufacturing presence.

A new beginning

A new beginning

In December 2012, we officially opened our new state of the art engine shop at our plant in Altona, making us the first Australian car manufacturer to produce both petrol and hybrid engines.

The $330 million redevelopment is a key piece of the company's manufacturing strategy and a significant milestone for Toyota. It will help us maintain our workforce and further develop technologies, skills and products to assist us to continue building engines and cars in Australia.

The engine shop will produce approximately 108,000 four cylinder 2.5 litre engines per year for the locally built Camry and Camry Hybrid sedans and for export. Of the 108,000 engines, 85 per cent will be petrol engines and 15 per cent hybrid.

Approximately 18,000 engines are expected to be exported to Thailand and Malaysia in 2013. This is the first time Toyota Australia has sold standalone engines to these countries.

The opening of the new engine shop supports our mission to transform our operations and build a more sustainable business.

Environmental Impact

Toyota's commitment to the environment is clearly demonstrated throughout all aspects of our business. From our global vision and principles, to the Toyota Earth Charter, there is a focus on making a positive contribution to the community and minimising our environmental impacts.

It is our aim to support environmental best practice throughout the supply chain. This includes managing the environmental impact of our vehicles, working with suppliers on environmental initiatives and encouraging environmental responsibility among dealers.

There is significant emphasis on reducing the environmental impacts of our manufacturing plant at Altona in Melbourne. This includes a focus on greenhouse and other emissions, resource use and waste.

Key environmental performance results

Workforce Engagement

As of 31 March 2013, we employed 4,029 people with the majority working at our manufacturing site in Altona, Melbourne.

We understand that our employees are our most valuable assets and aim to provide a workplace that is safe, supportive and inclusive. We recognise our responsibility for managing the health, safety and welfare of employees, contractors and visitors. The company is committed to providing a safe and healthy working environment and preventing work related injuries and illness.

We have a comprehensive training and development program focusing on four key areas - manager and leadership training, delivery of global Toyota programs, manufacturing training and dealer training.

Our workforce profile

Workforce Engagement

supplier
support

Toyota recognises that a sustainable supply chain is a key component to allow us to deliver on our commitment to maintain our manufacturing operation in Australia. A central aspect of our transformation strategy is to align our strategy for the future with the plans and objectives of our supplier base.

To achieve this we work closely with suppliers to help them improve their business processes and profitability. We also involve them in our plans, so we can work together to achieve mutual benefits.

In 2012/13 we had 1,467 suppliers with a combined value of buy of $2.4 billion.

Driving productivity at Total Tooling

Driving productivity at Total Tooling

Toyota has been leading a series of problem solving exercises in collaboration with pressed metal supplier Total Tooling, looking at its entire production process to find areas for improvement.

Total Tooling has been a direct supplier to Toyota since the launch of the 2011 Camry, and indirectly via Toyota Boshoku since 2006. It supplies Toyota with approximately 47,000 parts per week for its locally built Aurion and Camry. Parts supplied to Toyota include pressed metal and welded sub-assemblies for the boot, floor and car doors.

Prior to the review, Total Tooling operated three separate production processes which resulted in team members waiting for machines to finish before they could start the next task. To address this we simulated a range of alternate production set ups and performed basic trials.

After a week of simulating the entire process and making small adjustments, we were able to work together to combine three separate production processes into one. Toyota Production System has already helped the company improve its productivity by 26 percent equating to a time saving of 8.75 hours a week or just over one working day to produce the same number of parts.

Community Enrichment

Toyota Motor Corporation has a long tradition of supporting the community at both local and national levels. Toyota Australia's community investment philosophy underpins the global vision and is articulated in the Toyota guiding principles.

While Toyota is a car company, our community investment philosophy revolves around working with local communities to strengthen and contribute to society.

At the heart of our philanthropic focus is our community investment program - the Toyota Community Foundation (TCF). The TCF was established in 2011 to consolidate and build on community contributions and provide a framework for new programs. In 2012/13 we contributed $2.44 million to the community through the TCF.

Driving youth road safety education

Driving youth road safety education

In 2011, we strengthened our commitment to road safety by partnering with Road Safety Education Limited - a national not-for-profit organisation - to deliver road safety information to high school students.

Statistics show that young people are over-represented in crash data. By working with RSE we can make sure more high school students are exposed to driver safety information to help them make informed decisions when behind the wheel.

The one day program aims to provide senior students with practical information on safe driving practices and how to avoid or minimise the impact of common crashes and high risk situations.

Feedback from participants reveals that they are less likely to drive 5 km/h above the speed limit, have a better understanding of how to avoid a car crash and are more likely to switch off their mobile phones before driving after attending the program.

In 2012 the road safety program involved more than 45,000 high school students around Australia. The program began in New South Wales 12 years ago and has since expanded nationally and into New Zealand. More than 250,000 students have now participated in the program.

Customer Expectations

The direction from Toyota Motor Corporation is clear - aim to exceed customers' expectations. In Australia we do this by delivering outstanding automotive products and services, and keeping a focus on customers.

Our key connection with customers is managed through our network of dealers located across Australia. While independently owned, they are an extension of Toyota and integral to our success. Across Australia there are 210 Toyota dealers operating at 278 sites. There are 19 Lexus dealers at 24 sites. In 2012 these dealers employed 12,615 people.

We are also the largest fleet supplier in Australia and our fleet team work directly with government and business fleet buyers.

Toyota number one in Australia Corporate Reputation Index

Toyota number one in Australia Corporate Reputation Index

Toyota was ranked number one in the 2013 Australian Corporate Reputation Index, up from fourth position in 2012. Australia Post was ranked second and JB Hi-Fi third. The last time we were ranked number one was in 2006.

The survey, conducted annually by AMR and the Reputation Institute, examines Australia's top 60 companies using the BRW Top 100 list. Reputations are ranked by consumers giving their opinions on products and services, innovation, workplace, citizenship, governance, leadership and performance

*Note: The 2011 and 2012 Sustainability Reports were published in full online, therefore copies of these reports are not currently available for download.