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

Dave Buttner was appointed to the position of President Toyota Australia in May 2014. He reflects on the 2013/14 year as one of mixed emotions for everyone at Toyota Australia.

Dave Buttner
President, Toyota Australia

President's message

The past year was one of mixed emotions for everyone at Toyota Australia.

Our key priorities were to secure the future of our local manufacturing operations, continue to deliver exciting vehicles to our customers and contribute to the communities in which we operate.

To address the ongoing challenges facing the automotive manufacturing industry, we embarked on the second year of our company-wide transformation journey to strengthen our business.

This meant that every division in the company was tasked with finding new ways to improve productivity and reduce costs so that our company could be sustainable in the future.

All of our employees worked tirelessly to support this journey and we exceeded our performance and cost reduction targets for the 2013/14 financial year.

Due to this hard work we were able to secure the investment for the new-look Camry, which will be built at our Altona manufacturing plant from 2015.

Despite this positive news however, factors such as an unfavourable Australian dollar, high costs of manufacturing and low economies of scale placed pressure on our manufacturing operations.

We did everything that we could do to strengthen our company but in February 2014 we made the difficult decision to stop building cars in Australia by the end of 2017.

This was one of the saddest days in Toyota's history

Since making this decision our immediate focus has shifted to supporting our employees and local suppliers as we transition to a national sales and distribution company.

We have established a dedicated team that will oversee the company's transition and provide relevant training to impacted employees so that they can have more confidence about their future.

Together with the state and federal governments, we are also providing support to our local suppliers and assisting them in identifying opportunities to diversify their business.

This approach is based on the two pillars of the Toyota Way philosophy. The first pillar is respect for people, which is something that we endeavour to do in all aspects of our day to day business.

The second pillar is continuous improvement, which means that we are always looking for new ways to improve our business.

These principles will not only guide us during our transition period, but they will also be the foundation of all future activities.

Although we may not be building cars after 2017, the Australian market remains a key part of Toyota's overall global strategy.

Our commitment to our people will never change and we will continue to deliver innovative new products to our customers that are cutting-edge and fun to drive.

Dave Buttner
President, Toyota Australia

About toyota australia

Toyota Motor Corporation Australia Limited (Toyota Australia) is a wholly-owned subsidiary of Toyota Motor Corporation (TMC) in Japan. We are a leading manufacturer, distributor and exporter of vehicles under the Toyota and Lexus brands.

Our corporate headquarters is located in Port Melbourne, Victoria atnd our manufacturing plant is in Altona, Victoria. Sales and marketing operations are managed from Woolooware Bay, New South Wales with regional offices located in all mainland Australian states, except Western Australia where an independent company distributes Toyota branded vehicles on behalf of Toyota. Toyota Australia distributes Lexus vehicles in Western Australia.

2012/13 Key facts

* Actual headcount - the definite number of employees, excluding contractors. As of 31/3/2014 there were 80 (35 female/ 45 male) contractors working within TMCA.

** Full time equivalent - the total of the number of employees on full-time schedules plus the number of employees on part-time schedules converted to a full-time basis, excluding contractors. This number may vary slightly due to rounding up or down of numbers.

Our Stakeholders

Our stakeholders are those groups who are affected by or affect Toyota Australia. Our stakeholders have been identified as:

  • Our shareholder - Toyota Motor Corporation
  • Employees
  • Customers
  • Dealers
  • Suppliers
  • Community groups
  • Government

Our code of ethics provides a statement of duty specific to each group outlining the behaviours expected when engaging with different stakeholders.

Engaging with stakeholders

One of the most significant issues for our stakeholders during the year was the announcement of our decision to stop manufacturing by the end of 2017. Our focus is to work with our employees and suppliers, and support government as we transition to a national sales and distribution company.

As we prepare for the end of vehicle manufacturing in Australia we need to ensure our local suppliers and employees can plan for their future. We also need to guarantee the continued production of high quality vehicles and engines for our domestic and export customers until the closure of our manufacturing operations.

Support services have been made available to our employees and we will do everything that we can to minimise the impact of this decision on them. We have always treated our suppliers as partners and we will work closely with them to assist them during the transition period.

We will also work with government to determine how best to provide support to the automotive industry as the sector prepares for end of vehicle manufacturing in Australia. Our involvement with local communities will continue as we employ thousands of people both directly and indirectly via our extensive dealership network.

Engaging with stakeholders

Why We Report

We believe honest and transparent reporting helps build trust, motivates employees and gives us the opportunity to show that we understand and are managing issues of interest or concern to stakeholders. It also provides a platform to improve economic, environmental and social performance by highlighting the importance of measuring and monitoring in order to put in place sound management and improvement practices.

This is our eighth sustainability report and it details our performance for the 12 months from 1 April 2013 to 31 March 2014, corresponding with the Japanese financial year.

Our approach to reporting

Our approach to managing and reporting sustainability performance reflects the principles of inclusivity, materiality and responsiveness as defined in the AA1000 Assurance Standard (2008).

Our report is also guided by the Global Reporting Initiative (GRI) G4 reporting guidelines which were released in 2013. We report in accordance with GRI G4 Core reporting requirements.

In order to ensure we have addressed the issues of key importance to our stakeholders we conducted a thorough materiality assessment. We have reported on those economic, environmental and social issues identified as material.

Our approach to reporting

strategy and governance

Toyota's global vision outlines our aspirations as a company. It was developed in 2011 and details the values and actions required to unite Toyota for future prosperity.

The global vision has been developed to be similar to a tree in that its roots, the foundation of the company, are the Toyota values as articulated in the Guiding Principles and the Toyota Way. The trunk provides a stable base of business and the resulting fruits are always better cars and enriched communities. All of this exists within a structure of sustainable growth.

Sound corporate governance

Toyota Australia has robust systems in place to manage corporate governance including risk management frameworks, a fraud and corruption control program and a detailed code of ethics.

he code of ethics, which also contains the code of conduct, defines our position and provides guidance regarding the understanding, promotion and practice of ethical business standards by our employees. It covers fraud and corruption, conflicts of interest and equal opportunity. 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.

A key component of the code is the statement of duties applicable to each stakeholder group - employees, customers, suppliers, shareholder and the wider community.

Sound corporate governance

Manufacturing Viability

During the reporting period Toyota Australia was confronted with one of the most significant issues ever faced during its fifty year history in Australia - the sustainability of its manufacturing operations located in Altona, Victoria.

With a range of ongoing market and economic challenges contributing to the situation we focused on maintaining the sustainability of the plant. Our approach was to continue with our transformation strategy aimed at restructuring our business model to ensure a profitable and sustainable future. However despite these efforts, in February 2014 Toyota announced its decision to stop manufacturing in Australia by the end of 2017.

Announcement of closure

The announcement to stop building cars in Australia by the end of 2017, and transition to a national sales and distribution company, was extremely difficult.

The decision was not based on any single factor but driven by a range of external influences including the unfavourable Australian dollar making exports unviable, the high costs of manufacturing and low economies of scale for vehicle production and our local supplier base.

For these reasons, combined with Australia being one of the most open and fragmented automotive markets in the world and increased competitiveness due to current and future free trade agreements, it was determined it was no longer viable for Toyota to continue building cars in Australia.

as we prepare for the end of vehicle Manufacturing in Australia we need to ensure our local suppliers and employees can plan for their future.

supplier support

Toyota Australia has an extensive supplier base, vital to the production of vehicles at our Altona manufacturing plant. We understand that our decision to stop manufacturing will have a significant impact on suppliers, particularly in view of the Ford Motor Company of Australia Limited (Ford) and GM Holden Ltd (Holden) decisions to also stop manufacturing by 2016 and 2017 respectively.

Our approach is to continue to work closely with our suppliers to help them improve their business processes and profitability. Toyota is well known for business practices that eliminate 'non-value adding' activity and we have programs to share our skills and knowledge with our local suppliers which we hope will help ensure their long term sustainability.

Building supplier productivity and capability

It is through our supplier productivity and capability program (SPCP) that we provide skills and knowledge to our local supplier base.

The supplier development team at Toyota Australia has been supporting our local supplier base since 1989. It currently consists of 20 dedicated employees working with local suppliers to support operational improvement activities and other areas including developing understanding and applying Toyota production system methodologies, providing networking and diversification opportunities and supporting activities to improve cost competitiveness.

In 2013, the federal government announced it would contribute $5 million towards our $15 million five year supplier development program. This means we can continue and accelerate this activity over the next five years and increase productivity improvements in our local supplier network.

Building supplier productivity and capability

Economic Performance

Our contribution to the Australian economy is significant. We are a major employer in the automotive industry with almost 3,900 employees and we also support employment through contractors, dealerships and our suppliers. In addition to our role as an employer we support the community through partnerships and sponsorships, investment in capital, manufacturing and export programs, and through payment of taxes.

2013/14 economic performance

We reported an after tax loss of $437 million for the year ending 31 March 2014 due to restructuring costs totaling $889 million following our decision to stop building cars and engines by the end of 2017.

Total revenue was $8.4 billion which was down from $8.9 billion in 2012/13.

Local production of Camry, Camry Hybrid and Aurion vehicles was up slightly with 102,590 vehicles built during the period 1 April 2013 to 31 March 2014.

Our export program plays a significant role in our overall business, with more than 67,000 vehicles exported to the Middle East, New Zealand and South Pacific Islands during the period 1 April 2013 to 31 March 2014.

Total domestic retail volume for both Toyota and Lexus combined was 221,771 vehicles for the Toyota financial year (1 April 2013-31 March 2014).

Australians bought 1,136,227 cars in the calendar year 2013 with the most popular choice being the Toyota Corolla with 43,498 sales (3.8 per cent of the market).

Toyota was the top selling brand for the eleventh year (2013 calendar year) in a row with 18.9 per cent of the market or 214,630 sales.

TOYOTA WAS THE TOP SELLING BRAND FOR THE ELEVENTH YEAR IN A ROW

Innovation - cars of the future

Toyota is committed to innovation and to producing safe and sustainable vehicles. Our global mission is to lead the way in developing safe and responsible means of transport.

We are continually looking at opportunities to reduce the environmental impact of our vehicles. This takes many forms including the introduction of new technologies, improving recycling, increasing fuel efficiency and reducing tail-pipe emissions.

Our global leadership in innovation and sustainability is well recognised. For the year ending 30 March 2013, our parent company Toyota Motor Corporation invested $8.85 billion on research and development.

Cars of the future

Hydrogen - cars of the future

Toyota Motor Corporation's (TMC) commitment to environmentally-friendly vehicles is based on three basic principles: embracing diverse energy sources; developing efficient, low-emission vehicles; and driving environmental change by popularising these vehicles.

In late 2013, TMC unveiled a concept version of its ground-breaking hydrogen-powered car. In June 2014 it unveiled the final production car which will go on sale in 2015 in Japan.

Environment

Sound environmental management is a key issue for all manufacturing based industries. From Toyota's global vision and principles, to the Toyota Earth Charter and statement of environmental responsibility, our approach is to make a positive contribution to the community and minimise our environmental impacts.

A solid framework for environmental management provides the basis for continual improvement and innovation at Toyota Australia, in particular at our Altona manufacturing plant. Toyota's global approach to environmental management focusses on three pillars: compliance, risk minimisation and best practice.

Environmental Impact

Victoria's largest solar panel system

Our Altona manufacturing plant now boasts the largest roof mounted solar panel system in Victoria. The solar panel system covers approximately 10,000m2 of roof space and was partially funded by the federal government. It was built during the reporting period and commissioned in June 2014.

The facility will help reduce our carbon footprint and generate enough energy to meet the demand of 200 average residential households. It is made up of 2,000 individual solar panels and covers the rooftop of the plant's engine shop. It is estimated that the new 0.5MW solar photovoltaic system will save 2,631 GJ of electricity a year with greenhouse savings of 890 t CO2-e. It will save $110,000 a year in energy costs.

The monetary and carbon reductions are based on a number of assumptions verified by AusIndustry as part of Toyota Australia's successful funding application for this project under the Clean Technology Investment Program.

Our employees

We have a large and diverse workforce of 3,874 employees located across Australia with the majority based at our manufacturing plant in Altona, Victoria. Of our employees 14 percent are female and 86 percent male.

The most significant issue to impact our employees was our decision to stop manufacturing at Altona by the end of 2017. Approximately 2,500 employees directly involved with manufacturing will be impacted, as will some employees in the company's corporate divisions. The company is committed to working with employees to help them transition from Toyota Australia.

Focus on training

Training and development is often in the spotlight especially in organisations such as Toyota Australia which have large and diverse workforces. The issue has become increasingly important following the recent announcement to stop manufacturing by the end of 2017.

A key focus of training and development will be to assist employees's transition to new jobs, outside Toyota Australia, while still supporting current business operations and preparing the continuing workforce.

Following the announcement to stop manufacturing we commenced development of the DRIVE (dedicated, ready, individualised, vocational and energised) program to assist employees impacted by the decision.

The key purpose of DRIVE is to provide individual support and assistance to employees impacted by the closure of manufacturing. Impacted employees include those who will leave the business.

Focus on training

Community partnerships

The community is identified as one of Toyota Australia's key stakeholder groups and we have a long tradition of community support at both local and national levels.

Community investment plays a critical role in maintaining our social license to operate. There is also a community expectation that large organisations will support and enrich the broader community through partnerships that reflect the values of both the organisation and the community.

Employee community grants scheme

Employee community grants scheme

The Toyota employee community grants fund provides $1,000 grants for non-profit organisations in arts and culture, health, disability, sport and recreation, education, cultural diversity, environment and general fundraising.

Launched in April 2013, employees are given the opportunity to nominate a project or activity run by a non-profit organisation across Australia with 68 employees submitting applications.

The TCF Endorsement Panel randomly selected 15 employee applications with each of those employees having a connection with their nominated group either personally or through a child in their immediate family.

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