TRANSCRIPT: 2015 BUSINESS UPDATE AT NISSAN CASTING AUSTRALIA

Transcription

1 TRANSCRIPT: 2015 BUSINESS UPDATE AT NISSAN CASTING AUSTRALIA - Audio of this media conference is available online for play, download or embedding via: ralia MELBOURNE, Australia (24 April 2015) Transcript of media conference held at Nissan Casting Australia plant in Dandenong South, Melbourne, Australia on 21 April First speaker is Richard Emery - Managing Director & CEO, Nissan Motor Co Australia. Second speaker is Peter Jones - Managing Director, Nissan Casting Australia and Nissan Financial Services Australia. Q&A host is Peter Fadeyev - General Manager, Corporate Communications, Nissan Motor Co Australia. RICHARD EMERY: Welcome to Nissan Casting Australia. It is Nissan s home of manufacturing in Australia. Some of you will have been here previously, but if it is your first time, you will get to see it up close very shortly. It s the topic of manufacturing that brings me to my first point, and it s a very important one. Nissan is uniquely placed in this country. When you add up all of the various functions our Australian company performs, including our manufacturing operations, Nissan becomes part of a very small group. We are one of only a few fully integrated OEM car companies in Australia. And post-2017, we may be the only one. We re not just an automotive importer and distributor. It s often overlooked that Nissan is also a local automotive manufacturer. In total, we combine sales, marketing, financial services, technical services, motorsport and manufacturing in one single local operation a fully integrated OEM (Original Equipment Manufacturer) car business. I ll talk about each of these in a moment because for now I want to update you on the last 12 months. Many of you will know that this month marks my first full year at Nissan. And it s been a great first year. Measured across our Japanese fiscal year our sales volumes are up, our market share is up

2 and our customer and dealer satisfaction results are also up. Now that s a very short version of our scorecard and I m going to keep it that short at the moment. Because I want to go beyond the numbers and share with you how I ve come to understand Nissan in this last year and where it needs to present itself going forward. This is a big business. One in 10 cars sold globally comes from the Renault-Nissan Alliance, making it the world s fourth-biggest car-maker. Globally, in 2014 we sold a record 8.5 million new vehicles in 200 countries across multiple brands, including Nissan, Infiniti, Renault and Datsun. Here in Australia, together our three brands sold close to 76,500 vehicles (last year) and together we employ close to 650 people across multiple locations. And we support of course more than 200 dealerships with the associated investments, support and employment of thousands of staff. We are a big operation and we re growing at the correct rate. Since joining the team here last April we have done a lot. We established new business practices and improved our dealer relations. We ve made changes to our product line-up by adding some very popular new models and rationalising others. We ve reduced the number of cars we had in stock. We are now below 30 days of stock and I ve even mowed the lawn because we don t have to park cars on grass anymore. We ve taken all of these actions to create a foundation so that we can position ourselves as one of Australia s few fully integrated OEM car companies and be loud and proud about the Nissan brand. So, as a brand, where are we going? Nissan wants to move, and we are moving, from being a B-team brand and back into the A-team where it belongs. And after a year of hard work, we d like to think we are at that jumping-off point for our next phase. Late last month, I presented to all our staff a five-year plan for Nissan in Australia. This blueprint looks to 2020 and beyond and it isn t just about selling more cars in the future. It s about invigorating the Nissan brand, improving our customer focus and further advancing our manufacturing operations. In other words, it s about maximising the value of each function that makes Nissan a fully integrated OEM car business. So what are these functions I talk about? Firstly, sales and marketing, and as I ve said we re a sizeable operation.

3 As an importer and distributor that sells and markets cars, Nissan Australia staff work from offices across the country in Sydney, Brisbane, Perth and Adelaide and of course here at our headquarters in Melbourne, where we support our roughly 200 dealers across the nation. We have a financial services business. Back in 2008, Nissan Financial Services Australia was established. Last fiscal year it financed more than $A1.5 billion dollars in new vehicle sales. It s a very strong business and has grown to become one of our most successful ventures. It s our own captive finance business and is one of our highest-performing assets. Only a few car companies can claim to have their own captive finance business and we are one of them. Then, here at Nissan Casting Australia, our manufacturing business keeps going from strength to strength. Nissan Casting Australia continues to run close to capacity to satisfy global demand for what we manufacture here. There have been some recent exciting developments with our casting plant and I ll leave our Managing Director, Peter Jones, to fill you in on those shortly. Put simply, Nissan Casting Australia is in a very strong place. Here, our team works three shifts up to seven days a week to meet Nissan s growing demand for our high-pressure die-cast parts. Last year we exported more than 2 million castings to Renault-Nissan Alliance plants around the world. Some people think automotive manufacturing in Australia is dead. I can tell you it s alive and well here at Nissan Australia. And it will be here for years to come. Peter will take you through that shortly. On the topic of all things technical, here s something you probably don t know about us. Nissan Australia operates what s called a Field Quality Centre. Now, Nissan operates only nine of these globally and they re all attached to vehicle assembly plants and development centres. Except one - ours - making it the only one of its kind in the Nissan world. Our Field Quality Centres are central to our kaizen processes, or what we do to continually improve our cars. Nissan engineers stationed here work full-time to monitor how our cars perform in Australia, firstly, well ahead of being launched to the public and then when they are in the market. This information is fed back into the development and ongoing quality improvement programs. And, of course, as you saw outside, we operate our own official motorsport team. Motorsport is at the heart of Nissan s brand DNA and we re one of only a few manufacturers officially involved in high-level motorsport here in Australia. The Nissan Motorsport workshop is only five minutes down the road. It s easily one of the most sophisticated race shops in the southern hemisphere.

4 Our V8 Supercars program is part of Nissan s global motorsport initiatives that include the Super GT racing program in Japan, GT sportscar racing around the world and our endurance prototype racing program, which of course includes the Le Mans 24 Hour this year. Nissan Motorsport s V8 Supercars program sits right alongside these other investments and forms part of NISMO s famed global racing operations. And as a factory team, it s one of the many legs that I mention that make Nissan a rare entity in Australia: a fully integrated OEM car business. So after one year in the chair, what I can say is that Nissan in Australia is strong, it s implementing a local mid-term plan and we have some great products coming as well. In summary, Nissan has a strong sales and marketing operation that currently has us sitting in number five in sales volume in Australia in Various function support our sister brands Infiniti and Renault, both of which are in strong growth phases. We have a strong and unique manufacturing operation here at Nissan Casting Australia. And our own financial services company continues performing strongly. We run one of Nissan s Field Quality Centres, one of only nine globally, and we re unique in that we run our own factory motorsport team. As you can see, Nissan has a strong and sustainable business model that we believe puts us in a unique and strong position in the Australian automotive landscape. A serious player and over the next few years we may be Australia s only fully-integrated car business. A car company of course needs products. We are working hard to evolve our product range and make it more relevant and competitive. The latest examples of this you are driving today - the updated Nissan JUKE and the updated Nissan Micra. Now Steve took you through the highlights of these cars this morning. The JUKE has certainly turned heads since arriving here in late And this updated version will turn some more, especially with the addition of Yellow Bumblebee to the paint palette. The JUKE is the entry point to our strong SUV and crossover ranges. And, in time, we anticipate those customers who bought a JUKE as their first Nissan will stay with the Nissan brand into the future. In fact, 70 per cent of JUKE buyers have been new to our brand. And our Micra is also a very important model. It s the entry point for our passenger car range and it s where many first-time Nissan buyers join our family. This updated version is more than a facelift - we ve re-specified the Micra range to make it simpler and more appealing. It s a great little car. And of course we have more to come. The all-new NP300 Navara, which by the way has parts from Nissan Casting Australia inside it, will go on-sale next month.

5 And Infiniti will also add an all-new model to its catalogue around July with more updates and new models to follow. So I suppose my message is keep an eye on us. That is it from me for the moment. Thanks again for joining us today. I m looking forward to chatting to each of you over lunch. I ll now hand you over to Peter Jones, the Managing Director of Nissan Casting Australia and Nissan Financial Services Australia to update you on our local manufacturing operations. Thanks Pete. PETER JONES: Thanks Richard and good afternoon everybody. As Richard said, I m going to take you through some of the latest news and give you a general update about our operations here at Nissan Casting Australia. Some of you may have been familiar with what we do here but I m sure there are a number of you that wouldn t have realised that we actually manufacture parts here in Australia. There have been some exciting developments over the last few months and I ll come to those in a moment. But what I want to start with is; if we could capture what we do here in our Australian manufacturing operation in two words, it would probably be quietly flourishing. Amid the turmoil that s been reported about our country s manufacturing sector, especially the local automotive industry, Nissan has been working away in the background. In the last few years, Nissan has launched a multitude of new and updated models here and it s fair to say they have been the main drivers of our news and coverage. But today I want to make sure you know what we have been doing here in local manufacturing. So I ll start with some important background information. Nissan Casting Australia was established in Our manufacturing operations here comprise of high-pressure die-casting, low-pressure die-casting, (precision) machining, component assembly and accessories manufacturing. We sit on over 90,000 square metres of land here, over 20,000 of which is under the factory roof. At the moment we employ around 160 staff but we re recruiting for more. And currently, as Richard said, we are running three shifts a day, seven days a week and we re busy. And we re about to become busier. Every year, we make about 2.3 million aluminium castings and about 25,000 Nissan vehicle accessories, including tow bars and sports bars. Together, we make 49 separate components here 39 castings and 10 vehicle accessories. And right now, to be quite honest, we can t make enough of them.

6 Our castings are exported globally to our customers in Nissan assembly plants in Japan, the US, Thailand, the UK, South Korea and Mexico and to companies such as Calsonic Kansei and the transmission company JATCO. Here s an insight that I can share with you: success with these customers doesn t come down to merely cost or price. One thing unites them and that is the demand for quality. I m very proud to say it s one of the main reasons that we ve been able to get those companies to source from us. The high-pressure die-cast aluminium (parts) that we make here can be grouped like this: oil pans, gearbox housings, final drive housings and of course our Electric Vehicle (EV) motor parts. They go into more than 30 different models from a variety of our brands including Nissan, Infiniti and Renault. In fact, six Nissan, Infiniti and Renault models sold here in Australia have parts fitted that were cast in this plant and if you add the accessories we manufacture that grows to 12. In terms of those six models, the ones sold in Australia, they are the Nissan QASHQAI crossover, for which we make the gear carrier and rear cover; the Nissan Pathfinder, which receives our oil pan assembly; the Nissan X-TRAIL and Renault Koleos, which get part of their final drive units from here, and; the Infiniti Q50, which uses a gear carrier that we make. Even the manual transmission case for the all-new NP300 Navara is made here. In fact, last week we held our National Dealer Meeting in Thailand and I was very proud to show our Australian dealers our transmission casings at the beginning of the transmission line. They could tell by the small kangaroo that appears on every casting that goes out of the plant that the casing was made in Australia. Now, I don t want to sound biased but I think it s fair to say the jewels in our crown are the electric motor parts that we produce for Nissan s two EV models, the Nissan LEAF and e-nv200 van. At the risk of sounding boastful, they really are the jewels. When you see an example as it comes out of the die you ll think it s been machined, not cast, it s that special. It s a great example of the collaboration that we have with the CSIRO. Together, we developed what s called CASTvac, a casting technology that eliminates the valve blockages caused by molten aluminium. It avoids machine stoppages and can save us up to $100,000 a year in the production of a single component. If you have a look at the electric vehicle motor parts fitted to the EV motor on display, you ll see their accuracy and surface finishes are extremely precise. What you won t be able to see though is how dimensionally accurate they are. Our Quality team uses the same kind of measuring machines and granite tables used by Formula 1 teams.

7 These parts are that precise they match-up exactly with parts made in Japan to a tolerance of only 15 microns. That s less than the diameter of a human hair. And it s that precision and quality that has secured us the initial exclusive contract to supply those parts. And I m very proud to say they re part of the reason why we ve secured even more business from Nissan Global. Some of it will be exclusive to Nissan Casting Australia. Our manufacturing facility has been awarded more manufacturing work. And it won t be based only on our proven competitiveness and quality, but it will also be based on the high skill of our staff. This new business includes driveline components for soon-to-be-released new models, new motor technology and all-new propulsion systems that are yet to be announced, so I m afraid I can t share these details with you today. But what I can say is that these developments will see Nissan Casting (Australia) operating well beyond Further to Richard s point, I want to say that manufacturing is far from dead in Australia and we re proof of that. These additional contracts show that we ve been working to secure additional manufacturing business here in Australia. It s one of the reasons why we ve made some important investments here, such as our high-efficiency tower melter furnace. We commissioned this piece of technology in April You will see it when you go through the plant. It was part of our expanding manufacturing here in Australia. The total investment was $A2.1 million with more than $A600,000 of that coming from Federal Government assistance. The benefits of that tower furnace were numerous. It has an impressive melting capacity of three tonnes an hour, which is highly efficient. The energy reduction from our previous furnaces was 41 per cent and that gave us an annual energy savings of about $A252,000. In terms of CO2 emissions, it will save us 50 kilo-tonnes over its working life. Our investments and our results are working. We ve earned more work from Nissan Global and it has us operating at near capacity. But there is still more coming. As I ve said, Nissan Casting Australia is quietly flourishing. So, where to from here? We re strong and we re expanding. That s the short version. Right now our high pressure die casting operation has 30 job vacancies, where we need to employ people to keep us at the level we need to be at. We re working seven days a week and we ve been doing that for six months. Current indications don t have us slowing down. And new exclusive supply contracts awarded by Nissan Global will

8 see Nissan Casting (Australia) working well into the next decade. There no doubt about it, Nissan is a fully integrated OEM car brand in Australia. And it s one of the rare few, soon to be less. What adds to the uniqueness of our position is the success we continue to see in our manufacturing. I ve had plenty of people tell me that Nissan Casting Australia is defying belief in terms of making manufacturing successful and that it doesn t have a place in our country. Well, if you want evidence of Made in Australia, you ll find it here. And with the additional business, it will be here for a long time yet. We re very keen to show you our operations here, so we are going to have some Q&A and after we will be running tours to make sure that you do see our operation. I encourage you to take these tours so that you can see what we do here at Nissan Casting Australia. QUESTION: Why do you have a Field Quality Centre here? Is it because of the tough motoring conditions in Australia or a relic of having been a car manufacturer in Australia? EMERY: It s not a relic of being a car manufacturer a long time ago. It is because we have unique circumstances in our country in terms of the use of vehicles. It s more to do with our unique circumstances more than anything else. Because we are quite a large business within Nissan s global business, it aligns to have that (Field Quality) team here. QUESTION: Did you do any testing in the past in the Northern Territory? EMERY: Yes. QUESTION: Did that stop when they brought in the absolute speed limits? EMERY: No. QUESTION: The exports of 2.3 million bits. What was the value of that? FADEYEV: About $A65million in sales. QUESTION: Is it the repetitive nature of casting that gives you the efficiency to make it viable here? I imagine that you could do it elsewhere. JONES: There are a number of reasons why we are viable here and automation is one of them. We are a high-cost country. The other issue is flexibility. When you see the big plants in Japan, they have one machine that pumps out the same part all the time. We ve got 13 machines here and we make 39 different parts.

9 So some of the reasons are volume-based, and some of the reasons are our ability to change dies, but the other thing I d say is the complexity of the parts. When you actually see the parts that we make, they are not easy parts to make and because of that complexity and because of our level of quality, they keep awarding us business. When you see our water jacket for the EV and you look at the intricacy of the casting, you will see that it s not just a matter of repetition. Aluminium is a very strange metal and it does different things every time you thump it into a machine. So you ll see how complex these parts are and you will understand why a plant like this exists, because it is about being efficient but also having high quality and so on. We drive that through our kaizen activities. We are always looking at better ways of doing things, but the quality is what drives our business here. QUESTION: Do you make the tool for that here? JONES: The tools are made in various places. Some of the tools are made here, the dies are made here, and some are made in China. QUESTION: At any time have you chased business from outside of Nissan? JONES: Over time we have. We were doing some work with DSI for Ssang Yong at one stage and we were doing some gearbox casings for Ford at one time. But now we are 100 per cent Renault-Nissan Alliance. QUESTION: In terms of Nissan casting plants worldwide, where does this one sit in terms of size? JONES: It s a relatively small plant. When you see some of the plants in Japan, they are absolutely huge. But once again, they are pumping out the same part all shift. We are a relatively small plant. QUESTION: What is the capacity of the plant? JONES: In terms of the capacity, we actually base it on tonnage. So 10,000 tonnes is what our capacity is without expansion. Where we are operating at the moment is about 80 per cent of that. QUESTION: Is that per week? JONES: Per year.

10 QUESTION: You have been running at seven days a week for the last six months. Before that when was the last time you were running at seven days a week? JONES: As a rule we try to work six days a week, so seven days a week has been as a result of the additional orders we have taken. The last time we were running at seven days a week was six months before that (12 months ago). QUESTION: How many plants are doing this sort of thing in Australia? Dozens? Just a handful? JONES: No, I think in terms of automotive parts I d say we are the only casting plant. FADEYEV: In terms of scale, yes. The Alcoa plant in Geelong, which is scheduled to close at some point if not already, would be the other plant comparable to this one. QUESTION: Does the aluminium come from Australia? JONES: No it doesn t. We buy around the world depending on price. We d like to buy in Australia but the type of aluminium we actually use isn t made in Australia. Alcoa make a primary aluminium, we use a secondary aluminium, and for them to change recipe if you like for their aluminium would push our price up and put us out of the market. So our preference would be to buy in Australia obviously but that type of aluminium that we use, secondary, is not available in Australia at this time. QUESTION: Where does it come from? JONES: China. We used to buy from Sims Metal in Australia but Sims stopped making it two or three years ago. Alcoa only makes primary aluminium, which doesn t suit our purpose. QUESTION: Has that been a cost problem for you? JONES: We source aluminium globally, so in terms of that we get our aluminium at as competitive a price as we can and we source globally. QUESTION: You mentioned a desire to expand the workforce, but is there scope to expand the machinery you have got in the plant? JONES: As we said, we ve got 90,000 square metres and we re only using 20,000 of them. But what we are doing first of all is that we are looking at staffing, that s one issue. As you ll see when you walk through and see our machining centres, we have space within the plant for additional machining centres. We are always talking to Japan about additional capital investment in this country as more jobs become available to us, and that capital expenditure comes with the jobs.

11 About Nissan Motor Co. Nissan Motor Co., Ltd., Japan s second-largest automotive company, is headquartered in Yokohama, Japan, and is part of the Renault-Nissan Alliance. Operating with more than 244,500 employees globally, Nissan sold almost 5.2 million vehicles and generated revenue of 10.5 trillion yen (USD 105 billion) in fiscal Nissan delivers a comprehensive range of more than 60 models under the Nissan, Infiniti and Datsun brands. In 2010, Nissan introduced the Nissan LEAF, and continues to lead in zero-emission mobility. The LEAF, the first mass-market, pure-electric vehicle launched globally, is now the best-selling EV in history with almost 50% share of the zero-emission vehicle segment. For more information on our products, services and commitment to sustainable mobility, visit our website at For further information: Peter Fadeyev Chris Jordan Colette Dunn General Manager Corporate Communications Nissan Motor Co. Australia Phone: peter_fadeyev@nissan.com.au Corporate Communications Supervisor Nissan Motor Co. Australia Phone: chris_jordan@nissan.com.au Corporate Communications Coordinator Nissan Motor Co. Australia Phone: colette_dunn@nissan.com.au For more information please visit: Nissan Australia Media Information: Nissan Australia YouTube: Nissan Australia Facebook: Nissan Australia Twitter: Nissan Australia Instagram: Nissan Global: Nissan Newsroom: Nissan Channel 23 Blog: