TOKICO USA Inc., based in Berea, Ken., has advanced a considerable distance in the global arena in a relatively short span of time by purposefully blurring international boundaries, becoming a top supplier to major automotive manufacturers. Dan Harvey takes the tour.
It only took TOKICO USA Inc. about 30 years to emerge as a top producer and supplier of original equipment (OE) parts to the automotive industry in North America. The Berea-based enterprise, a subsidiary of the Tokyo-headquartered parent company, TOKICO LTD., achieved this enviable position by committing itself completely to innovation, strong engineering support, and progressive technology and manufacturing strategies. Today, the world’s leading manufacturers benefit from the advantages of TOKICO’s advanced suspension and brake systems.
Paul Carroll, TOKICO USA’s executive vice president and general manager, emphasizes that commitment is more than a buzz word that graces marketing literature. Rather, it represents a well-defined policy that generates concrete results. Indeed, commitment to technological excellence and innovation led to the development of twin-tube, low-pressure gas shock technology. This has amounted to one of the company’s claims to fame, as low-pressure gas shock absorbers deliver better control of proper damping force.
Partnering with Customers
TOKICO’s commitment extends toward an especially strong concentration on customer needs. To be sure, the top priority of its corporate philosophy is engendering a “customer first” attitude. “We’ve been so successful because we do such a good job of focusing on the customer,” says Carroll. “Our cultural makeup and corporate mentality is built on customer support.”
Essentially, this translates into developing close working relationships best described as “partnerships,” indicates Carroll. TOKICO USA works cooperatively with OEMs, exchanging ideas toward the development of components, systems, and modules that meet their brake and suspension requirements. “The key is establishing strong relationships with the most important people within our customers’ companies,” he explains. “That way, we can zero in and truly understand their needs and then deliver the most appropriate and innovative solution.”
This cooperative process can last as long as five years before an innovative solution is taken into the production process. In this way, TOKICO offers superb quality, evident in products such as brake master cylinders, front brake calipers, suspension struts, air-suspension struts, air compressors, and shock absorbers, which provide high reliability as far as mileage and durability and at competitive prices.
Moreover, the concept of partnership extends internally as well as externally. “We’ve developed strong partnerships with our company colleagues overseas,” Carroll points out, describing the relationship TOKICO USA enjoys with its Japanese parent company.
This involves embracing proven philosophies from both eastern (Japanese) and western (American) national and corporate cultures, a commingling of the best manufacturing and management methods of both worlds, so to speak, to generate optimal results in the highly competitive automotive components market. “By striving to collaborate in such a way, we can operate seamlessly,” remarks Carroll.
For TOKICO USA, important elements of this blend includes the adoption of continuous improvement practices as well as lean manufacturing principles that foster versatility in its employees, accomplished through continuous training and cross-training programs. As a result, workers become qualified to work on different assemblies and develop competence with different machines, processes and procedures, and this enables them to contribute to the creation of a variety of products designed for different customers, or to quickly transition from the manufacture of brake products to suspension products.
Deployment of these advanced manufacturing practices, coupled with the company’s degree of commitment, has allowed TOKICO USA to compile a client list of the most prestigious auto manufacturers such as the Ford Motor Company, DaimlerChrysler, General Motors, Toyota, Mazda, Nissan and Subaru.
Accommodating a Shifting Marketplace
Those elements also enable the company to rapidly and almost effortlessly adapt to ever-evolving industry needs. That’s a characteristic that TOKICO displayed early on, when it became one of the first companies to develop vacuum boosters with mechanical brake assist devices. Later, in response to manufacturers’ demands, TOKICO developed the twin-tube, low-pressure gas shock absorber. TOKICO began working on this technology in the mid-1970s. Since then, it has been adopted throughout much of the world because it provides a high degree of stability and a smooth ride.
When established in California in the late 1970s, TOKICO USA was set up as an after-market enterprise to supply components for Japanese vehicles sold in North America. In 1980, it secured its first contract to supply a major U.S. automotive manufacturer: the Ford Motor Company. Two years later, TOKICO supplied twin-tube, gas pressurized shock absorbers for Ford’s Lincoln Continental, making the car the first U.S.-built vehicle that used the technology.
In 1988, the company built a manufacturing plant in Berea, its current headquarters, to produce OE parts for auto manufacturers. These include shock absorbers, suspension struts, air-spring modules, air compressors for air suspension systems, brake master cylinders, disc brake calibers, and other various suspension and brake products, according to Carroll.
The Berea manufacturing site began with 350 employees working in a 65,000-square-foot plant. Today, the site employs nearly 1,000 workers who work in two facilities comprised of more than a half-million square feet of manufacturing space. One facility focuses on brake systems, while the other produces the suspension systems.
The company has two more U.S. locations, including an office for original equipment sales and engineering in Allen Park, Mich. This is where TOKICO engineers contribute to product design and development through collaboration with engineers from both the customers’ companies and the parent company. Aftermarket sales and inventory are located at the site in Rancho Dominguez, Calif. Both shock absorbers and brake hydraulics are sold from this location.
The company also has international manufacturing sites in Japan, Thailand, and China, and its global character is another factor that enables it to keep pace with the changing technological requirements of a competitive industry, as it won’t allow itself to be bound by international barriers – either physically or intellectually.
TOKICO USA’s value to customers has also been enhanced by the 2004 merger between Hitachi, Ltd, Automotive Systems; TOKICO, Ltd., and Hitachi Unisia Automotive, Ltd. “The merger will have beneficial ramifications for us, because Hitachi has some wonderful R&D facilities and capabilities, and they do a good job of transferring the advancements and developments generated in the R&D centers into its business units,” explains Carroll. “So far, it has been a real advantage to us, because we have been able to tap into the technology resources to help develop technical solutions for our customers.”
Further, Carroll anticipates that the combined companies will become one large automotive systems group focused on providing solutions in key areas for customers, such as chassis, powertrain, and electronics. “We will be in the chassis group, and I would expect a strengthening of our technical capability that will help us provide much better service as we go forward,” he says.
The company’s size also enhances its position, Carroll indicates: “Because we’re a relatively small to mid-sized company, we can react quicker. In many ways, we can provide much better technical support than larger companies.”
Technical support is what customers really need, he points out, as they require strong technical solutions to their complex problems. “Our organizational structure enables us to support OEMs’ engineering requirements with strong technical teams that do testing and validation to create robust engineering solutions,” reports Carroll.
This has proven crucially important on the suspension side of the business, as some OEMs have started moving away from twin tube shock absorber technology to mono tube shock technology. “The benefits we offer to the customer is improved ride and handling and better control of the vehicle,” says Carroll.
Carroll provides another significant “for instance” as far as changing industry needs: “In the past few years, OEMs have sought system integration from their large brake manufacturers for complete systems and modules. Now, they’re changing their strategy and looking more toward their components sourcing and component engineering,” he reports. “This turns out to be better for us, because these are our strengths. We are much better able to provide component engineering and sourcing at a much more competitive price than some of the larger companies that are more geared for system integration.”
Another Growth Spurt
Thanks to its commitment to quality and customer service, TOKICO has already demonstrated growth over the last several years that has been as sustained as it has been significant. “We have averaged between 10 to 25 percent growth every year over the last five years,” says Carroll. “As we move forward through 2010, we are expecting another 40 percent growth over the next four to five years.”
In all, this has combined to place TOKICO USA at the top two in market share for shock absorbers and suspension, says Carroll. However, through its dedication to quality and innovation, as well as the goals that it has established for itself, the company could very easily assume the top spot and this could happen very soon. That’s what Carroll anticipates. “We are well positioned as a small components manufacturer, and I would expect that in the next five years we should become number one,” he concludes.