1.
Reforming the Domestic Employment Structure
We will reform our employment system by transitioning
from the life-long employment and seniority-based
salary systems, both of which have long been regarded
as the foundation of Japanese companies' competitiveness,
to a globally competitive employment system. We will
simultaneously implement a performance-based employee
evaluation and merit-based salary system. We will
also make our workforce more flexible to external
changes by increasing the percentage of outsourced
labor. By March 2003, we will reduce the number of
personnel by 1,000, which is about 10% of our present
Japanese workforce, through natural attrition, transfer
of workers to other companies and expansion of the
"New Life Support Program (early retirement program)."
We expect to drastically reduce the fixed portion
of our labor costs.
2. Reorganization
of the Production System in Japan
In our bearing business, we are planning to shift the
production of commodity products to Asia and adjust
production among plants in Japan consistent with the
decrease in domestic demand caused by the shift in
our customers' production to lower cost countries
and reduced profitability due to intensified global
competition.
Our Fukushima Plant, which manufactures miniature
to small-sized ball bearings, was spun off in July
2001 to become NSK Fukushima Co., Ltd. While shifting
their current products to our Jakarta Plant in Indonesia,
NSK Fukushima will re-establish itself into a specialized
production plant of small-lot orders after receiving
medium-sized ball bearing production lines from our
Fujisawa Plant and Shiga Manufacturing Division. It
will continue to function as a "mother plant"
by offering technical support for overseas plants.
Our Shiga Manufacturing Division Ohtsu Plant will
gradually shift part of its standard ball bearing
production to our Kunshan Plant in China. Our Saitama
Plant will receive production of tapered roller bearings
for trucks from our Fujisawa Plant while transferring
part of its existing tapered roller bearing production
to a new plant under construction by our joint venture
with The Timken Company of the U.S.
We will spin off our automotive components and
precision machinery and parts businesses during 2002
and continue to examine ways to build a more competitive
production system. As part of our reorganization programs
slated for the year ending March 2003, our automotive
components business will close its Akagi Plant by
March 2003 as we divest from the constant velocity
joint (CVJ) business. In our precision machinery and
parts business, our Maebashi Plant will shift production
of small-sized commodity-type and OEM-based ball screws
to NSK Kyushu Co., Ltd. It will also shift production
of XY tables to the Kirihara Precision Machinery &
Parts Plant.
3. Reinforcement
of Management and Profit Accountability
As part of our "Streamlined, highly competitive
business units" strategy, both our steering column
and precision machinery and parts businesses will
be spun off by the end of 2002, following the successful
spinning off of NSK Fukushima Co., Ltd and NSK Steering
Systems Co., Ltd, in 2001. We hope these measures
will result in enhanced profit accountability and
speed-up our decision-making process.
4. Reduction
of External Procurement Costs
In our three-year plan ending March 2005, we are aiming
to reduce total external procurement costs by 15%.
Domestically, this amounts to an accumulated reduction
of ¥15 billion. We will select and focus on cost
competitive suppliers, both in Japan and overseas,
through SACC (Strategic Approach for Cost Competitiveness)
activities where a joint team comprised of members
from sales, manufacturing, engineering, and procurement
divisions sets strategic numerical cost targets for
each product and each item. We will also promote global
procurement by focusing on Asian countries such as
China. This will inevitably lead to a reorganization
of our existing supplier base and further reform our
procurement system.
5. Restructuring
our European Business
We will expand the scope of the ongoing restructuring
programs and bring forward target deadlines. We are
determined to dramatically reduce our current deficit
level by the end of 2002 and return to profitability
by the end of 2003 through withdrawal from unprofitable
businesses, and the subsequent integration and closure
of production, sales and engineering bases, as well
as personnel reduction.
The automotive components business in Europe
was placed under the direct control of the parent
company, NSK Ltd., to enable the European headquarters
to focus on its bearings and precision machinery and
parts businesses. In the bearing business, we will
focus on our core businesses, centering on automotive
bearings at our Peterlee Plant, precision bearings
at our Newark Plant, both in the U.K., and standard
ball bearings at our Iskra Plant in Poland. As for
our non-core products, we will examine the profitability
of each product, and decide whether to withdraw from
the business or replace them with imports from Japan.
In the automotive components business, we will continue
to expand our EPS business. In the steering column
business, we will consider raising prices or withdrawing
from certain business projects. We will also reduce
the number or production bases in the U.K. from the
current three to one to improve profitability. Administrative
divisions will be subject to streamlining, including
scaling down of our European headquarters and technology
divisions. The European workforce will be reduced
from 6,300 at the end of 2001 to less than 5,000 by
the end of 2002.
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