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Financial Information:
Annual Report 2002
Special
Feature 2
Reorganization of
the Global Production System |
| Reorganization of the
Global Production System |
NSK first started overseas production in Brazil in 1972.
Since then, we have steadily expanded our global production
bases at various locations close to our customer production
sites, consistent with our "Production at market-oriented
manufacturing base" concept. We will continue to
follow this principle for value-added products such as
automotive bearings and steering-related products because
it is important for us to stay attuned to customer needs
in local markets and to be on hand whenever our customers
require our services.
NSK has gradually introduced
a "Production at optimum manufacturing base"
concept whereby production sites are decided based on
cost competitiveness. This concept is applied to products
with stiffer price competition such as miniature and small-sized
ball bearings and standard commodities such as standard
ball bearings. Recently, more and more customers have
shifted production to lower cost areas, and our competitors
based in these countries are exporting products to the
Americas and Europe. The result of these global changes
is further market turmoil and relentless price competition.
In response to these events, NSK has accelerated the shift
of production bases to Asian countries and East European
countries such as Poland. |
| Shift to Asia |
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Kunshan Plant, China |
Beginning with the launch of our Changwon Plant in
South Korea in 1989, we have expanded our production
bases throughout Asia. We will partly shift production
of miniature and small-sized ball bearings from NSK
Fukushima Co., Ltd. to our Jakarta Plant, standard
ball bearings from Shiga Manufacturing Division to
our Kunshan Plant in China, and tapered roller bearings
from Saitama Plant to a new joint venture in China,
which we are preparing to establish with The Timken
Company of the U.S. On completion of these projects,
the proportion of NSK's production in Asia will increase
from 35% to 53% of our worldwide production quantity
of ball bearings.
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Establishment
of a Procurement Center in
Shanghai to Promote Global
Procurement
A new procurement center will
be established in Shanghai
by the end of 2002. The center
will not only supply our production
bases in China but also NSK
plants throughout the world
with bearing steel, preprocessed
rings, and other components,
which are to be procured at
low costs.
Development
of a Production Base for Preprocessed
Rings for Ball Bearings in
China
We are planning to establish
a production base for preprocessed
rings for ball bearings in
China to keep pace with the
promotion of global procurement,
the expansion of our Kunshan
Plant, and increased demands
for automotive bearings in
Asia. This will support our
own strategic business expansion
and improve our cost competitiveness
worldwide, including China. |
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| Shift from the U.K.
to Continental Europe |
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Iskra Plant, Poland - Introduction of manufacturing
technology from Japan has completely transformed
production. |
For over the past 20 years, products manufactured at
our main plants in the U.K. have been supplied to
the continental European market, including Germany
and France. However, the British pound has continued
to gain strength against the euro by more than 20%
since 1999. The effect this exchange rate has had
on our bottom-line is estimated to exceed ¥3.0
billion annually.
To cope with the adverse effect of the exchange
rate, we decided to shift production of our commodity-type
products, centered on standard ball bearings, from
the U.K. to Poland. We will customize plants in order
to specialize and concentrate on production of specific
core products. We will also withdraw from or streamline
unprofitable businesses. On completion of these projects,
the proportion of production in the U.K. to total
production in Europe is expected to decrease from
62% in fiscal year 2001 to 42% in fiscal year 2003.
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