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Financial Information:
Annual Report 2003
Review of Operations
Michio Hara, General Manager, Bearing Division |
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Sales
of Bearings |
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| (Billions
of Yen) |
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Bearings are NSK’s main business, accounting for approximately
60% of total sales. As a comprehensive bearing manufacturer, we
provide a broad range of bearings to various industries and regions.
NSK is ranked No.1 in Japan and is positioned among the top companies
in the world. Small-sized to standard ball bearings, automotive
bearings, and precision bearings are core products in which we
hold the No.1 or No.2 position in the global market. We have production,
sales, and R&D operations in each of the four key global regions,
including Japan, the Americas, Europe, and Asia, which allow us
to meet the needs of users anywhere in the world.
| Sales
Performance for Fiscal 2002 |
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Overall bearing sales amounted to ¥322.0 billion, up
¥19.6 billion (6.5%) from the previous year. Operating income
increased ¥10.8 billion (96.2%) to ¥22.1 billion.
Since the latter half of fiscal 2001, domestic sales to
the automotive industry have remained strong. Demand from other
industries, such as the electrical, IT and the aftermarket, have
also started to recover, resulting in domestic sales exceeding
the previous year’s results. Sales in the Americas, Asia,
and Europe were also robust.
The business environment has been changing on a global basis,
with formation of global alliances among bearing manufacturers
and the rise of Chinese manufacturers. Amid this environment,
we are implementing a clear business strategy to strengthen operations
for each product category.
- Standard ball bearings
- NSK boasts the top share of this market worldwide and
we expect sales to increase, consistent with growth in the
Chinese market. Because ball bearings are basic commodity
items, cost competitiveness is the key determinant in winning
sales. We are thus shifting production to low-cost bases,
including Kunshan NSK Co., Ltd. in China and NSK Iskra S.A.
in Poland. We also established a procurement center in Shanghai
in 2002 which supplies low-cost components procured in China
to production facilities around the world. We are striving
to boost productivity and improve cost competitiveness by
transferring production expertise developed in Japan.
- Automotive bearings
- At present, NSK holds the top position along with The
Timken–Torrington group and AB SKF in this market worldwide.
With Asia expected to be the focus of growth in the automotive
market, we have established the following strategy for gaining
the No.1 market position:
- Expand orders for strategic products, including wheel hub
unit bearings, water pump bearings, bearings used in pulley
units with one-way clutches, as well as bearings for electromagnetic
clutches for vehicle air conditioning units, in which we are
able to meet a variety of customer needs worldwide ranging
from production and sales and technical development.
- Strengthen our alliance with The Timken Company, the largest
bearing manufacturer in the U.S., in the area of tapered roller
bearings. Timken has acquired The Torrington Company, a leading
player in the needle bearing market, and we will also maintain
our alliance with Timken in this area to strengthen overseas
sales capabilities.
- Enhance efficiency and reduce costs through implementation
of APS (Advanced Production System) activities. We will also
strengthen our cost competitiveness by combining the “Production
at market-oriented manufacturing base” and “Production
at optimum manufacturing base” concepts (please refer
to this page).
- Bearings for general industrial use
- For bearing products used in general industries such
as steel, machine tools, paper, mining, and pumps, we are
targeting the aftermarket for roller bearings. This market
is approximately ¥650 billion in size worldwide and has
large profit potential. We plan to expand annual sales, mainly
in the Americas and Asia, from ¥53 billion at present
to ¥70 billion in three years. In terms of production,
we aim to lower costs at our Fujisawa Plant, our main production
site for these bearings, by 20% and to halve product lead-times.
From a technical perspective, we will expand our series of
highly functional standardized roller bearings.
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| Sales
by Industry |
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Sales
by Region |
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(Sales are recognized by customers’
location) |
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- Japan
- As part of the reorganization of our domestic bearing
business, we completed the transfer and consolidation of production
of medium-sized ball bearings from our Shiga and Fujisawa
Plants to NSK Fukushima Co., Ltd. at the end of 2002.
For automotive bearings, sales of wheel hub unit bearings
are growing favorably. In 2002 we began mass production of
third-generation HUB III bearings for four new car models
in Japan. We also commenced mass production of HUB K bearings
developed for light vehicles in October 2002.
- The Americas
- We moved into our new headquarters for our American
operations in August 2002. At the same time, we intergrated
the sales and technical divisions, which were previously in
separate locations. These actions were taken to improve service
to our customers. In January 2003 we established a business
unit dedicated to increasing sales to the general industrial
sector. Initial sales efforts are focused on pump and compressor
manufacturers.
NSK has also received large-scale orders for tapered
roller wheel bearings from two Japanese automakers and we
are working together with Timken to supply bearings amounting
to ¥6.0 billion annually. We will also expand production
at our Franklin Plant in Indiana in August 2003 to respond
to increasing demand for HUB III bearings.
- Europe
- The shift of production of standard ball bearings from
the U.K. to Poland was completed in June 2003, approximately
six months ahead of schedule.
We intend to increase production capacity at our Peterlee
Plant in the U.K., following the start of production of HUB
III bearings for Volkswagen AG at the end of 2002. Going forward,
we plan to expand supply of these bearings for next-generation
car models, which share common platforms and aim to supply
approximately 2.0 million units annually by 2005, which is
nearly twice the level of projected volume for 2003. We anticipate
annual sales of more than ¥5.0 billion.
In order to respond to steady requests from Japanese
automakers for needle bearings, we are outsourcing production
of these components to Timken’s plant in Germany and
started supply in December 2002. We estimate annual sales
of ¥1.0 billion for these products.
- Asia
- The second factory building at Kunshan NSK Co., Ltd.
in China started production in 2002 and construction has begun
on a third factory building to respond to the surge in domestic
automotive demand. Our objective will be to begin production
in 2004. Construction also began on a joint venture tapered
roller bearing plant with The Timken Company in Suzhou China
in February 2003. The plant is slated to start production
in 2004.
| Sales
by Production Region for FY2002 |
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| Topics |
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Pulley
Units with Roller Type One-way Clutches
In 2001, NSK succeeded in developing a pulley
unit with a roller type one-way clutch for use
in engine accessory drive systems.
Engine accessories, such as alternators
or compressors, are driven by the revolution of
the engine, which is conveyed via the engine belt.
However, slight changes in the rotational speed
of the engine or the elasticity of the engine
belt can cause slippage between the engine belt
and pulley, resulting in such problems as noise
or premature wear of the engine belt.
NSK’s pulley units use a roller type
one-way clutch to eliminate any unnecessary motion
between the pulley and belt, thus ensuring optimal
performance of the engine accessory drive systems
as well as extending the life of the engine belt.
Handling the units is also easy as the pulley
and sleeve are combined into a single unit and
are also compact in size. These units can be used
in hybrid vehicles and thus, we expect an increase
in their demand.
HUB
K Bearings
NSK recently completed development of a
third-generation wheel hub unit bearing for use
in light vehicles that significantly lowers production
costs. Delivery of these products to domestic
automakers has already started.
While mounting of third-generation HUB III
bearings in larger vehicles is well advanced,
the cost of using these products in light vehicles
had been too high and use was therefore limited.
By reducing the number of components and
simplifying production procedures, production
costs were lowered. In addition, the HUB K bearings
provide the required strength and rigidity while
at the same time reducing size and weight.
Our objective is to have these units mounted
onto all light vehicles and are aggressively working
to expand orders.
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