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Home | Investors | Financial information | Annual Report 2006

Annual Report 2006

New Mid-term Plan

Business Strategies

Industrial Machinery Bearings

Basic Policy:
Expand sales by strengthening our marketing and production capabilities

NSK has identified its industrial machinery bearing business as “income growth driver” and aims to increase the sales and profitability of this segment. The business environment, especially in emerging markets including BRICs, is expected to continue to grow globally over the next three years. Our mid-term plan calls for the reinforcement of aggressive policies in these markets.

As a product strategy, we will focus on expanding the sales of roller bearings, in which field NSK can utilize its strong product development capability, advanced technology, material technology, and its long-accumulated manufacturing knowhow. NSK will expand such high value-added products globally through emphasis on specific industries. On the other hand, we will also expand our business operations in the aftermarket segment, where we have built a global business presence, by emphasizing our strength in original products. To achieve this goal, we will raise NSK’s brand profile by improving end-user services, and by strengthening our regional business organization.

To support sales expansion, we will reinforce our production capabilities lead by marketing, improve productivity at existing facilities, build a global production system, and increase the sophistication of our supply chain with interconnecting production, sales, technology, and management units. We will also speed up our business operations and improve our ability to adapt flexibly to changes in the business environment.

Automotive Products

Basic Policy:
Reinforce productivity and order winning activities

For NSK, the automotive products business, which contributes 56% of total net sales, represents “a stable source of income” as demand grows. We expect automobile production in emerging markets to expand over the next three years. Expansion of global production of Japanese automotive manufacturers is also expected. These projected trends in the business environment are reflected in our mid-term plan as basic policies calling for the improvement of profitability and for aggressive order winning activities that will contribute to our income.

In the area of automotive bearings, we aim to keep pace with demand growth and improve productivity by expanding productive capacity, using existing capacity more effectively, and strengthening pre-processing operations. We will also focus on the development of new facilities and processing technologies to enhance productivity.
Our achievements in Japan, which include the development of the world’s
fastest needle roller bearings and high-performance tapered rolling bearings, will help us to expand our global sales for drive train applications. Furthermore, we will intensify our efforts to win orders from customers in Europe and other overseas markets by engineering-focused briefing activities to overseas customers.

In the automotive components category, we will strengthen our productivity by reducing costs with measures such as restructuring overseas production sites, increasing the percentage of products made in-house at overseas plants, and promoting global procurement. To win orders, we will also focus on sales expansion through the differentiation of high-power EPS (electric power steering) systems, and target increased sales of EPS systems for small and compact vehicles in Asian markets, especially China and India.

Precision Machinery and Parts

Basic Policy:
Improve profitability by emphasizing on linear motion products

While the precision machinery and parts business is vulnerable to economic fluctuations, it accounts for a substantial share of earnings during periods of strong economic performance, and we believe this segment has the potential to make a sustained contribution. Our forecast of business conditions points to continued strong demand for machine tools, accompanied by an increasingly pronounced upward trend in demand for products used in the semiconductor and liquid crystal production equipment sectors.

In our mid-term plan, we defined our basic policy as the “reinforcement of profitability” through focus on products with high earning potential in the mechatronics products, and through giving priority to linear motion products and ball screws and linear guides.

Many users of precision equipment in Japan are globally competitive. We will continue to strengthen our activities that target customers in Japan, while also working to expand overseas sales through increased global marketing efforts. We are now in the process of streamlining the production lines at the Maebashi Plant, which is NSK’s main ball screw manufacturing base. Also, we plan to improve profitability through productivity improvements and streamlining of information system and supply chain. Another priority will be the differentiation of NSK from its competitors through the introduction of new products embodying our original technology. We will also work to improve our market mix through sales expansion and product development activities targeting new users, including manufacturers of motor vehicle equipment, foodstuffs and medical equipment.

Regional Strategy:Initiatives in China

Basic Policy:Further business expansion and contribution to earnings

Rapidly growing demand in the Chinese market is predicted to expand because of factors including growth in automobile production and industrial infrastructure development. To meet forecast demand, NSK has expanded its production sites and technical centers. In 2005, we established a wholly owned local sales company in China. NSK aims to increase local production and expand its sales and distribution network by taking advantage of our operations in China, an operation that extends from development through to manufacturing and sales. We believe that it will drive further business growth and contribute to earnings.


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