I. Restructuring of domestic operations

Review of machining and procurement processes

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1) Reduction of procurement cost   (1) Procurement of parts from China Bearing rings China -> Ohtsu Plant   China -> Clarinda Plant (2) Reinforcement of procurement cost reduction activities            Systematic, continuous activities, with no exemptions (3) Review of the procurement system for steel balls   2) Reorganization of domestic suppliers   (1) Reorganization in consequence to the reorganization of our       domestic production plants (2) Selection of competitive suppliers regardless whether they are       located in Japan or overseas

We are also taking part in the reduction of machining and procurement costs. The reduction of procurement costs is vital to our survival and to win the fierce global cost competition, especially in order to comply to automobile makers' procurement strategies such as TOYOTA's "CCC21 (Construction of Cost Competitiveness)" and NISSAN's "NRP (Nissan Revival Plan)". One of our tactics is to adopt global procurement and develop China as a major supply base for components. Another new tactic we are currently taking is to set a unified, global procurement cost target per product segment and component and implementing continued cost reduction activities in order to achieve them. No exemptions shall be made. These activities and the aforementioned reorganization of our domestic production sites will also necessitate the reorganization of our domestic suppliers. We will not set separate standards for domestic and overseas suppliers. We aim to distinguish the most competitive supplier, regardless of its location. In order to promote the series of tasks that have just been explained, we established a new organization called "The 2nd Enterprise Restructuring Management Office" in October.