II. Restructuring of European operations

Outline of Business Restructuring

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Bearings The main plants for wheel hub bearing units (Peterlee Plant), precision bearings (Newark Plant), standard ball bearings (Iskra Plant) shall specialize in their respective products, and withdraw from other products. The remainder of the current production sites shall be thoroughly reorganized. Automotive components Integration of the steering column production sites and reduction of production capacity   Administrative divisions Ruddington (The former European headquarters) European Technology Center Workforce

The following are more detailed descriptions of the measures currently being implemented or under consideration;  Regarding our bearings operation, production of water-pump bearings at the Peterlee Plant shall be partially stopped and transferred to Japan. As for the former RHP plants, production of ball and cylindrical roller bearings shall be stopped and changed to imports from Japan. Small-sized ball bearings currently being produced at the Iskra Plant in Poland shall be transferred to the Jakarta Plant.  Regarding automotive components, we currently have 3 steering column production sites in the U.K., but will integrate 2 plants in the Peterlee area during 2002, and reduce costs by drastically streamlining the administrative divisions, centering on the Silverstone site, in an attempt to return to profit by the end of 2002. The EPS production plant in Poland, which is under construction, shall be postponed for the time being due to the deterioration of the economic environment and design changes of our customer.  As for the administrative divisions, our pan-European market-oriented marketing and sales organization is operating very well, and we will now aim for a leaner organization. Our logistics division is currently engaged in the "European Central Delivery Center Project", while our finance divisions are gradually preparing to transfer functions to a shared-service organization. Also, in accordance with the reorganization of our production divisions, we are planning to scale-down our European Technology Center.  In line with these measures, we will close our European headquarters, currently located just outside Nottingham, U.K., by the end of 2002, transfer the European Technology Center by mid-2003, and cease our Nottingham operations.  As part of the reorganization of our production and administrative divisions, we are planning to reduce our European workforce by 1,500 workers by the end of 2002, the majority of which will take place in the U.K. This figure includes the 400 workers that will be dismissed at the Iskra Plant at the end of January next year.  We estimate the benefit of these measures to amount to 7 billion yen.