Progress report on the 2nd Phase of the
“NSK Business Restructuring Program”

(1) Reduction of external procurement costs by 15% +a over 3 years (Japan)
·Reduction of suppliers from 900 companies to 801 (End of Sep. ’02)
·Establishment of the Chinese Procurement Center (Jul. ’02)
 Beginning the supply of bearing rings to the Ohtsu Plant (Japan) and Changwon Plant (Korea)
·Beginning preparation of a lathe plant in China to be launched in Jinagsu in 2003

(2) Promotion of SACC (Strategic Approach
for Cost Competitiveness) activities
·The target for HUB? bearing units is expected to be achieved
SACC activities currently being expanded to other products

(3) Promote implementation at overseas affiliates

 NSK’s current objective is to reduce the number of its suppliers by half. As of the end of September, the number of suppliers was reduced by nearly 100, from 900 to the present 801 suppliers.
 In an effort to reinforce global procurement efforts, NSK established a procurement center in China which began operations in July. This procurement center has already started supplying Ohtsu Plant and Changwon Plant pre-processed rings. In the future, we are expecting this procurement center to supply our plants in the United States and Thailand, and will gain further importance as a major procurement center.
In addition, NSK has decided to establish a production company to pre-process lathe rings in China’s Zhangjiagang Economic Zone in Jinagsu Province. This company, is expected to begin operations in 2003. By competing with both domestic as well as other Japanese suppliers operating in China, we will be able to obtain the best procurement price for these pre-processed rings.
 NSK has focused on the SACC activities in the midst of the carmakers’s cost-cutting demands. The program implemented at our HUB? production lines represents one major achievement of these activities and we are expecting to reach targeted objectives. Using momentum gained from the success at our HUB III production lines, we will be looking to expand the program to other products.
 Our future objective will be to take the SACC concept and deploy it overseas to a level equal or above that of Japan, starting with the global procurement for HUB ? production. By doing so, we will contribute to the further reduction of procurement costs on a world-wide level.