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NEW Plan 21: Transforming NTN's Corporate Structure

NTN has launched the NTN Evolution for Worldwide (NEW) Plan 21 to transform our corporate structure. NEW Plan 21, which represents NTN management's firm commitment to positive action, is designed to counteract the rapidly changing business environment and market structure that have weakened our foundation and to make NTN a strong lean corporation that puts shareholders and customers first and generates sustained growth and profit.

Within a two-year period the Plan aims to transform NTN's high-cost nature into a high-profit nature by reducing the costs of outside supply, personnel and distribution, and by concentrating management resources in high added-value fields, such as strategic products.

NEW Plan 21 Strategies

1.Strengthening Our Business Development Capacity
1) Selective streamlining of businesses
  2) Expansion of strategic product sales
  3) Organizational reform

2.Developing a High-Profit Nature by Strengthening Cost Competitiveness
(Reducing the costs of outside supply, personnel and distribution)

3.Reorganization of Production to Strengthen Competitiveness
  1) Reorganization of production (domestic and overseas)
  2) Expansion into China

4.Strengthening Product Development and Plant and Equipment Development Capabilities for Sales Expansion

1.Strengthening Our Business Development Capacity

  1)Selective streamlining of businesses
  Concentration of management resources in strategic products: CVJs, axle units, needle bearings, precision bearings, aerospace bearings, automotive clutches, etc
  2) Expansion of strategic product sales
 
  1. CVJs:¥20 billion (22%) increase in sales within a 3-year period
 
  1. Axle units:¥6 billion (24%) increase in sales within a 2-year period
  3) Organizational reform (commencing April, 2002)
  Reorganization in order to respond swift]y to accelerating changes in the market and customers
 
  1. Unification and reorganization of sales departments (domestic and overseas) and engineering departments, establishment of Automotive Sales Headquarters and Industrial Sales Headquarters, and appointment of Global Account Managers in each automotive production field
 

Goals:

 
  • Increase our global share and expand sales
  • Strengthen strategies for sales to global customers
  • Respond to our customers' technical needs
 
  1. Unification of research divisions and establishment of the Research &
    Development Center
 

Goals:

 
  • Speed up product development
  • Strengthen overall capacity and mobility
 
  1. Establishment of an independent business unit for precision equipment
    (Precision Equipment Division)
 

Goals:

 
  • Clarify independent profit
  • Consolidate the After Service Division
  • Expand sales into overseas markets (Taiwan, Korea, Southeast Asia)

2.Developing a High-Profit Nature by Strengthening Cost Competitiveness

 
  1. Outside supply costs: 20% reduction within a 2-year period
 
  • Review the market price (including VA/VE)
  • Reorganize and concentrate supplies
  • Expand international supply
  • Expand local supply
 
  1. Personnel cost: 20% reduction within a 2-year period
 
  • Implement an early retirement benefit system
  • Review the retirement benefit system
  • Review various allowances
 

Emergency Measures:
 
  • Salary cuts for directors and employees; directors(20%), management(6-10%), regular employees (5%)
 
  1. Distribution costs: 20% reduction within a 2-year period
 
  • Review the market price
  • Reduce costs by unifying and eliminating distribution bases
  • Reduce outsourcing costs

3.Reorganization of Production to Strengthen Competitiveness

1)Reorganization of production (domestic and overseas)
  We will shift away from producing where there is demand to producing in the optimum location. Domestic production will be reorganized to match the scale of domestic demand. Reorganization will be undertaken in every location to improve production efficiency and strengthen our profit-generating foundation through consolidated production.
 

In Japan
 

Improve production efficiency through consolidated production at five major plants in Japan.
 
  1. Extra small, small radial ball bearings: from Nagano to Iwata, from Iwata to China
 
  1. Medium radial ball bearings: from Takarazuka to Kuwana
 
  1. Tapered roller bearings: from Takarazuka to Okayama
 

Overseas
 
  1. Reorganization through streamlining of NTN-BCA (America)
 
  1. Reorganization by shifting production from NTN Kugellagerfabrik (Deutschland) GmbH to eastern Europe through an alliance for production of radial ball bearings.
  2) Expansion into China
  A Supply base for products, semi-processed goods, and parts
 
  1. Establishment of a manufacturing company for needle roller bearings, axle units and CVJ parts (independent capital)
 
  1. Establishment of manufacturing company for CVJs (finished product; joint venture)
 
  1. Production Consignment for radial ball bearing (Shanghai Tungpei Enterprise Co., Ltd.)

4.Strengthening Product Development and Plant and Equipment Development Capabilities for Sales Expansion

1)Strengthening product development capability
 
  1. Reduction of the development time by two-thirds
 
  1. Round-the-clock development set up
 
  1. Integration of R&D facilities in North America
 
  1. Strengthening of sample manufacturing
  2) Strengthening plant and equipment development capability
 
  1. Equipment costs: reduce to 50% of March 2002 figure (target)
 
  1. Develop next-generation plant and equipment: low-cost, compact, high performance

5.Anticipated Cost Reduction

The annual cost reductions anticipated after completion of structural reforms are as follows:
Outside supply costs: ¥20 billion
Distribution costs: ¥2 billion
Personnel costs: ¥15 billion
Reorganization of production: ¥3 billion

Total:
¥40 billion

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