Continued Strengthening of the Automotive Products Business
To strengthen the automotive products business, a medium-term initiative currently beingimplemented, the Mabuchi Group will continue to make focused investments in the markets formotors for power window lifters and motors for power seats and take measures to increase salesof compact, high-output motors.
First, with regard to motors for power window lifters, we will strive to increase sales by further strengthening our sales systems and technical service systems in emerging countries and will vigorously proceed with development of next-generation models that will be more compact and lightweight and cost less.
We will also work to develop motors for power seats into a second key product line comparable to motors for power window lifters by concentrating resources on development and sales expansion. We will take advantage of our product competitiveness and successful track record to steadily convert product inquiries, which are increasing in number, into purchase orders.
At the same time, we will create greater synergy between our power seats business and power window lifters business to further reinforcement of competitiveness.
Furthermore, with regard to increasing sales of compact, high-output motors, anticipated growth of the compact car segment in the automotive industry is expected to bring increased demand for motors with a focus on lighter weight, lower noise, and environmental durability. We regard this change in the market environment as a new business opportunity and will work to expand our line of products that meet this market need and increase sales by publicizing the benefits of those products.
Sales Expansion in China
To strengthen our business in China, an enormous market that holds promise for future growth, we will develop competitive products appropriate for the local market by optimizing the performance and structure of our products, establishing quality standards, and reviewing partsand materials procurement methods to adapt them to the market.
We will also take advantage of the strengthening of our technical service system in China, such as utilization of the Economic Cooperation Framework Agreement (ECFA), and the benefits of wholly owned production bases in Guangdong Province to increase sales to customers in China.
Reorganization of Production Bases
The Mabuchi Group has engaged in activities from a medium-term perspective to optimize production base allocation with the aim of ensuring stable supply of products and enhancing operating efficiency. We have implemented an initiative to decrease the ratio of production in China from 80% to 60% and increase the ratio of production in Vietnam, where wage competitiveness is high, from 20% to 40% by the end of 2011. Since the transfer of production from China to Vietnam progressed according to schedule in fiscal 2010, prospects for achieving this target are good.
In the future, we will seek to maximize the benefits of reorganization by continuing activities to further strengthen our production bases, including the reallocation of models according to production base location and organizational capabilities.
Specifically, we will further boost global cost competitiveness: for instance, production capacity expansion for motors for power window lifters and power seats at Mabuchi Motor (Jiangsu) Co., Ltd., production expansion and start of production of motors for automotive products at Mabuchi Motor Danang Ltd., production expansion at Mabuchi Motor (Yingtan) Co.,Ltd., and fixed cost reduction and assurance of management flexibility through full ownership of the factories in Guangdong Province.
Plant Efficiency Improvements
Serious problems such as sharp wage hikes and increasing employee turnover have arisen in the employment environments in China and Vietnam, and the question of how to increase production efficiency is emerging as a major factor that will affect future competitiveness. To respond to these developments, the Mabuchi Group will pursue manufacturing processes that can ensure more stable, higher quality while proceeding with the systematic introduction of laborsaving facilities and improving worker efficiency.
At the same time, the Group will strive to transform manufacturing fixed cost levels to levels that enable it to compete worldwide. To this end, the Group will review the roles and functions of all work associated with its worksites, consolidate and streamline the organizational structure and functions, abolish redundant functions, and further systematize operational procedures.
