To maximize the results of emergency measures to improve profitability and the various structural improvements implemented during the year, as well as to lay stepping stones to lead Mabuchi into new growth areas, Mabuchi has determined three important management themes for fiscal 2010: optimization of costs, development of priority operations and restructuring of production bases.

Optimization of costs

We are optimizing the operating costs incurred in our current business environment as part of an ongoing drive to transform to a leaner, more powerful business structure that makes it possible to secure a certain level of earnings even under severe business conditions. Specifically, we are fortifying our budgeting management system and procedures and carrying out rational budget allocation to strategic business areas, while reviewing the operational profitability and effectiveness of all budgets in a bid to thoroughly purge superfluous costs groupwide. Furthermore, we are constructing more efficient systems by revising and fully restructuring overlapping functions and roles at production bases.

Development of Priority Operations

Our policy is to explore all possibilities for our core small DC brush motor business. In line with this principle, we continue to focus on highly marketable and new applications. Specifically, we have identified two key priorities: expanding sales of automotive products, particularly power window lifter and power seat applications; and developing new applications by launching compact, high-torque products in the automotive products market.
We maintain our belief that this market, centered on newly emerging nations, will sustain high levels of growth over the long term. By continuously cultivating this market, we will form the base to expand our operations and return to higher levels of profitability.

Restructuring of Production Bases

The Chinese government is reviewing its system of incentives for foreign direct investment. This reality, coupled with ongoing market-oriented economic reforms in the country, make it evident that we will be unable to sustain our operations in China in their current form. Owing to these circumstances, Mabuchi will persist in its policy of establishing a 6:4 production ratio between China and Vietnam by 2011 to ensure a stable supply system and enhance Group management efficiency.
As part of this approach, we plan to terminate one of the three contract manufacturing agreements in which motor production is outsourced by Mabuchi Industry Co., Ltd., a wholly owned subsidiary, on expiry of the contract in December 2010. To replace the capacity of the closed plants, we will transfer motor manufacturing activities to bases in Vietnam and other locations in China. Through this shift, Mabuchi will ensure the stable supply of products and improve production efficiency.