2013

NTN Corporation
Shigeyoshi Takagi, President

Let me start by wishing you all a happy New Year. I hope that you had a wonderful New Year's day.

Looking back on the past year, we can see that it was marked by a sharp slow-down in the global economy due to factors such as the European financial crisis, slowing of the Chinese economy, and the effects of the long-running strong yen. With such economic conditions surrounding global markets, NTN embarked on the second year of the mid-term management plan “Global Advance 2013” with the aim of drastically increasing sales and profits, however the harsh economic conditions meant that both sales and profits dropped sharply. From the 3rd quarter and on, we launched a wide range of policies focusing on “improving profits” and “creating a stronger financial framework” in order to “reform corporate structure to generate profit despite the tough management environment”.

We must be ready for even further worsening of the business environment this year. With such rapid changes occurring today, it remains vital that we make important business decisions, and implement relevant action, as soon as possible. The “emergency measures” policy has been designed to generate profit for the immediate short-term, and has already drastically reduced personnel costs and fixed costs, as well as limited equipment investments by utilize existing equipment more efficiently. By reducing stock we can generate capital, and this can further lead to shorter production lead-times and cost reductions.

With customers ramping up production overseas and the strong yen expected to continue over the long-term, there has also been a focus on “structural reform” that chiefly involves reorganization of global production systems. Products and half-finished parts that have until now been manufactured in Japan and shipped overseas will be transferred overseas together with their associated equipment so that they can be managed locally, while products manufactured at plants overseas will be imported back to Japan as part of a way to capitalize on the strong yen. Plants in Japan will be considered “mother plants” and strengthen their function to advance Monozukuri and provide better training for local plants. As we continue advancing the “on local site with local materials by local personnel” policy around the world, the most important asset that NTN has is real personnel, which in this case refers to its excellent human resources. We will focus even more on creating an environment that makes it easy for young personnel around the world to work.

“Centralization of management resources” is also a key policy to achieve further growth into the future. Sales will be expanded into the highly-profitable industrial machinery and equipment repair markets, while focusing on the Asian region that is slated to undergo tremendous growth. Fundamental reviews will be conducted for automotive products from the design stage, covering materials through to “Monozukuri” in order to increase NTN's cost competitiveness. Procurement of raw materials and parts will not only see more steel material from overseas being utilized, but also a major shift in pre-processes from the concept of “self-sufficiency” to “external procurement”. Research and development will be extended to cover periphery equipment, with a key focus on development and mass-production of high-value added “module products” such as system products for EV.

The ancient zodiacs show that 2013 is the serpent; it is the year of the snake. The Chinese character for serpent is said to stem from a fetus with a growing head and body. For plants and flora, this is the time when seeds start to take form. This can be interpreted as the year to review work conducted so far, and to embark on new challenges aimed at further growth. We are confident that seizing the changes that are occurring today as a brand new opportunity, responding quickly and working with the utmost confidence will lead to positive results.

In closing my New Year's remarks, I extend my prayers for health and prosperity to you and your family.