- Review of the akebono New Frontier 30 - 2013 Midterm Business Plan
- akebono New Frontier 30 - 2016 Midterm Business Plan
Review of the akebono New Frontier 30 - 2013 Midterm Business Plan
“akebono New Frontier 30 - 2013” midterm business plan, covering the three year period from fiscal 2013, was concluded at the end of March, 2016. However, due primarily to the continuing impact of production-related problems that arose in our North American operations in 2014, this year marked the second consecutive period of consolidated losses, and most unfortunately resulted in a failure to meet our quantitative targets by a significant margin.
Aside from those quantitative targets, however, we made progress with three main goals. In “making a difference with next-generation technologies,” we began providing brakes to European manufacturers of high-performance vehicles. Another achievement was the creation of an organization for developing electromechanical brakes. Under the strategy of “continuous drastic cost reduction and its global implementation,” we successfully shifted drum brake production from Iwatsuki Manufacturing to Sanyo Manufacturing. Overseas, however, we were unable to achieve our targets due to production problems in North America. In terms of “acceleration of globalization encompassing Japan, North America, Europe and Asia,” in addition to plants in Mexico and Vietnam, in 2015 we established and began production at a new high performance brake plant in Slovakia. We expect to see profits improve as the plant ramps up to full production going forward.
Major Losses in North America
In response to the changing economic environment in North America since 2005, Akebono has worked to strengthen the competitiveness of its North American operations by restructuring the business. In 2008, we scaled down our production capacity in North America. In 2009, we acquired two North American manufacturing locations from Robert Bosch LLC, which was, at that time, reducing its production capacity in response to rapid sales declines caused by a US financial crisis. This acquisition transformed Akebono into a truly global company. While the acquisition price for the assets fairly reflected certain loss-making products at those plants, Akebono focused on quickly improving profitability by taking orders for new products at more favorable pricing. Just as we had proceeded to rebuild the business by scaling down production capacity and acquiring new business, around 2013, the economic recovery in North America accelerated, and with that recovery came a rapid increase in automobile sales, leaving us with more orders than our production capacity could handle. Because we were forced to move to a round-the-clock, three-shift labor system (operating seven days a week, 24 hours a day) to meet orders, labor costs increased significantly. Furthermore, continuous operation of equipment resulted in more breakdowns, and to meet delivery deadlines, products had to be shipped by air, resulting in additional logistics costs. The convergence of these and multiple other issues resulted in significant operating losses for fiscal 2015.
In addition, in our endeavor to enter a new field by providing high-performance brakes to European manufacturers, our products were so highly regarded that we won more orders than anticipated. Because we had expected to launch production on a small scale, we were unable to build out our production capacity in Europe in time to handle these large-scale orders, forcing us to take on production at our plant in Columbia, South Carolina, with a resulting increase in transportation costs as products were shipped from North America to Europe.