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  4. Issues to be Addressed

Issues to be Addressed

1.Initiatives to Bring About a Recovery in Earnings

Based on the results of fiscal year March 2015, Akebono Brake has initiated to implement various measures to bring about a recovery in earnings of our various operating regions.

Japan

  • Restructuring of Disc Brake Manufacturing Structure: Strengthening of our global competitive position through further improvements in productivity (Akebono Brake Iwatsuki Manufacturing Co., Ltd.)
  • Optimization of Products: Expansion of sales and strengthening of competitive positioning through transfer of small drum brake production (From Akebono Brake Iwatsuki Manufacturing Co., Ltd. to Akebono Brake Sanyo Manufacturing Co., Ltd.)
  • Response to Risks of Large Fluctuations in Production Volumes: Orders for high volume products manufactured at two facilities (Akebono Brake Fukushima Manufacturing Co., Ltd. and Akebono Brake Yamagata Manufacturing Co., Ltd.)
  • Future Measures: Development of high performance brakes systems, electric parking brake systems, and environmentally friendly friction materials

United States

  • Elimination of Volatility in Production: Transfer of production to other facilities, fortification, and addition of new manufacturing facilities to improve productivity
  • Optimization of Global Manufacturing Functions: Optimization of global distribution of production responsibilities to reduce the burden upon the North American manufacturing facilities
  • Optimization of Product Manufacturing in North America: Improve manufacturing efficiency through consolidation of aluminum caliper product production at one plant
  • Improve profitability: Eliminate use of external warehouses, adjustment of costs, and, sales price increase of unprofitable items

Europe

  • Strengthen business foundations: Start of full scale production at the new disc brake manufacturing facility, and strengthen development capabilities

2. Strategies for Future Growth

As part of Akebono's growth targets established in its "Global 30" (Acquire 30% share of the worldwide OEM disc brake pad market) is to be achieved by fiscal year 2020. We have also created the new midterm business plan "akebono New Frontier 30-2013" ending in fiscal year 2015. This new midterm business plan maintains three main strategies of "Making a Difference by Creating Next Generation Technologies," "Continuous Drastic Cost Reduction and Global Implementation," and "Acceleration of Globalization: Japan and North America, plus Europe and Asia." Our basic strategy established in 2010 remains unchanged, with the new midterm business plan calling for reinforcement of our competitive standing to acquire 30% share of the worldwide OEM disc brake pad market in order to expand our business operations and raise our corporate value. An outline of the plan is described below.

Making a Difference by Creating Next-Generation Technologies

In addition to increasing our knowledge and expertise in the realm of noise and vibration, Akebono also seeks to achieve "overwhelming strength in costs (commonization, standardization, low cost brakes, and others)," unrivaled production technology that contributes to the protection of the environment (development of lightweight, electric mechanical products, responses to electric and hybrid vehicles, and other products that help reduce the environmental burden)," "development of next generation production facilities that are environmentally friendly and highly cost effective," "products used in high performance vehicles," and "technologies that will enable us to capture a large share of the compact and low priced car market as demanded by emerging countries."

Continuous Drastic Cost Reduction Measures and its Global Implementation

We seek to raise efficiencies by pursuing "commonization and standardization" throughout all of our businesses, and to raise our competitive strength by identifying the "characteristics" of our customers and adapting products to meet their needs. In addition, we also endeavor to promote reductions in costs of goods sold through local materials sourcing and optimized global production.

Acceleration of Globalization: Japan and North America, plus Europe and Asia

The Akebono Brake Group positions its operations within Japan as a base from which technologies and manufacturing engineering (Monozukuri) will be spread to the rest of the world. In addition, we are also implementing measures to further expand our North American business, the largest business of our Group, and grow the high performance brake system business in Europe, and further fortify our business operations in developing countries, which are primarily the growth markets in Asia and other regions. At the same time, we will continue to expand our businesses to provide products for vehicles produced for global platform programs by fortifying our competitive strengths and by strengthening our global development structure and supply network.