AKEBONO REPORT 2015

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Special Feature 2: Looking to Our Future OperationsOur Fiscal 2015 StrategiesLeveraging its global business network Akebono will achieve sustainable growth through the pursuit of strategies optimized to each market region.Growth driver: Secure a more robust profit base by streamlining our core business bases that together serve as core driver for the globaldissemination of the Group’s manufacturing technologiesPerformance forecasts Net sales: ?87 billion; unchanged year on yearOperating income: ?3.2 billion; a decrease from the previous fiscal year due to development expenses and cost for establishing global networksRegional strategiesP Re-creating Iwatsuki?Overhauling the Disc Brake Production StructureHaving positioned Akebono Brake Iwatsuki Manufacturing Co. Ltd. (Iwatsuki Manufacturing) as a key domestic productionbase Akebono has implemented thoroughgoing reviews of its entire operational process from the receipt of parts to shipmentsof finished products. This move has led to the establishment of the “model line ” a streamlined workflow developedin accordance with our intention to enhance the productivity and international competitiveness of Iwatsuki Manufacturing.Going forward we will further upgrade the base’s aging facilities which regularly produce a considerable volume ofmainstay products while prudently controlling spending on that upgrade. In these ways we are working to enhance thecost-competitiveness of our manufacturing to ensure our advantages over global competitors.Eventually we will re-create Iwatsuki Manufacturing as a truly competitive manufacturing base offering a favorable environment-friendly working environment while serving as a driver for our expansion into markets around the world.We will achieve this goal during the next five years.P Optimizing ProductionWith regard to the small-size drum brake lines presently manufactured at Iwatsuki Manufacturing Akebono Brake SanyoManufacturing Co. Ltd. which has been positioned as a key manufacturing base in the western Japan is scheduled to takeover production. This move will enable a more competitive production structure capable of boosting drum brake sales.P Fukushima Manufacturing?Ensuring Capacity to Meet Production Demand FluctuationsCustomers may suddenly place high-volume orders for the friction material type products for automotive air conditionersthat Akebono produces only at Akebono Brake Fukushima Manufacturing Co. Ltd. (Fukushima Manufacturing). In light ofproduction-linked problems that recently confronted our North American operations we decided to hedge against similarrisks by creating a two-plant production structure capable of ensuring stable profits from growth in orders.In these ways we will secure future growth in this business category.P Forward-Looking InitiativesAkebono’s core locations in Japan also play a significant role in its effort to get the European business on a growth track.Having positioned high-performance brakes as a key priority product group we will focus our management resources ontheir development and production. Moreover we will pursue the forward-looking development of electric parking brakes andcopper-free eco-friendly friction materials.89.5 89.2 86.7 87.0(Billions of yen)(Outlook)(FY)05025751002011 2012 2013 2014 201596.2Net SalesJapanRegional strategiesP Streamline ABE’s and ABG’s Production StructureWe will transfer production of some of the lines manufactured at the Akebono Brake Elizabethtown Plant (ABE) to otherfacilities thereby optimizing its workload. Moreover we will augment ABE’s disc brake production facilities. In the secondhalf we will reinstate its labor schedule into three-shift system that operates six days a week while reducing the generationof scrap. In these ways we will enhance ABE’s profitability.At Akebono Brake Glasgow Plant (ABG) we will expand and reinforce friction material production lines with the goal ofboosting disc brake pad production capacity about 15%. Simultaneously we will streamline these facilities to enhance overallproductivity thereby securing greater responsiveness to sudden rises in production demand.P Global Initiatives? Streamlining Product DistributionAkebono will review the distribution of product lines around its manufacturing network to improve performance at all locations.Specifically we will relocate the production of some items from North American to other sites and better utilize those facilities’freed-up capacity thereby optimizing the overall production structure.P Initiatives in North America?Optimize Product MixWe will narrow down the breadth of items handled by the Akebono Brake Columbia Plant (ABCS) to aluminum calipers toenhance its production efficiency and profitability.P Step Up Assistance by Japanese LocationsWe will dispatch domestic staff with extensive experience to train North American associates with the aim of enhancingproduction capacity and efficiency. This move is expected to contribute to the overall improvement of human resources andonsite capabilities. Moreover we will roll out the “model line” established in Japan to improve production lines in NorthAmerican locations and other global locations.P Cost Reductions through VisualizationWe will step up the installment of an enterprise resource planning (ERP) system covering every location and utilize it to makecost elements visible and to implement exhaustive numerical control. At ABE we will cancel external warehouse contractsentirely and begin using on-site storage for inventory management. This will shorten lead times and decrease inventorieswhile cutting transportation and storage expenses.In the caliper business we will negotiate with customers to raise product prices while reducing manufacturing costs.Furthermore we will initiate the mass-production of brake corner modules incorporating high-value-added rotors finishedusing the ferritic nitro-carburizing (FNC) process. In these ways we will secure greater returns in this field.140.3165.696.3 98.4122.80100501502002011 2012 2013 2014 2015(Billions of yen)(Outlook)(FY