AKEBONO REPORT 2015

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supplying brakes for HP vehicles we are finally positioned for furtherexpansion in the market. Going forward we will thoroughly reorganizeall aspects of our European operations from supply development andsales to quality assurance. In effect we are approaching the task as ifwe were starting over in the region from scratch. This will better enableus to use our technological capabilities quick response and costcompetitiveness to accommodate the needs of European automakers.We will steadily address and implement these initiatives in theupcoming renewal of the midterm business plan.Time to Refresh Our Management Approach towardTrue GlobalizationAs people’s values are diversifying we must create an organization thatembraces diversity. Specifically we should utilize human resources whohave diverse values and reflect their opinions in our operations. Thiskind of openness will be key to transforming our management approachand meeting our goal of achieving true globalization. In thislight we will work to enhance communication between and facilitatemutual understanding among associates. Another key to achievingglobalization is establishing a defined structure of responsibilities andauthority. As the composition of workforce diversifies associates’approach to work will vary largely by individual due to differences incultural backgrounds. Therefore clarifying each associate’s responsibilitiesand authority is essential. In addition to step up our diversityinitiatives we added revised indices to assess executives’ work performance including such items as “contribution to diversity promotion”and “ability to nurture staff.”Lastly we have compiled the AKEBONO REPORT 2015 puttingemphasis on featuring ongoing globalization initiatives that draw on ouradvantages of organizational size independent status and manufacturingexpertise as well as our future outlook. We would like to ask ourreaders to send us their frank opinions and comments on this report.We sincerely ask for your understanding and ongoing cooperationwith our efforts which are governed by our unwavering commitmentto delivering safety and peace of mind through brake products.June 2015Hisataka NobumotoPresident and CEOAkebono Brake Industry Co. Ltd.To summarize Akebono’s strengths as a manufacturer lie in itsspecialization and this allows it develop the knowhow and expertisethroughout the company. Everyone including our associates canconcentrate on improving their skills knowing that their contributionswill enable Akebono to win against larger competitors.So I would like to encourage associates to embrace two mottoesthat will enhance Akebono’s strengths. First prioritize perfectinghuman skills. Second work as a team to achieve objectives that mightbe impossible if tackled alone. In line with these mottoes we mustcontinue to build on our reputation as a reliable manufacturer capableof doing things that no other companies can accomplish. That’s myvision of Akebono’s future.Accelerating Initiatives toward the Renewal ofMidterm Business PlanIn the year ended March 31 2015 (fiscal 2014) Akebono experienceda downturn in its performance that reflected production-relatedproblems in North American operations. So it is unlikely that we willmeet the goal of achieving operating income of ?20 billion by March31 2016 (fiscal 2015)?the final year of akebono New Frontier 30-2013 a three-year midterm business plan launched in November 2012.However we are working to quickly resolve the challenges in NorthAmerica by raising production capacity improving productivity andoptimizing the product mix. At the same time we are working tostreamline our corporate structure so that we are more responsive toissues as they arise.Now well into fiscal 2015 we are focusing on two initiatives namely: re-creating Akebono Brake Iwatsuki Manufacturing Co. Ltd.(Iwatsuki Manufacturing) and U.S.-based Akebono Brake Corporationto accelerate globalization (from Iwatsuki through ABC to the world)and; re-establishing the foundation for our European business.In recent years a key factor determining success in global manufacturingoperations has been changing radically. Previously we had beenpursuing “internationalization ” that is establishing factories abroadsimply with the aim of manufacturing products to a quality standardequivalent to that applied to domestically-manufactured products.Now we recognize that true “globalization ” means the timely supplyof products tuned to local needs specifications and cost constraints iscrucial. With this in view we expect that the role of our Japanesebusiness locations will be even more significant.Iwatsuki Manufacturing is our core manufacturing location and wehave been striving to augment its capabilities. Nevertheless our effortshave made no significant progress because the facility suffers from achronic lack of human resources due to the need to send associates tosupport international locations. Having acquired all shares of AkebonoBrake Sanyo Manufacturing Co. Ltd. however we established atechnological stronghold in the western Japan to supplement theresources of Iwatsuki Manufacturing. This in turn has freed managementresources that can be used to improve operational efficiency. Also Akebono recognizes that the United States is a market of foremostimportance. We are working to quickly overcome the challengesconfronting us in North America and plan to deploy the latest technologiesat Iwatsuki Manufacturing in our U.S. operations. Moreover we will re-create ABC with an eye to nurturing its associates to competein the challenging global business environment. In these ways we willstep up initiatives in Japan and the United States to achieve globalization.Meanwhile Akebono had been facing great difficulties in penetratingthe European market and its market share has been stagnating atless than 1%. However with the commencement of operations