AKEBONO REPORT 2017

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associates change their thinking and mindset and the way they work, responding to change on their own as individuals. We will work to develop the next generation of associates based on the concept of diversity.Progress with the Akebono New Frontier 30 – 2016 Midterm Business PlanRebuilding the North American operations is an important pillar of the midterm business plan. We have made faster-than-expected progress with the three initiatives involved: a rebuilding of the Company’s foundations through a top-down reshufing of key management positions, including the CEO; stronger cost management with the assistance of outside consultants; and increased productivity. Performance has steadily improved and prospects are for a return to protability for the North American operations in scal 2017 and beyond. We will continue to focus on improving productivity to rmly establish a protable structure. Efforts to expand the high performance brake business and recreate European operations are moving forward as planned, and we hope to quickly establish an integrated production and supply system at the new Slovakia Plant. In China, meanwhile, sales of compact cars are strong due to tax reductions, while automotive markets in Thailand and Indonesia have also begun to show signs of recovery going into 2017. We will work to tie that recovery to earnings by further increasing our competitiveness in these regions.Development and Accumulation of Technology to Ensure SurvivalTo survive the intense competition in development in response to environmental problems and safety issues, it is essential that we continue to enhance our technological capability. As part of that effort, in 2007 we began supplying brake systems to the MacLaren F1 team. This challenge grew out of the philosophy that for Akebono to become a world-class expert in the brake eld it is essential that we take on the world’s best, and 2016 marked its 10th anniversary. Today, we continue to pursue our core technology, “Friction and Vibration, their Control and Analysis,” under these extreme conditions. Technology accumulated through our participation in these races comes to fruition in our high-performance brakes. Coupled with growing recognition of the Akebono name in Europe, our technology is contributing signicantly to the expansion of the high performance brake business and the rebuilding of European operations, one of the pillars of our midterm business plan. The valuable experiences our engineers acquire on-site at these races are also linked to our human resource development efforts.In addition, as seamless application of technology based on our expertise in “Friction and Vibration, their Control and Analysis,” our Infrastructure and Mobility System business unit is moving forward with development of products for rolling stock, including bullet train brakes. Further, utilizing our sensor technology, we are also developing and marketing products in new elds including vehicle behavior detection devices for rolling stock and surface incline measurement systems in an effort to further expand our business. We are also diligently working to advance development of next-generation technologies, such as our innovative MR Fluid Brake, which successfully reduces environmental impact through the use of a structure that eliminates brake dust. Since its founding, Akebono has centered all of its business activities around providing safety and peace of mind. The unfavorable situation in our North American operations over the past three years has caused considerable concern for our stakeholders, but performance is now on track toward recovery. We will continue to devote our efforts to further increasing corporate value, and we hope our stakeholders provide us continuous support. We would like to ask your frank opinions and comments on this report.June 2017Hisataka NobumotoPresident and CEO* APS stands for the Akebono Production System as well as the Akebono Philosophy and Spirit.AKEBONO REPORT 2017 08Top Message