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increase in operating income in the Machined Components segment—owing to firm demand for bearings and bearing-related products—and reflected a fall in production and a deterioration in profitability in the HDD spindle motors business, expenses resulting from the shift of PC keyboard production to China from Thailand and the restructuring of our information motors business, which prompted a sharp increase in the operating loss in the Electronic Devices and Components segment.
Management Policy
As president and chief executive officer of Minebea, I believe my principal responsibilities are to strengthen profitability and pull Minebea out of its current malaise, and to restore the Company to a position worthy of international respect. To these ends, we have set three priority tasks for the companies of the Minebea Group going forward:
Take decisive actions to implement structural reforms
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Reorganize manufacturing and sales divisions |
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Build a cross-divisional manufacturing organization |
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Strengthen cross-divisional functions |
Reinforce R&D
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Strengthen ability to develop basic technologies |
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Establish a structure that can integrate and reorganize technologies |
Manage the Company with a clear vision
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Reinforce manufacturing technologies that give Minebea an advantage in the marketplace |
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Build a lineup of products that responds to market needs by maximizing cutting-edge technologies |
Take decisive actions to implement structural reforms
Our first step was to implement sweeping reforms to our management structure. Our revamped management structure, which went into effect July 1, 2005, is depicted in the chart on the following page.
Our previous management structure consisted of manufacturing and sales headquarters, which oversaw a number of subordinate divisions. Our new, integrated management structure, however, features dedicated manufacturing and sales units for each of 14 newly established, product-specific business units, to which they report. These business units in turn report directly to the president. This sleek, product-based structure is designed to make individual business units accountable for the performance of their respective businesses. The new structure also features Manufacturing, Engineering, Sales, Operations and Administration headquarters, which provide support for the business units as well as report to the president.
Rather than direct supervision of the business units, the headquarters are charged with providing specific support functions, thereby assisting business units to effectively manage their respective businesses. One example of this concept in practice is the Master Engineers Team, established within the Manufacturing Headquarters. This team comprises veteran engineers with specific expertise in Minebea's specialized manufacturing technologies. These engineers make themselves available to business units that have need of their expertise, thereby assisting units to overcome challenging technological issues.
To use an obvious analogy, the vertical organization of the business units and the horizontal organization of the headquarters function like the warp and the weft of a piece of woven fabric. By ensuring a balanced warp-weft ratio, we will strive to clarify responsibility and authority and accelerate the making and implementation of decisions—two achievements we are confident will contribute to improved operating results.
Reinforce R&D
Minebea faces five key challenges in reinforcing its R&D:
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Although we boast a top-class technological development infrastructure, there is room for improvement when it comes to bringing together and making the most effective use of technologies. |
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In the years since our establishment, we have created
a considerable competitive advantage by developing proprietary manufacturing technologies and expanding early into Southeast Asia. In recent years, however, we are facing increasingly serious challenges to this advantage. |
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Recognizing that there is a limit to our ability, using only proprietary technologies, to develop products that meet increasingly diverse market needs, we must focus on integrating existing technologies, developing new technologies and amalgamating proprietary technologies with our proprietary technologies with technologies introduced from sources outside the Company. |
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To respond to customer demands for ever-faster service, we must increase our roster of engineers. |
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Minebea's core technologies are essential to every one of its products. These core technologies are supported by outstanding basic technologies. Accordingly, we must strengthen and increase both basic and core technologies. |
None of these challenges is limited to a single business unit; responding effectively will demand a broad, Companywide perspective. Accordingly, efforts will be spearheaded by the Engineering Headquarters. As I have already stated, this is the principal reason for establishing this and other headquarters as part of a horizontal support structure. The Engineering Headquarters will focus on a number of key measures. These include:
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creating a system for integrating technologies that are currently scattered throughout the Company |
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establishing a team of engineers that function outside our new management structure and are charged with cross-unit development and design |
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further advancing core technologies, notably ultra-precision machining technologies, which we consider our forte |
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creating an internal organization that will enable us to amalgamate technologies and strengthen cooperation with outside organizations |
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reinforcing our ability to identify and cultivate talented individuals, and to assign these individuals to the most appropriate positions |
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improving our system for developing basic technologies. |
Through the prompt implementation of these and other key measures, the Engineering Headquarters will strive to strengthen Minebea's technological capabilities, thereby accelerating the improvement of operating results.
Manage the Company with a clear vision
Our vision has always been for Minebea to be the world's leading manufacturer of high-precision components. To this end, we have set forth three strategies:
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Strengthen and expand our bearings and bearing-related products business |
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Reinforce our rotary components business, which centers on HDD spindle motors, fan motors and other high-precision small motors, into the second pillar of our operations (the first being bearings and bearing-related products) |
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Increase the weighting of high-value-added products in all product categories while at the same time broadening our product range to better serve a wider range of markets. |
In the course of addressing the first two challenges—take decisive actions to implement structural reforms and reinforce R&D—we will review our objectives in terms of the kinds of products we should focus on, how we should manage our plants and how we should approach marketing. In doing so, we will further elaborate on our vision and these three strategies.
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