How will you build an optimal production system, given declining manufacturing volumes?

We will adjust our personnel structure to fit production volumes, and work to reduce capital expenditures by reviewing them from all aspects.

Until now, we have aggressively striven to expand production and supply structures in all regions of the world, from Japan to North America, Europe, China and the rest of Asia, based on the premise of ever-increasing growth. However, sales have already shrunk to approximately 70% of their fiscal 2008 levels, which was the highest in the Company’s history. Presently, to create a structure suited to the diminished production conditions, we are adjusting the personnel structure to fit production volume, utilizing existing facilities to the furthest extent possible, developing and introducing simple and slim equipment, introducing “raise, combine, stop operations” at production bases and group companies, carefully evaluating capital investment plans and working to reduce capital expenditures from all aspects.

Consequently, we predict that capital expenditures in fiscal 2010 will slow to ¥100 billion—less than half our previous high. Moreover, we intend to accelerate such activities in fiscal 2011 and beyond, to further streamline capital expenditures. With falling capital expenditures, depreciation peaked in the fiscal year under review, and will start declining in the coming fiscal year.

^* Raise, combine, stop operations: Manufacturing and development departments work together to “raise” production capabilities of lines and facilities “combine” lines and “stop” using excess production lines and equipment. for improving production efficiency.