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Ube Industries, Ltd. (President: Kazumasa Tsunemi), as part of the restructuring
initiatives of its current "New 21·UBE Revised Plan",
three-year management plan, will be restructuring its
caprolactam (CPL) business-one of the Ube Group's fundamental
businesses-and related operations.
(1). CPL Business Restructuring
The Ube Group's CPL business currently maintains an annual
production capacity of 365,000 tons-equal to approximately
10% of global annual demand-as well as a global distribution
framework through the four manufacturing centers of Ube's
Sakai Factory; Ube Chemical Factory; a subsidiary in Thailand,
Thai Caprolactam Public Co., Ltd. (TCL); and a subsidiary
in Spain, Productos Quimicos del Mediterraneo, S.A. (PQM).
Ube will be shutting down the Sakai Factory's No. 1 CPL
plant in spring 2003, thereby achieving a substantial
cost reduction. The No. 1 CPL plant, which has an annual
capacity of approximately 20,000 tons, uses a traditional
process which produces relatively large volume of ammonium
sulphate as by-product. Through concurrent reductions
in personnel and running costs, Ube anticipates achieving
an overall cost reduction of ¥2.3 billion between fiscal
2002 and 2003.
Also, in April 2002 organizational reforms were implemented
at Ube Chemical Factory, and departments indirectly related
to manufacturing were slimmed down. Through these reforms,
Ube will strengthen its production technologies and enhance
production efficiency, aiming to achieve ¥1.8 billion
improvement in profit between fiscal 2002 and 2003 from
the streamlining.
With these initiatives, Ube will strive to improve earnings
by a total of more than ¥4.0 billion between fiscal 2002
and 2003, which will add an additional Y1.0 billion to
the streamlining plans in the New 21(UBE revised plan
for the CPL business.
Meanwhile, to coincide with these rigorous streamlining
plans in Japan, Ube will shift its CPL production from
Japan to overseas and aggressively develop its CPL related
business. Specifically, reflecting the closure of the
Sakai Factory's No. 1 CPL plant, TCL will expand its CPL
production capacity by approximately 20,000 tons (representing
roughly ¥0.8 billion increase in annual earnings in fiscal
2004 and thereafter), which will
improve Groupwide profitability through the shift to more
cost-competitive TCL products.
(2). Restructuring of Related Operations
Ube maintains a chemical complex located in Ube district
that focuses on CPL operations, including its subsidiaries.
The complex deals in the manufacture of such CPL downstream
products as nylon-6 and nylon-12 resins, several kinds
of fine chemical products derived from intermediary materials,
and agricultural products which utilizes ammonium sulphate
by-product and ammonia as a raw material of CPL. In addition
to the aforementioned CPL streamlining plans, a variety
of initiatives will be implemented in these related operations
to generate additional profitability for the entire Ube
Group.
Specifically, the three manufacturing plants of Ube Agri-Materials,
Ltd., will be consolidated into a single plant to achieve
rationalization, and Ube Ammonia Industry, Ltd., will
work to reduce costs by lowering raw materials prices
and curtailing labor and operating costs, while striving
to achieve greater competitiveness by reducing maintenance
costs through the attainment of voluntary security certification.
(3). Ube Group positions the CPL business and related
operations as one of its fundamental businesses, and will
continue to restructure manufacturing operations both
in Japan and overseas, strengthen its chemical complex
by leveraging the synergistic effects among related products,
and implement further specific initiatives to improve
its earning stability.
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