Tokyo, Japan, September 27, 2001 -- Hitachi, Ltd. (TSE: 6501)
today announced that it will split off the company's Consumer Products
Group and Industrial Components & Equipment Group. The decision
of the Board of Directors, reached today, calls for the two groups
to be split off in April 2002.
In recent years, Hitachi has progressively put in place the legal
systems and otherwise laid the groundwork for full-fledged consolidated
management. As the company's worth increasingly came to be assessed
in terms of consolidated value, Hitachi in November 1999 launched
the i.e.Hitachi Plan, a medium-term management plan aimed at optimally
restructuring every business operation for maximum competitive strength
in the marketplace.
The rebuilding of businesses is being carried by a variety of methods
including M&A, joint ventures and alliances with third parties, reorganization
within Hitachi Group, and transfer of business units. Cases of restructuring
involving split-offs include Hitachi Air Conditioning Systems Co.,
Ltd. (formed by splitting off the Air Conditioning Systems Division
as an independent company and then merging it with Hitachi Air Conditioning
& Refrigeration Co., Ltd., an unlisted subsidiary, in July 1999),
Hitachi Industries Co., Ltd. (to be formed in October 2001 by consolidating
the Industrial Machinery Systems Division and Hitachi Techno Engineering
Co., Ltd., an unlisted subsidiary), and Hitachi High-Technologies
Corporation (to be formed in October 2001 by consolidating the Instruments
Division, Semiconductor Manufacturing Equipment Division and Nissei
Sangyo Co., Ltd., a listed subsidiary).
The newly announced reorganization involves Consumer Products Group,
whose main products are refrigerators, air conditioners, washing machines,
vacuum cleaners, microwave ovens and other white goods, and Industrial
Components & Equipment Group, whose main products include low-voltage
motors, transformers and air compressors. Both groups will be consolidated
with their related manufacturing subsidiaries split off earlier, while
Industrial Components & Equipment Group will also be merged with associated
maintenance service companies, thus reorganizing each into an operation
integrated end-to-end from R&D and manufacturing through marketing
and after-sales services.
As a company specializing in home appliances, the new company will
develop, manufacture and market white goods and will also market digital
audio-visual equipments. It will help add momentum to the ongoing
Home & Life Solutions initiative, focus its resources on the development
of home network appliance systems and other new product sectors, and
move forcefully ahead with the expansion of global operations and
improvement of marketing and service capabilities. The new company
is expected to earn steady profits and aims to post sales of 600 billion
yen on consolidated basis in the fiscal year ending March 2004.
The new industrial components and equipment company will meld Hitachi's
well-proven technologies in the areas of industrial machinery design
and manufacture with top-level expertise and know-how in the provision
of engineering and solutions. These capabilities will ensure the new
company's ability to come quickly forward with high added-value equipment,
services and solutions that reflect immediate market needs and offer
customers maximum value for money. As the company capitalizes on its
engineering prowess to develop new sectors of business and expand
overall operations, it will also move ahead with base consolidation
and organizational streamlining for speeding up decision-making and
boosting profitability. The new company will aim to post sales of
158 billion yen on consolidated basis in the fiscal year ending March
2004.
1. Reorganization of Consumer Products Operation
The split-off of Consumer Products Group will be carried out under
the corporate split provisions of the Japanese Commercial Code. Consumer
Products Group will be split off as an independent company and it
will take over all operations of its two manufacturing subsidiaries,
Hitachi Tochigi Technology Co., Ltd. and Hitachi Taga Electronics
Co., Ltd., both of which will then be dissolved. The new company will
be a wholly owned subsidiary of Hitachi, Ltd.
Hitachi consolidated the consumer product operations from product
planning to marketing through a merger of its consumer products marketing
company, Hitachi Sales Corporation, in April 1995. Between 1998 and
1999, manufacturing divisions were reorganized as separate companies
to strengthen cost competitiveness. In October 2000, the company concluded
an agreement for broad-based cooperation in the field of home appliances
with BSH Bosch und Siemens Hausgerate GmbH of Germany. In May 2001,
it entered a strategic partnership with Matsushita Electric Industrial
Co., Ltd. that calls for extensive collaboration in the home-appliance
sector, particularly in the development and application of eco-friendly
technologies for home network appliances and white goods. Purpose
of these moves is to add stronger customer-orientation to consumer
product operations and to use alliances to expand the business domain
and speed up the pace of business.
In June this year, Hitachi's Consumer Products Group launched the
Home & Life Solutions initiative as a new product development strategy
to respond to the needs of the coming age of home network appliances.
The home appliance market environment is growing increasingly harsh.
Although Hitachi is a particularly large presence in the Japanese
market, it needs to put consumer product operations on the fast track
if it expects to ensure continuing growth in its global consumer products
operations. This means it has to develop the ability to move boldly
and flexibly in every facet of the business from R&D and design to
manufacturing and marketing.
Still, the market also has a bright side. In Japan, for example, consumer
products market long considered to have reached maturity is seeing
the emergence of new products with high growth-potential such as plasma
TVs, washing-drying machines, induction heater and dish washer-driers.
In addition, the home appliance business is expected to enter a new
stage with the advent of the home network appliance era.
By integrating all functions from R&D to marketing for white goods
operations as well as marketing of digital audio-visual products,
the new company will be able to make a coordinated response to these
changes hand in hand with regional sales and service companies.
The new company will be provided with a completely new management
system. Currently, each of Consumer Products Group's three manufacturing
divisions has its own development/design and manufacturing facilities.
These will be consolidated to enable flexible utilization of their
resources for timely development and production of new products. Specifically,
the division system will be abandoned and a business unit headed by
a unit chief established for each product. The unit chief will be
responsible for effectively allocating the required development, design
and production resources. Manufacturing will also be put under unified
management, with emphasis on accruing and upgrading the quality of
production technology and cutting costs.
Steps will also be taken to reinforce the global supply system and
bolster cost competitiveness. These include the establishment of an
overseas operations division for centralizing strategic management
of overseas manufacturing subsidiaries coming under the new company's
umbrella. By this the new company will be able to step up the expansion
of overseas production of products for world markets, including Japan.
Reorganization of the sales and services division is also under consideration,
with the ultimate aim of intensifying the focus on improving customer
satisfaction.
Hitachi believes these reforms will create a new consumer products
company that will earn steady profits and is capable of making solid
advances in the home appliance market.
Outline of New Consumer Products Company
Company Name |
: |
Pending decision |
President |
: |
Pending decision |
Head Office |
: |
Tokyo, Japan |
Split-off date |
: |
April 1, 2002 (provisional) |
Capital |
: |
Pending decision |
Employees |
: |
Approximately 18,000 (at time of split-off) |
Business |
: |
Development, manufacture and sales of
consumer products and peripheral systems |
Sales |
: |
About 560 billion yen (The fiscal year
ending March 31, 2002)
About 600 billion yen (The fiscal year ending March 31, 2004)
|
Outline of Manufacturing Subsidiaries
Hitachi Tochigi Technology Co., Ltd.
President |
: |
Mitsuru Murata |
Head Office |
: |
Tochigi Prefecture, Japan |
Established |
: |
July 1, 1998 |
Capital |
: |
450 million yen(100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 2,300 (as of March 31,
2001) |
Business |
: |
Design and manufacture of refrigerators,
room air conditioners and related products |
Hitachi Taga Electronics Co., Ltd.
President |
: |
Shinji Matsuoka |
Head Office |
: |
Ibaraki Prefecture, Japan |
Established |
: |
April 1, 1999 |
Capital |
: |
450 million yen(100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 1,400 (as of March 31,
2001) |
Business |
: |
Design and manufacture of washing machines,
vacuum cleaners and related products |
2. Reorganization of Industrial Components & Equipment Operation
The split-off of Industrial Components & Equipment Group will
be carried out under the corporate split provisions of the Japanese
Commercial Code. Industrial Components & Equipment Group and the
sales divisions in charge of the group's products at area operation
will be split off and consolidated with Hitachi Service & Engineering
(EAST), Ltd., which will also merge Hitachi Service & Engineering
(West) Ltd., Hitachi Drive Systems, Ltd. and Hitachi Nakajo Technology,
Ltd. The name of the new company has not yet been decided.
Industrial Components & Equipment currently has design, development
and quality assurance divisions spread over three prefectures, Chiba,
Niigata and Shizuoka. These and the group's Operations Administration
Division will be consolidated under the new company to establish a more
streamlined organization and speed up decision-making. The sales and
service divisions will also be united to increase the benefit of their
activities to customers.
Ongoing changes in the industrial components equipment market environment
are making it imperative to accelerate the process of developing and
offering high added-value products tailored to evolving user requirements,
to offer consultation on ways to save energy, and to provide solutions
such as in the building of systems that utilize highly energy-efficient
industrial equipment.
Hitachi is responding to these market realities by reorganizing its
industrial components equipment operations in a way that will permit
the company to ascertain the overall equipment cycle. The new company
will have a formidable lineup of strengths, including top market share
in key products like aluminum alloy frame motors and amorphous transformers,
advanced technologies in air compressors and the like, and industrial
equipment engineering capability extending across the board from marketing
and maintenance to the building of systems of every description. The
integration of these strengths will put the new company in a position
to grow its businesses by promptly responding to market needs and priorities
with high added-value equipment and services. The new company will also
move aggressively ahead with the application of Hitachi's accrued engineering
skills to the development of new businesses in areas such as remote
plant equipment monitoring services. An all-out effort will also be
made to achieve a thorough improvement in operating efficiency by, for
example, expanding the transfer of operations to Hitachi Industrial
Technology (Thailand), Ltd., OEM supply of principal products to third
parties, OEM purchasing, diversification through alliances, and organizational
streamlining through consolidation of overlapping operations.
Outline of New Industrial Components & Equipment
Company
Company Name |
: |
Pending decision |
President |
: |
Pending decision |
Head Office |
: |
Pending decision |
Split-off date |
: |
April 1, 2002 (provisional) |
Capital |
: |
Pending decision |
Employees |
: |
Approximately 4,800 (at time of split-off) |
Business |
: |
Manufacture, sales, and servicing of
industrial components and equipment |
Production bases |
: |
Chiba Prefecture, Niigata Prefecture
and Shizuoka Prefecture |
Sales |
: |
About 149 billion yen (The fiscal year
ending March 31, 2002)
About 158 billion yen (The fiscal year ending March 31, 2004)
|
Outline of Companies Involved
Hitachi Service & Engineering (EAST), Ltd.
President |
: |
Masanobu Yoshizaki |
Head Office |
: |
Tokyo, Japan |
Established |
: |
October 1, 1963 |
Capital |
: |
600 million yen (100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 450 (as of March 31, 2001) |
Business |
: |
Industrial equipment maintenance services
in eastern Japan |
Hitachi Service & Engineering (West) Ltd.
President |
: |
Kunimoto Tomioka |
Head Office |
: |
Osaka, Japan |
Established |
: |
September 2, 1950 |
Capital |
: |
600 million yen (100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 400 (as of March 31, 2001) |
Business |
: |
Industrial equipment maintenance services
in western Japan |
Hitachi Drive Systems, Ltd.
President |
: |
Takeshi Aso |
Head Office |
: |
Chiba Prefecture, Japan |
Established |
: |
April 1, 2000 |
Capital |
: |
480 million yen(100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 700 (as of March 31, 2001) |
Business |
: |
Design and manufacture of motors, inverters,
pneumatic and hydraulic machinery, and other industrial components |
Hitachi Nakajo Technology, Ltd.
President |
: |
Akihiro Yamaguchi |
Head Office |
: |
Niigata Prefecture, Japan |
Established |
: |
April 1, 2000 |
Capital |
: |
320 million yen(100% owned by Hitachi,
Ltd.) |
Employees |
: |
Approximately 600 (as of March 31, 2001) |
Business |
: |
Design and manufacture of transformers,
power transmission equipment, air cleaners and other industrial
components |
About Hitachi
Hitachi, Ltd., headquartered in Tokyo, Japan, is one of the world's
leading global electronics companies, with fiscal 2000 (ended March
31, 2001) consolidated sales of 8,417 billion yen ($67.9 billion*).
The company manufactures and markets a wide range of products, including
computers, semiconductors, consumer products and power and industrial
equipment. For more information on Hitachi, Ltd., please visit Hitachi's
Web site at http://global.hitachi.com.
*At an exchange rate of 124 yen to the dollar. |