Structural Reforms Designed to Reinforce the Business Foundation

By defining structural reforms as a means to reinforce our business foundation, we have continuously worked to curb production costs and sustain fixed costs at appropriate levels. We consider these efforts our never-ending task.

While we need to invest for growth as needed, we also need to unfailingly cut down production costs at the same time. This is what we mean by separation of costs from growth. To this end, we are striving to maintain our fixed costs at appropriate levels.

In the structural reforms designed to reinforce our business foundation, we have not only carried out necessary reforms even when demand remained sluggish, but also made continuous efforts to improve costs in the last few years. We reduced fixed costs by JPY12.5 billion in three years from FY2013 to FY2015 by absorbing an increase of the basic salaries and including the effects of structural reforms. In FY2015 alone, we cut down fixed costs as planned and made an addition reduction, achieving a reduction of JPY11.9 billion from FY2014.

Structural Reforms Designed to Reinforce the Business Foundation

Concerning development, we should be able to lower costs by adopting new measurement and simulation technologies. All in all, we are concerting efforts to make our development lean and powerful. With respect to production as well, we are accelerating the speed of connecting our production jobsites, networking not only manufacturing plants of the Komatsu Group worldwide, but also our suppliers, in order to promote production reforms. We are also stepping up our efforts to link our plants directly to marketplace, end-customers and distributors in order to accelerate the speed of delivering our products and parts and further enhance the level of our inventories.