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5. JTEKT Corporation Business Report FY ended 2015

Contracts

<Toyota>
-The Company announced that it has developed a high-pressure hydrogen supply valve and a pressure reducing valve for the Toyota Mirai fuel cell vehicle. The company already began production of these products. (From a press release on December 16, 2014)

Business Development

<China>
-The Company has started production of pinion-assist type electric power steering (P-EPS) in China. The company added a new production line to its production subsidiary, JTEKT Steering Systems (Xiamen) Co., Ltd., in Fujian Province. JTEKT started supplying the P-EPS to a joint venture between a European automaker and a Chinese automaker in June 2014. This is the first time for the company to produce the P-EPS in China. The company has expanded its production base for the P-EPS to China following Japan and Europe. The investment amount and production capacity for the added production line have not been announced. JTEKT aims to receive more orders successively from European automakers in China. (From an article in the Nikkan Jidosha Shimbun on July 23, 2014)

Restructuring

-The Company will reorganize its bearing production operations in Japan in order to become more competitive in the bearing market. Currently, the company's bearings are produced mainly at its Kokubu Plant in Osaka. By March 2018, the plant's automotive bearing lines will be transferred to the company's Kameyama Plant (Mie Prefecture), and its forging operations will be transferred to its Kagawa Plant (Kagawa Prefecture). Prior to these transfers, JTEKT will add a new factory to the Kameyama Plant by 2016, while expanding the Kagawa Plant. The Kokubu Plant will also be expanded and its operations will be streamlined in such a way that it can specialize in manufacturing industrial bearings. JTEKT plans to invest approximately JPY 9 billion in this whole project by March 2018. (From an article in the Nikkan Jidosha Shimbun on February 6, 2015)

Mid-term Business Plan

-Under its mid-term business plan that covers through FY ending in March 2020, the Company's steering division aims to maintain the largest share of the competitive global market by stepping up its efforts to cut costs and to offer new products that meet the market trend. The driveline division will work on improving profitability and ensure the largest share of the 4WD business by enhancing operations in Europe and the U.S., while focusing its business on certain areas. The bearing division aims to become more competitive in the growing market by accelerating its initiatives to reorganize its production structure in both Japan and overseas, developing "No.1" and "only one" products, improving sales networks and sales capability, and further increasing its engineering capability.

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Facilities

<Japan>

<Outside Japan>
-The Company held a completion ceremony at a new office building of JTEKT Research & Development Center (Wuxi) Co., Ltd. In June 2013, the company decided to move its R&D center to a new location within the same city in order to expand its development capability for the Chinese market. The new facility will develop bearings, steering systems and drivetrain systems, whereas the former center specialized in developing bearings. With this expansion, JTEKT hopes to build up support for the local factories of Japanese automakers and to improve its presence in the market. (From an article in the Nikkan Jidosha Shimbun on May 17, 2014)

Product Development

Steering Systems Division
-The Company is mass-producing its dual-pinion type electric power steering (DP-EPS) systems. Currently it is working on commercializing a rack-parallel type electric power steering (RP-EPS), which offers excellent steering performances due to a structure that directly transmits steering torque through a ball bearing.

-In response to high safety requirements of ISO26262 for automotive electric power steering, the Company adopted a redundant design for both torque sensors that detect the driver's driving performance and for the motor control units that generate assist torque. It already began mass-producing these world's first technologies.

-The Company has developed a world-first electronic power steering (EPS) system and started mass-producing it. The new EPS system prevents the trouble of having difficulty in turning the steering wheel caused by a malfunction in the torque sensor or other equipment. The new EPS system has dual software control and electronic circuit systems for the motor drive unit so that one system maintains the performance in case of a glitch in the other system. The new EPS system can automatically activate its backup system without the driver's intervention. Therefore, it is also compatible with autonomous driving technologies. Moreover, the new EPS system complies with the ISO26262 functional safety standard and offers enhanced safety in its entire product life cycle. As the improved performance was recognized, the EPS system was selected for Toyota Motor Corporation's new Alphard and Vellfire for the first time. (From an article in the Nikkan Jidosha Shimbun on March 25, 2015)

Driveline Division
During 2014, the Company released a series of new driveline products:
-a compact and lightweight sealed linear solenoid valve that reduces delivery flow;
-a compact and lightweight constant velocity universal joint offering optimized strength balance among each component;
-a third-generation Intelligent Torque Controlled Coupling (ITCC) that uses a high-performance electromagnetic clutch featuring a new surface design. The ITCC significantly reduces torque variation caused by temperature changes; 
-a double offset joint for compact and lightweight propeller shafts.

Bearing Division
-The Company is in the final phase of developing LFT-IV ultra-low-torque tapered roller bearings. The IV series is the advanced version of the Low Friction-Torque Bearing (LFT) I, II, and III series.

-The Company has developed two new bearings, namely the "super thin-walled thrust needle roller bearing" and the "needle roller bearing for high-speed spinning planetary gears," which contribute to lowering fuel consumption of vehicles with automatic transmissions. It has also established techniques for mass-producing the new bearings. The super thin-walled thrust needle roller bearing uses rollers at the sliding point to improve the efficiency of a unit. Thus, the new bearing by itself can reduce friction by at least 80% from that of a conventional bearing with copper washers. The needle roller bearing for high-speed spinning planetary gear is designed to speed up planetary gears for advancing multi-speed automatic transmissions. The new bearing can support rotating speed of a planetary gear which is 5% to 15% faster than that supported by a conventional bearing. The new bearing also achieves an approximately 10% reduction in width. For the time being, JTEKT aims to secure monthly sales volume of 200,000 units for each bearing. Utsunomiya Kiki Co., Ltd. (a JTEKT group company in Utsunomiya City, Tochigi Prefecture) will produce the new products when the Company receives orders for them. (From an article in the Nikkan Jidosha Shimbun on November 13, 2014)

Mechanical Components
-During FY that ended March 2015, the Company invested mainly in facilities and equipment at its global operations. 

Investment outside Japan

<USA>
-The Company announced that it has expanded its Koyo-brand bearing plant in Richland County, South Carolina, USA. With an investment of USD 130 million, the 250,000 square-foot expansion will allow the company to meet needed capacity to produce automotive wheel bearing hubs for the U.S. market. The plant is expected to employ additional 175 people in the next three years. (From news releases issued by multiple sources on July 10, 2014)