News

1. Basic concepts behind reorganization

We plan to adopt the "in-house company system," a more advanced version of our existing business headquarters system. In this new system, the presidents of in-house companies are given greater autonomy in decision-making, in return for which they must bear a larger share of responsibility for their own business performance. It is believed that the in-house company system will improve speed and efficiency in management decision-making as well as day-to-day business operations, and thereby help to mold a stronger corporate culture that will allow Kuraray to compete successfully in the global marketplace of the 21st century. This, in turn, requires that all our employees understand and actively support the Company's new direction.

2. Objectives of in-house company system

• (1) Effect major devolution of decision-making powers, eliminate organizational redundancy, and achieve faster, more efficient management
• (2) Clarify responsibility for business performance, thereby making staff more accountable for their actions
• (3) Elevate importance of capital effectiveness to the same level as profitability; the system will thereby foster a management mindset with a strong focus on effective utilization of assets
• (4) Allow thorough application of performance-linked staff compensation system, including linkage between individual compensation and in-house company performance
• (5) Integrate subsidiaries and affiliates within the in-house company system, thereby achieving greater synergy and facilitating fairness in treatment of components of the corporate group

The role of the group headquarters will be spelled out, and the headquarters will devote its full efforts to energizing the operation of the in-house company organization.

3. Outline of reorganization

(1) Composition of in-house company system

Care will be taken in organizing the in-house company system to ensure continuity with policies under the G-21 medium-term management plan. To promote integrated management, consideration will be given to materializing synergies wherever possible by utilizing the factors held in common by the various in-house companies with respect to markets, technology, and raw materials.

a. Operations hitherto under the authority of the Fibers and Textiles Operation Group

To achieve higher efficiency across the whole range of management activities, from R&D through production to marketing, the existing Fibers and Industrial Materials, Fastenings and Non-Woven Fabrics, and Clarino divisions will be made into in-house companies. Textile business operations will be transferred to Kuraray Trading Co., Ltd., while the newly established Clavella Division will manage the raw yarn.

b. Operations hitherto under the authority of the Specialty Polymers Operation Group

To enhance the effectiveness of new market development efforts, the existing Poval, Eval, and Methacrylate divisions will be converted into in-house companies.

c. Operations hitherto under the authority of the Chemicals Operation Group

In view of the factors they hold in common, the Chemicals Division and the Fine Chemicals Division will be amalgamated into a single in-house company in charge of chemicals. The Elastomer Division will become a separate in-house company in recognition of the overriding strategic importance of its focus on developing its own unique market.

d. Operations hitherto under the authority of the High Performance Materials Division

The optical products business, which has succeeded in developing a promising market, will be made into an in-house company. The environmental facilities and high-performance materials development-related businesses, which are still at the preparatory stage, will form a new High Performance Materials Division, with the aim of building a more effective structure for further business development.

(2) Composition of corporate organization

a. Corporate Management Division

The adoption of the in-house company system will speed up decision-making in the operation of each in-house company, but for this reason, risks will grow larger. To manage and minimize risk, therefore, Kuraray will establish an overall management headquarters, named the Corporate Management Division, to optimize corporate resources allocation.

b. Purchasing and Logistics Division; Environment and Technology Division

The Office of Purchasing and Logistics and the Office of Environment and Technology will be renamed the Purchasing and Logistics Division and Environment and Technology Division, respectively, as headquarters organizations to serve all members of the Kuraray group equally.

c. Research and New Business Development Division

Under the in-house company system, it will be difficult to coordinate research and development activities for the benefit of all the member units. Therefore, this new organization will be put in charge of group-wide adjustment, to achieve greater efficiency and speedy commercialization.

d. Corporate Supporting Divisions

For the purpose of promoting the integrated operation of the Kuraray group and higher efficiency, the Business Service Center, Kuraray Information Systems Center Co., Ltd. and Kuraray Finance and Accounting Co., Ltd. will be merged and spun off as an independent company within the Kuraray group.

e. Offices in Japan

The Company's offices in Nagoya, Sapporo and Sendai will be closed to create a more efficient office network.

f. Saijo Plant

A new company, Kuraray Saijo Co., Ltd., is to be created to take over all operations at the Saijo Plant.