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SDK Sets up New Unit for Production System Innovation

April 21, 2004

Showa Denko K.K. (SDK) has established an SPS (Showa Denko Production System) Innovation Office effective April 16 to coordinate and further encourage innovations made independently so far at respective production sites of SDK and its subsidiaries.

SDK pioneered in total quality management activities in Japan, becoming the recipient of the first Deming Prize in 1951. To further enhance product quality, SDK began total productive maintenance (TPM) activities at its Oita Petrochemical Complex in September 1997. Since then, efforts have been made at respective sites to reform production systems mainly by the TPM method.

While those activities first started at production departments, they have helped to substantially reduce equipment failures/accidents, customer complaints, and costs. Since 1997, we have achieved an accumulated total of around ¥25 billion in cost reductions as a result of these activities.

SDK will hereafter carry out production innovation activities on a group-wide basis under the concept of “SPS Innovation.” This program will coordinate activities at respective sites and subsidiaries, covering all areas of business. Thus, it will be used as an effective tool for reducing all kinds of losses on a group-wide basis, thereby facilitating accomplishment of financial goals under the ongoing medium-term consolidated business plan, the “Sprout Project.”

Specifically, the new program will cover such activities as marketingand supply-chain-management in addition to production. Efforts will be made to achieve financial goals under the Sprout Project with greater speed. To that end, employees at different locations will make sure to share commonunderstanding of problems to be addressed.
SDK will also ensure higher levelsof production innovation through close cooperation among various sites and subsidiaries that have performed theactivities in different ways.

Under the three-year Sprout Project, SDK is planning to reduce costs by ¥20 billion. The SPS Innovation Office will work hard to realize overall business optimization and help achieve the targeted cost reductions.

SDK is transforming itself into a focused and individualized chemical company through interconnections of inorganic/aluminum and organic chemical technologies and based on market-oriented business strategies.
Notes:

1. Deming Prize A prize awarded by the Union of Japanese Scientists and Engineers to companies with distinguished achievements in the area of total quality management.
2. TPM Abbreviation for “total productive maintenance.” This is a concept advocated by the Japan Institute of Plant Maintenance for the purpose of increasing efficiency in production systems.