Sharp 2009 Annual Report Download - page 10

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Starting with the recovery plan, the first measure is reor-
ganizing our LCD plants, an effort that got underway in
January 2009. The goal is to strengthen cost competitive-
ness by closing some older production lines and concen-
trating production in highly competitive lines, as illustrated
in the diagram. The second measure is personnel realloca-
tion and organization review. In Japan, we are shifting
employees to priority business areas such as solar cells
and sales divisions. Outside of Japan, we are strengthen-
ing our sales force to expand operations in China and
other emerging markets. Remuneration of board mem-
bers and executive officers has been reduced by 50-30%
on a real, annual basis, and annual salaries for managers
have been lowered by 20-10%. Through these initiatives
we intend to reduce fixed costs by approximately ¥100.0
billion compared to fiscal 2008, including personnel costs
and depreciation and amortization and excluding amounts
relating to operating the new LCD panel plant in Sakai
City. In addition, we will step up cost-cutting activities for
every category of variable costs, including advertising
expenses, utilities, and transportation and packaging, in an
effort to reduce total costs, including fixed costs, by
¥200.0 billion compared to fiscal 2008.
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At the same time, with the aim of fundamentally changing
our profit structure from a medium to long-term perspec-
tive, we will implement a new business model consisting
of localizing front-end processes in the device business as
well as forming alliances with prominent local companies
around the world in order to establish value chains in the
areas where our products are consumed. This represents a
move toward local production for local consumption. Up
until now we had built plants for front-end processes in
Japan by investing our own resources, but going forward
we intend to take advantage of alliances to maximize
investment efficiency and improve cash flow as we work
to thoroughly minimize risks associated with investment
returns and exchange rate fluctuations. While we still plan
to bolster cutting-edge production technologies and manu-
facturing capabilities at mother plants in Japan, technolo-
gies that are developed there will be gradually extended to
other global sites. Our alliance with Italian power company
Enel SpA in the area of solar cells is an example of this
new direction. We plan to consider overseas development
based on the same approach for LCD panels as well.
Concept of New Business Model
Localization of
front-end processes
Maximize investment efficiency by
minimizing investment amounts
Alliances with prominent
local companies
(Receive investment from local
companies)
LCD Plant Reorganization
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Kameyama Mie Tenri
Large-size
(TVs, etc.)
Large-size
(TVs, etc.)
Small- and
medium-size
(Mobile phones, etc.)
Small- and
medium-size
(Mobile phones, etc.)
Sakai
(Under
construction)
Kameyama
Mie
(Partial
closure)
Tenri
(Partial
closure)
(Production Plants)
(Main Production
Items)
Establish value chains
where products are
consumed
Improve cash flow
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