Yamaha 2008 Annual Report Download - page 22

20 Yamaha Corporation
PT. Yamaha Music
Manufacturing Indonesia
(YMMI)
Organizational Strength to Sustain Growth
Elevating Profitability in the Acoustic Musical
Instruments Business
In order to improve profitability, the basis for stable growth over
the long term, the Company has reorganized its infrastructure for
the production of acoustic musical instruments, a business in
which Yamaha is already extremely competitive. The Company is
solidifying its production structure by allocating specific roles to
each of the major factories in Japan, China and Indonesia.
Japan will serve as the central production base, handling pro-
duction of medium- and high-quality products with high added
value. Piano production is being centralized at the Kakegawa
Factory, while the factories in Toyooka (Shizuoka Prefecture) and
Saitama will concentrate on the production of high-value-added
wind, string and percussion instruments.
Yamaha’s Chinese factories will take advantage of their
quality- and cost-competitiveness and supply capabilities.
Hangzhou Yamaha Musical Instruments Co., Ltd. (Hangzhou
Yamaha) will handle the entire production process for pianos
sold in the Chinese market, while Xiaoshan Yamaha Musical
Instrument Co., Ltd. (Xiaoshan Yamaha) will focus on increasing
production volume of wind instruments and drums, as well as
stabilizing production quality. Finally, Yamaha will take steps to
expand the production capacity and supply abilities of its Indo-
nesian production facilities, expanding and integrating piano
production and increasing production of medium-class guitars.
During 2007, Yamaha closed its guitar production facility in
Taiwan and its piano and wind instrument plants in the United
States. This improved profitability by ¥2.0 billion. Going forward,
Yamaha plans to continue working to reduce inventories of both
unfinished and finished products by further enhancing the supply
chain management (SCM) system, making efforts to cut lead
times and other initiatives, especially in the piano business.
The plans to centralize almost all of Yamaha’s piano-related
operations in Japan—from product development and production
to sales and after-sales service—at the Kakegawa Factory will
establish a solid foundation on which to continue expanding and
developing the piano business. The consolidation is scheduled
for completion by 2010. This should improve the quality, cost-
competitiveness and distribution capabilities for both grand
pianos and upright pianos. Since piano construction requires
skills and techniques that are passed on from one generation to
the next, the concentration of production activities at the Kakegawa
Factory will also provide a better environment for personnel
training and advancement. Administrative functions have already
been transferred to the facility. Going forward, Yamaha plans to
further reform manufacturing and restructure operations by
reorganizing production processes, particularly in the upright
piano production department, taking measures to reduce
unused space in the plant, and relocating the grand piano
assembly department, the early-stage coating department and
the component processing department one by one.
Improving Capital Efficiency
In addition to reorganizing its production bases for musical instru-
ments, Yamaha is continuing the process of consolidating its opera-
tions to focus on areas of core competitiveness. The Company has
transferred businesses which do not have any synergy with its core
business, including the electronic metal products business and four
resort facilities (Kiroro, Toba Hotel International, Nemunosato and
Haimurubushi). Yamaha also sold a portion of its equity holdings in
Yamaha Motor Co., Ltd., allocating the proceeds to investment in
businesses associated with “The Sound Company” business
domain as well as returns to investors. In this way, the Company is
pursuing improved capital efficiency.
Reorganize and Reinforce Acoustic Musical Instrument Production Bases
Hangzhou Yamaha
20 Yamaha Corporation
Indonesia
Strengthen supply and
manufacturing capabilities
■ Yamaha Indonesia (YI)
Equip for increased piano production and integrate
production processes
Upright pianos 25,000 units p.a.
Grand pianos 7,500 units p.a.
■ Yamaha Music Manufacturing Indonesia (YMMI)
Specialize in guitars, expand into mid-level products
600,000 pieces p.a.
Japan
Aim for mother factory functions and
pursue added-value products
■ Kakegawa
Complete integration of piano production bases
in Japan (2010)
■ Toyooka/Saitama/Yamaha Music Craft, etc.
Continue pursuing creation of added-value
products (wind, string and percussion)
Strengthening Yamaha’s Financial Position
62.9%
60.8% 62.0%
07/306/3 08/3
0
400
300
200
100
Shareholders’ Equity* and Equity Ratio
(Billions of Yen)
Shareholders’ equity*
Equity ratio
Plants that have ceased production
■ Taiwan: guitars (February 2007)
■ U.S.: pianos (March 2007), wind instruments (April 2007)
China
Aim for quality, cost control
and supply capability
■ Hangzhou Yamaha
Increase piano production, establish
integrated production systems
Upright pianos 50,000 units p.a.
Grand pianos 5,000 units p.a.
Launch guitar manufacturing to
meet increased demand
for production
200,000 pieces p.a.
■ Xiaoshan Yamaha
Establish systems for increased
production of wind instruments
128,000 pieces p.a.
Main factory for high-level drum
products
Drum shells 7,000 units p.a.
*Shareholders’ equity=Net assets–Minority interests