September 29, 2003

Reorganization of Corrugated Board Business

Nippon Daishowa Paperboard Co., Ltd.

Nippon Daishowa Paperboard Co., Ltd., a major member of Nippon Unipac Holding, has decided on the target for Nichiita Package Industries Co., Ltd., which will be established to bolster the Group's corrugated board business and improve profit stability, as announced on March 24, 2003. A timetable as well as policies for achieving the target have also been adopted.
We hope that we may count on your support for the new company.
1. Streamlining Production Bases
(1) On October 1, six corrugated board producing companies will merge into Nichiita Package Industries Co., Ltd. Later, the new company will take over the business of the two other companies. These two companies and one mill will be closed. As a result, Nichiita Package Industries Co., Ltd. will have a total of nine mills and one office, improving the equipment-operating ratio and cutting fixed costs. (This constitutes a change from eight companies with 13 production bases to a single company with nine mills and one office.)
- Merging companies:
Jujo Higashi Corrugated Fiberb. Co., Ltd. (Nakoso and Takahata)
KG Pack Corp. (Tokyo, Fuji and Kansai)
Nichiita Package Tokyo Corrugated Case Corporation (Matsudo and Koga)
Jujo Corrugated Case Corporation (Nagoya)
Goto Corrugated Case Corporation
Nichiita Package Kyoto Corrugated Case Corporation
- Companies and mill subject to closure:
Chubu Corrugated Case Corporation
San-Mic Chiyoda Corrugated Case Corporation
Jujo Corrugated Case Corporation Osaka Mill
(2) Reinforcing and enhancing the equipment in the following two mills within this fiscal year (ending on Mar. 31, 2004) to maintain the production system and to increase efficiency after the business integration
- Aichi Mill: replacing corrugators to introduce operations based on two eight-hour shifts
- Shizuoka Mill: strengthening case-making equipment to introduce a system based on two eight-hour shifts
- In other mills, measures appropriate to user needs will be adopted to enhance and improve quality.
2. Enhancing the Business Structure
(1) Rationalizing the workforce
- Cutting the workforce of 1,021 as of April 1, 2002 to 773 at the end of fiscal 2004 (ending on March 31, 2005) (A reduction of 248 employees)
Directors: from 37 to 7 (a reduction of 30 Directors)
Employees (inc. part-time workers): from 984 to 766 (a reduction of 218 employees)
(2) Strengthening the sales force
- We will integrate the existing individual sales structures of eight companies into a single sales team.
- We will set up a wide-area user sales department and regional sales departments (Kanto, Chubu and Kansai) to run sales activities in their respective areas under the Sales Division. Our aim is to unify the line of instructions and commands, and clarify the locus of responsibility for sales activities to ensure that they are customer and community oriented.
(3) Establishing a system network
- We will introduce a company-wide uniform sales and management system to accelerate personnel downsizing in the management and back-office sections as well as information distribution.
(4) Establishing an operating tie-up with Tokan Kogyo Co., Ltd.
- We will conduct mutual OEM production to increase the operating rate of every mill and to cut distribution costs by streamlining transportation.
- We will jointly procure materials to cut costs.
- We will promote technical and personnel exchange to improve production efficiency and quality.
- We will study and implement joint strategies to improve our positions in the industry and enhance customer trust.
3. Profit Target
We will strive to increase profit by 2.3 billion yen compared to the level in fiscal 2002, to attain ordinary profit of at least 600 million yen in fiscal 2005.
- Personnel downsizing: 1.4 billion yen
- Reduction of fixed costs after mill closedown: 0.5 billion yen
- Effect of operating tie-up, etc.: 0.4 billion yen
4. Timetable
Oct. 1, 2003 Merger of six companies into Nichiita Package Industries Co., Ltd.
End of Dec. 2003 Closure of Jujo Corrugated Case Corporation Osaka Mill
End of Jan. 2004 Corrugators replaced in Aichi Mill to introduce operations on two eight-hour shifts
End of Mar. 2004 Business transfer from Chubu Corrugated Case Corporation and San-Mic Chiyoda Corrugated Case Corporation to Nichiita Package Industries Co., Ltd. for the closure of the first two companies
End of May 2004 Introduction of a system of two eight-hour shifts to Shizuoka Mill
5. Future Challenges
We will proceed with the above revision to our business structure within fiscal 2005 to establish stable profitability. We will then use the cash flow to achieve further labor savings and update equipment to bolster our strength.
Nichiita Package Industries Co., Ltd. : Corporate Profile
  Location of Head Office : 1-3 Kanda Sudacho, Chiyoda-ku, Tokyo
  Capital : 306 million yen
  Annual sales : 30 billion yen
  Number of employees : 1,021 (when founded) to be reduced to 773 (as of the end of FY 2004)
  President : Shigeru Kagaya

  [Mills and Office]

[Mills and Office]

Name (Former Company Name) Location
Fukushima Mill (Jujo Higashi Corrugated Fiberb.Co., Ltd.)
Ibaraki Mill (Nichiita Package Tokyo Corrugated Case Corporation (Koga Mill))
Saitama Mill (KG Pack Corp. (Tokyo Office))
Chiba Mill (Nichiita Package Tokyo Corrugated Case Corporation (Matsudo Mill))
Shizuoka Mill (KG Pack Corp. (Shizuoka Mill))
Aichi Mill (Jujo Corrugated Case Corporation (Nagoya Mill))
Gifu Mill (Goto Corrugated Case Corporation)
Shiga Mill (KG Pack Corp. (Kansai Mill))
Kyoto Mill (Nichiita Package Kyoto Corrugated Case Corporation)
Iwaki, Fukushima
Sowa-machi, Sashiwa-gun, Ibaraki
Soka, Saitama
Matsudo, Chiba

Fuji, Shizuoka
Anjo, Aichi
Mizuho, Gifu
Kusatsu, Shiga
Kumiyama-cho, Kuse-gun, Kyoto
Name (Former Company Name) Location
Takahata Office (Jujo Higashi Corrugated Fiberb.Co., Ltd. (Takahata Mill)) Takahata-machi, Higashi Okitama-gun, Yamagata