May 21, 1999
Restructuring Plan of Nippon Paper Industries Co., Ltd.
Nippon Paper Industries Co., Ltd.
Today's paper industry must respond to rapid changes in industrial structure such as changing demands for paper and the drastic transformation brought on by international competition. As a leading paper manufacturing company, NPI, Nippon Paper Industries Co., Ltd., has aggressively pursued several measures, such as shut down or elimination of 12 paper machines, since the establishment of NPI through merger. Taking this change in the environment into account, NPI decided to reconsider its production facilities in order to establish a robust company foundation that will enable further progress in the 21st century and also to contribute to the reduction of excessive production facilities in the industry as follows:
1. NPI will shut down and eliminate six lower productivity paper machines, and examine the possibility of further elimination of paper machines to achieve improved productivity.
2. NPI will close Miyakojima Mill, which is located in the middle of a city, and will make use of the asset.
3. By means of bilateral use of surplus production capacity between NPI and its affiliated companies (Japan Paperboard Industries Co., Ltd., Otake Paper Mfg. Co., Ltd., and Mishima Paper Co., Ltd.), NPI will reinforce its group business foundation.
Elimination of Facilities and the Date of Shut Down
|Mill and Paper Machine||Annual Capacity||Date of Shut Down|
|Yatsushiro Mill||#2 machine||62, 000||September, 1999|
|Miyakojima Mill||#2, 3, 4 machines||23, 000||March, 2000 (Closure)|
|Iwakuni Mill||#2 machine||43, 000||March, 2000|
|Asahikawa Mill||#3 machine||17, 000||March, 2000|
|Asahikawa Mill*||22,000||March, 2000|
|Total||6 machines||167, 000 ton/year||Reduction rate 4.7%|
(*Reduction of production by means of integration of raw materials)
The products heretofore manufactured by the paper machines in Iwakuni Mill, Yatsushiro Mill and Asahikawa Mill will continue to be manufactured by other paper machines at NPI mills, maintaining a continuous, high quality supply to our ustomers.
Closure of Miyakojima Mill
Miyakojima Mill started its operation in 1914 as Imperial Paper Co., Ltd., and through the era of former Oji Paper Co., Ltd., became Miyakojima Mill of Jujo Paper Co., Ltd. in 1949. For many years, the Mill has been manufacturing value-added thin papers, such as rice paper, india paper, glassine paper and base paper to back carbon paper, supported by high-tech production equipment. The Mill also contributed to the development of carbonless paper, various kinds of information recording paper, composite paper (brand name "Oper") and development of other new products.
However, in spite of urgent efforts for rationalization, the Mill began to lose its competitive edge due to its disadvantageous location in the middle of a city and the matured market of its main products. In consideration of changes in the paper industry's structure, NPI abandoned the effort to continue operations at the Mill, and decided instead to utilize its assets to improve equity efficiency to immediately strengthen the company's business foundation.
Basically, the products manufactured at Miyakojima Mill will be produced at Fushiki Mill, Yufutsu Mill and Komatsujima Mill, but some of those products will be produced by Mishima Paper Co., Ltd. In this way, we are determined to guarantee continued sales of these products without the slightest inconvenience to our customers.
We would like to take this opportunity to express our sincere thanks to all the customers who have been purchasing the products of Miyakojima Mill until now, and to ask for your continued cooperation. Accordingly, Osaka Mill of Japan Paperboard Industries Co., Ltd., which is adjacent to NPI's Miyakojima Mill, will also be closed as a part of the Mid-term Strategic Program of Japan Paperboard Industries Co., Ltd.
Utilization of Surplus Production Capacity among the NPI Group
In conjunction with the closure of Miyakojima Mill, a portion of the products that have been manufactured at Miyakojima Mill will be manufactured on its behalf by Mishima Paper Mfg. Co., Ltd. In addition to the closure of Osaka Mill of Japan Paperboard Co., Ltd., some of the paper machines in the company's Geibo Mill are scheduled to be shut down. The products manufactured at Geibo Mill will be manufactured by NPI and Otake Paper Co., Ltd. As a result, the surplus pulp from Japan Paperboard Industries Co., Ltd. will be sold to Otake Paper Co., Ltd.
As mentioned above, by utilizing the surplus production capacity among the NPI group, we expect to improve revenues at each company.
1. Surplus workforce and countermeasures
|(1)||Number of surplus employees (at the end of March 1999)|
|Due to closure of Miyakojima Mill:||185 employees|
|Due to elimination of
paper machines at other mills:
|(2)||Measures to reduce total number of employees to 5, 500|
|a.||Promoting company-wide personnel reshuffle and acceleration of personnel transfer to affiliated companies|
|b.||Establishment of an exclusive task force for the purpose of efficient use of employees and creation of new businesses|
|c.||Voluntary retirement for all employees|
2. Influence on revenue
|(1)||Improvement by restructuring of production facilities|
Total improvement by four companies: 5 billion yen annually
(Nippon Paper Industries Co., Ltd. / Japan Paperboard Industries Co., Ltd. / Otake Paper Mfg. Co., Ltd. / Mishima Paper Co., Ltd)
The cost improvement estimated by means of the company's Mid-Term Planning will be as follows:
3. Efficient use of assets
Miyakojima Mill Site (98, 000 square meters)
(According to company estimate)
|Book value:||5 billion yen|
|Market value:||40 billion yen|