Yokogawa Electric Corporation announced an extensive realignment of its production facilities in Japan to be completed by the end of fiscal year 2003, to enhance cost competitiveness in the rapidly changing global market.

Since the company's founding in 1915, Yokogawa has contributed to the industrial progress of Japan and the world as a specialized supplier of industrial automation, measuring instruments, and systems. Committed to supplying the most advanced, quality technology and products that meet and exceed the needs of the market, it is essential to maintain a very high level of efficiency at all production facilities throughout the world, but especially in Japan - as presently 90% of the total production of the Yokogawa Group is completed in Japan.

To maintain this efficiency level, the existing 19 production facilities of the Yokogawa Group in Japan will be realigned to four plants - Kofu, Komine, Ome, and Komagane - by the end of the fiscal year 2003.

After realignment, these four plants will function as the core manufacturing facilities for industrial automation instruments, systems, electronic measuring instruments, and semiconductor manufacturing equipment in Japan.

The realignment of all production facilities in Japan will allow centralized production, a reduction of redundant functions, and streamlining of administrative functions. These actions will enhance Yokogawa's superior production abilities, already known for their outstanding capability to manufacture multiple products in small lots in a very short delivery period.

The workforce of the 15 plants affected by the realignment will be relocated to the four main plants and other relevant assignments within the Yokogawa Group.

Global Production Set-up Remains

As mentioned above, the realignment of production facilities in Japan is expected to increase Yokogawa's global production capability and cost competitiveness in an extremely price-conscious world market.

To meet the requirements of global customers, Yokogawa currently has production operations in 13 factories in nine countries - United States, The Netherlands, Germany, Singapore, Indonesia, China, Korea, India, and Brazil. Some of these plants are supplying to the global market while others are providing specific products to the local market.

A new production facility to be constructed in Suzhou, China, is designated as one of the global production centers to enhance Yokogawa's global production and cost competitiveness.

With the addition of Yokogawa Electric China, the global production centers will consist of the controller manufacturing plant in Korea (Yokogawa Electronics Manufacturing Korea), distributed control systems plants in Singapore (Yokogawa Electric Asia) and Indonesia (PT Yokogawa Manufacturing Batam), the meter plant in Suzhou (Suzhou Yokogawa Meter Company), and the field instruments plant in Suzhou (Yokogawa Electric China). The nine plants in other countries will continue their present production activities.

Presently, production outside of Japan is 10% of the total production of the Yokogawa Group. Yokogawa plans to increase this ratio to 50% by fiscal year 2005. With the realignment of plants in Japan and by expanding global production, Yokogawa will realize a significant cost reduction. The financial result of reduced fixed expenses arising from the realignment and the strengthening of global production centers is expected to be an increase in consolidated operating profits by 10 billion yen in fiscal year 2004.

These bold decisions express the Yokogawa Group's resolve to achieve the goals of the VISION-21 and ACTION-21 business plans - consolidated sales of 500 billion yen and consolidated operating profit of 50 billion yen.