Daibea Co. Ltd. (Japan) said it has targeted a 20% reduction in overall manufacturing costs for fiscal 2003.

Founded in 1936, Daibea was formerly named Osaka Bearing Company. In 1963, bearingmaker Koyo Seiko (Japan) took an ownership interest. Osaka Bearing was later renamed Daibea, and Koyo now owns 42.5% of the company's outstanding shares.

Daibea manufactures specialty ball and roller bearings, such as thin-section and special-environment bearings, for industrial, robotic, automotive, rail, bicycle and other applications. 96% of Daibea's production is ball bearings, the rest tapers.

Virtually all of Daibea's sales are through Koyo, which now buys 98% of the company's output. Daibea sells a small amount directly in Japan, but all export sales occur through Koyo. Half of Daibea's Koyo export sales end up in the North American market.

Increasingly, Daibea has been facing stronger competition in all of its markets from bearings imported from eastern Europe, China, Korea and India. To counter those challenges, Daibea recently announced it has targeted the end of this fiscal year for a 20% overall reduction in manufacturing costs.

Daibea operates two manufacturing plants, but its main facility Nabari will receive virtually all of the attention and investment.

The bulk of Daibea's cost-reduction focus will be on improving throughput and efficiency, particularly in the grinding operations. Daibea's focus reflects virtually every bearing manufacturer's concern; that grinding is the most potentially trouble-prone and bottleneck-prone step, and the step where the cost of scrap rises dramatically. A parallel phase involves improving inspection processes and accuracy, with the aim toward pinpointing the sources of defective products as they move through the manufacturing process, enabling the company to proactively address problem areas.

Targeting material cost reductions, Daibea said it will increase its outsourcing of bearing seals to more low-cost vendors in China, among others.

So far, Japanese equity markets have reacted favorably to Daibea; its share price is up 40% over the past year, recently trading at ¥228 per share.


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