1. Economic recession in Brazil

[2] Executing structural reforms

DNBR President & CEO Hiroshige Shimbo led a series of structural reforms to rebuild the company’s management. The two pillars of these reforms were Total Cost Reductions and Sales Maximization.
In the area of Total Cost Reductions, DNBR deployed DANTOTSU(best by far) Plant Activities to enhance the productivity of direct divisions and part localization activities. DNBR also reviewed its logistics network for imported goods and cut intermediate costs by arranging for customs clearance and sea freight on its own.
In terms of fixed costs, DNBR significantly revised its manpower planning, and carried out large-scale layoffs after holding interviews. It also called for an 80% cut in its initial expense budget, canceling almost all necessary projects and even cutting into areas essential to corporate management. Regarding M&E investment, DNBR reviewed the implementation timing and scale of new projects. In addition, DENSO made efforts to improve profitability throughout the region, and liquidated a subsidiary in Brazil that had manufactured plastic cases and other air conditioner parts. This subsidiary’s functions were then incorporated into DNBR.
As for Sales Maximization, DNBR promoted new sales expansion measures and the extension of exports to DENSO affiliates in other regions, while at the same time focusing its energy on the aftermarket business in order to decrease its dependence on its O.E.M. business. DNBR also asked its customers for their understanding regarding Brazil’s economic circumstances, including fluctuating exchange rates and high customs duties, and requested them to review their product prices.
In this way, DNBR achieved profitability in 2016 for the first time in three years. The structural reforms carried out at this time also formed the basis for subsequent business expansion.