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OMRON SWITCH & DEVICES Corporation to Commence Operation;
Aiming for World's No. 1 in Switch Business

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  • March 31, 2010
  • FOR IMMEDIATE RELEASE

OMRON Corporation (TOKYO: 6645, ADR: OMRNY) today announced that OMRON SWITCH & DEVICES Corporation (OES) will commence operation on April 1, 2010 with the aim of strengthening OMRON's switch business.

On the same day, with the aim of enhancing its relay business, OMRON Takeo Co., Ltd. will be merged with OMRON RELAY & DEVICES Corporation (OER), and the production base in Takeo will operate under the umbrella of OER. (These switch and relay strategies have already been announced on November 26, 2009.)

1. About OES

Inauguration of OES

As of April 1, 2010, OMRON will relocate the headquarters of its consolidated subsidiary specializing in the development and production of switches, called OMRON KURAYOSHI Corporation, to OMRON's Okayama Factory, where it will start operation under the new name, OMRON SWITCH & DEVICES Corporation. For the inauguration of OES, OMRON will spin off the switch division of the Electronic and Mechanical Components Company (EMC) into OMRON KURAYOSHI through an absorption-type corporate split. As part of this split, OMRON's consolidated subsidiary OMRON IZUMO Co., Ltd. will be absorbed by OMRON KURAYOSHI as the surviving company. The production bases in Kurayoshi and Izumo will continue to operate under the umbrella of OES.

Objectives of OES Inauguration

Although the switch market is highly attractive with anticipated steady growth, global competition is increasingly fierce with the rise of competitors from emerging countries.

OMRON's switch business boasts one of the broadest scopes of product offerings in its industry with more than 30,000 different product types. This extensive range accommodates uses in consumer and commercial products, as well as automotive, factory automation and industrial applications. Focusing on contact reliability, a key factor that determines the basic performance of switches, OMRON produces high-quality products through an integrated production system that covers parts to final assembly. At the same time, it draws on its cutting-edge manufacturing technologies for materials and precision processing.

As it faces a highly competitive business environment, OMRON will strive to fully demonstrate its unique strengths, in order to successfully expand business in the highly promising switch market. Toward that end, integration and concentration of product planning, development/design and production functions in a single site (OES) will be essential. This will allow OES to speedily create new products that address a diversity of potential market needs, while flexibly responding to customization demands for meeting the specific applications of individual customers. As a comprehensive switch manufacturer, OES will strive to accelerate growth through its "only one, only for you" strategy designed to meet diversified customer requirements through state-of-the-art manufacturing technologies.

OES's Business Strategies

OES will implement the following three strategies to strengthen its switch business.

(1) Acceleration of Global Development
[Global Development of Production]
OES will establish a three-tier structure for global production consisting of the central strategic bases, satellite factories and partner factories. The individual roles and functions of these three parties will be clarified, aiming for total group-wide optimization of the production system. Specifically, the central strategic bases in Japan will be tasked with developing core manufacturing technologies, while overseas satellite factories will pursue product creation meeting the highest possible standards of quality, cost and delivery. External partners will fully demonstrate their own unique strengths. As part of this drive, production operations will be transferred from the Kurayoshi and Izumo factories in Japan to overseas satellite factories. This will allow Japanese sites (Okayama, Kurayoshi and Izumo) to concentrate on strengthening their function of overseeing and supervising overseas production operations.

[Global Development of Sales]
With customers' production activities increasingly transcending national boundaries, it is not unusual at all for development and production sites to be located in separate countries. OMRON has more than 150 sales locations throughout the world. OES will serve as the "hub" for connecting and providing centralized control over these production and sales bases. By so doing, OMRON will be able to provide customers anywhere with optimal products and services that meet their quality, cost and delivery requirements, so as to better contribute to individual customers' global business operations.

(2) Acceleration of New Product Creation
The switch business is best characterized by the need for customized development and modification in a way that ideally suits specific applications based on the full knowledge of each customer's product usage conditions. With this in mind, OES will build and augment a frontline engineering system. With this system, developers, engineers and technical staff will visit customers inside and outside of Japan and accurately grasp their needs in order to speed up the creation of new products. During fiscal 2010, releases of various new products are planned, including highly oil-resistant switches for industrial equipment, and door switches for automobiles that increasingly deploy electronics.

(3) Enhancement of Manufacturing Technology
Aiming to overcome global competition, OES will strive to produce breakthroughs in product creation through the enhancement of manufacturing technologies. With the key concept of "clever conservation," OES will bolster the platform of manufacturing technologies with the main aims of preserving the global environment and reducing manufacturing costs. Specifically, an MFCA (Material Flow Cost Accounting) technique will be adopted to "visualize" materials that were formerly discarded as waste during conventional production processes. Based on this endeavor, OES will work to eliminate waste scraps from the pressing process using the new die design concept, while promoting conservation of resources through the development of new materials. High-cycle molding technology will also be adopted to minimize loss in molding materials.

Functions of OES's Offices/Factories

[Okayama Head Office]
Various functions including business strategy formulation, product planning, product development and production engineering will be concentrated in the Okayama Office, where OES will be headquartered. By effectively coordinating and synergistically integrating these functions, OES will aim at product creation at an even higher level. The Okayama Office houses the Monozukuri Innovation HQ, OMRON Group's cross-divisional organization responsible for technological support. By drawing on the core technologies that this organization possesses, OES will aim to promote more advanced product development and reinforcement of production engineering.

[Kurayoshi Factory and Izumo Factory]
The Kurayoshi Factory's core strengths are in technologies related to parts and dies, as well as automated production, boasting high mass-production quality through the use of an integrated production system that handles everything from parts to final products. The Izumo Factory in turn specializes in low-volume, high-mix production based on its experience accumulated through the production of components for industrial equipment, resulting in the production of highly reliable products. The Kurayoshi and Izumo factories will continue producing existing products by taking advantage of traditional proprietary production expertise, while at the same time overseeing and supervising overseas factories as central strategic bases.

Sales Target

OES aims to become the world's leading switch business company, with sales revenue of 50 billion yen by fiscal 2018.

Overview of OES
President and CEO Yoshihiro Taniguchi
Location 2075 Miyoshi, Naka-ku, Okayama-shi, Okayama
Business Business planning, marketing, development and production of switches for industrial equipment, consumer and commercial products, and automobiles
Capital 300 million yen (as of April 2010)
Established April 24, 1969 (name change: April 1, 2010)
Employees 664 (as of April 1, 2010)

2. Management Integration of Relay Business

OMRON's relay business consists of OMRON RELAY & DEVICES Corporation (OER) and OMRON Takeo Co., Ltd. These companies will merge on April 1, 2010, in order to enhance technological expertise in product creation and accelerate the optimization of global production.

Through management integration, OMRON Takeo's business planning, marketing and relay design functions will be centralized at OER headquarters in the Kumamoto Office to concentrate on global business management and enhancing manufacturing technologies for relays. The production base in Takeo will be dedicated to relay production, utilizing its know-how regarding low-volume, high-mix production. Following management integration, OER will aim for 85 billion yen in sales revenue in fiscal 2014.

Overview of OER
President and CEO Koichi Tada
Location 1110 Sugi, Yamaga-shi, Kumamoto
Business Business planning, marketing, development and production of relays and peripherals
Capital 300 million yen (as of April 2010)
Established August 24, 1971 (name change: April 1, 2003)
Start of operations April 6, 1972
Sales 28.9 billion yen (fiscal 2008)
Employees 1,034 (as of April 1, 2010)

About OMRON

Headquartered in Kyoto, Japan, OMRON Corporation is a global leader in the field of automation. Established in 1933 and headed by President & CEO Hisao Sakuta, OMRON has over 36,000 employees around the world working to provide products and services to customers in a variety of fields, including industrial automation, electronic components, social systems (ticket gate machines, ticket vending machines and traffic control) and healthcare. For more information, visit OMRON's corporate website at www.omron.com.

Media Inquires
Masayuki Atsumi (masayuki_atsumi@omron.co.jp)
Strategy Planning Division,
OMRON Electronic and Mechanical Components Company
Tel.: +81-75-344-7047

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