content_image/83795.jpg content_image/83810.jpg
<img src='content_image/83795.jpg'>

We, the Aerospace Company, have a clear vision for the future under FDR-1. We have set specific objectives and are imple- menting decisive initiatives that are bringing us steadily closer to these goals. I would like to outline for you where we stand today. 

First, to participate aggressively in the long-term growth of the international aircraft industry, we are actively partnering with and expanding our relationship with The Boeing Company and work- ing with Airbus in its A380 commercial aircraft program. We are also actively participating in the High Performance Environmental Adaptability of Small-Sized Aircraft Program for development of domestic aircraft. In addition, we were selected from among many supplier candidates to participate in the planning work on the new Boeing 7E7 commercial aircraft program as an Airframe Team Member. 

In the field of defense aircraft, we have been entrusted with the development, manufacturing, and maintenance of Japan Defense Agency aircraft, such as the AH-64D, the T-7, and others as well as related tools and equipment. In the field of large military air- craft development, we are responsible for the wing and vertical tail fin sections of both the P-X and C-X. Going forward, we will continue to focus on our defense-related activities as a core component of our aerospace business and are committed to playing an important role in contributing to the defense of Japan. 

Looking to future growth, we are closely monitoring those segments of the aircraft business offering the greatest potential and are fully committed to expanding our position. Thus far, our own previous projects have included the FA-200, 700/710 (FA-300) and 204B; looking ahead, we will assess the growth potential of the projects we undertake and focus on maximizing profitability. First, in the unmanned aircraft field, we have nearly 

<img src='content_image/83810.jpg'>

In fiscal 2002, net sales of the Industrial Products Company decreased ¥5.9 billion, or 15.9%, from the previous year. This was a disappointment in light of the development cost of the new flagship EX series of OHC engines, which would be essential to ensure future growth. Operating losses sparked a sense of crisis within the company. Now, the development, manufacturing, and sales divisions are working together to wring all inefficiencies from product development, manage profitability by product and 

## Aerospace Company 

## Industrial Pr oducts Company 

exclusive responsibility for the development and production of practically all unmanned aircraft in Japan and have successfully developed and applied the advanced technologies needed to support these activities in the private and defense sectors. These core technologies for unmanned aircraft have been important in enabling us to implement other activities, including the High-Speed-Flight Demonstration Project (HSFD), other experimental aircraft projects, and the development of an airship system for the Stratospheric Platforms Project. 

In the period ahead, leveraging our core technologies, we will continue to expand our unmanned aircraft business and have reached the point where we have confidently made the decision to enter the small jet aircraft business under our own brand. We are steadily working to upgrade our automation, mass production, and other technologies in preparation for carrying this enterprise forward. Accordingly, we will undertake in-depth market research and prepare business plans to guide us forward and conclude alliances with the best strategic partners to ensure optimal sales and operational support. 

To achieve our goals, we are strengthening management resources and are making progress as planned to be among the world’s top companies in terms of quality, cost, and delivery (QCD). Recognition for this progress came during the year when we received a “Supplier of the Year” award from The Boeing Company. 

Through these initiatives, we of the Aerospace Company plan to boost sales 50% over current levels, to ¥100 billion, by fiscal 2007. Moreover, in 10 years we are aiming to expand sales more than three-fold, to ¥200 billion. We will become an aircraft man- ufacturer with a global presence and are committed to success as a leading manufacturer of aircraft and related systems, based on the highest level of technology developed independently. 

by region, discontinue unprofitable models to reduce costs, conduct activities to improve productivity, and undertake other measures to restructure the Group. The company started full-scale marketing activities for the EX series in fiscal 2003 and net sales of the engines increased ¥2.2 billion, or 7.0%, putting a halt to the decline in net sales and mitigating the scope of operating losses. 

In fiscal 2004, the company intends to reverse two years of losses. The war in Iraq, the issue of SARS, the weakness in the U.S. dollar, and other external factors are hurting the economy, but the Industrial Products Company plans to maintain the sales 

