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Dear
Shareholders,
Passion,
drive, teamwork and focus combined to make 2001
a year of extraordinary change for KR Precision.
It was a year in which we strengthened our operations
and achieved many noteworthy milestones.
It was also a year in which the overall market
declined upwards of 30%, perhaps the worst year
for the industry in 20.
We
knew we were in for a tough year as PC sales, the
No. 1 driver of disk drive demand, started to show
signs of slowing just before Christmas 2000, and
then actually declining beginning in the first quarter.
PC shipments are projected to be down between
5 percent and 6 percent from 2000 ending 15 years
of unbroken year-over-year sales growth.
But
there may be more good news than bad news in these
numbers.
During the year the
digital data storage industry witnessed the first
incremental shipment of hard disk drives to the
consumer electronics market: the Microsoft's Xbox
and the Apple iPod MP3 player.
The expansion of disk drives into gaming
box and mobile audio devices represent two
of the most significant new market developments
in the history of the hard drive industry, a tangible
demonstration of the incremental opportunities now
emerging for rotating magnetic storage.
Even
though our financial results in 2001 failed to satisfy
our longer-term goal of profitability, both
unit sales and total revenue grew in spite of an
overall flat HDD market. Our
sales reached a milestone of over Baht 2 billion (US$88
million), an increase of 83% from 2000. Shipments
ended the year at approximately 73
million units, up 15% from the previous year.
KR's market share will be approximately 11%
at year-end 2001 compared to 8% at year-end 2000.
To achieve these milestones, we broadened
our customer base, expanded our product line, and
improved our ability to perform to tighter customer
specs.
Digital
data storage continues to be one of the most exciting
places to be.
Demand for storage capacity continues to
rocket upwards.
The market continues to diversify.
And, the industry continues a relentless
pace of technology breakthroughs.
The industry ended the year shipping 40GB/platter,
up from 20GB/platter at the end of 2000. With
the escalating complexity of the disk drive programs
being undertaken by KR, we are investing more to
achieve operational excellence. We have further
strengthened our middle and senior management teams
during the year. Concurrent with the completion
of our advanced manufacturing cells, the
company introduced a number of new
manufacturing technologies over the last year.
We have some exciting technologies in development,
and we are looking forward to introducing these
in the coming year.
The
company completed construction of its new precision
tool and die facilities and successfully sold both
of the former manufacturing buildings.
These new tool and die facilities provide
world-class precision tooling capability and arguably
the best facilities in Thailand today.
In the last year, we also introduced
three major initiatives in our management:-
(i) Quality/Environment/Safety/Health:
We completed certification for ISO 9001:2000
and we are well on our way to completing ISO 14000
and OHSA 18000; (ii) We put the “e” (for e-business)
and the “i” (for intranet and internet) in everything
we do, and in the process, dramatically improved
productivity and efficiency throughout the organization;
and (iii) we became a six sigma company and we will
leverage six sigma to further extend these productivity
and performance improvements throughout the
company.
In
a nutshell, our people, processes and technology
have never been stronger. Our operations today are
in the best shape they have been in for years and
we will continue to improve further in the future.
In
conclusion, our foundation is solid. We are building
new value on this foundation.
James R. Steger
Chief Executive Officer & President
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