July 30, 2008,08:55 +0900(JST) Fortune Global 500

“Global 500,” an annual list of the world’s largest corporations prepared by Fortune Magazine, has been published this year as usual. Companies on the globe are ranked in order of revenue (for fiscal 2007). Although the ranking does not reflect overall corporate strength, it is worthy of attention. By inclusion on the list, a company can be recognized as having a certain scale. More importantly, changes in the rankings from the previous year tell us how the companies have grown over the last year. This is why the Global 500 list attracts wide attention every year.

On this year’s list, Sumitomo Electric was ranked No. 383, slightly down from its previous rank, unfortunately. The Company had moved up to No. 344 on last year’s list, from No. 366 the year before that. Given the Company’s generally favorable business performance for fiscal 2007, I had secretly hoped for a higher rank this year, so I am somewhat disappointed with the result.

Let me make a quick analysis. Since revenue figures are converted to U.S. dollars, foreign exchange rates seem to have a considerable impact on the rankings, as it often happens. Despite the dollar’s weakening globally, the value of the yen has not increased against dollar as much as other currencies. As a result, U.S. and Japanese corporations suffered declines in their rankings, on the whole. Admittedly, some uncertainties did exist over the economies of both countries.

By country, the U.S. and Japan ranked first and second, respectively, in the number of corporations on the Global 500 list, a clear lead over third place. However, when I look to the remarkable growth of corporations based in the euro bloc, China and other emerging economies, I ponder how I should steer the Company to future growth amid the rapid spread of globalization. I feel like sighing about the business environment surrounding us, which has become severer every year.

While Sumitomo Electric has increased its revenues by more than 9% in terms of the U.S. dollar, other world enterprises generally recorded two-digit growth. Some of them, such a Bank in India, enjoyed a growth rate of over 40%.
Unfortunately, some well-established Japanese corporations have fallen off the Global 500 list. Japanese companies, including Sumitomo Electric, should make further efforts, hopefully to display the latent power of Japanese industry.

Among the Global 500 corporations, companies whose revenues were more than tenfold that of Sumitomo Electric are the top five big businesses: Wal-Mart Stores (No. 1), Exxon Mobil (No. 2), Royal Dutch Shell (No. 3), BP (No. 4) and Toyota Motor (No. 5). (General Motors ranked fifth on last year’s list, and fell to ninth place this year.)
These comprise a group of the ‘best of the best’ corporations, which we can look up to as a lofty goal.

As I wrote on this blog last year, increasing the size of operation is one of the most important goals to pursue for sound development of the Sumitomo Electric Group, to achieve our goal of becoming a “Glorious Excellent Company.”
We are determined to continue our management efforts from a global perspective, so that we will remain on, and move up on, the Fortune Global 500 list in the future.

July 23, 2008,08:57 +0900(JST) Yamagata Ginzan-Onsen Hot Spring Trip

I reported in a blog entry last year that my wife and I, with three couples of friends, enjoyed a two-day trip to Kushiro Marshland, Hokkaido, immediately after the shareholders general meeting.

This year, we organized and took a trip to Ginzan-Onsen Hot Spring in Yamagata Prefecture on July 5 and 6, immediately after the shareholders general meeting, as we did last year.
The four couples decided to make this one a “freewheeling” trip, in which we say whatever we feel, eat and drink as much as we like and play to our heart’s content. We understand each other’s positions and feelings very well. When we drank, we had endless things to talk about, maybe because we usually spend stressful days. I enjoyed the trip very much.
We take turns in organizing trips.

At Ginzan OnsenOur travel itinerary always includes a round of golf for the men, while the wives go sightseeing. For the rest of the itinerary, we visit places of scenic and historical interest together.

This journey’s main features were a stay at Ginzan Onsen, a hot spring resort with the atmosphere of the romanticism of the Taisho period (1912 - 1926), a trip to a silver mine site, which produced high-quality silver for 400 years, and a boat ride on the Mogami River, site of one of the most famous poems of haiku poet Basho: “Samidare wo / Atsumete hayashi / Mogamigawa (The summer rains / Gathering swift / Mogami River)” (In The Narrow Road to the Deep North).
The original version, with “cool (suzushi)” instead of “swift (hayashi),” was a greeting poem for his host at a linked verse party gathering in Obanazawa, where Basho had a long stay. Basho wrote this poem to express his appreciation for the host’s kind hospitality. In response, the host wrote a splendid poem depicting Basho’s stay as the gleams of fireflies: “Kishi ni hotaru wo / Tsunagu funagui (Fireflies at the riverside / Moored to a mooring post).”

Satonishiki cherry pickingWe also wanted to remain moored to the post longer, but we knew we could not do so.
The itinerary also included the Satonishiki (the famed variety of cherries) cherry picking and a visit to Risshakuji mountain temple, another site of a famous Basho’s poem: “Shizukasa ya / Iwa ni shimiiru / Semi no koe (The stillness / Seeping into the rocks / The chirping of cicadas).” To reach the main temple, visitors ascend 1,015 stone steps. The itinerary was very tight.
These destinations seem to represent the diversity of purpose of tours that travelers of about our age seek, which makes me smile a wry smile.

Me against the backdrop of the Ginzan RiverNow, I would like to briefly write about Ginzan Onsen.
The hot-spring town is located in Obanazawa City, the birthplace of the traditional Japanese folk dance song “Hanagasa Ondo.” Fourteen Japanese-style inns (three- or four-storied wooden buildings) line both banks of the Ginzan River, a clean stream five to six meters wide. In some of smaller inns, visitors can take a long stay for a hot-spring cure. At the fall of evening, gas lights are lit. I felt I had gone back to the romantic Taisho period by time machine. Of course, I have never experienced Taisho days. If someone asks me if I am sure, I will not be able to confidently answer “yes.” At least I can say for sure that the streets are not modern.

Even in the inn room, I could hear the clattering of wooden clogs on the stone-paved road as guests took strolls nearby inn, seeking the evening cool. In addition, the nostalgic croaking of kajika frogs helped stage a summer evening in a mountain town.
We stayed at Notoya Ryokan, the oldest inn in the hot spring area, on Saturday. We enjoyed watching till late at night the locals do a traditional Hanagasa dance on one of the bridges across the Ginzan River. This event is organized by the Ginzan Onsen Resort Association on weekend nights in summer.

This concludes my report on our “refreshment of spirit” tour.

July 18, 2008,09:24 +0900(JST) Sumitomo Electric Group Partners’ Meeting

The first Sumitomo Electric Group’s Partners’ Meeting was held on July 4. We launched this new series of meetings to provide opportunities for our suppliers to meet purchasing managers from Group companies, and get briefed on the Group’s long-term strategies and purchasing policies. As important business partners, companies that supply raw materials, parts, equipment or the like to Group companies will be invited to partners’ meetings. Participants in the first meeting included suppliers to Sumitomo Wiring Systems, Tokai Rubber Industries, Nisshin Electric and other major companies of the Sumitomo Electric Group.

The business environment surrounding the industry has undergone drastic changes. Among other things, it looks like manufacturers are fighting for resources, such as crude oil, iron ore, copper and rare metals, on a global scale. In view of this alarming situation, we must ensure stable supply of products to fulfill our social responsibilities as a corporation. To this end, it was extremely meaningful to have opportunities to share ideas and information with our suppliers at this meeting.

Explaining “VISION 2012”Partly because it was the inaugural meeting, I outlined Sumitomo Electric Group’s “VISION 2012,” albeit briefly.
Directors in charge also gave presentations on our materials purchasing policies and R&D trends. Due to time constraints, however, it was difficult to explain in detail. We will continue our sincere efforts to share information and values in various forms.

Although we fail to achieve it for this meeting, we should include something interactive in the program of this kind of meeting, instead of unilaterally providing information to participants. We need to improve the content of the meeting program so that we can exchange opinions with participants.

At the partyAfter the presentation session, I had an opportunity to talk in person with participants at a buffet-style party. Unfortunately, it was impossible to talk with all participants, since those attending far exceeded 200 persons. Even so, I was very pleased that there were so many persons with whom I was able to exchange greetings for the first time.

I think one of the advantages of buffet-style parties is that we can exchange words with relatively many people in this fashion. I had a great time, albeit a short time, talking with our important partners at this party.
I look forward to next partners’ meeting.

July 15, 2008,09:17 +0900(JST) Impact of Superconducting Electric Cars (3)

The superconducting electric car was displayed at the Integrated Exhibition of the Environment in celebration of the Hokkaido Toyako Summit, held from June 19 to 21, and was made available for a test ride at the venue.
Unfortunately, I was not able to go to the venue, Sapporo Dome. According to an employee who participated in the Exhibition partly as a presenter at our exhibition booth, the venue was thronged with visitors. I was pleased to hear that.

Governor Takahashi delivering Hokkaido declaration of the environment

At the opening ceremony of the Integrated Exhibition, Hokkaido Governor Harumi Takahashi delivered an opening address and the Hokkaido declaration of the environment, in a powerful yet graceful manner, to other parts of Japan and the world.

In Sumitomo Electric’s exhibition booth, we installed a demonstration machine to provide an easy-to-understand explanation of superconductivity, and displayed power cables and the motor of a superconducting electric car as example applications of superconductivity technology. The demonstration machine attracted particular attention, since it demonstrated a superconducting state in a way easy to understand, using liquid nitrogen. A local television crew came to get some footage of this exhibit for a program.

Director-General Fukano of Hokkaido Bureau of Economy, Trade and Industry visiting the booth (left) / Mayor Kita of Naie Town before the test-rideWe had the honor of receiving a visit to our booth by Mr. Hiroyuki Fukano, then-Director-General of the Hokkaido Bureau of Economy, Trade and Industry. As I wrote in my earlier blog entries, the Sumitomo Electric Group places great importance on its contribution to Hokkaido, having set up a number of manufacturing subsidiaries there. On the basis of such connection between Sumitomo Electric and Hokkaido, Mr. Fukano visited our booth. He listened intently to then-Managing Executive Officer Ryosuke Hata and other staff at the booth as they explained the exhibits, and he took a test ride in the superconducting electric car.

We also had the honor of a visit at the booth by Mayor Ryoji Kita of Naie Town, Sorachi County, Hokkaido. Naie town is home to our two Group companies, Hokkaido Sumiden Precision Co., Ltd. and Hokkaido Electric Industries Ltd. The Mayor intently looked around the environment exhibition. After visiting our booth, he also took a test ride. I am sure he enjoyed the smooth and powerful driving performance of our superconducting car.

Partly due to the novelty of a superconducting car, the test-ride event was popular among visitors. By actually having a ride in the car, people will probably understand its performance and advantages very well.

Given that the motors need to be cooled, it may be difficult to put superconducting cars to general consumer use in the immediate future. We will continue our efforts toward practical use of the superconducting electric car — an environmentally friendly vehicle with low energy loss.

July 8, 2008,09:57 +0900(JST) Impact of Superconducting Electric Cars (2)

Two superconducting electric cars were prototyped.
As soon as we issued a press releaseon June 12, we received a massive response. The superconducting electric cars have been often taken up by the media on various other occasions as well.
Unless you actually drive or get in such a car, you cannot know the characteristics of the car, as well as its riding comfort and, if I may be allowed a little exaggeration, you cannot assess whether or not this application is promising as a business. So, I had a test ride on the occasion of a R&D presentation.

Before the test-ride

Since it is an electric vehicle, the test car is very quiet. There are different types of cars driven by electric energy supplied by batteries, ranging from golf carts to current hybrid vehicles. The quietness of these vehicles is irresistible.
And the superconducting motor proved its merits! Since superconductivity means low energy loss, superconducting wires do not emit heat, so are free from risk of burnout due to overload. You can start a superconducting car with the accelerator pressed to the floor, without fear of motor burnout. With rapid acceleration, this car could win an easy victory over a sports car, if in a very short distance.

The greatest advantage of a superconducting car lies in fuel efficiency, rather than in performance. In this sense, we will focus our research on application of superconducting motors first to large vehicles, such as buses and trucks, or electric vehicles used by delivery companies, instead of cars for the consuming public.
That said, by actually having a ride in such a dream car, albeit a prototype, I felt that the day the dream comes true was drawing nearer.

Looking under the hood while hearing an explanation, I understood very well how the technology mentioned in my previous blog entry is used in this car. I also understood how hard those involved have worked to develop this groundbreaking vehicle. The test ride proved a very valuable experience for me.

[ This superconducting electric car was displayed and test-driven publicly at the Integrated Exhibition of the Environment in celebration of the Hokkaido Toyako Summit, held from June 19 to 21 at Sapporo Dome. In addition, the superconducting motor will be exhibited at the Environmental Showcase, held from July 7 to 9 at Hokkaido Toyako Summit International Media Center. ]

SUMITOMO ELECTRIC President CEO Masayoshi Matsumoto

Born in 1944 in Hyogo Prefecture, Masayoshi Matsumoto joined Sumitomo Electric in 1967. After serving as General Manager of Chubu District Office, Managing Director and Senior Managing Director, he assumed office of President and CEO in June 2004.

His leisure activities include jogging, reading and art appreciation. Also a seasoned athlete, he played baseball in junior high school and practiced judo in senior high school. In university, he threw the javelin competitively and participated in all-Japan inter-university competitions.

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