September 26, 2008,09:30 +0900(JST) Shinkansen timetable and diamonds

The core of Sumitomo Electric’s business management principles is to serve our customers and the world at large through our original products, services and activities. Since its founding, Sumitomo Electric has produced numerous products founded on technologies that we can proudly show to the whole world as “ours.” One such product whose significance is visibly understandable is, in my opinion, artificial diamonds.

Diamonds are the hardest material produced on earth, with the highest thermal conductivity and the smallest thermal dilatation, which transmits sound most rapidly. At Sumitomo Electric, we are capable of manufacturing diamonds artificially and stably.

On hearing the word “diamond,” most people usually think of diamond as a jewel. Our diamond, on the other hand, is an industrial tool so may lack decorative beauty.

Tokaido-Sanyo Shinkansen timetableRecently, we had our diamond photographed for a promotion to advertise our cutting-edge technology. The photograph will be featured on the front and inside-front pages of the pocket timetable of Tokaido-Sanyo Shinkansen (bullet train).

There are some common features of diamonds and shinkansen: solidness, excellent performance... I hope that you will find the pocket timetable useful.

The pocket timetable will be made available at major shinkansen stations following a timetable revision in October. Copies featuring photographs of our diamonds will be randomly distributed along with those with other companies’ advertisements. So if you come across one with yellow diamonds, I hope you will take it in your hands and see our pride.

September 24, 2008,09:10 +0900(JST) Visiting “Technopia”

Tokai Rubber Industries, Ltd., a Sumitomo Electric Group company, has business activities in various areas starting with anti-vibration rubber for automobiles. The company is growing thanks to its unique and quality products. In late July, Tokai Rubber Industries completed its research center “Technopia.” I recently visited the facility.

Whole view of TechnopiaTechnopia is in Komaki City, Aichi Prefecture, where the company’s head office is also situated. It’s a six-story building with a total floor area of 10,700 m2 on a site of some 5800 m2 where future advanced technologies will be developed. In other words, it’s a center of new business and new value creation. The facility is quite befitting for this role, and I could feel the company management’s high hopes for this research center.

The center’s researchers told me that the new building is ingeniously designed to facilitate their work, that they feel greatly motivated toward research activities, and that the entire workplace is invigorated thanks to this new environment. I was very pleased with these heartening words. I look forward to many great research achievements from Technopia, a name that means a utopia of new technological development.

Spiral staircaseInside the building, I went to the showroom, where a strange-looking (or I should probably say “original”) spiral staircase caught my eye. You might have guessed … yes, the staircase resembles Drs. Watson and Crick’s double helix model of DNA structure. This is one idea suggested by the researchers, who joined the project team for construction of the center. I felt they were in good spirits. I hope they’ll make great achievements here that will rival the work of the two famous molecular biologists and Nobel laureates.

Opening ceremony of the pedestrian bridgeSince Technopia is separated from the company’s head office by a major road, a pedestrian bridge was also built to facilitate access. The bridge was donated to the city of Komaki for public use.

I sincerely hope that every one of the Technopia personnel remains highly aware of his or her responsibilities and does their best in their work so that Technopia will be a facility the local community loves and takes pride in.

September 17, 2008,14:04 +0900(JST) Lehman Brothers’ bankruptcy

Shocking news: Lehman Brothers, the No. 4 American securities firm, collapsed and filed for Chapter 11 bankruptcy protection. The news shocked not only the American financial sector but the entire world economy.

Founded in 1850 by the three Lehman brothers, the firm was known to have supported post-Civil War reconstruction of the U.S. economy. For such a giant company with 25,000 employees around the world and total assets worth 68 trillion yen, the end came rather abruptly.

I have repeatedly pointed to the dangerous possibility of the financial crisis triggered by the U.S. subprime loan problems resulting in major negative impacts on the real side of the economy. Signs had already been clear: some credit firms had collapsed, and personal spending, in real estate, automobiles and others, had begun to diminish. Since it has been whispered that a depression is not entirely unlikely if the current situation is poorly handled, I was surprised by the decision-making process leading to this conclusion.

Some with prying eyes suggest that the current situation is a natural outcome in the US election year, given the lame duck president and his equally lame duck key administrators unwilling to take bold steps to bail out falling individual financial institutions.

At the same time, I was impressed by the dynamic and speedy manner in which the administrators and leaders of the financial sector deliberated non-stop from September 12, when talks on a bailout started, all the way even on a Sunday to reach a conclusion by the deadline of the morning of the 15th, when US markets reopened. Those working on the bailout moved as expected as the world’s economic leaders.

It is reported that the private financial sector tenaciously insisted on a government bailout by using public funds, which the Department of Treasury and the FRB refused. Whether this conclusion and developments following this conclusion were appropriate or not will be proven by the US economy from now on. When I think of the so-called “lost decade” that Japan underwent due to the failure of economic reconstruction measures during the post-economic bubble recession, I have no hesitation to say that greater swiftness and severity will be needed in the US financial policies from now on.

As a corporate manager, I can’t simply be a spectator. The whole world is reacting to the situation in various manners, on stock and exchange markets, in oil prices, etc. In this situation, I believe that as business leaders it is our responsibility to carefully analyze the information and draw up and carry out the best possible management strategies.

September 17, 2008,10:16 +0900(JST) A small luxury hotel (IR meeting in the UK (2))

Dorset Square HOTELWhile I was in the UK for IR meetings, I stayed at the Dorset Square Hotel, where I had always wanted to stay.

I already wrote in this blog that I was once stationed in the UK to supervise the company’s European operations. Back then, my office was located right on Dorset Square.

Of course, the hotel was already there in those days, but I never had a need to stay there. I hadn’t forgotten about it, but I had never had the opportunity until my last UK trip, when I deliberately made the decision to stay at the Dorset Square Hotel.

Hotel roomThe photo should show you what this hotel is like: a clean facility thoroughly appointed in the style of a typical English country house. The hotel’s service was neither excessive nor scant, and it had a unique, comfortable atmosphere. I found the well-equipped modern bathroom also quite luxurious with an abundant use of marble and mahogany. You may laugh, thinking that I actually slept in that bed. Well, but it was quite relaxing, and personally I thought it rather suited me.(!?)

I learned that many business travelers regularly stay at this hotel since the room rates are quite reasonable. You can have a quality continental breakfast for only 1.5 pounds and the hotel’s modern English cuisine is very well received.

Dorset Square is a former cricket ground. Beautiful lines of trees and the serene atmosphere seem to attest to the square’s such history.

The Dorset Square Hotel is listed in the publication titled City Sanctuaries by Small Luxury Hotels of the World. I think that the hotel has its rightful place in this listing. There are many other hotels that I hope to stay at one day. I look forward to such future opportunities.

September 12, 2008,14:52 +0900(JST) IR meeting in the UK

In early September, I went to the UK for annual investor relations (IR) meetings. In this blog, I’ve already written some entries about the importance we attached to IR at Sumitomo Electric, and so I’m not going to start another here. As President and CEO of Sumitomo Electric, a publicly listed company, I believe that providing information to those considering investing in us through stocks is a major priority. We intend to continue various IR activities on different occasions.

Sumitomo Electric’s IR activities outside Japan are mainly conducted in Europe and the U.S., where many large-scale investors are found. On my last IR trip, I made the UK my base. Although I don’t get to see investors very often, I’ve known some of them for quite a while. So I really cherish this opportunity to talk with them directly and do PR for Sumitomo Electric once a year.

As for topics covered in the IR meetings in the UK, most questions were about the Sumitomo Electric Group’s current performance and future prospects. This was just as we had expected, given the worldwide economic slump following the U.S. subprime loan crisis; with the automobile industry, particularly the Big Three, in marked stagnation; and the fact that almost half our sales and profits come from automobile-related sectors.

We can’t say that the present situation has no impact on us since the automobile output has largely dropped from projections made at the beginning of the year. However, the Sumitomo Electric Group has developed various new automobile-related products and technologies, and our five-sector portfolio is expected to show steady, well-balanced mid-term growth, which should not be overlooked. In response to this explanation, the investors commented that they felt assured.

Concerning the Sumitomo Electric Group’s prospects, centering on our new mid-term business plan “VISION 2012,” some investors praised our Industrial Material division’s solid performance, while others proposed that we put our strengths to full use in electronics-related sectors, particularly in FPCs. I felt very grateful for such feedback since it showed that our investors were aware and appreciative of the efforts we’d been sincerely making for many years.

As already publicly announced, our sales for the current year have remained level, while the recurrent profit is expected to drop slightly. However, as I have already explained, these results are largely due to special factors that are limited to this year; outside these factors, our profits have increased.

The economic environment is likely to remain extremely severe, particularly for the automobile and related industries. Despite this, I hope that the Sumitomo Electric Group will continue making group-wide efforts to overcome this difficult period and remain an excellent company that can guarantee sustainable mid- and long-term growth and win investors’ confidence.

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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