June 29, 2009,08:57 +0900(JST) Shareholders’ General Meeting

On June 25, the company’s Ordinary Shareholders General Meeting was held in the Ritz-Carlton Osaka (same venue as last year) with over 400 shareholders participating.

Shareholders meetings provide the opportunity to personally meet the company’s shareholders, report to them on the company’s business performance during the previous year and explain challenges currently facing us, while communicating to them my ideas as the president and hearing them voice their requests and expectations regarding the company’s management. As on every past occasion, I attended the last shareholders meeting in all sincerity.

During the question-and-answer session we received eight questions, more than we did last year. They included the following: “in view of the organization’s scale, how will you reconcile the structural reforms to keep the company appropriate to its abilities with reinforcement of educational rearmament?”; “what are the company’s R&D themes in life science, as the next-generation strategic domain?”; “what products seem promising as regards the new product ratio goal of 30%?”; “what is the situation of employment of the disabled, and what are the future goals in this area?” We also received an opinion that showed understanding of the need for emergency measures amid the severe business environment, but that demanded care to avoid going to extremes with structural reforms, since they could prove problematic once presently stagnant demand starts picking up again. I would like to take this opportunity to thank our shareholders once more for their valued feedback and advice, which will be put to use in the company’s future management.

Toward the end of the meeting, we also received a request for our explanation regarding the company’s remaining in Osaka, while many companies are shifting their headquarters to Tokyo. I replied, not on behalf of the company, but from my personal point of view: “About 40% of the Sumitomo Electric Group’s sales are generated outside Japan, which means that we’re becoming increasingly globalized and, in a sense, the location of our head office no longer matters all that much. Since this is the way it is, I think we should stay in Osaka so that we can express our gratitude to our hometown, which has nurtured the Sumitomo Group as a full-fledged business entity.” Unexpectedly, my words were greeted with generous applause from the audience. I was deeply touched and encouraged anew by Osaka people’s strong expectations regarding Sumitomo Electric.

The meeting, which started at ten o’clock, quickly came to an end 90 minutes later. I’m quite satisfied with the constructive exchange of views that took place there, between the company and shareholders.

I believe that communication is one of the most important roles of business managers, who must be able to speak openly, in their own words, as to where the company is headed and what management policy has been adopted. Through such communication, mutual understanding can develop and deepen between company management and shareholders.

Kaishu Katsu (1823 - 1899), a Japanese statesman during the Edo to Meiji period, says in his memoirs, Hikawa Seiwa, that the state is more important than the government and that political affairs can be handled properly only with integrity and sincerity. The same is true of business management. It should not be pursued solely for profit, and you must make sure there is morality in what you do. Mere novelty does not last, and decisions must be made from a long-term viewpoint, not a short-term one. At the helm of the Sumitomo Electric Group, I always try to remain faithful to the original precepts of the Sumitomo’s Spirit, “banji-nissei (do your sincere best, not only in business but in every aspect of your life),” “shinyo-kakujitsu (place importance on integrity and sound management)” and “fusu-furi (do not act rashly or carelessly in pursuit of easy gains).” I tried to convey these ideas during the shareholders meeting, and I hope my message was clearly communicated to the shareholders.

With the last shareholders meeting as a new beginning, the entire management of Sumitomo Electric renewed our commitment to our managerial roles in all sincerity and integrity. Dear shareholders, your continued understanding and support will be greatly appreciated.

June 25, 2009,13:11 +0900(JST) DSSS trial

Do you know how many people lose their lives in traffic accidents each year? In Japan, traffic casualties reached their peak in 1970, with 16,765 victims. Since then, thanks to improved safety functions of automobiles, medical advances, widespread deployment of traffic signals and other safety devices, better road conditions and regulatory efforts including compulsory use of seat belts and stricter control of drunken driving, the death toll due to traffic accidents dropped to 5,155 persons in 2008, a decrease to a one-third in 38 years. The Japanese government wishes to go further and decrease the present number of victims by half in the next ten years, by adopting various new measures. One such measure is the Driving Safety Support System (DSSS) advocated by the National Police Agency and the Universal Traffic Management Society of Japan (UTMS). The other day, I had the opportunity to try out a DSSS-equipped automobile in Toyota City, Aichi Prefecture.

The DSSS, which is designed to reduce traffic accidents, relays information to automobiles from roadway infrastructure, advising drivers of nearby traffic lights or warning them of the approach of a vehicle or a pedestrian from a side road. Unlike conventional traffic services such as the Vehicle Information and Communication System (VICS), which conveys road congestion information to in-vehicle automobile navigation systems or the Electronic Toll Collection (ETC) system on expressways, the DSSS, which ensures traffic safety thanks to “collaboration” between roadway infrastructural equipment and automobiles, is expected to comprise a higher stage of development of the advanced Intelligent Transport Systems (ITS).

Related research and development through academic-governmental-industrial collaboration have been actively carried out; the National Police Agency, automakers and electric appliance manufacturers are currently involved in developing the system. Sumitomo Electric is also playing a leading role in this process as a traffic infrastructure manufacturer.

The automobile equipped with DSSS which I rode inMy trial of a DSSS-equipped automobile was brought about by the UTMS, which promotes standardization of the system, with kind cooperation from many parties, particularly Toyota Motor Corporation, which promotes the DSSS in Aichi. I rode in the car, equipped with DSSS still in the process of development, and went through public roads equipped with experimental traffic information infrastructure, to personally experience the convenience and effectiveness of the system. Concretely, the DSSS, via visual or vocal indications from the automobile navigation system, reminded me not to ignore red lights at intersections or “stop” signs ahead, and notified me, before turning left or right, of the presence of a pedestrian crossing the road. The DSSS also informed me of the imminent change of traffic lights from red to green -- a function particularly useful in assuaging the irritation or uneasiness of drivers who cannot see the traffic light because of their location behind a large truck. Having experienced these features, I believe that much can be expected from the practical use of the DSSS. Some of these features are in fact scheduled for practical application in 2010, so you too will be able to experience them soon.

After the trial, Sumitomo Electric staff in charge of system development told me about their work, including the difficulty of developing a system of safety services in collaboration with other companies. I expect these people to keep working hard. The trial, which lasted for about an hour, was quite impressive despite its relatively short duration. I look forward to further development of the DSSS and its practical application in the near future. As for Sumitomo Electric’s role, we hope to remain a company that keeps on contributing to society through ITS development.

June 15, 2009,08:53 +0900(JST) Go, go, Yokohama Works, Hama Road Supporter!

Company signboardAs you may already know, Sumitomo Electric is based in the Kansai area. However, our largest facility is Yokohama Works in Sakae Ward, Yokohama City. If you take a JR Tokaido Line train for Tokyo you will see, a little after passing Ofuna Station, the signboards “SEI,” “Sumitomo Electric Industries” and “Ingenious Dynamics” from the left-hand windows.

Yokohama Works was opened in 1961. In preparation for the milestone of its 50th anniversary in 2011, Yokohama Works began “the G-UP50 Campaign” last year, to become an environment-friendly factory loved by the local community. The campaign involves various activities.

Street clean-up campaignOne of these activities is cleaning up roads around the Works. For this activity, Yokohama Works is recognized as a Hama Road Supporter by Yokohama City. This activity was first begun by a small number of volunteer employees of Yokohama Works who cleaned up the outside roads around the site in 2000. Today the clean-up, held about 15 times per year, covers a total distance of 5 km, including the street between the site and JR Ofuna Station, which Yokohama Works people use for commuting. At least once every two months the clean-up is held during Yokohama Works’ lunch break, so as to enable as many people as possible to participate. The lunch-time clean-up attracts about 100 people each time, whose “sacrifice” of their precious lunch break is rewarded with cookies hand-made by disabled people working at a nearby activity center.

Hama Road Supporters are officially registered participants in a voluntary local street clean-up campaign jointly promoted by Yokohama City and local voluntary groups. Yokohama City’s goal is to have over 10,000 people join the campaign. At the moment, about 10% of the 200 registered groups are private businesses. At Yokohama Works, we hope to further promote this activity and to continue expanding with ingenious ideas the circle of participants, without becoming contented with the current status of participation.

Yokohama Works is also very active in recycling. For four consecutive years since 2005 it has achieved its goal of zero emission rate(*). Campaigns encouraging environment-friendly lifestyles and to bring own bottles for resource conservation are also actively promoted, to raise individual employees’ “Mottainai (Japanese phrase expressing regret over wasteful use of resources)” consciousness. While pursuing such activities on our part, we are fully aware that a company cannot develop on its own, without the local community’s understanding. So the people at Yokohama Works will continue the effort to be a factory that truly deserves the verdurous and scenic environment that surrounds it.

Hama Road Supporter signboardIncidentally, the “G” in the “G-UP50 Yokohama” stands for Glorious, Growing, Green, Genki (high spirits) and Genba-ryoku (on-site ability). Activities that make up the campaign are small, but they will become a great achievement when continued with perseverance. I look forward to seeing the people at Yokohama Works actively continue working on environmental protection and interaction with the local community, so as to have a green and energetic factory truly loved by local residents.

(* Note)
Emission rate is calculated as follows:
Volume of waste processed by simple incineration or landfill / total volume of waste output X 100
The Sumitomo Electric Group aims at an emission rate below 1%.

June 10, 2009,08:50 +0900(JST) Keidanren Kansai members' meeting

The other day, for the first time in a year and a half, I attended an informal meeting of the Kansai members of the Japan Federation of Economic Organizations (Keidanren). The last time I attended such a gathering I was given the opportunity to represent the Keidanren members in the Kansai area in expressing our opinions on regional socioeconomic revitalization. This time I took part as one of the representative Kansai members.

During the meeting, four Kansai members expressed their views on such themes as global warming control, regional revitalization and tourism promotion. One of those members, Mr. Idaka, Chairman of Nissin Electric Co., Ltd. - a Sumitomo Electric Group company - and Chairman of the Kyoto Employers' Association, spoke of Kyoto's economy and employment situation, raising questions about the work view of today's youth and introducing the activities of Kyoto Job Park.

Some newspapers covered the event, with headlines hinting at the Kansai business community's aversion to ritualization. In the members' luncheon held just before the meeting, Kansai business leaders were seen actively exchanging their opinions. Regarding regional economic revitalization, discussions often extend to such subjects as reforms in the prefectural administrative system and decentralization. I myself shared with the others my frank opinions, as the representative of a Kansai-based company.

As for the nationwide economic situation, we're still in delicate circumstances, with uncertain future prospects, although the government's economic forecast includes an upward revision for June as for May, and a bright ray of hope is slowly appearing for some. At the moment, we are definitely at a historic turning point worldwide, as epitomized by some major events: Chrysler and GM, two of the Big Three automakers that have led the world's industrial life, have successively filed for bankruptcy, giving rise to giant corporations whose principal shareholder is the federal government (for GM) or the labor union (for Chrysler) -- and this is happening in the United States, the most capitalist of all the countries in the world. With such changes, coupled with the gradual worldwide spread of Green New Deal measures that are expected to stimulate demand and mitigate environmental and resource problems, we are indeed undergoing a paradigm shift.

It may be obvious that in the long run Japan, the world's second largest economy in terms of GDP, will be surpassed by China, with its population ten times that of Japan. Nevertheless, resource-poor Japan has persevered thus far, drawing on the spiritual strengths of the Japanese people, which can be described as entrepreneurship, adventurousness, innovativeness and goal-orientedness. It is vital to pass these characteristics on to future generations, and to build an energetic society in which young people can embrace hopes and dreams for the future. To that end I hope to continue, in my own humble way, speaking out actively as a business leader, so as to help clarify problems of the Japanese economy and better define Japan's future vision.

June 5, 2009,09:10 +0900(JST) Intellectual Property Right Convention 2009

In this pro-patent age, it goes without saying that it is important to protect our own intellectual property rights and not to infringe on other companies' rights.

To improve Group-wide awareness of the importance of intellectual property rights, we held the Annual Intellectual Right Convention. This year hold in our Itami Works, about 250 employees from R&D and Intellectual Property sections attended the Convention for the commendation for excellent intellectual property activities and case reports on patent applications/approvals for this year.

Intellectual Property Right Convention 2009Before the case repots, I called in a poster session. It was well organized to facilitate information sharing on trade marks and patent rights including the meanings, application procedures and current states of applied cases. I was impressed by the concerted efforts of our IP-related members.

After that, I presented awards to individuals and teams for their active patent application during this year. It was my pleasure to see those people proudly standing on the podium for their achievements after longtime efforts.

As to the case reports, we had four individual cases which had been extremely successful. Each report clearly described the processes of overcoming difficulties and challenges. To know such tenacious efforts by researchers, I strongly realized that the company was supported by such dedicated employees.

Although every case above was quite challenging containing both legal and managerial aspects, I was reassured to learn that our people were handling them greatly. This convention reminded me of the fact that business is a battle, and the intellectual property right is the last bastion for a company.

Award Ceremony, National Commendation for Invention 2008Incidentally, last year, Sumitomo Electric received two awards from Japan Institute of Invention and Innovation: “the Incentive Award for the 21st century invention” and ”the Contribution Award” for its high-quality gallium nitride (GaN) substrate for the blue-violet lasers installed in next-generation DVDs.

Although our business remains still in a severe condition, the importance of long-term R&D and intellectual property related activities is rising. Creating ingenious technologies and products is the key to the company’s growth. To promote patent application activities, we have revised our regulations on employee inventions and set no upper limit on incentives for researchers depending on their achievements.

To create competitive products, our R&D, Business Units and Intellectual Property Department need to solidly cooperate, stretch their antennas and maintain excellent communication among them. I am looking forward to successful outcomes generated by the enhanced cooperative frameworks.

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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