June 28, 2010,09:58 +0900(JST) Shareholders' General Meeting

On June 25, the annual shareholders' general meeting was held. Shareholders' meetings provide great opportunities for company management to engage in two-way direct communication with shareholders, listen to their opinions and convey our frank views to them. I attended this year's shareholders' meeting with far greater care than usual, since it was the occasion of reporting on our overcoming the once-in-a-century economic downturn and our plans for future development.

During the question-and-answer session, at first we didn't get any questions. We nevertheless urged the audience to feel free to ask questions, saying that we were well prepared. The first question finally came, and it was about our efforts at improving profits. Fortunately, this was followed by many other questions.

Some questions concerned the smart grid, cloud computing and water-related business. Regarding the smart grid, we explained that we are working from a long-term perspective -combining all our technological capabilities-with the NEXT Center and Power system R&D Laboratories, newly established to focus on developing hardware such as superconducting units and power devices.

One shareholder suggested that we put up an advertising billboard at Universal City Station. We will seriously consider this suggestion, while looking into its cost effectiveness, since PR is an important matter for us, even if we are a B-to-B company.

Another question concerned how business unit performance was evaluated in the process of determining officers' remuneration. We replied that, while we believe that officers are responsible for business performance, this is never evaluated on a short-term basis, considering the fact that some positive results come about only after steady efforts over 10 to 20 years, as exemplified by such success stories as artificial diamonds, optical fiber and compound semiconductors.

All in all, we of the management team were able to proudly present the company's FY 2009 business results, which were far more positive than initially forecast, although due to the influence of the worldwide recession, sales amounted to about 70% of our best years. We attribute our positive results to our strong group-wide efforts at keeping our organizations appropriate to our abilities and reconstructing our cost system, promoting expanded and deeper internal solidification, and pursuing educational rearmament to strengthen our corporate constitution.

At the general meeting, the management team offered our apologies to the shareholders for the anxiety caused following the on-site investigations by the Fair Trade Commission. At the same time, we expressed our firm determination to pursue fair corporate activities worthy of society's trust by further reinforcing our Anti-Monopoly Act compliance system.

In closing the general meeting, the management team renewed our commitment to hard work and effort toward realizing steady contributions to society through sustainable growth and development, and the secure return of profits to the shareholders.

June 10, 2010,10:59 +0900(JST) Attending the IWCC Joint Meeting - Extra

To conclude this series of entries I've been writing since last month about my business trips to Europe and South America, I offer this "extra" to relate to you some impressive episodes I had during the South America trip.

In front of the Sao Paulo Museum of ArtThe first episode is about the Sao Paulo Museum of Art (Museu de Arte de Saõ Paulo) on Paulista Avenue, which I visited just before leaving Sao Paulo. This museum has an impressive collection of Western art, unique in South America, featuring paintings by such masters as Rembrandt, Rubens, Monet, Renoir, Van Gogh, Cezanne, Gauguin, El Greco, Modigliani, Picasso… no wonder it is called a museum of miracles.

I regret not being able to show you the paintings here; I was completely overwhelmed by the richness of the collection. I was also equally impressed by the fact that many of the works had been donated by business people. I was particularly thrilled by an unexpected encounter with a major work by John Constable, reputed to be the greatest landscape painter in the history of British art.

With Washington on the planeThe next episode also involves an unexpected encounter, but this time with a person: I met a football player of the powerful Sao Paulo FC during my flight from Sao Paulo to Rio de Janeiro. As you can see in the photo, I met Washington, Sao Paulo FC's forward, who was formerly with the Urawa Red Diamonds of the Japanese national football league. Despite being a star player, he was very friendly and pleasant, and casually accepted my request for a photo. We even had a nice conversation.

This was just about the time that the members of the national team, who would be playing in the FIFA World Cup in South Africa, were about to be announced. Brazil was in a quite excited atmosphere, with people eagerly trying to find out if their favorite players would make the national team.

For the final episode, I'd like to tell you about a breathtaking sight. Although I did not have the time to climb the hill of Corcovado, Rio de Janeiro’s premier sightseeing spot, atop which stands a giant statue of Jesus, I was able to visit Pao de Acucar, an equally famous tourist spot, just before going back to Japan. Pao de Acucar is a cliff on the beach. The name, which means sugar bread, comes from the unique sugar bread-like shape of the cliff.

With Rio de Janeiro's townscape in the background, Guanabara Bay to the rightFrom the peak of Pao de Acucar, at an altitude of 400 meters which I reached via ropeway, I had a breathtaking view of the whole of Rio de Janeiro. "Rio de Janeiro" means "river of January" in Portuguese. This name is said to have been given by Portuguese who arrived near Pao de Acucar in January 1502 and mistook the present Guanabara Bay, seen from the peak, for a river.

During my business trips I was able to meet people in group companies in Brazil and Germany, so far from Japan. Their enthusiasm and dedication encouraged and energized me. It was also great learning experience for me to feel the enthusiasm in Brazil firsthand, which was different from the enthusiasm one feels in China, another newly emerging economy. For that and for the unexpected encounters, the trips proved very meaningful for me.

June 7, 2010,09:07 +0900(JST) Visiting Group Companies in Europe and South America – SDB

Leaving Dusseldorf, I arrived in Sao Paulo, Brazil. It took me some 10 hours by plane including a short stop in Paris. This time I inspected Sumidenso do Brasil Industrias Eletricas Ltda (SDB).

SDB is a manufacturing company of wiring harnesses for two- and four-wheel vehicles. The company enjoys the sales of about R$ 320 million with 2,400 employees working in its six plants in Minas Gerais, Sao Paulo and Amazonas.

On this visit I went to their two factories in Minas Gerais: Pouso Alegre and Tres Coracoes plants. Incidentally, Tres Coracoes is the birthplace of Pele, "the King of Football."

At Pouso Alegre PlantAt Tres Coracoes Plant 

With the population of 200 million and bountiful iron ore and other resources, Brazil is leading the global economy as a member of the emerging countries of the BRICs. Amid the financial crisis after the Lehman shock, the country weathered the difficult time without a major turbulence, and is now enhancing its presence in the world. Hosting the FIFA World Cup in 2014 and the Olympic Games in 2016, the country’s future prospects are very promising.

Back in 1978 Sumitomo Electric first expanded its business activities to Brazil with the aim of introducing local production of motorcycle wiring harnesses. Over 30 years have passed since then; Brazil ranks fifth in the automobile sales with 3140,000 cars (in 2009), following China, the U.S., Japan and Germany. This market is expected to grow further to reach the sales of 5 million units in a few years. Consequently, SDB are eager to gain more purchase orders from Japanese and European automakers.

Factory inspectionBoth of the SDB plants I visited were kept clean and tidy. This is partly because “Pika Pika” activities or the Shining Clean Campaign led by Sumitomo Wiring Systems Ltd. The goal of the activities is to maintain and improve further their production efficiency with the same standard in the all overseas subsidiaries.

SDB is located near Sao Paulo, employing many talented graduates from the prestigious University of Sao Paulo. Backed by a 100-year-long trust established by 1.5 million Japanese-Brazilians, our seven Japanese staff members are also doing their best so far from Japan home.

I was the first Sumitomo Electric President who had ever paid a visit to the group companies in Brazil. Commemorating the future prosperity of both the county and the company, we planted a tree of ipe amarelo or yellow ipe. This tree is also called the cherry tree of Brazil.

Planting ipe amareloAlthough ipe flowers come in various colors: purple, white, pink and so on; the only yellow ipe is regarded as the Brazilian national flower. The Sumitomo Electric Group will commit to the further progress of Brazil and thereby strengthening the tie with the country. I am looking forward to the full bloom of beautiful flowers between us.

June 2, 2010,08:45 +0900(JST) Visiting Group Companies in Europe and South America – SHG (Part2)

This is an old photo that I received from London after my business trip this time. It dates September 14, 1990, when I was stationed in London. Sumitomo Electric’s then President Mr. Kawakami stopped by our office along the way of his business trip to Europe. We visited SHF together, which had just opened.
I was only in my 40’s. This photo brought me back old memories.

At SHF, Honorary Consultant Mr. Kawakami (in the middle) and I (in the far left)

June 1, 2010,08:39 +0900(JST) Visiting Group Companies in Europe and South America – SHG (Part 1)

Following SEBN, I stopped by Sumitomo Electric Hartmetall GmbH (SHG). This company is also located near Dusseldorf in Germany.

Other than this SHG, we have two group companies that deal with cutting tools within Europe: Sumitomo Electric Hardmetal Ltd. (SHL) in the U.K. and Sumitomo Electric Hartmetallfabrik GmbH (SHF) in Germany. This time, I attended a managers’ meeting, which was held after their joint shareholders’ meeting. During this lunch meeting, I received the business performance reports from the managers of each sales and production base.

Some 30 years ago, I finished my duty in Chicago, the U.S. and came back to Japan to serve as Marketing & Planning Section Manager of Hardmetal Division. After the inauguration, I became fully aware of the importance in strengthening our sales activities for cutting tool products in the German market. This is because Germany was advanced in machining and also an origin of cemented carbide. Since then, I scrambled for the establishment of the sales bases in the country.

SHG, established in 1981, has six sales offices in Germany, France, Italy, the Czech Repaublic, Hungary, and Turkey, with over 120 employees. With its center in Germany, the company covers a wide business area including countries from Russia in the east to Portugal in the west and South Africa in the south. Fully using autobahns and airplanes, they are trying hard to enhance their presence in the cutting tool market.

SHL was founded in 1984 in order to promote the sales of cutting tools in the U.K. and Ireland. About 20 British staff members are proactively conducting their sales activities for domestic and Japanese car manufacturers.

The third company SHF is the first European manufacturing base of cutting tools, established in 1989 in preparation for the inauguration of the European Union. Located near Stuttgart in south Germany, the company aimed at local production of these products and improvement in technical service. This establishment took place when I was stationed in London as director of a company in charge of European business. Now the company has expanded its subsidiaries to build a factory in the Czech Republic.

Since I was involved in the establishment of all the three companies, albeit in a different but devoted attitude, I listened to the managers’ reports thinking back fondly to the early days of the companies as if I was their “founding father.” As their reports went on, however, on-site perception came back to me and I found myself enthusiastically firing intensive questions.

After the meeting, we took a group photo with the General Manager of SHG Mr. Sullot, Sales Manager Mr. Kuhlmeier, General Manager of Italian branch Mr. Rizzi and other executives from the three European companies.

SHG is a mixed bag of personnel from 12 countries (Germany, France, Italy, Holland, the Czech Republic, Rumania, Belgium, Poland, Hungary, Uzbekistan, Turkey, and Japan). At the office English is dominant; however, once the lunch break starts, it is quickly switched into other languages, such as German, Turkish, and French. It depends on who they talk with and what they talk about. Viewing this, I was deeply impressed by the intricacies of the European continent.

My visit matched the best verdurous season. The company site was filled with greens and they had occasional visitors of rabbits, squirrels and pheasants in their backyard.

The European market is currently in an embattled situation with the volcanic eruption in Iceland and Greece’s fiscal crisis, yet it still remains in the most important position in business. I am hoping to see the all three companies fully utilizing their networks they have built and vigorously and closely cooperating each other for further business expansion.

* In present-day Hardmetal Division

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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