June 9, 2011,10:28 +0900(JST) Safe Environment, Product Quality, and Clerical Work Quality Conventions

As in previous years, the Sumitomo Electric Group held Group-wide Conventions on Safe Environment, Product Quality and Clerical Work Quality, all the elements comprising our Group’s priority issues. I attended the conference together with many other parties concerned.

The conventions comprised reports on activities in fiscal 2010, commendation of excellent workplaces, and discussions on activities and tasks to be fulfilled during fiscal 2011. These programs were designed to allow all the management, ranging from corporate executives to frontline supervisors, to share information and foster common values. At the same time, I hoped that the conference would inspire the management of Group-wide organizations to apply best practices introduced at the meetings.

Attending the conventions, I had an impression that activities were being increasingly specialized, and speakers were developing their presentation skills year by year. I am concerned, however, that with the growth of respective organizations and scale of activities, individual workers involved in these activities might feel that they are only small cogs in a large wheel. Rather than voluntarily committing themselves to such activities, workers might feel organizational pressure to engage in them. To cope with such problems, we must further empower frontline leaders so they will be able to resolve various problems on site in a timely manner. Moreover, we must facilitate communication within the respective organizations, and maintain transparency and openness within our corporate culture.

To deepen awareness of related problems among all staff members across the Group, and to thoroughly promote relevant activities in all workplaces concerned, grassroots campaigns are essential. Since assuming the office of president, I have taken every opportunity to ask plant managers and frontline supervisors to tour around their respective workplaces at least twice a day, and to identify and take notes on at least three items that need improvement. At the conventions, I reminded participants of that instruction once again.

This year, in the wake of the Great Tohoku Earthquake and Tsunami, several speakers reported on our disaster preparedness, examining our existing measures against worst-case scenarios. After the disaster of March 11, many leaders of disaster-affected organizations excused themselves by saying, “the disaster was of an unexpected scale.” They used this phrase so frequently that it has become popular buzzwords. At the conference, I stated that in the Sumitomo Electric Group, all staff members should prepare for the worst, so that there would not be a single incident of an “unexpected scale.”

Concerning environmental activities, there were presentations about energy conservation, resource conservation, recycling, and the management of chemical substances. Some reports concerned measures against possible shortage of power supply. For instance, some speakers suggested the introduction of cogeneration systems and other responses to power supply regulations. With regard to eco-friendly products, it was decided that efforts should be made to improve their sales ratio to 50% of our sales by 2012.

Finally, I truly hope that all staff members will be patient and make tireless efforts to promote SEQCDD (safety, environment, quality, cost, delivery, and research & development) activities. Since new challenges continue to emerge in succession, we must remember that we should continue these activities endlessly. In this regard, I would like to remind us all of the saying: Perseverance leads to success.

Chanting a safety slogan in unison

June 6, 2011,08:48 +0900(JST) IR Meeting

In late May, following the announcement of Sumitomo Electric's final business results for FY 2010, we held our annual IR meeting at our Tokyo Head Office. Over 100 institutional investors attended. To start, I briefly presented our FY 2010 business results and discussed prospects for FY 2011.

Following supplementary comments by Mr. Hideaki Inayama, Managing Director, on the business results, Mr. Katsuhide Kurasaka, Senior Managing Director, gave a presentation regarding the current status of our industrial material business. Our major products in this segment include cutting tools, sintered parts and special metal wire.

As for our FY 2010 performance, we registered 277.5 billion yen in sales (up 22% from the previous year) and 16.9 billion yen in operating income (16-fold increase). Focusing our efforts on strengthening our corporate constitution, developing original materials and capturing global demand, we managed a rapid recovery from the drastic decline following the global financial crisis triggered by the bankruptcy of Lehman Brothers. For FY 2011 we are aiming at even greater growth, with prospects set for 290 billion yen in sales (up 5% year on year), 25 billion yen in operating income (up 48% year on year), and 8.6% as operating income ratio.

In the question-and-answer session, many questions focused on prospects for the current year. I understand that following the Great Tohoku Earthquake and Tsunami, whose impact is far-reaching, many companies decided not to announce their forecasts, due to exceptional uncertainty about the future. Regarding our own announcement as well, it was extremely difficult to define the scope of the disaster's impact with any measure of accuracy. However, in the belief that it is my duty to publicly communicate the company's position and views, we have announced our business performance forecasts by gauging the impact of the Earthquake and Tsunami as carefully as possible.

Scene from the IR meetingWe anticipate that the first half of FY 2011 will be a challenging period, with sales and operating income forecast at 900 billion yen and 20 billion yen, respectively. In the second half-year, however, we expect to come up to 1,100 billion yen in sales and 80 billion yen in operating income. In response to investors' questions, I expressed my firm belief in the indomitable strength of the world-leading Japanese automobile industry, and my expectation that the supply chain-related problems would be resolved shortly, with the industry starting to rapidly increase production around the end of summer.

We also received questions about our molten salt electrolysis battery. I myself expect much from this technology, which, however, is still in the developmental stage. In future, I hope to see the new battery and superconducting cable jointly integrated into a commercialization project that fulfills public expectations.

We are aware that overall confidence in Japan's technology is unfortunately wavering following the Great Tohoku Earthquake and Tsunami, and the resultant nuclear power crisis. Nevertheless, I would like us all to do our utmost to restore the disaster-affected areas and revitalize Japan, constantly propose new products and technologies to the rest of the world, and impress the world with the presence of excellent Japanese companies.

For those interested, presentation materials and documents used at the meeting can be viewed on our web site.

(Reference: FY2010 Results and FY2011 Activities)

June 2, 2011,08:54 +0900(JST) Graduation Ceremony and 6th Homecoming Day at Hitotsubashi University

This year many Japanese universities cancelled their graduation ceremonies-usually held in March, the final month of the Japanese academic year-due to the Great Tohoku Earthquake and Tsunami. Hitotsubashi University, my alma mater, also called off its commencement ceremony.

However, university graduation is too important to go uncelebrated. To mark this major milestone, the graduating class should celebrate together the culmination of their last four years and the beginning of a new chapter in their lives. It was decided, therefore, that Hitotsubashi would hold a graduation ceremony on Saturday, May 14, about two months after the originally scheduled ceremony, and concurrently with annual Homecoming Day. I was given the great honor of delivering a speech in this ceremony, as one of the former students and "elders" of the graduates.

The day of the ceremony was blessed with fine weather, and about 200 recent Hitotsubashi graduates came back to the University.

My speech took on a bit of preaching tone. I said, among other things, that knowing one's goals and fixing a timeframe to achieve them is important toward living a meaningful life; a sincere, serious and conscientious attitude toward work is a key to winning others' trust and confidence; it is essential to be constant in the effort to be one's natural self at all times, develop inner tranquility, and cultivate oneself so as to be free from narrow-mindedness, prejudice and dogmatism. I wonder how my speech was received by the graduates, who had entered the "real world" in April and embarked on their working lives in various companies and organizations.

Needless to say, as the President of Josui-kai, Hitotsubashi's alumni association, I did not forget to do some association PR and entice the graduates to join, and as the Chairman of Hitotsubashi University's 10-billion-yen fund-raising committee, I asked the graduates to actively contribute to the campaign as a way of giving thanks to their alma mater, which had nurtured them thus far, and thereby help younger students and human resource development at the University.

After the ceremony, I participated in the party of the 6th Homecoming Day, which began in the afternoon. I was happy to see many elderly graduates visiting their old campus for the first time in a long while and renewing their friendships. I was asked to speak at this event as well. So I recited part of one of my favorite poems, "Youth" by Samuel Ullman. I'd like to share it with you here as well.

The following is the version of the poem that was first published in the December 1945 issue of the American magazine Reader's Digest.

Youth is not a time of life-it is a state of mind. It is not a matter of red cheeks, red lips and supple knees. It is a temper of the will; a quality of the imagination; a vigor of the emotions; it is a freshness of the deep springs of life. Youth means a temperamental predominance of courage over timidity, of the appetite for adventure over a life of ease. This often exists in a man of fifty, more than in a boy of twenty. Nobody grows old by merely living a number of years; people grow old by deserting their ideals.

Years may wrinkle the skin, but to give up enthusiasm wrinkles the soul. Worry, doubt, self-distrust, fear and despair-these are the long, long years that bow the head and turn the growing spirit back to dust.
Whether seventy or sixteen, there is in every being’s heart a love of wonder; the sweet amazement at the stars and starlike things and thoughts; the undaunted challenge of events, the unfailing childlike appetite for what comes next, and the joy in the game of life.
You are as young as your faith, as old as your doubt; as young as your self-confidence, as old as your fear, as young as your hope, as old as your despair.
In the central place of your heart there is a wireless station. So long as it receives messages of beauty, hope, cheer, grandeur, courage, and power from the earth, from men and from the Infinite-so long are you young. When the wires are all down and the central places of your heart are covered with the snows of pessimism and the ice of cynicism, then are you grown old, indeed!

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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