I joined Sumitomo Electric in 1967 and was assigned to the Hardmetal Div. That division had the longest history among the Company’s non-electrical wire departments; its annual sales were around ¥500 million in those days.

Sumitomo Electric’s hard metal business dates back to when copper wire drawing dies were created in-house. In 1923, cemented carbide was invented in Germany, the main ingredient being tungsten carbide. Sumitomo Electric commenced research and development, and in 1929 succeeded in the production of cemented carbide dies for in-house use, which were released to the market in 1931, named “IGETALLOY Hard Alloy.” Incidentally, the trade name “IGETALLOY” (alloy from Sumitomo whose emblem features a diamond-shaped igeta mark) has been in use since 1959.
　

Sumitomo Electric is celebrating the 80th anniversary of IGETALLOY this year, thanks to support from our customers and the efforts of our forerunners. I am deeply grateful to them. To commemorate the 80th anniversary, Sumitomo Electric held a lecture meeting on manufacturing, featuring a special speech by Tetsuya Hamaguchi, Project Professor at the University of Tokyo and renowned for his knowledge of failure; unfortunately, I could not attend the meeting due to some business.

Sumitomo Electric has developed novel products and technologies, such as IGETALLOY, sintered parts, compound semiconductors and optical fibers, on the basis of the Company’s copper wire production technology. These products were able to evolve into product groups sustaining our business growth, only thanks to the Company’s sound manufacturing base. To bear its importance always in mind, in 1997 the Hardmetal Division held its first lecture meeting on manufacturing, celebrating the 100th anniversary of the Company’s founding. This year marked the fifth such lecture meeting.

In the meanwhile, I am most concerned with research and development as a source of business growth, and attended a research presentation meeting held in the Itami area. There were many participants from within the Company. I directly asked various questions of development personnel regarding progress. Specifically, my expectation was high for magnesium alloys, Aluminum-Celmet, green semiconductor laser and nano-polycrystalline diamond. I was deeply impressed by everyone’s great efforts, and gave them words of encouragement.

After the celebration ceremony, we planted commemorative trees in front of the new office building. They are flowering dogwood, which has white or pale pink flowers in spring.

These trees were selected by persons associated with Sumiden Friend, hoping that the disabled and non-disabled will help each other, be united with great love, and all grow together.
　

It was a mild late-autumn day, the warm rays of the sun pouring down on us. The warm and cheerful workplace atmosphere made me feel balmy -- and made the weather balmy.

On November 22, I attended a completion ceremony for a new office-cum-workshop building of Sumiden Friend, Ltd., a special subsidiary of the Sumitomo Electric Group.

Sumiden Friend was established three years ago on the premises of Sumitomo Electric’s Itami Works. The company commenced operation in a newly built greenhouse and an office installed in a corner of the factory, with 12 employees consisting of five disabled persons who were hired as general office employees and seven support staff members. Originally the company’s main activities were the maintenance and rental of foliage plants and stuffing bags with buffer materials for packing. Since then, thanks to the efforts of everyone involved, the scope of business activities has expanded to include such work as digitizing drawings and other documents using PCs and shredding and recycling used paper. In terms of the workforce, the company currently has 12 general office employees and 10 support staff members (22 total employees).

　
To accommodate increased operations, a new office-cum-workshop building and another greenhouse were recently constructed at a total cost of 130 million yen. To celebrate the completion, we had the chief priest of Higashiten Shrine come and perform a completion ceremony. I joined in the celebration with people working at Sumiden Friend.

I delivered a congratulatory speech expressing my appreciation to everyone at Sumiden Friend and hoping for the company’s future growth. Here is the gist of my speech.

Every week, with a knock on the door and a loud and cheerful greeting “Konnichiwa (hello),” you visit my office in Yodoyabashi to take care of the foliage plants installed in the president’s office. You not only water the plants but also bring cheer to me, for which I am always grateful to you.

For the last three years, you must have encountered many difficulties and confusion. I hope, despite difficulties, you will continue to foster your warm and friendly corporate culture. The Sumitomo Electric Group is striving to create a work environment that enables every employee to work actively, cheerfully and energetically. I hope Sumiden Friend will play a leading role in this endeavor. It is also my hope that you will continue to work vigorously and cheerfully without feeling organizational pressure to fulfill your duties.
I encouraged them, citing the words of the Japanese Buddhist monk Saicho: “People who illuminate a small corner of society are national treasures.”

According to Mr. Yutaka Dairaku, president of the company, what he is most proud of about Sumiden Friend is the fact that no employee has ever missed the daily morning exercises, which start at eight twenty. He said it was his pleasure to see every employee living a fulfilling life with a joy for work. It was also a pleasure for me to hear that.

At the end of the ceremony, all 12 general office employees expressed their determination: “We will continue saying greetings in a loud and cheerful voice and strive to perform our duties safely and responsibly as Sumiden Friend employees.”
I was deeply moved by their words.

Every year, the Sumitomo Electric Group holds Partners’ Meeting to promote mutual trust and cooperation with suppliers. This year the Partners’ Meeting took place in mid-November, later than usual due partly to the Great East Japan Earthquake. As our important business partners, companies that supply raw materials, parts, equipment or the like to Group companies were invited to the meeting.

This year Japanese manufacturers have suffered serious damage to their facilities and disruption of their supply chains caused by the Great East Japan Earthquake and the flooding in Thailand. These disasters helped us recognize anew the importance of secure and reliable supply chains. Meanwhile, the continuing hyper-appreciation of the yen to its highest post-war level has strongly hurt Japanese companies in exporting their products, at the same time being beneficial when purchasing goods from overseas. With the growth in emerging markets, prices for copper, polyvinyl chloride, rare metals and other materials are expected to rise in the mid and long terms.

To survive intensifying competition in international markets, the Sumitomo Electric Group will need to promote local procurement of parts used in overseas production and to pursue a more competitive material procurement strategy. To this end, fostering a stronger partnership with our suppliers is a priority management issue.

As for the Partners’ Meeting, the program consisted of two parts. The first part opened with my report on the business results for the first half of fiscal 2011 and activities that we have pushed ahead toward “VISION 2012” goals. Then Managing Director Hideaki Inayama outlined the Sumitomo Electric Group Global Procurement Policies. As the last speaker, Dr. Junji Itoh, Executive Officer & General Manager of Power System R&D Laboratories, gave a presentation on the development of our Micro Smart-Grid Demonstration System.

At the end of the first part, a VA (value analysis) Excellent Partner award ceremony was held to present JSR Corporation with a letter of appreciation and a commemorative gift.

This year, we also decided to present special awards to 26 companies that made tremendous contributions to quickly resuming operations or maintaining stable production amid the chaotic conditions in the wake of the devastating earthquake and tsunami. Unfortunately, I was not able to present the awards in person due to time constraints. I am truly grateful to these partners. Let me once again express my appreciation for their efforts.

In the second part, a small convivial party was held to thank participants for their constant support and cooperation. In addition to the presentation session, the party helped us deepen mutual trust with our partners.

We are determined to continue our efforts to strengthen relationships of mutual trust with our business partners, which serve as a foundation for the Group to expand its business and grow further to meet the expectations of our stakeholders.

The Hitotsubashi University Kansai Academia, which I’ve introduced several times before in this entry, recently held its 8th symposium, cosponsored by Hitotsubashi and Kobe Universities. Although I was not able to attend the symposium due to some business, I participated in a party to thank the panel as Board Member of Hitotsubashi University and President of the university’s alumni association Josuikai.

The symposium was held under the theme of “BRIC Economies and Strategies of Japanese Companies—Perspectives of business entrepreneurs and researchers,” and started with the keynote speech “Komatsu’s BRIC Strategy,” by Mr. Satoru Anzaki, former president and current advisor of Komatsu Ltd., followed by reports on Brazil, Russia, India and China (the BRICs) from research aspects, by Professor Shoji Nishijima of Kobe University, Professor Ichiro Iwasaki of Hitotsubashi University, Professor Takashi Kurosaki of Hitotsubashi University, and Associate Professor Kai Kajitani of Kobe University.

Today there is widespread concern over the global economic slowdown triggered by the ongoing euro-zone credit crisis, which poses a difficult challenge for the BRIC nations that are under pressure to secure economic growth while containing inflation. In addition, the BRIC nations, having achieved high growth rates, are experiencing serious social gap problems. However, in the medium-to-long-term, the BRIC nations are expected to grow even further, and Sumitomo Electric is among those who are actively involved in these emerging markets. Our major business activities in the BRIC nations are as follows:

In China, Sumitomo Electric began local production as early as the early 1990s and now has over 90 Group companies operating in the market, which has grown to bring us as much sales as the U.S. and European markets do. We continue aggressive investment in China while shifting from the strategy of making China our global production center to one based on the idea of “local production for local consumption” exploiting domestic-demand driven growth.

In India, since the 1980s Sumitomo Electric has set up joint ventures and other strategic alliances with local partner companies in the fields of automotive wiring harnesses, cutting tools and vibration-proof rubbers. With a view to expanding sales in our social infrastructure businesses, such as information & communications and railway, as well as environment and renewable energy-related businesses, SEI Trading India Private Limited was newly established and commenced operations in November 2011.

In Brazil, which is to host the 2014 FIFA World Cup and the 2016 Olympic Games, since our entry into the market in 1978 we have been actively promoting our businesses, focusing on such sectors as automotive wiring harnesses, information & communications, and industrial materials.

In Russia, a verification test of high-temperature superconducting (HTS) cables incorporating Sumitomo Electric’s bismuth-based HTS wire DI-BSCCO was conducted in December 2009 in Moscow, which demonstrated successful power transmission. The wire’s production base has not yet been established, but we recognize Russia as a promising market.

Speaking of emerging nations, much focus is now being placed on the VIP nations (Vietnam, Indonesia and Philippines). Sumitomo Electric has more than 20 Group companies operating in these countries and will continue active investment in these emerging markets.

The Kansai Academia holds symposia and public lectures several times a year in order to strengthen ties between Hitotsubashi University and the Kansai region, as well as to promote public relations campaigns. The next symposium scheduled for March 2012 will be held under the theme of “Energy Problems,” the most important and pressing issues facing Japan. As an External Board Member of Hitotsubashi University, I would like to encourage as many people as possible to participate in the next symposium.

On 11 November, following the announcement of Sumitomo Electric’s business results for the second quarter of FY 2011, we held an IR meeting at our Tokyo Head Office. Many institutional investors attended the meeting. I would like to take this opportunity to thank those who attended and provide a brief report on the meeting below.

To start, I explained our business results for the first half of FY 2011 and strategic policies for the second half of FY 2011 and beyond.
As reported earlier in this blog, the second quarter of FY 2011 recorded a decrease in both our sales and income over the previous quarter. However, we managed to attain the estimates officially announced at the beginning of the fiscal year, through our efforts for early recovery from the March 11 disaster, full use of our global operations, and reinforcement of our corporate constitution. Despite the rapidly appreciating yen, our overseas sales ratio has increased steadily to 46.8%. When our indirect export sales are included, more than 60% of Sumitomo Electric’s total sales come from overseas markets.

　
There is growing uncertainty and concern over European financial instability, global economic slowdown, and other future prospects. To achieve the estimated fiscal year-long performance figures in this difficult situation and secure the future growth and development of the Sumitomo Electric Group, we forge ahead with the Group’s all-out effort to secure and strengthen our international competitiveness. In the second half of FY 2011 and later, while further promoting the shift of production facilities to optimal locations at the global level, we will improve the cost competitiveness and added value of our products made in Japan. Therefore, we plan to inject more than 60% of the 130 billion yen capital investment for FY 2011 in Japan while at the same time expanding the overseas operations.
　

Mr. Masanori Yoshikai, Managing Executive Officer, gave a presentation on the Company’s R&D activities, the key to our growth.
Mr. Yoshikai first commented on the recent improvement of the R&D organizational system and structure. In January 2010, the NEXT Center was established to analyze social trends and changes triggered by technological innovations from a 20- to 30-year long-term perspective, in collaboration with outside experts and research institutions with the aim of identifying future growth areas and creating large-scale new businesses for Sumitomo Electric. In October 2011, the R&D General Managing Unit was newly set up to enhance fusion of technologies of the materials and the information & communications, strengthen research planning functions for new business areas, and accelerate our development speed. In November 2011, we established the Business Development Division, which assumes the function of developing business models and marketing strategies that facilitate the commercialization of our new technologies and products.

For R&D activities in FY 2011, we have set a budget of 85 billion yen, the same amount as in the previous fiscal year. This demonstrates our commitment to further acceleration of the commercialization of new technologies, such as our micro smart-grid system, Aluminum-Celmet, molten salt electrolyte batteries, true green semiconductor laser, 10G-EPON(*1) Optical Access System, near-infrared composition imaging system Compovision, magnesium alloys, and superconducting wire rods.

Many industries, including such fields as safety & security, environment & energy, and life sciences, are now undergoing major paradigm shifts. In the meeting, I tried my best to convey to the audience our Group’s concerted commitment to developing new technologies and products along with new business models that will lead us to create innovations that cater to society’s needs. So, please look forward to future developments from Sumitomo Electric.

(*1) 10G-EPON：10 Gigabit Ethernet Passive Optical Network