July 26, 2012,17:06 +0900(JST) U.K. and Associated Episodes

TableI have purchased new curtains and lamps to match the yew tree furniture that I used when I was stationed in the U.K. Along with the new items, the furniture is now placed in one of the rooms in the head office. Let me tell you once again about the furniture.

The bookshelf, which doesn’t hold many books right now, goes very well with the color tone of the room, reminding me of my days in U.K. Last April, I wrote about the furniture in the blog titled “Yew Tree and Associated Episodes.” Since the furniture would be no longer used at the U.K. office, I asked my staff to send the furniture to Japan to use it in a parlor especially for guests from foreign countries.

Sitting at the tableWhen I was stationed in the U.K. as the president of our local corporation, I had many staff under me, and was tasked with managing our entire Europe area. I was enthusiastic about creating a “mini Sumitomo Electric” in Europe. To make my determination known to all my staff, I purchased a building situated on the street backing onto Baker Street, where Sherlock Holmes had once “lived.” The building we bought as our London base had been the private residence of the former British Prime Minister Harold Macmillan. Perhaps it was only to be expected, but the building was totally empty of furniture when we bought it, so I had a local manager arrange to buy the necessary furniture, which is what I am now introducing. The pieces are all very imposing, made of wood from the yew tree, which I heard is renowned as a high-grade material for its strength and hardness.

Even though years have passed and my position has changed, sitting at the table still reminds me of my burning ambition in those days. Our current business environment has some harsh elements, both domestically and internationally. However, I’d like to take a step forward towards our goal, with the determination that “if you look back on what you have done and you find that you are right, you should not hesitate to step forward, even if you are surrounded by 10 million opponents.”

July 25, 2012,18:57 +0900(JST) The Near-Infrared Composition Imaging System “Compovision”

Research and Development is the most important source of a company’s power to bolster its business competitiveness. Each year, Sumitomo Electric selects several outstanding R&D achievements for awards in the R&D category. Though we can’t disclose the details of the awards for this year because of a trade secret, we would like to demonstrate the near-infrared composition imaging system “Compovision.” This product received an award in the R&D category last year.

Sumitomo Electric has worked on expanding use of optical communication technology (materials and devices), which we have fostered over many years, in the field of life science.
“Compovision” is the first product that has been developed for use in the above field. It is an inspection system for non-destructive/non-contact measurement of the composition, concentration distribution and other properties of substances on a real-time basis, by irradiating the substances with near-infrared light. We began marketing this product in August 2010.

“Compovision” was introduced on the “Let’s Go to Exhibition” program of BS 12ch TwellV.

Our future goal is to develop a system that can diagnose the human health conditions merely by observing the body surface.

July 24, 2012,09:40 +0900(JST) Shareholders' General Meeting

On Thursday, June 7, Sumitomo Electric held its 142nd annual shareholders’ general meeting in Osaka. I would like to thank the over 600 shareholders who attended the meeting for sparing their valuable time. Through communication with participants, and answering a number of questions, I believe that we could help them in understanding more about our company—whose business is not particularly well known to the public.

As one of the reported matters, we apologized for the case in which we received a surcharge payment order from the Japan Fair Trade Commission in January this year, regarding automotive wiring harnesses and related products. We explained that we accepted this issue with sincerity, and consider compliance with competition laws as an issue of the highest priority in our business management. We also promised that we would thoroughly implement measures to prevent the recurrence of such an incident.

We also received questions regarding the development status of our smart grid system using secondary batteries; electricity-saving measures for this summer; risk management measures against natural disasters, including tsunami and earthquakes, pandemics, and against confidential information leakage; global business trends; stock price level (PBR); and social contribution activities.

Here, I would like to introduce some of our answers to these questions from the participants.

We are currently developing two types of secondary batteries: a molten salt electrolysis battery and a redox flow battery, each of which offers different advantages. The molten salt electrolysis battery, with its high energy density, enables battery downsizing. It is also safe, consisting of non-flammable materials. Potential uses of this battery include a back-up power supply at many locations such as homes and base stations, and applications in automotives. To promote practical application, we conducted a driving test this spring, using an automobile in which this battery was mounted. The redox flow battery, which is suitable for large scale energy storage, is capable of charging and discharging instantaneously. This battery is also safe, composed of non-flammable materials. We expect that this battery will play a key role in renewable energy utilization and smart grid systems. We are planning to commence a demonstration of a megawatt-class power generation/storage system on the premises of the Yokohama Works in July. We explained that we would monitor the system’s long term durability and identify points to be improved through this test, and strive to put the system into practical use as early as possible.

Responding to the question about our electricity-saving measures for this summer, we reported that we have already implemented measures that ensure a 15% reduction in electricity consumed at our facilities in Kansai against FY 2010 levels. Such measures include switching to LED lights and other high-efficiency lighting, as well as introducing standby power generators. To the question regarding our overseas sales ratio, we reported that the ratio reached 45.6% in the fiscal year ending March 2012, despite the rapid rise of the yen, and we anticipate that the ratio will continue to increase. We also stated that we plan to develop new products and technologies in Japan, and expand our businesses both inside and outside the country to meet the varying needs of our customers. With globally expanding businesses, we could actually situate our Group’s head office anywhere in the world. We emphasized, however, that we would remain in Osaka, the place where we grew, and continue to contribute to the city.

Also, we received a valuable comment on our advertising activities. It was pointed out that the artificial island of the Japanese archipelago built in Koya Pond in Itami City can be clearly seen from aircraft departing from Itami Airport. The comment suggested installing a company name board that would be visible from the air on the roof of Itami Works. Explaining that we have installed our advertising boards in many places, including Koshien Stadium and railway stations in the Kanto region, we answered that we appreciated such a valuable comment in promoting further advertising activities.

I strongly felt at the meeting that our shareholders have high expectations for us. Although the political and economic conditions are drastically changing—both domestically and globally—we are determined to endeavor to respond to these expectations.

July 23, 2012,11:02 +0900(JST) Talk to New Employees

The other day, I had the opportunity to talk to our new employees who had just finished their on-site training. I would like to give you a summary of my talk.

講話する私First, I asked them to address themselves, with high aspiration, to improving SEQCDD (safety, environment, quality, cost, delivery and research & development) activities, a key word in our business management. Regarding safety, I wanted to make extra sure that they fully understood the basic safety standards in the workplace and commit themselves to their work, keeping in mind our principle that gives overriding priority to safety, thereby ensuring the safety of everyone, including themselves.

Next, I explained about the three points I mentioned in my New Year message for our employees to focus on during this year. Currently, the world is still in the midst of great uncertainty. In Europe, there is growing concern regarding the election in Greece and the financial instability in Spain. The outcome of these issues could produce consequences even worse than the Lehman Brothers’ bankruptcy. Meanwhile, the economic growth of emerging countries has also been slowing down.

(1) Final spurt toward the goals of VISION 2012
Although uncertainty still prevails in the world economy, we have to prevent the situation in which our announced forecasts cannot be achieved for two consecutive years. Under these circumstances, we have officially announced our consolidated forecasts for fiscal 2012 as follows: net sales of 2,200 billion yen, and operating income of 110 billion yen. Apart from these forecasts, however, we internally set an operating income target of 135 billion yen, by converting the target set for VISION 2012 (210 billion yen) at the current exchange rate. I believe that achieving this target will clearly demonstrate our strength. So, let us start the final spurt toward achieving this internal objective.

(2) Improvement in ability to deal with change
Nowadays, the whole world can be regarded as a single market. The Lehman Brothers’ bankruptcy and the severe flooding in Thailand, for example, rapidly affected the entire world. As the globalization of society accelerates, you will increasingly need to deal with diverse cultures throughout the world. So, work hard to develop your English skills as a tool for communication.

(3) Believing in your dreams
I believe it is essential to have more than one dream in both your personal and professional lives. Even if one dream cannot be fulfilled, continue to make effort to achieve a different dream with an unwavering spirit. I hope that young people like you will take on challenges willingly, not fearing to fail.

In closing, I introduced “A Psalm of Life,” a poem written by the great American writer, Longfellow, as a gift for our new employees. During the 45 years of my professional life, I have learned that the essence of this poem is the key to earn people’s trust and confidence. Also, I believe that it is important to maintain a sense of courage as depicted in the poem, especially in today’s society that is full of uncertainty.

Now, it is time for the new employees to be assigned to their workplaces. I hope that they will take care of their health and their safety, finding their own health management method. I would like to extend my best wishes for all of them in their new life as a member of the Sumitomo Electric Group.

July 23, 2012,11:00 +0900(JST) Group-Wide Convention on Safety, the Environment, Product Quality, and Clerical Work Quality

I attended the group-wide convention on safety, the environment, product quality, and clerical work quality, the areas that form the foundation of our corporate activities. The convention, which has now been held a total of 17 times, comprised reports on activities in fiscal 2011, and the 2012 activity policy. As I always like to mention this meeting in my blog, I would like to introduce the main points of this year's conference.

As for safety, there was a report about a serious accident that occurred this spring at one of our group companies, and all convention participants pledged to prevent the recurrence of such an incident. Also to our regret, the annual results have now remained at the same level for three years. Accordingly, we reconfirmed the importance of management leadership in each division, thorough implementation of equipment risk assessment, development of global key personnel, and improvement of everyone's safety awareness. Other reports stated that workplace patrols by female employees have been very effective, especially from a hygiene viewpoint, and that safety training using videos is valuable because safety awareness differs according to country, and even between facilities.

Regarding the environment, there were reports on energy-saving and zero-emission activities. To respond to the current energy problems, regarded almost as a national challenge, we have been promoting investment in standby power generators and a change to high-efficiency equipment. I asked that the reported experiences and results be shared globally and thereby achieve a good cost reduction effect over the longer term.

Quality activities have been actively conducted, as indicated in examples such as ensuring that everything in respective facilities is perfectly in order and the global quality audit system. Further effort is still needed, however, to completely eliminate "total loss." Other reports explained the strengthened measures implemented at mother factories in Japan and the improvements being made at global facilities.

Regarding the issue of clerical work quality, which forms the basis for our corporate activities alongside production quality, steady improvements have been made. There were reports on the visualization of production processes and inventories using information technology. In response to this report, I requested specific measures to be developed to prevent the leakage of industrial secrets from centrally-managed systems, which are more susceptible to information leakage.

After the convention, company executives visited our Technical Training Center and observed "danger experiencing machines," adjusted exclusively for training. Through demonstrations, visitors can actually see how powerfully a rotating mechanism can draw an object into it, and just how large is the impact given by a heavy object swaying while being hoisted. Also, visitors can actually walk on dangerous stairs with different heights between the steps. I hope these actual experiences will help all our employees in enhancing their safety awareness.

見学中の写真 blog_img120507_03.jpg

Throughout the entire day, we worked hard to share SEQCDD challenges among all convention participants, from senior management to workplace representatives. I believe that the information reported by many divisions can serve as a useful reference for other divisions. To achieve significant results to close the final year of VISION 2012, we will endeavor to strengthen our commitments to safety, the environment, product quality, and clerical work quality through friendly competition among Group members.

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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