Nippon Steel & Sumitomo Metal Corporation was established on October 1, 2012 by a merger of Nippon Steel and Sumitomo Metals. I believe that we have made an excellent start and a steady progress in the first 18 months, toward our aim of becoming the “Best Steelmaker with World-leading Capabilities.” I would like us to acquire formidable competitive strength, unrivaled by any steelmaker in the world, and to strive to increase our corporate value by making progress in dealing with management issues.
I think there are two working objectives we need to focus on. The first thing is to expand profits and keep strengthening our business foundation in Japan. The second is, on the premise of our doing the first, to expand profits overseas. Both of those are indispensable and inseparable, like the two wheels of a cart, for us to become a truly global company.
Let me first take up the first point. Becoming more profitable and stronger in Japan means we must make continuous efforts at rebuilding and fortifying the competitiveness of our domestic manufacturing bases. At the same time, it reflects our will to be a company that creates, pursues, and exploits technological advances.
Manufacturing lines in Japan are positioned as the mother plants of our global supply system. We have to pursue high quality and productivity, develop and commercialize advanced technologies, and ensure an outstanding manufacturing capacity. We should always have in mind that our domestic manufacturing lines play a role of mother plants only because they are the sources of our competitiveness and have our two essential properties: “responsiveness to customers” and “Genba-Ryoku.” Genba-Ryoku is a Japanese buzzword literally meaning “on-site competence.” It describes the capability of front-line workplaces where employees identify challenges and issues of their workplace, and work cooperatively to bring better results or come out with better solutions.
Many of our customers in various industries in Japan are exposed to fierce global competition but prevail with formidable power. We have strived to do our share of making effective proposals to improve the value of their products and their productivity. Thankfully, such processes have also helped us become stronger in various ways, in areas including quality, productivity, and manufacturing technology, and become more competent in the global market. This “responsiveness to customers” is truly one of our strengths, in my view.
Another area of strength is our “Genba-Ryoku.” Products of Nippon Steel & Sumitomo Metal are highly regarded in terms of quality by our customers. This is because of superb “Genba-Ryoku” of our manufacturing bases, including those of our group companies, which show themselves to be clusters of technologies, skills, and ethical behavior.
While our business environment constantly changes, we will be flexible and continue to raise competitiveness of our manufacturing bases by making better use of our existing facilities and exercising timely and planned replacement investment. We are currently undertaking a campaign to strengthen our manufacturing bases. We will conduct replacement investment as needed, consistently seek to have optimal manufacturing systems, and further enhance our “responsiveness to customers” and our “Genba-Ryoku.” This, I believe, is how we will make ourselves more competitive.
Moreover, I would like us to further strengthen R&D activities and keep pursuing technological advances, without being confined by fixed mind-sets. Specifically, we should carry out more joint R&D activities with research universities and research institutions elsewhere, and focus more on developing new processes and other manufacturing technology in order to realize the cost levels that make us competitive even in general-purpose steel, or so-called volume-zone products. In addition, we should do more joint development with our customers to develop high-function products, which may meet future needs in new growth areas. We should thus enhance our product technology development, pursue technological advances, and expand globally.
Regarding the second point, “overseas profit expansion,” we already have 195 overseas subsidiaries and affiliates in the group. We will strive to enhance the profitability of those existing overseas businesses. On top of that, we will aim at further growth by developing businesses which are needed and doing so in a profitable way.
We are anticipating more intensified competition in the East Asia region and ASEAN countries where steel demand is expected to increase. I wish earnestly that we survive in this competition and continue to prevail in the global market. In order to do so, we have to capture demand, command the market, and be regarded highly by customers and markets, not only in the automotive market where we have already achieved a significant presence in Japan and overseas, but also in resources and energy, transportation, infrastructure and other areas where demand is expected to increase and where we could leverage on our competitiveness.
I also think that it is important that we contribute to development of the countries where we have a presence and help promote their growth. In satisfying the needs of our customers and markets, we must always be mindful of the importance of working to have optimal production systems, which includes local sources of iron. We also must make efforts to improve the supply chain, work jointly with group companies in facility maintenance, logistics, systems, and other areas, and build a stronger network with local partners and administrative authorities.
What I mentioned here is incorporated in our Corporate Philosophy, which was adopted when Nippon Steel & Sumitomo Metal was integrated. I firmly believe that a truly global company is one that strives for development of the countries it does business in, and to be trusted and respected worldwide. The NSSMC Group will be committed to “pursue world-leading technologies and manufacturing capabilities” and “provide products and services that benefit society, or, in other words, help develop the world.”
I sincerely hope that you will extend your continued support and cooperation to us.
Nippon Steel & Sumitomo Metal Corporation
Kosei Shindo, President