2018 New Year Message from the SWS President: Fumiyoshi Kawai

Happy New Year everyone and safety first.

I am happy to start the New Year with you and deliver my New Year address for 2018 on this occasion. Last year, we celebrated our 100th anniversary, and this year marks the first step toward the next 100 years. I am determined to work with you to make 2018 another year of success for Sumitomo Wiring Systems, Ltd., and its Group companies and ask for your continued cooperation.

January 8, 2018

Fumiyoshi Kawai,

President and CEO of SWS

Looking back on the previous year

For the last year’s global economy and business environment for our Group, the economy in Europe and the United States generally remained strong, and stable growth continued in China. The Japanese economy was on a recovery trend, and Japan’s economic expansion is expected to continue in the future.

For the global automobile industry, it exceeded the 90-million unit mark for the first time in 2016 and has since been performing well. In particular, the Asian market centering on China and India has served as the driving force behind the stable growth of the global automobile industry. The Asian automobile market is expected to become a 100-million unit market in the near future. For the domestic market, the sales performance of new cars remained strong and the sales of kei cars that had been sluggish recovered.

The order intake volume of the Group as a whole remained strong despite exchange fluctuations and the deceleration of the market expansion rate, and the Group’s sales reached a record high in the first half.

In the midst of such a business context, you worked hard to address the issues for the final year toward the 17 Vision, such as the implementation of safety measures, quality enhancement, cost reduction, global production, and the development and sales expansion of new products. Taking this opportunity, I would like to express my sincere gratitude to you for your daily, unflagging efforts.

Aiming to become a company with a solid manufacturing foundation

Our priority business issue for 2018 continues to be the strengthening of global competitiveness. Our company is now at the vortex of a sweeping, 100-year trend involving the automobile industry. The “four angry waves” of electric vehicles (EV), self-driving cars, sharing, and connected urge us to make unprecedented changes. As the automobile industry is changing drastically, the time is approaching where automobile parts suppliers are required to carry out reforms in every process of development, design, and manufacture, as well as technology innovation related to products and parts. In order to achieve sustainable growth of the wiring harness business in this severe and difficult environment, we need to further promote the development of competitive plants and fields, the development of unrivaled technology, and a prompt response to globalization toward a company with a solid manufacturing foundation. I ask you, therefore, to address the following three issues with an acute sense of crisis.

Further strengthening of SE-QCDD

The first is to further strengthen SE-QCDD that places the highest priority on safety. SE-QCDD is the essence of the manufacturing foundation, and the further strengthening of SE-QCDD will lead to the enhancement of our global competitiveness.

Thanks to your commitment, we have successfully made continuous improvements in safety (S), the environment (E), and quality (Q). However, our goals have not been fully achieved. Genchi Genbutsu (go and see) and Genri Gensoku (rules and principles) are what underlie safety, the environment, and quality. In order to solve problems, it is essential for us to go to the manufacturing site, ponder the causes while examining actual goods, and determine the root causes of injuries, accidents, defective goods, and errors. I ask you to reinforce the capabilities of shop-floor workers by visualizing problems at the shop floor, enhancing individual employees’ awareness of issues, and establishing a culture and climate where each worker makes efforts toward betterment.

For costs (C), a company cannot survive unless it makes a profit. Therefore, it is indispensable to promote cost reductions not only in the manufacturing settings, but also in back-office functions. I ask you, therefore, to promote cost reductions in back-office operations, such as the development of easy-to-build designs, easy-to-use facilities, and rational production plans and the promotion of inventory reductions. For high-quality products, the source of profits lies in the technological capabilities of development, design, and production departments, and the sales capabilities of the sales and marketing department that create customer satisfaction, whereas quality control that pursues product reliability and the capabilities of the production control department to cater to customer needs in a timely manner contribute to the generation of profits. Moreover, strengthening cost reduction activities in the corporate division that supports the business resources, that is, people, goods, money, and information, for such activities will generate more profit. I ask you to continue promoting the Reduction 10 activity, discover and thoroughly eliminate waste, inconsistency, and unreasonableness by leveraging the strong determination of each worker through teamwork, and further deepen the activity. In April when the 22 Vision will be launched, we will start a new series of cost reduction activities.

For delivery time (D), we are required to meet the diversified needs of customers and deal with the modularization of parts, the globalization of production, and the shortening of delivery time. Under such circumstances, we are required to observe deadlines while reducing inventory. To promptly respond to customers’ order changes, I ask you to develop competitive factories and manufacturing sites, which are capable of shortening the lead time without increasing inventory by obtaining accurate information quickly and developing production plans that take the load of facilities and workers into consideration.

For research and development (D), in order for our company to establish a competitive edge in the midst of intensifying global competition, it is important for us to differentiate our products from others via unique, unrivaled features while leveraging our strengths, such as long-accumulated quality, reliability, and technology, and strengthen the manufacturing competitiveness that enhances customer value. I ask you to enhance your ability to collect and analyze information and address the enhancement of development and proposal-making capabilities and the acceleration of commercialization and the reinforcement of global marketing capabilities.

Manufacturing starts with the development of employees

The second is to start the D&I (diversity and inclusion) activity and the development of human resources with a focus on five “-tions” in full swing. It is the people that have supported the 100-year growth of the SWS Group, and the most valuable asset for our company is people. Our company positions human assets as irreplaceable management resources and supports employees who pursue self-realization. Toward the realization of D&I, I ask each worksite to give chances to employees who demonstrate flexible thinking free from stereotypical views and who embrace the spirit of challenge, to further promote the development of human resources that can play a leading role on the global stage, and to enhance organizational strength.

For the development of human resources, I ask you to promote the “five-shons”—passion (passion and enthusiasm), mission (a sense of mission), action (ability to take action), hakushon (abnormality/crisis perceiving ability), and communication—which I requested when I assumed the presidency last year. In particular, I ask you to focus on the development of the ability to perceive abnormalities and crises (hakution). The ability to perceive abnormalities and crises is the ability to find errors at work. If you can notice abnormalities and crises before it’s too late, you can avoid disastrous mistakes and accidents. This ability to perceive abnormalities and crises is the most important factor that prevents mistakes and accidents from happening.

Raising awareness of compliance

The third is to raise employees’ awareness of compliance. Last year, Japan’s manufacturing quality and trust in it wavered largely because of a number of scandals, such as the falsification of quality data, inspections by unqualified persons, window dressing, and accounting fraud, of major companies. Corporate scandals could lead to a situation that affects a company’s business continuity, such as a drop in performance, transaction cancellations, and deferment of loans by banks. I ask each and every one of you to raise your awareness of compliance.

Last, we saw extreme weather occurring often around the world last year. There were many disasters that were caused by devastating hurricanes in North America and typhoons and localized heavy rain caused sudden downpours in Japan. I ask each of you to raise your awareness of disaster prevention so that safety of all employees can be secured in the event of an emergency.

These are the requests to you for this year. I wish you and your family a very happy new year. Safety first.

Fumiyoshi Kawai,

President and CEO of SWS