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SHAPING A BETTER FUTURE

Top Message

Sustainability for JTEKT

Nowadays, society on the whole tends to place importance on sustainable growth - a fact which is evident by the widespread acceptance of SDGs and ESG investment in the global community. For JTEKT to secure sustainability and realize long-term growth, we must sincerely address society's demands and forge relationships of trust with all stakeholders. Amidst such circumstances, the four issues that JTEKT believes we must place particular importance on are coexis- tence with the environment, effective governance and risk management, development of professionals who "think and act" and promotion of diversity.

Coexistence with the environment

In FY2016, JTEKT established Environmental Challenge 2050, which expresses our goal of minimizing environmental burden and maximizing environmental value across the entire JTEKT Group. Moreover, as part of efforts to achieve our targets, we established Environmental Action Plan 2020, and have set milestones for promoting initiatives aimed at reduc- ing CO2 and waste emissions, as well as the effective utiliza- tion of resources.
In order to achieve our 2020 milestone, we are taking the approach of not only focusing on our products, but also ensuring more effective ways of making products.

In terms of the product-centric approach, JTEKT's true task is the creation of environmentally-friendly products, and expanding this directly leads to reduction of environmental burden. For example, fuel consumption can be reduced by 2 to 3% simply by switching from hydraulic to electric power steering. Through pursuing tribology engineering in our Bearing business also, we have led the way in development of low friction torque bearings. Low friction torque means our customers' machines don't need as much force to rotate, which helps to improve energy efficiency.
Moving forward, in order to minimize environmental burden from a product-centric approach, we believe focusing on the expansion of vehicle types compatible with EPS, the further pursuit of tribology engineering and so on will be effective.

Expansion of vehicle types compatible with EPS

JTEKT will further increase the output of our RP-EPS, which are being adopted in comparatively large vehicles, and focus on promoting a shift away from hydraulic steering. In order to improve output, there is a need to increase the output of the power sources also. Here, our high heat resistance lithium ion capacitor announced in 2017 plays an active role.

Further pursuit of tribology engineering

In order to pursuit tribology engineering and further reduce environmental burden, we must ramp up our initiatives related to fluid control technology aimed at making lubricant film thinner. By further strengthening this field, arguably one of JTEKT's strengths, we aim to improve energy efficiency. On the point of improving the efficiency of how we make products, manufacturing method innovation and supply chain optimization are two issues to be addressed.

Insofar as manufacturing method innovation, we are consider- ing a shift to high energy-efficiency manufacturing techniques and process-saving. In regards to changes to process techniques, currently the heat treatment process for bearings uses a heat treatment furnace, however, if this can be changed to induction, which can be completed in a relatively short period of time, it would be possible to drasti- cally reduce energy consumption. Meanwhile, process-saving is the most effective way of reducing environmental burden. However, this is much more challenging than process change, as we must revise all prior common knowledge and rethink how processes should be from scratch.
Even in the supply chain, in order to continue the same business activities we have to date but in less steps and using less time and energy, we must review the entire supply chain and think boldly about the changes we can make.
Either way, we need to pursue innovative initiatives in addition to ongoing improvement. In order to achieve this, we believe it is important to continue being a company that constantly doubts the conventional way of working.

Effective governance and Risk management

As I also mentioned in the FY2016 Integrated Report, JTEKT has a system whereby its management is monitored by external parties through summoning outside directors and auditors. Effectiveness is a crucial part of governance and JTEKT has poured considerable effort into accurate appraisal of our management status and raising of issues by our outside directors and auditors in the form of Audit & Supervi- sory Board briefings. Furthermore, auditors cover not only Japan, but also our overseas bases, therefore provide us with many proposals and much advice each month in order to achieve a higher standard of management. The proposals and issues raised, etc. by these outside parties are monitored in monthly progress reports until they are finalized or solved by the director in charge, which ensures a more solid mecha- nism.
From FY2018, new auditors took the post meaning our management will be examined by fresh eyes, hence I anticipate a further improvement in management quality.

From the perspective of risk management, we have entered an age where the existence of the entire company could be endangered due to risk in one specific business in one specific region. As such, JTEKT has formed a risk manage- ment system centered on a Global CRO (Chief Risk Manage- ment Officer) in order to respond swiftly to a situation when necessary. We will continue enriching the content of this system so that functions, businesses and regions may unite and enable comprehensive appraisal and response toward risk.

Risk management structure

Development of professionals who think and act

In order for JTEKT to secure sustainability and realize long-term growth, it is essential that we develop profession- als who "think and act" for themselves.
This can only be achieved with efforts by the employees themselves, but, as a company, in order to engage in this initiative persuasively, I think we need to offer support, build mechanisms and foster the right culture to ensure mutual happiness.
To this end, we place emphasis on organization of a training structure, strengthening of policy management and person- nel training that utilizes global posts.

Organization of a training structure

When I was appointed president, our training system resem- bled a Buddhist temple, where there was a master, and beneath him were young employees who were nurtured through on-the-job training (OJT).
While this style of training is indeed important, in order to nurture professionals with the ability to "think and act", there is a need to also practice Off-JT as the basis.
Here, to strengthen our problem-solving concept, we incorpo- rate problem-solving training and have those in positions of responsibility (supervisors, etc.) engage in training to acquire an awareness that they must always, when faced with issues, consider the points of "What is the cause of this problem?", "Where is the root cause of this problem?", "How should I solve this problem?" and "How should the solution be incorporated in the mechanism?" Moreover, for managers and above, we provide training to teach that it is important to not only identify the root cause of the problem that has occurred, but also practice "back-casting" from the gap between how the situation should be and the reality in order to imagine what issues could exist.
Problem-solving training itself is beginning to take root, however as a training system, I believe we have only just reached half-way. As an example of future initiatives, we are promoting JTEKT Business Practice as a guide to JTEKT's basic approach to work.

Strengthening of policy management

In order to effectively leverage the abilities of all employees and be a highly-productive organization, we must all be on the same page as One JTEKT.
At JTEKT, our management is based on a mid-term manage- ment plan, however, when implementing this, while the activity plans of departments, offices, groups and individuals are being cascaded down, not only the activities expected from high-level policy, but also what can be done for high-level policy is divided into themes and thrown back and forth between superiors and subordinates in a “catchball” process until the concerned parties agree and understand the content, then play catchball again with the outcome until further agreement and understanding is obtained. Through this process, we believe JTEKT Group management should draw out the autonomous actions of each and every employee and it is the ideal we aim for.
For this mechanism to function, the premise is that firm department policies exist and I believe that it is the responsi- bility of management to create such a condition. As president, I am checking the policies of all departments more rigorously than last year. Our policies were insufficient in FY2017 however, I communicated that the design of department policy was extremely important for policy management, and for FY2018, every department produced extremely high quality policies. We will continue aiming for a high level in FY2018 and beyond.

Cascading-down of policies and plans

Professional development utilizing global posts

As long as we are making a global footprint, we must raise globally-minded professionals. Our overseas bases are enthu- siastic about this and boast many outstanding employees. So that these promising workers can gain experience as leaders and various other positions and grow as professionals while they are young, we are formulating succession plans unique to each region incorporating its specific circumstances. Moving forward, I'd like to see increased interaction between employees from different overseas bases and develop profes- sionals with a broad perspective.

Mid-term Management Plan Structure

Promotion of diversity

There are only around seven more years before 2025, when Japan is said to face a situation in which one-third of its citizens are 65 or older. As such, we need to address this situation immediately.
JTEKT is already pushing forward with initiatives to improve productivity through the sophistication of operator working styles and task reforms of indirect departments, but in addition, we will focus on the promotion of diversity focusing on utilization of female and senior workers.
For example, if we increase the automation of production lines, work such as robot maintenance and programming becomes more important. This type of work can be performed by female employees and senior employees too. We are working to enrich systems so that such people have greater opportunity to contribute.

Moreover, we are exerting efforts in relation to health so that employees can work for a long period of time. As unique initiatives, we have introduced a walking campaign for all employees and a 2-night, 3-day diet/exercise program target- ing employees susceptible to obesity. For the diet/exercise program, there is one health consultant for every 4 or 5 partic- ipants. Participating employees learn appropriate dietary intake and exercise habits. Many lose around 4 to 5 kilograms within six months of joining the program, and even I am surprised by the positive result.

The environment surrounding us is changing at an ever-in- creasing rate. Amidst this, we will constantly possess a healthy sense of danger and further strengthen initiatives aimed at a desirable future. I humbly ask that our stakehold- ers continue to provide us with their invaluable support and advice.