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“Swift manufacturing” for responding quickly to market changes
We express our deep sympathy and condolences to the victims of the Great East Japan Earthquake and truly hope for the earliest possible recovery in the areas devastated by the disaster.
For fiscal 2010, which ended March 31, 2011, the Nippon Electric Glass (NEG) Group reported record the highest sales and profits, thanks to its robust business performance in the first half of the fiscal year. However, we entered fiscal 2011 amid increasing uncertainty over the future prospects of the Japanese economy due to post-earthquake turmoil and problems such as radiation leakage from nuclear power facilities. Meanwhile, turning to the wider world, China and other emerging countries are rapidly increasing their economic strength. Japanese companies have to compete with these economies despite the severe business environment in the wake of the earthquake. Under these circumstances, it is important for us to create a business structure that enables us to respond quickly and flexibly to any change in the economic situation. On a routine basis, we should identify issues that will be addressed while the market is undergoing a market adjustment phase so that, in extreme situations, we will be able to quickly put the brakes on production and improve equipment to increase our production capacity. With increased capacity, when the market enters a recovery phase, we will be able to thrust down the accelerator to increase production volumes and thereby increase sales. In fiscal 2011, by skillfully stepping on the production accelerator and brake as necessary, the Company is pursuing “swift manufacturing” to respond quickly to market changes and needs.
Priority issues for fiscal 2011 (Creating a better-balanced business structure)
In the display field, NEG actively responds to the needs for thinner substrate glass for liquid crystal displays, while seeking further enhancement of productivity. Meanwhile, expanding non-display businesses is an important issue for improving our business portfolio, a disproportionately large portion of which is occupied by the display segment. To address this issue, this April, the Company implemented a partial executive reshuffle and organizational restructuring, and launched a number of actions in operational aspects. In the fiberglass business, we utilize a new facility in Malaysia to meet the growing demands for fiberglass used in the automotive industry in western and emerging countries. In the building materials segment, we have created an integrated structure for the whole cycle from development to production, and plan to aggressively promote sales. In the medical glass field, we commenced the operation of a new facility for glass tubing for medical use to meet future demand from emerging markets, which is expected to grow. We will promote sales of these glass tubing products together with our radiation shielding glass used for positron-emission tomography (PET) diagnosis and other advanced medical equipment. In addition, the Company entered into the markets of specialty glass for chemical strengthening used for cover glass for smart phones, and substrate glass for solar batteries. We hope to see growth in these new businesses.
Toward sustainable growth
In our mainstay segment of glass for flat panel displays (FPDs), we have focused on domestic manufacturing. In light of overseas demand trends and Business Continuity Management (BCM), however, we need to consider establishing production bases in optimal locations by closely examining ways to diversify risks associated with operation sites. As for research and development activities, we continue to center our efforts on key promising fields such as next-generation displays, new types of lighting, and energy. In the next-generation display field, development efforts have focused on organic light-emitting diode (OLED) displays. In the new-type lighting field, development is under way on phosphor glass for light-emitting diodes, and on glass for OLED lighting. In the energy field, NEG has introduced to the market the above mentioned substrate glass for solar batteries, following the launch of mirrors for use in solar thermal power generation. Making use of the P&P Technology Center, our recently established development base, we are working to develop new products and processes to accelerate the development of our new businesses.
Social responsibility principles that NEG is pursuing
We at NEG consider that the basics of our social responsibility are 1) offering useful products to the public, 2) protecting jobs in communities, and 3) making profits and paying taxes. On the basis of this notion, the Company sets forth three key issues in corporate social responsibility (CSR) activities: employing disabled persons, contributing to local communities, and preserving the environment. Regarding the employment of disabled persons, the NEG Group achieved an employment rate of such persons of 3.7% in fiscal 2010, exceeding the target of doubling the statutory rate (1.8%). However, we are not merely pursuing a higher rate. We are also continuing our steady efforts to create a better work environment and jobs so that disabled workers will feel that their jobs are worth doing. Activities for contributing to local communities focus on the human resources development of local people who will lead the next generation. For example, we are carrying out collaborative projects with the University of Shiga Prefecture and conducting donated courses at the university. Regarding environmental preservation, we believe that wasteless manufacturing will lead to conservation of energy and resources, and consequently to environmental conservation. Based on this fundamental notion, we are striving to reduce CO2 emissions, promote recycling of materials, and avoid the use of substances of concern, contributing to the protection of the global environment and the conservation of nature and biodiversity.
In conclusion
NEG aims to become a company with solid manufacturing and development capabilities and a strong management base. With solid manufacturing and development capabilities, we can continue to offer useful products to the public. At the same time, we will only be able to achieve corporate growth through such business activities if we have a solid management base. Based on this notion, NEG practices cash-flow-oriented management to improve its financial strength. We also consider it a key priority management issue to return profits to our shareholders. In fiscal 2010, the Company increased its dividend per share by 2 yen from the previous fiscal year. This marks the seventh consecutive year of dividend increases. Taking into consideration the financial conditions and business performance outlook, we intend to continue providing a steady profit return to our shareholders over the long term.
Yuzo Izutsu, Chairman of the Board
Masayuki Arioka, President