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News Release

JFE Holdings, Inc.

New Year’s Message for 2010
Fumio Sudo, President and CEO, JFE Holdings, Inc.

A Happy New Year to All Group Personnel!

It is with great pleasure and enthusiasm that I address you at the start of the New Year.

Action is more worth than 100 thoughts

Revere the past to create anew

As the 21st century accelerates, paradigm shifts are taking place swiftly on all fronts — economic, societal and industrial. Japan’s domestic market is shrinking due to depopulation, the global economy is transitioning from a U.S.-driven structure to one powered by Asia and developing countries, and a movement to adopt international financial reporting standards is sweeping the world, to mention just a few of the major shifts.

It will be impossible for JFE to survive without drastically changing its ways of business. We cannot expect the same profits as before just by following past business models, even if the economic environment recovers. If we adhere to previous business styles, we will find ourselves left behind.

“Onkochishin ” is a Confucian proverb that says we should carefully examine our past culture, traditions and customs to acquire new knowledge. But acquiring new knowledge is not enough for a corporation to grow and develop. By nurturing the truly essential elements of our corporate vision and values, as well as shedding any unnecessary or outdated customs, ideas, etc., we must strive to create new value. This new perspective is aptly expressed in the modified proverb “Onkososhin” which advises us to revere the past to create anew.

JFE will maintain its unchanging vision of “Contributing to society with the world’s most innovative technology” and its eternal values: “Challenging spirit, Flexibility, Sincerity.” But while holding firmly to our vision and values — the core of our essence — we also must boldly challenge ourselves to devise a new business model for profitability. Simply maintaining the status quo would be to decline, whereas tireless effort, courage and practice could help us achieve a breakthrough.

The Challenges of a New Business Model

The key to any growth strategy is to gain orders and sell products

Amid the drastic changes taking place in today’s economic environment, last year we devised a solid business strategy to guide us into the future. I now ask you to steadily implement this new growth strategy while keeping an eye on the emerging new business environment.

Focus on the fact that our ability to win orders and sell products will be put to the test this year. These two tasks will demand your keen attention, as much as or even more than the development of technologies and products, areas where we traditionally have placed great emphasis.

As you reinforce your sales systems, I also want you to fundamentally review your past business practices, how you won orders and sold products, and your relationships with customers, and then use this insight to capitalize on new demand with all your power.

We cannot place much hope in Japanese domestic demand due to the country’s deflationary economy and its low birthrate, so the key to our growth is the expanding Asian market, where we must enhance our presence to take advantage of the region’s rising demand.

Please give special attention to enhancing our group efficiency and productivity. Carefully scrutinize any redundancy among our group companies and thoroughly examine our production and sales bases to find ways to make our business functions and strategic allocations more efficient.

To everyone in our steel business, the demand structure is undergoing significant change, so hasten our development of products for new markets and technologies for the environment. We need you to strengthen our revenue base.

In engineering, develop alliances with new companies and in new fields in order to win orders and sell products more proactively. Be mindful of the evolving Japanese business environment in which public works and domestic demand are in decline.

In shipbuilding, strive for world-class competitiveness by thoroughly reducing costs and strengthening our ability to win orders and sell products in these difficult times.

To those of you in our LSI and urban development businesses, swiftly complete our ongoing structural reforms as well as your review of our business framework for the future.

Corporate Survival Depends on Shared Crisis-Awareness

Face the crisis resolutely, without giving in

The global financial crisis has seen U.S. mega financial institutions and automobile companies that once had led the world economy buckle under enormous debt and seek publicly funded bailouts from their government. Clearly, even the world’s “top” companies are vulnerable to rapid environmental change if they lack a sense of crisis and do not prepare for change.

Day by day we watched the business world fall into disarray and the crisis spread around the world, threatening corporations everywhere. Every employee must remain on guard for any sign of crisis, and must share such observations with their colleagues.

Please support our transformation by recognizing that we can’t survive without change. Return once again to our core vision and values to transform the new JFE with a sense of crisis. In the spirit of “Onkososhin”, I firmly believe that the future holds promise for us.

In closing, I sincerely wish you and your family a prosperous 2010 as we begin the new year.