JFE Holdings, Inc.
New Year's Message for 2011
Hajime Bada, President and CEO, JFE Holdings, Inc.
President and CEO
It is with great pleasure and enthusiasm that I address you at the start of this New Year.
The global economy is gradually recovering from the financial crisis and ensuing turmoil, with emerging economies in Asia and elsewhere having rebounded the fastest and now growing strongly. We now expect to see sustained growth mainly these economies, although economic stagnation in developed economies such as Japan is like to persist.
Final year of third medium-term business plan
Despite the rapid deterioration of the economic environment in the past couple of years, we determined it was not necessary to make interim changes in the basic policies of our third medium-term business plan, the blueprint for the JFE Group's bold evolution. The core strategy of this plan is to contribute to society with the world's most innovative technology, guided by our code of conduct — challenging spirit, flexibility and sincerity — which are especially important these difficult times. Going forward, we will focus on five key strategies to reinforce our earning power and enhance our corporate value over the long term:
- Develop innovative technologies from a 10-year perspective
- Secure footholds in markets offering growth and development
- Review management systems throughout the Group
- Enhance CSR and corporate governance
- Strengthen our financial position and return profits to shareholders
After carefully evaluating our fiscal 2010 performance, we are now setting our targets for fiscal 2011, the final year of our current medium-term plan. In fiscal 2011 we will introduce our next medium-term business plan. Our new initiatives will focus on what we expect the state of our business environment to be in ten years' time, rather than how current business will progress.
We are a "challenger"
So let's look at the key issues that will shape our business in 2011.
First, we must accelerate our development of innovative technologies for both production processes and product applications, and introduce all-new products faster than ever. A Japan-based organization such as ours is underpinned by technology-driven competitiveness and strong cooperation in manufacturing. Leveraging these strengths, we must continue to develop products and services that truly satisfy our customers' needs, including by helping them to save energy and reduce environmental loads, fields in which JFE is becoming a world leader.
The second key issue in 2011 is to strengthen our foundation for business in Japan. We intend to lower our breakeven point by improving domestic manufacturing productivity and enhancing manufacturing technologies for highly value-added products. We also need to make our workforce more efficient and cut costs in selected areas through a combination of internal reorganization and outside partnership, including taking a hard look at businesses that either overlap with other units or have weak prospects going forward.
The third key issue is to rev up our growth engine in the highly promising markets of Asia. Infrastructure development in Asia's emerging economies will present us with huge opportunities. However, the success of our highly value-added products and technologies in Asia's market of commodity-grade offerings depends on costs, not only technologies, so Group-wide collaboration towards this end will be crucial. To compete in emerging markets, we cannot forget that we are the "challenger" when we step into the ring.
Issues for our major Group companies
JFE Steel is nearing its goal of establishing a domestic production system with a 33-million-ton capacity on a non-consolidated basis, or 37 million tons consolidated. In addition to strengthening this base through innovative technologies and products, the company also intends to strengthen profitability by developing more overseas business and raising raw material interests to a target 30%.
JFE Engineering is gaining new strength through business alliances and M&A, mainly in sectors such as shield machines, recycling and water treatment. But the job is unfinished, so the company will accelerate its alliance strategy to improve competitiveness in all sectors of its business. Capacity expansion will be a key issue as JFE Engineering works to enhance its ability to win orders, manage projects and convert new technologies into commercial products. Efforts to develop business overseas will proceed briskly but mindful of avoiding undue risk.
Universal Shipbuilding will continue to tackle cost-cutting, including by raising man-hour efficiency. In the face of persistent global over-capacity, the company must upgrade its ability to secure orders, in part by developing customized hull forms that meet specific customer needs, including energy savings.
Kawasaki Microelectronics is charged with the task of swiftly completing the reorganization of its business structure and proceeding with the development of promising products.
Further development of Group synergies
In 2011 the goal is not only to make our businesses more efficient and rationalized, but also to develop Group-wide synergies from the standpoint of total optimization. Collaborative efforts have already produced tangible results, including the development of expanded applications for steel products, eco-friendly photovoltaic facilities and ballast water treatment systems. Other promising areas include green energy and overseas business.
Strengthened human resources
Another important issue for JFE is the reinforcement of human resources, including the increased empowerment of female personnel. Every one of our companies is faced with the common problem of losing many baby-boom veterans at the same time due to compulsory retirement. It is crucial that younger employees be given the skills and know-how they will need to lead us into the future. I call on all companies to provide necessary training at every level and to allocate human resources with great care, including the productive utilization of new graduates and mid-career hires. This also means making sure that female employees have equal opportunities to enjoy meaningful, productive careers at JFE.
Our response to globalization trends must include the hiring of international graduates, which has started already at some of our companies. The JFE work environment must embrace people of different cultures and values. Not only will this help them to realize their full potential, it will allow all of us to gain a deeper appreciation and understanding of overseas markets — the growth engine of our future.
There will be increased opportunities to study and work overseas, mainly to help younger employees hone their skills in foreign languages and international communication. We also will expand training for high-level personnel who must acquire the skills needed to manage overseas companies.
Forging wisdom and energy
As we further globalize the JFE Group, many of you will find your individual abilities being tested. I wish to remind you that these are beneficial experiences, so please accept each challenge with enthusiasm. I assure you that by broadening your interests and work skills, you will make the process both easier and more rewarding.
In closing, please remember that the value of this Group is the total sum of our wisdom and energy, and that our venture into the future will be a function of how boldly we demonstrate our challenging spirit.
In closing, very best wishes to you and your family for a prosperous New Year.