With the intention of responding to market needs that surged in 2020, including a growing push to achieve “carbon neutrality” and promoting efforts to solve social issues through our businesses, the Tamura Group is stepping up initiatives to propel the “One Tamura Strategy.” Chairperson Tamura and President Asada will talk about the financial results amid the COVID-19 pandemic and the progress of the medium-term management plan, and discuss the direction of the road ahead under the Group’s sustainability management.
With the impact of COVID-19, tell us about
the business environment for FY2020.
President and Representative Director
Asada: In FY2020, on the back of the global economic downturn due to the COVID-19 pandemic, both sales and profits plunged, particularly until the second quarter. Since October, however, sales and profits have recovered moderately, and are on a gradual recovery track.
Tell us about the financial results for FY2020 and the progress of the medium-term management plan.
By business, whereas the electronic components and electronic chemicals businesses have been rebounding, soldering equipment and LED-related products for vending machines faced an uphill battle as customers cut capital spending. The production system was disrupted somewhat mainly in countries where lockdown measures were taken to curb the spread of COVID-19. Nevertheless, no major trouble was reported, and since the latter half, nearly the same production system as that before the pandemic has been in place.
With the headwind continuing into 2021, prices of metals in particular, such as tin, silver, copper, and iron, have been soaring since February, weighing extremely heavily on the electronic components and electronic chemicals businesses. Furthermore,
due to the effects of the COVID-19 pandemic, the number of flights and ships has fallen sharply to affect logistics, and freight rates have been surging. Albeit no exit for both in sight as yet, we expect the situation to be brought under control in the latter half.
Asada: As for our financial results for FY2020, sales and operating income fell 7.2% and 14.0% from a year earlier, respectively. By business, whereas the electronic components and electronic chemicals/FA systems businesses saw both sales and profits decrease, the information equipment business met the sales target during a demand expansion period at the end of the fiscal year to ensure increased profits albeit decreased sales. In terms of the progress of the medium-term management plan, to our regret, we failed to meet the target for the second consecutive year.
Tell us about the measures taken as part of the One Tamura Strategy and the effects and results of them over the past year.
In FY2021, the final year of the current medium-term management plan, we anticipate that the effects of the COVID-19 pandemic would drag on, and it would be unlikely for us to fulfill the target. For this reason, we position FY2021 as a period for sowing seeds with the post-COVID-19 era in view and for getting ready to give us a head start in the next medium-term management plan that starts in FY2022, with the aim of achieving a V-shaped recovery.
Asada: The One Tamura Strategy is a tripartite initiative that promotes “business strategy” to take up challenges in the future, “work style reform” with the aim of becoming a company that gives employees job satisfaction, and “operational reform” to boost work efficiency, thereby realizing “One Tamura.”
Under the One Tamura Strategy, you have stated that you will contribute to achieving carbon neutrality in particular as part of needs that surged on the back of the COVID-19 pandemic.
In order to move this initiative forward, we reshuffled management and strengthened cooperation among business units for strategic projects in 2020. As the heads of business units were reshuffled, we decided to redraw business strategy plans. Drawing a four-quadrant matrix with "new products and technologies" and "existing products and technologies" on the vertical axis and “existing markets” and “new markets” on the horizontal axis, we have identified ways of creating new businesses essential to sustainable growth and determined the direction of the road ahead (page 10).
Furthermore, we were able to make great strides in promoting cooperation among business units in the past year as we conducted cross-business-unit research and development to create new products and technologies in new markets. For instance, a project to create a new product is underway by a joint team of developers from the electronic components and electronic chemicals businesses. Moreover, we set up the Business Reform Promotion Office in April and launched a new project with a view to stepping up marketing activities as well. The management, including Chairperson Tamura and me, has joined hands to promote business reform from bottom up vigorously.
Asada: Recently, one company after another has declared that it would achieve net-zero carbon emissions in the future both at home and abroad. Tamura has traditionally dealt with “highly reliable” and “highly efficient” electronic components and parts that constitute the backbone of energy conversion for wind power generation, automobiles, or charging, and will further enhance this product portfolio. With the realization of a decarbonized society in mind, we need to come up with new products and services, follow the business trend toward attaining carbon neutrality, and link that initiative to a new business strategy by setting a big goal.
As for automobiles, based on our assumptions that it will take some more time for the mass adoption of electric vehicles (EVs) to happen, and that hybrid vehicles (HVs) will keep growing, we are expanding the production system for boosting reactors for automotive use. At the new factory built at Wakayanagi Tamura Corporation, a member of the Group, mass production was launched on a full scale in 2019. Also, a new factory was completed at our Sakado Factory in December 2020. Production facilities will be deployed by the end of FY2021, and the factory will be launched in the first half of FY2022. As for overseas operations, we are optimizing our manufacturing sites in China. We have established a new factory for boosting reactors for automotive use in Foshan, and have realigned the factory for power source-related products in Shenzhen into two factories in Suzhou and Shenzhen as well.
Regarding greenhouse gases, you have set a new reduction target before formulating the next medium-term management plan.
Chairperson and Representative Director
Tamura: We hold the CSR Management Committee meetings, including outside directors, on a regular basis. In one of our discussions, a member pointed out that we might need a slightly longer-term strategy to address this. In order to help achieve carbon neutrality, comply with Japan’s Corporate Governance Code, and respond to a wide array of requests from customers and shareholders, we concluded that we should reformulate a new sustainability strategy typical of Tamura, and as a way to achieve the goal, we decided to identify what materiality is for us.
Please share with us the progress of identifying materiality and a schedule for announcing new sustainability strategy.
As we worked on identifying materiality, given the fact that the society’s demand to cut greenhouse gases has grown, we set a new goal of cutting greenhouse gases by 51% relative to the FY2013 level by 2030 ahead of time. Needless to say, carbon neutrality means achieving net-zero CO2 emissions. Thus, with revising ways to procure energy in the first place also in view, we will proactively source renewable energy down the road. For example, we are considering deploying new solar power generation facilities on the roof of the new factory for boosting reactors for automotive use in addition to the office building, which is a nearly ZEB (net zero energy building), at the Sakado Factory.
Tamura: As for materiality, we evaluated candidate items on the basis of two yardsticks, i.e., the degree of importance from the society's perspective and that from Tamura's perspective, respectively, and listed those of high importance. The nine key challenges that we picked are described in detail on page 13. As we begin formulating the next medium-term management plan that starts in FY2022, we hope that we would be able to reflect the identified materiality in each business unit's strategy as well.
In recent years, SDGs have been drawing attention in society. What efforts or initiatives did you carry out in FY2020?
We are in the process of drawing up a new sustainability strategy. We believe that it is indispensable to incorporate this new strategy into the next medium-term management plan as part of long-term guidelines. We will work out the final details and deploy this new strategy as it is integrated with the business strategy, and announce it at the same time as the next medium-term management plan.
Tamura: More than five years have passed since the Sustainable Development Goals (SDGs) were adopted by the United Nations (UN) in September 2015. Rather than whether we contribute to them or not, now is the time to call the substance of the initiatives into question. I myself, as the person in charge of promoting the initiatives, have come to feel the burden of responsibility more than ever.
Finally, tell us about the future challenge that you face, the direction of the road ahead, and your aspirations for the centennial anniversary.
In FY2020, we revised the Tamura Group Quality Policy as part of issues associated with SDGs. Considering that our utmost fundamental social responsibility is to contribute to the global community through our products and services from the very beginning, we wanted to go back to where we started and think about the quality that serves as the basis for our social responsibility, and reconfirm that none other than the untiring efforts for quality improvement represent a matter-of-course corporate culture for the Tamura Group. We believe that especially because this culture is a matter of course for us, it helps enhance not only the quality of products but that of the company as a whole as well, which ultimately results in achieving all SDGs. We will take concrete actions using this new quality policy as the compass.
In parallel, we will move further ahead with the personnel system reform as measures related to Goal 8 “Decent Work and Economic Growth,” so that we can give important posts to those who are motivated regardless of age or gender. On top of these, we are actively leveraging remote work from the standpoint of preventing the spread of COVID-19. This has made our work environment more employee-friendly for those facing the challenge of raising children or nursing the elderly.
Asada: In addressing carbon neutrality, which is one of the immediate social challenges, we believe that our products are highly effective. In areas centered on automotive application, power electronics, and IoT/next-generation telecommunications, which form the nucleus of the medium-term management plan, we will develop and launch new highly reliable and efficient products, and grow them as our strategic products that lead our sales as a whole.
Furthermore, in order to help promote innovation at job sites where strategic products are created, we will promote operational reform by leveraging information and communication technology (ICT) aggressively. We will also push ahead with work style reform that respects the diversity of people and put in place a personnel system that remunerates individuals according to their motivation at and ability to work, thereby making Tamura a company where people can truly feel job satisfaction. I am positive that building an organizational climate that gives rise to innovation will definitely give us a head start as we work on the next medium-term management plan.
Tamura: In such a year plagued by the COVID-19 pandemic, whereas activities outside the company were affected significantly, there were not a few positive aspects, including the fact that we were able to accelerate efforts to enhance internal systems, such as work style and personnel system reforms, at a single stroke. On the business front, I am convinced that we were able to draw up a new business strategy and build a strong portfolio, thereby laying a robust management foundation that can respond to the post-COVID-19 business environment. Tamura will continue to be a company that is needed by society and aspire to reach new heights as it nears its centennial anniversary, which is just around the corner. Let me close this message by asking all stakeholders for their continued understanding and support.