Expression of gratitude for employees on the frontlines during the COVID-19 pandemic
We continue to respond to the COVID-19 pandemic, which has persisted since 2020. The Fujikura Group continues to pay close attention to ensuring the health and safety of employees who work on the frontlines as our highest priority as we continue business operations.
Our location in Mexico, for example, is striving to maintain stable operations while placing the highest priority on preventing infection of employees who work on the frontlines. They are implementing measures to prevent clusters of infections by creating multiple work teams, implementing preventive measures to minimize the impact to the extent possible if someone is infected, and providing education on personal health consciousness, among other measures.
I would like to express my gratitude and respect for each and every member of executive management and the management teams at our locations by again introducing our many stakeholders to the hidden reserves of strength they have demonstrated in local operations in response to such an emergency.
We will never allow the cases of impropriety in quality control to be forgotten
We will never reach the end of our efforts to restore the trust of society in our Company concerning the cases of impropriety in quality control announced in 2018.
Top management will demonstrate strong resolve and will continue to communicate messages on measures to prevent recurrence, including changing the culture, to firmly root the awareness that quality constitutes corporate value itself and make sure that the cases of impropriety in quality control are never forgotten.
Moving from the operational turnaround phase to the sustained growth phase
Faced with a rapid, severe deterioration in performance in FY2019, the Fujikura Group changed course to a basic strategy a concentrating on a rapid operational turnaround. We designated the second half of FY2020 onward as the operational turnaround phase and the entire company has worked as a team to pursue various reforms. We are working to stabilize and improve the profitability of our core businesses through the key measures of “strengthening governance” and “the unreserved selection and concentration of existing businesses” based on the 100 Day Plan to turn around operations.
To explain “strengthening Group governance” in greater detail, we halved the number of directors and corporate officers, dissolved and constructively reorganized the former in-house company system, clarified responsibilities and authority, and implemented agile decision-making and efficient business management from April 1, 2021.
As part of “the unreserved selection and concentration of existing businesses,” we implemented various measures to reduce fixed costs, stabilize businesses, and pursue an optimal business portfolio. Such measures included strengthening the optical cable total solutions business, selling subsidiaries in the energy business, stringent selection of capital investments, consolidated and elimination of locations, and selling real estate. The largest reforms involved splitting off and reorganizing the energy business and flexible printed circuit (FPC) business.
With the series of initiatives noted above, we believe the end of the operational turnaround phase is in sight and have therefore decided to steer toward the sustained growth phase.
Change in Director, President and CEO
Masahiko Ito, the Director, President and CEO has taken charge of structural reform, and I have been responsible for pursuing core businesses as COO up to this point.
Since we have reached a certain point of completion in structural reforms and other initiatives in the operational turnaround phase as already noted, I assumed control of the Fujikura Group as Director, President and CEO from April 2022. Masahiko Ito is supporting supervision of business management under the new structure as Chairman of the Board of Directors, in a non-executive capacity. The Board of Directors decided this after receiving a report from the Nomination Advisory Committee. Outside directors comprise the majority of committee members on this committee.
Establishment of Chief Financial Officer (CFO) and Chief Technology Officer (CTO) positions
In addition to the change in Director, President and CEO, we thought it was essential to appoint personnel who have extensive expertise in the area of corporate finance and technological development, areas requiring an extremely high level of expertise, and who can execute business from a company-wide perspective. These qualities are necessary for a manufacturing company that has chosen the Prime Market as the listing market, which will require strong governance and high corporate value.
The extremely large sum spent on capital investment made it difficult to respond agilely to changes in the business environment. We recognize this as a major issue and one of the reasons for the rapid deterioration in performance in FY2019. We therefore designated maximizing corporate value as our mission in future growth strategies and established the position of CFO to strengthen financial discipline out of the perceived need to standardize company-wide investment decisions and strengthen risk management.
We also branded Fujikura as a technology leader and are confident that we achieved penetration in that area, at minimum. Many social changes and technological advancements are likely to occur in the future. I think these will always provide business opportunities to utilize the superb capabilities of the Fujikura Group. We established the position of CTO responsible for formulating company-wide business strategy out of the perceived need to strengthen technological capabilities as a technology leader.
In other words, Fujikura will strive for sustained growth by building a structure that augments the part of the functions of the CEO with functions that utilize the financial expertise of the CFO and the technological development expertise of the CTO. This will enable the CEO to fully engage in the pursuit of company-wide strategy.
Fujikura has not appointed executive directors who are equipped with expertise in finance and technology, as is evident in the Skill Matrix included in the Notice of Convocation of Fujikura’s 173rd Annual General Meeting of Shareholders and in the FY2021 Integrated Report. The establishment of the CFO and CTO positions will establish a full line-up of internal directors skilled in company-wide strategy, finance, technology, and global business.
The “new” Fujikura will use this management structure to pursue business that offers the promise of sustained growth. We plan to disclose our new mid-term business plan in May 2023 as the new growth strategy.
Achieving carbon neutrality
The greatest problem we are confronting in capturing the changes in the world is our response to climate change.
There are global cries for decarbonization. Japan has also declared the goal of achieving carbon neutrality by 2050 and some customers are also demanding reduction in CO2 emissions. We formulated the Fujikura Group Long-term Environmental Vision 2050 in 2016 and are aiming to conquer four challenges. The most ambitious challenge is achieving net zero CO2 emissions from our plants in 2050. Introducing renewable energy is an effective way to achieve that and Fujikura has joined the RE100, a global initiative by companies committed to the proliferation of renewable energy.
Recognizing the need for active disclosure of information, we are also taking advantage of the opportunity presented by endorsing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and are organizing internal information on carbon neutrality and other initiatives to combat climate change. We will use such information to engage in constructive dialog with customers, investors, and other stakeholders by analyzing the impact of climate change-related risks and opportunities and disclosing information appropriately.
ESG is corporate value itself and the importance of ESG continues to increase. However, achieving carbon neutrality is an extremely high hurdle for manufacturers like Fujikura to clear. I think the only way to achieve carbon neutrality is to confront the problem head-on and tackle it earnestly. Cogeneration of power by the Company and purchase of credits are the main ways to achieve carbon neutrality in addition to dedicated efforts to conserve energy. We will target more efficient operations by consolidating decentralized locations based on energy conservation to achieve our mid-term targets in 2030.
As we approach the growth phase, we need to generate and develop new businesses that capitalize on changes in the world while maintaining steady growth in our core businesses.
The establishment of the Chief Technology Officer (CTO) position will strengthen Fujikura’s brand as a technology leader. We will pursue R&D in a manner that enables us to provide value that only Fujikura can provide.
WTC® adds environmental value to innovative products
I will explain WTC® small-diameter, high-density optical cable.
WTC® offers product performance that makes it possible to insert high-density cable into existing small-diameter spaces while also contributing to reduction in the customer’s total cost of ownership (TCO). Telecommunication construction has required ducts and hand holes to accommodate higher fiber counts up to now, increasing the percentage of civil engineering costs.
However, WTC® is thin and light, and existing equipment can be used. This renders additional civil engineering construction unnecessary and can substantially reduce construction costs for the customer. Producing WTC® also takes 78% less energy than manufacturing cable possessing the same functions.
WTC® has many properties that add environmental value such as reducing the amount of plastic used in products, reducing electricity use by improving manufacturing efficiency, and reduction in CO2 emissions with improved transport efficiency. In the future, how many energy-efficient products we can produce will be important. I want to continue to develop green products based on the good practices for WTC® and contribute to achieving the sustainable development goals (SDGs).
Targeting the Sustained Growth Phase
The Fujikura Group takes pride in our substantial contributions to the development of society and our customers in the areas of telecommunication systems, energy, electronics, and automotive products, based on our corporate philosophy and mission, which is to create exceptional value for our customers around the world using "tsunagu" ("connecting") technologies. We dedicate ourselves to providing exceptional products and solutions earning our customers' trust and contributing to society.
Fujikura exists to create customer value and contribute to society through our unique capabilities. This is precisely why I think such contributions are the only to path to ensure the company’s continued existence.
The world will continue to undergo great transformation and witness a myriad of technological innovations in the future. I think such social changes and technological advancements will always provide opportunities for us to utilize the superb capabilities of the Fujikura Group.
The expectations of stakeholders on the pursuit of sustainable corporate growth and sustainability have been steadily increasing in recent years. As we integrate ESG into management to meet these expectations, I will stand at the helm as we explore ways to control the new issues that the Company will confront such as carbon neutrality, which I mentioned earlier. We also want to reduce capital costs by establishing governance of sustainability.
In the Integrated Report published at the end of January 2022, our former president, Masahiko Ito explained initiatives aimed at ensuring that we never forget the cases of impropriety in quality control. He also explained our views on human resource development initiatives, establishing and pursuing human rights due diligence that includes our supply chain, how Fujikura is utilizing digital transformation (DX), and other aspects of sustainability. This is the consensus view of all members of management. As the recipient of the leader’s baton, I naturally intend to diligently pursue these aspects of sustainability.
All officers and employees in the Fujikura Group will unite to create a new Fujikura as we work to achieve sustainable growth. We will take action to promote the continual metabolization of change aimed at transformation and contribute to society by connecting our superb capabilities to the creation of value for customers.
I am confident that this will enable Fujikura to thrive together with our customers and other stakeholders and enjoy the resulting benefits.
I ask all of our stakeholders for your continued understanding and support of the Fujikura Group.
Director, President and CEO