TS TECH Co., Ltd. TS TECH Report 2020
TS TECH Report 2020 Creation of a Foundation for ESG Management
November 2020 Printed in Japan We are not bound to the present. Rather, we will create value that goes beyond the present in order to bring joy to all our stakeholders as we work to help build A goal that goes beyond comfort a sustainable world.
Working to help build a sustainable world Environmental
Safety Passenger protection Sensing technology Simulation, etc.
Environmental conservation efforts Social contribution activities Governance Vision statement A company dedicated to realizing people’s potential A company sincerely appreciated by all Environment Attractiveness Weight reduction Enhanced comfort
Lower CO2 emissions Seat arrangement technology Eco-friendly development Higher performance, etc. and production, etc. Manufacturing process Social
In the manufacture of its products, TS TECH pursues safety, environmental sustainability, and comfort. The pursuit of comfort in particular is multifaceted and deep, and over the course of time this pursuit is subject to an infinite process of evolution. Our corporate message is “Beyond Comfort.” “Beyond” connotes transcending, rising above, or going ahead of something, while “Comfort” denotes ease, contentment, and relaxation. Put together, they represent our will to deliver much more than just comfort. Our actions are underpinned by the belief that comfort leads to satisfaction, which in turn brings joy to the end users of our products. We are not bound to the present. Rather, we will create value that goes beyond the present in order to bring joy to all our stakeholders. As we continue to grow as a seat and interior system supplier that is trusted world- wide, we are determined to embody our beliefs to be a company dedicated to realizing people’s potential and a company sincerely welcomed by all. To accomplish this, we will incorporate ESG-focused management that considers environmental (E), social (S), and governance (G) issues, and we will strive to contribute to a sustainable world.
TS TECH Report 2020 1 TS TECH Philosophy Editorial Policy 02 The TS TECH Group has been issuing the Sixty Years of the TS TECH Group “TS TECH Report,” an integrated report 04 that includes both financial and non- 08 TS TECH’s Value Creation Model financial information, since 2012. These reports introduce the Group’s stance as an 10 Top Message enterprise and the efforts it is making to Review of the 13th Medium-Term contribute to sustainability in the course 14 of its business in order to be a company Management Plan sincerely appreciated by all whose pres- 16 14th Medium-Term ence is valued by all of its stakeholders. Management Plan Overview About the Report’s Formats TS TECH Philosophy 17 TS TECH’s Value Chain Development and Engineering Vision Statement 18 Corporate Sales and Purchasing 20 Manufacturing 21 Quality Control A company dedicated to realizing people’s potential TS TECH Website 22 Initiatives to Achieve ESG Management Non-Financial A company sincerely appreciated by all Section 1 | Corporate Governance Information Financial Information Sustainable Business Growth CSR Activities IR Information Provides qualitative and Provides consolidated quantitative information on financial summary, results Dialogue with the Outside Directors society and the environment announcement, etc. https://www.tstech. https://www.tstech. Mission Statement 24 Board of Directors co.jp/english/csr/ co.jp/english/ir/ 26 Efforts to Improve Corporate Governance Scope of the Report and Compliance While the report is based on the consoli- TS TECH Report 2020 dated group (TS TECH Co., Ltd. and its We shall provide comfortable, 34 Section 2 | Environmental domestic and overseas subsidiaries and Harmony with the Social Environment affiliates), some data regarding environ- high-quality products at competitive prices mental and social initiatives, etc., may CONTENTS Initiatives That Help Make Us a Leading pertain to aggregate results for the to our customers worldwide, Environmental Company non-consolidated company in Japan. Cases in which the scope of aggrega- always pursuing the infinite 36 Environmental Protection Efforts tion differs will be specified in the text. Section 3 | Social About This Report’s Designations possibilities in manufacturing. 40 “TS TECH Group” (the Group) signifies the Diversity Management consolidated group, while “TS TECH” (the company) signifies the non-consolidated Creating Workplaces That Are company in Japan. Even More Employee Friendly Term Covered Fiscal 2020 (April 1, 2019–March 31, 2020) Operational Directives 44 Philanthropy * Select activities from before or after this term may be included. 46 TS TECH’s Products Reference Guidelines • ISO 26000:2010 standard, International • We should make our workplace a vibrant one, valuing consensus 47 Original Value Creation Story Organization for Standardization (ISO) and communication. Seats for the Honda Fit • International Integrated Reporting Framework, International Integrated • Work should be done in accordance with the circumstances, 48 Discussion Reporting Council (IIRC) with importance placed on time and priorities. World Yuru Sports Association × • Guidance for Collaborative Value Creation, Ministry of Economy, Trade Aisareru Seat • We must always challenge ourselves to create new value and Industry (METI) of Japan Disclaimer by leveraging our passion and know-how. 50 Discussion Sony × TS TECH This report contains forward-looking • Each of us should always persevere to make our individual vision statements from TS TECH Co., Ltd. per- What Are the Future Needs for taining to plans, forecasts, strategies, a reality. an Automobile’s Interior Space? and results. These forward-looking statements are based on currently avail- 54 Fact Book able information. The TS TECH Group’s Business Operations/ For Comments and Inquiries Regarding Financial Reporting/Financial Highlights/ the Report, Please Contact Us at the Address Below. Non-Financial Highlights/Financial Information/ TS TECH Co., Ltd. Honda Non-Financial Information/Corporate Data Public Relations Section, Fit seat Administration Department 120 The Year in Review TEL: +81-48-462-1136 (April 2019–March 2020) FAX: +81-48-465-0403 3-7-27 Sakae-cho, Asaka-shi, Saitama 121 Integrated Report Review 351-0012, Japan
2 TS TECH Report 2020 TS TECH Report 2020 3 Sixty Years of the TS TECH Group
It is estimated that people in Japan sit for some seven hours a day,
making sitting virtually inseparable from daily life.
Since our founding in 1960, TS TECH has been driving the evolution of
automobile seats, and we mark our 60th anniversary in 2020.
When it comes to seating, we are perfectionists, and the automobile seats
we have designed over the years highlight the excitement of driving,
the comfort of the working person, and family ties.
TS TECH will continue to create and deliver new seating value through
automobile seats that provide innovative comfort in next-generation
automotive interior spaces, as well as seats that offer a sense of fun
that transcends the typical automobile framework by combining
seating with sensing, the Internet of things (IOT), and other technologies.
Revolutionizing Seating
4 TS TECH Report 2020 TS TECH Report 2020 5 Sixty Years of the TS TECH Group
From Producing Work Uniforms to TS TECH’s predecessor, Manufacturing Seats Teito Fuhaku Kogyo More for Motorcycles Corporation, manufac- Electrical Devices Seats used to be simple, consisting mainly of a frame and Automobiles tured work uniforms for for More Comfortable, and cushion with leather covering. They have since Honda, who recognized 1996 Honda Step WGN swivel seats in face-to-face mode Safer Seats evolved, and today many electrical devices are built into the quality of our sewing technology and asked seats to add greater safety, comfort, and appeal. TS TECH us to begin manufacturing motorcycle seats. Honda’s Super Cub Seat Arrangements has a department dedicated to the research and develop- scooter became a runaway hit and our production system expanded. Created Using The 1990s saw a minivan boom. The interior was ment of electrical devices. The department is a self- We then began to manufacture lightweight seats for racing motorcy- Structural seen as a space to enjoy spending one’s time, contained entity, handling everything from proposals of new cles, developing technologies early on to make seats lighter. Design Technology generating demand for more comfortable seats. features to control settings and system veri cation. We later made seats for the Honda T360 pickup truck, which We then began a multi-pronged pursuit of Electrical devices marked the start of TS TECH’s full-edged manufacture of seats comfort. One result of this pursuit was seat (Shown in blue) Za Lab was launched in 2012 with young employees for automobiles. From then on, the scale of our operations grew arrangement technology. We employed structural selected from various departments to come together steadily. design technologies and a wealth of expertise to develop arrangements Za Lab: and research seating. with various kinds of usability. TS TECH’s designs have earned a solid Honda T360 Seat for the original A Research Group The interaction between different occupations reputation among European automakers, who have long been leaders seat Honda Super Cub That Studies generated many new, outside-the-box ideas. Za Lab in the industry. the Philosophy and continues to routinely conduct research in collaboration Science of Seating with the New Product Development Department to commercialize their ideas, a few of which Honda’s top-of-the-line sports car, the (Acura) have been shown at events such as the The Relentless Quest NSX, debuted in 1990. Making the car lighter was Tokyo Motor Show as prototypes. These for Weight Reduction: essential to achieving its phenomenal performance. and other ideas that have emerged from Za The Honda (Acura) We worked to develop a seat frame that only used Lab will lead to future technologies. NSX Aluminum aluminum instead of steel, the conventional material used for seats. We experimented with Seat Frame In order to compete alongside the world’s processing methods, rustproo ng technologies, Aiming for mega-suppliers, in the early 2000s, TS TECH and more. Our wealth of technical expertise Incomparable Quality rst set its goal of achieving world-class quality. resulted in seats that greatly reduced the weight of the vehicle. The and Achieving Under the slogan at the time, “Incomparable same technology was utilized for the newest NSX seats to develop a World-Class Quality Quality,” we set out to not only improve produc- frame that blends aluminum with cutting-edge materials. tion ef ciency and quality through the installation Early Establishment of facilities such as jig lines but also to change of a Manufacturing TS TECH rst expanded its people’s way of thinking about manufacturing. More recently, TS business outside of Japan in Base in Honda (Acura) NSX seat TECH has been a highly ranked supplier by vehicle size class in a North America 1977, setting up a production seat quality and satisfaction survey conducted by an American subsidiary in Nebraska, U.S.A. research rm. to manufacture motorcycle Original model seats locally for Kawasaki. New model In 2004, TS TECH introduced a new cutting-edge We later began production for Honda. A dynamic sled testing facility to reliably reproduce series of orders for automobile seats and Safety Evaluation car crash impacts. The facility was the rst of leisure vehicle seats came in from American Technology Obtained its kind in Japan. Over 1,000 tests are conducted automakers, and the scale of local production through annually, and the safety assessment technologies was expanded. Today, the Group has produc- High-Performance have led to TS TECH’s seats receiving top-class tion centers in Japan, the Americas, Europe, 1994 Dynamic Sled Testing safety assessments from vehicle safety assess- China, and other parts of Asia. Expanded operations to Asia ment organizations around the world. 1960 1996 Established Tokyo Seat Co., Ltd. Expanded operations to South America Took over the motorcycle seat business 1997 from predecessor Teito Fuhaku Kogyo Corporation Changed company name to TS TECH Co., Ltd. 1963 1977 1999 2001 2007 2010 Began producing automobile seats Expanded operations to North America Expanded operations to Europe Expanded operations to China Stock listed on the TS TECH’s 50th anniversary First Section of the Tokyo Stock Exchange 1960 Sales Trends 1970 1980 1990 2000 2010 2020
Assuring Quality Pursuing Comfort Honda Civic Seat Establishing a Strong Pro t Structure Creating New Value Launched 1995 The seats for the original Honda Civic TS TECH continues to pursue comfortable The rst use of a mechanism As business has expanded, we have been As the automotive industry enters a period could be considered the starting point for seats that prevent fatigue by translating to adjust seat height. This severely impacted by changes in the of major transformation, the functions and TS TECH’s manufacture of automobile subjective judgments of comfort and seat made it possible for external environment, including a global value demanded of automobiles are also seats. When the model was launched, fatigue, which vary by person, into smaller drivers to adjust to a nancial crisis and natural disasters in undergoing great change. however, there were frequent issues quanti able gures and conducting more comfortable different countries. Even in the face of signi cant change, involving seam tears in the covering and repeated research based on ergonomics. driving position. TS TECH has streamlined develop- we aim to continue delivering attractive bent seat frames when used by people This approach is reected in our unique ment and manufacturing through produc- products that always exceed customers’ with larger body types. The system we theory of a comfortable posture. tion line automation and other technolo- expectations. TS TECH is working to established at that time to facilitate the gies. This has enabled our company to create new value with an eye to the future immediate sharing of quality issues among Honda Odyssey Seat withstand external changes, laying the through our “Project to Create Exciting, departments and quick improvements is Launched 2013 foundation for the current highly pro table Attractive Products,” which transcends the still in place today. We have turned this Seat for The seat bottom tilts upward as structure of the TS TECH Group. boundaries of the automotive industry. A combination of rough start into a legacy of a strong the original Honda Civic the backrest is lowered to close sensing technology and the IoT commitment to the perfection of quality. Launched 1972 in on the perfect posture for Automated welding equipment Aisareru Seat maximum comfort.
6 TS TECH Report 2020 TS TECH Report 2020 7 TS TECH’s Value Creation Model
Changes in the structure Our goal is to become a seat and interior system supplier that is trusted Exchange rate fluctuations Material price fluctuations Economic and business trends Competitive environment Technological innovation External factors of the industry and appreciated worldwide. To achieve this goal, we will work to build Long-Term Vision a value creation model that will enable us to continue to provide value A company dedicated to realizing people’s potential Vision Statement to society by taking advantage of our strengths and to adapt that model A company sincerely appreciated by all To become a seat and in response to the changing expectations and demands of society. In addition to value creation through the value chain, we will continue to 2020 Vision INNOVATIVE QUALITY COMPANY Medium-Term Vision 2030 Vision INNOVATIVE QUALITY COMPANY Continued creation of new value interior system supplier strive for sustainable growth and increased corporate value through proactive social contribution activities. that is trusted worldwide BUSINESS MODEL
INPUT BUSINESS ACTIVITIES OUTPUT VALUE Strengths Value chain Main products
Technological prowess FOR STAKEHOLDERS FOR TS TECH Social value Value provided Expertise related to “the philosophy Products for and science of seating” cultivated since our establishment 60 years ago automobiles Sales Customers High degree of stability Seats Safety (Customer companies and in all QCDDM domains Intellectual end users) Door trim capital A high level of safety achieved with data Competitive patents Resin-based products gathered from a variety of collision tests, Number of patents held in Japan: 1,180 highly accurate simulation analysis and Intellectual Number of patents held outside of Japan: 6 expertise, and cutting-edge technology Shareholders and developed over many years capital Research and development expenses Research investors 12.3 billion yen (3. % of revenue) and development Global business development Products for Attractiveness Business partners Manufactured A system arranged into the four regions motorcycles Manufactured capital of Japan, the Americas, China, Comfort and convenience born of our capital Seats and Asia and Europe unique theory on ideal posture to prevent Resin-based products Operations in 1 countries fatigue even over long periods, as well
Quality control as a wide range of proprietary seat Number of sites: 79 arrangement technology that is versatile, Human Employees Human Number of production sites: 51 Purchasing functional, and easy to use capital capital Global promotion of TS TECH Philosophy education
Environment Sustainable management base Other products Society and Lower environmental impact over the local communities Financial A philosophy for debt-free management Seats for multipurpose since our establishment entire process from development through off-road vehicles capital production, thanks to research and devel- A sound financial base Seats for Financial Manufacturing opment of new materials that are both Consolidated equity: 27 .5 billion yen capital personal watercraft high quality and eco-friendly, lighter- Revenue: 359.6 billion yen Chairs for medical use weight products that help improve the fuel The environment ef ciency of automobiles, and energy- Operating margin: 7.3% (Transport equipment industry average: 4.4%) saving equipment to reduce CO2 emissions
Corporate evolution through Social responsibility Contribution to the creation of a sustainable society MISSION ESG management
* QCDDM: Quality, Cost, Delivery, Development, and Management Changes in comfort sought The creation of Car safety Response to climate change Social issues for automobile interiors employee-friendly workplaces
Investments in sustainable management resources
8 TS TECH Report 2020 TS TECH Report 2020 9 Top Message
Estimated Impact of COVID-19 Pandemic
FY2020 impact FY2021 impact (forecast) Segment Revenue Operating income Revenue Operating income Japan -500 million yen -500 million yen -6.7 billion yen -2.4 billion yen Americas -5.2 billion yen -1.9 billion yen -32.0 billion yen -5.3 billion yen China -9.5 billion yen -2.5 billion yen — — A generous commitment of Asia and Europe -1.6 billion yen -300 million yen -15.8 billion yen -4.4 billion yen managerial resources to Consolidated -16.4 billion yen -5.3 billion yen -51.0 billion yen -12.0 billion yen the quest for further growth Duration of Plant Shutdown Due to the COVID-19 Pandemic by Region Japan: No shutdowns (partial production adjustment implemented) Americas: Production stoppages in North America from mid-March to early May 2020, and in Brazil from mid-March to mid-July 2020 China: Production stoppages from early February to mid-March 2020 (excluding Chinese New Year holiday period) Asia and Europe: Production stoppages in Thailand from late March to early May 2020; in India from mid-March to mid-June 2020; in Indonesia from mid-April to late June 2020; and in the U.K. from mid-March to early June 2020
underscored for us the importance of achieving a balance creating fully automated production lines and worked to fur- between efficiency-oriented consolidation and risk diversi- ther enhance our automation efforts, we are also working to fication. The TS TECH Group has faced many crises in the bring production technology in-house through means such past, including the financial crisis of 2008, the Great East as the creation of specialized divisions capable of imple- Japan Earthquake, and wide-scale flooding in Thailand, but menting the self-manufacture of production equipment. it is the strong financial foundation we have built through With respect to products, we have launched a next- Masanari Yasuda the lessons learned from these crises that has enabled us generation seat frame that is approximately 28% lighter President and to maintain continuous employment and achieve a smooth than existing seat frames and among the lightest in the Representative Director restart of operations even in the face of the COVID-19 crisis. world.*2 Already in use in the newest model of Honda’s Fit, this From a global standpoint, it is evident that it will take a seat has been well received by drivers, and we will continue to good deal of time to contain the COVID-19 pandemic, and expand the range of models in which it is used. Introduction The Impact of the COVID-19 Pandemic the outlook remains uncertain. As we continue to monitor the In terms of “diversity management” that helps human situation carefully, we will review capital investment and curb resources thrive, TS TECH has adopted a flextime system I would like to extend my deepest sympathy to all those The impact of the COVID-19 pandemic on our fiscal 2020 re- costs, and, in accordance with directives from national and lo- with no core time and an elective retirement system in Ja- affected by the novel coronavirus (COVID-19). I would also sults was sizable, with revenue down by approximately 16.4 cal governments, we will take thorough measures to prevent pan, while overseas the Group is working to enhance person- like to offer my heartfelt respect and gratitude to the medi- billion yen and operating income reduced by approximately the spread of the virus and ensure business continuity. nel systems in line with the characteristics of each region. cal personnel and essential workers who are giving their all 5.3 billion yen. Production stoppages by our customers As for our efforts to achieve “harmony with the social to prevent the spread of the virus. caused by government-imposed restrictions on business environment,” we have received high acclaim from outside The global outbreak of COVID-19 in the final year of operations and other factors resulted in shutdowns at our Looking Back on the 13th Medium-Term the company. Recognition includes the acquisition of a the 13th Medium-Term Management Plan (fiscal 2018–fiscal plants, first in China and then in the Americas and the Asia Management Plan “Leadership” level A- score in a CDP*3 evaluation of our 2020) has cast a large shadow over the TS TECH Group. and Europe segments. Even at plants that were still able advanced environmental management initiatives and the The 14th Medium-Term Management Plan (fiscal 2021–fiscal to operate, a decline in demand for automobiles negatively We named the “Creation of a foundation for ESG manage- receipt of the Minister of Economy, Trade and Industry Award 2023), which represents the first step of this decade leading impacted the number of orders received, meaning that with ment”*1 as the Group’s management policy under the 13th (METI Minister’s Award), the top award in the Energy Con- up to 2030, began under that shadow, and it will take some the exception of the China segment, production was down Medium-Term Management Plan as a means to realize our servation Grand Prize project. time before many regions of the world can return to normal year on year in all regions. As of July 2020, operations have 2020 vision and become an innovative quality company On the other hand, some challenges remained in the ar- conditions. At the same time, technological innovation in the resumed at all TS TECH Group plants. whose presence is appreciated by stakeholders. To help eas of the “creation of a system for world-leading quality” and automotive industry geared toward new forms of mobility in In terms of business continuity, on January 29, 2020 achieve this, we designated “sustainable business growth,” the “establishment of a base*4 for new customer operations.” society continues to advance at a remarkable pace, and the we established a Group-wide COVID-19 emergency re- “diversity management,” and “harmony with the social envi- In quality-related matters, we experienced significant value that is required of us as suppliers is changing. Amid sponse committee. Thanks to its collection of information ronment” as priority measures. Looking back on the results quality losses in the Americas. Although we are making this backdrop, we must continue to strengthen our existing and efforts to maintain production, including alternate pro- of the plan, we believe that we largely achieved the goals of steady progress in improving quality through a variety of foundation as an automotive interior component system duction of parts and intra-Group supply, we did not experi- the priority measures. *1 ESG Management: Management from an ESG standpoint comprises supplier, working tirelessly to evolve into a company capable ence any disruptions in the supply chain or other issues at In particular, as part of our “sustainable business environmental (E), social (S), and governance (G) issues *2 In-house research of responding with versatility and flexibility to a wide range plants that were still operating. Although it was necessary growth” measures, we worked to become a “world leader *3 CDP: An international non-profit organization (NPO) headquartered in of changes in the external environment, and further enhance to suspend operations at several seat trim cover supply in component competitiveness” by undertaking proactive London, U.K. CDP collects, analyzes, and evaluates information on the environmental activities of the world’s major companies that are our corporate value. bases, it was possible to maintain a supply thanks to the efforts in all regions to promote automated production, and aimed a sustainable economy and discloses the results of these activ- establishment of an inter-segment supplementation system this has helped us to steadily improve our competitiveness. ities to institutional investors. *4 The base is a move to expand sales to finished vehicle manufacturers that transcended national boundaries. These events have Moreover, not only have we launched projects aimed at other than major customers.
10 TS TECH Report 2020 TS TECH Report 2020 11 Top Message
measures, including initiatives to promote automation and determination to continue to create new value with technologies and products we can offer to new customers enhanced educational tools, we are still some distance high-quality management. and aim to steadily acquire orders for target models. Exclud- away from achieving world-leading quality. The entire TS Based on this vision, under the 14th Medium-Term Man- ing our key customers, we aim to expand our sales channels TECH Group will continue to work on improving quality agement Plan management policy of “Corporate evolution to a scale of 300 billion yen by 2030. through steps to refine our automation technology and oth- through ESG management,” we will advance two priority To achieve these extremely ambitious targets, we must er measures. measures from two distinct angles: “Evolution for business engage in business development and decision-making more In terms of establishing a base for new customer op- growth” from a proactive angle, and a “stronger business strategically and with a due sense of urgency, rather than erations, although we have secured an increasing number operations structure to support evolution” from a protective simply carrying on with a business-as-usual approach. As of orders, including 3rd row seats and trim covers for the angle. In the formulation process for the new plan, the is- part of this initiative, in April 2020 we integrated our Sales Volkswagen group and new orders for lighting components sues that remained outstanding from the 13th Medium-Term Division and Corporate Purchasing Division. This will enable from Japanese manufacturers, barriers to receiving orders Management Plan in each region and functional division us to integrate all aspects of business, from orders to cost from European and American automakers remain high, and were clearly identified and reflected in seven priority mea- and procurement strategies, and conduct faster, more re- this has impacted the scale of sales growth. Nonetheless, it sures, and they were then broken down by each company sponsible activities. is a fact that the number of orders is increasing, and we will and department. In order to expand our commercial rights, it is essential ensure that this increase translates into further progress by To achieve further corporate growth, it is essential to to commercialize our unique technologies that can draw out steadily building trust in our ability to deliver high-quality, expand sales. We will, therefore, place a special focus on customers’ latent needs. In addition to the development of Incorporation in June 2020 which allows Outside Directors competitive products. proactive efforts aimed at the expansion of strategic com- conventional advanced technologies, we will promote new to also serve as Chairperson of the Board of Directors. Since Looking at earnings, we fell short of our earnings plan mercial rights, which is one of the challenges that remains value creation projects that are not constrained by conven- this change, an Outside Director has served as Chairperson in fiscal 2020 due in part to the impact of external environ- from the previous management plan. To this end, we will tional frameworks and are comprised of employees select- of the Board of Directors, and this has led to more active dis- ment factors, including a decrease in orders from customers aim to acquire new customers and commercial rights as ed from multiple departments within the company. We will cussions in meetings with Outside Directors and clarified the and the COVID-19 pandemic, but we were able to keep our well as increase our share of orders from major customers. also actively pursue research and development activities execution and supervision functions of the Board of Directors. operating margin in the 8% range, a high level compared to To increase our share of orders from major customers, through industry–academia joint projects and collaboration Going forward, we will continue to work to strength- our industry peers. We believe this demonstrates that our we will leverage the partnerships we have built to date and with different business sectors. en each ESG domain, not only by striving to improve the profit structure has been strengthened, even in the midst of work with customers from an earlier stage in the develop- In addition, we intend to make active use of mergers DJSI evaluation but also by working to preserve what we th an increasingly competitive environment. ment of new models to propose forward-looking technical and acquisitions as a means of achieving enhanced com- perceive to be the essence of TS TECH. Under the 14 In summing up the 13th Medium-Term Management solutions that lead to the development of more appealing ponent competitiveness and expedited acquisition of new Medium-Term Management Plan, we will further expand the Plan, we believe that it has been a three-year period during products. Our most recent share was 58%, but we aim to customers. While taking care not to disperse our manage- disclosure of financial and non-financial information required which we were able to steadily lay the groundwork to take increase this figure to 70% in the future. rial resources or dilute our profitability, we will thoroughly of us as a company, including materiality (material issues), the Group to the next stage in terms of both its business Regarding the acquisition of new customers and com- evaluate any partner that possesses solid technological as we work to promote dialogue and help all stakeholders base and earnings structure. mercial rights, although I stated that barriers to receiving capabilities and whose business is highly complementary to better understand our Group. orders are high, such perceptions may have arisen because our own, utilizing the financial base we have built to date to development mechanisms, processes, requirements, and invest our managerial resources generously. The 14th Medium-Term Management Plan: business practices differ greatly from one automobile manu- To Our Stakeholders Toward Further Growth facturer to another, yet TS TECH had been dependent largely on a single customer to date, and, therefore, was not suffi- ESG Management to Achieve Sustainable Growth In addition to the structural reforms we are seeing in the Our vision statement for this decade leading up to 2030 is ciently aware of the “way things are done.” However, as we automotive industry, where suppliers are engaged in a strug- “Innovative quality company—Continued creation of new have gained experience, we have gradually learned different The TS TECH Group believes that contributing to the real- gle for survival, there are an increasing number of major value.” We have retained the reform-oriented axis that was ways of doing things. Using the contacts we have devel- ization of a sustainable society will lead to sustained and challenges that threaten corporate operations, such as the an inherent part of the 2020 vision and incorporated the oped thus far as a foothold, we will continue to enhance the further corporate growth, and we will continue to promote a COVID-19 pandemic and natural disasters. This year marks variety of measures with ESG management at their core in 60 years since the TS TECH Group was established in 1960. Vision Statement A company dedicated to realizing people’s potential A company sincerely appreciated by all our 14th Medium-Term Management Plan. Over the course of the years, we have faced many hardships, In order to increase the effectiveness of our ESG- and we are deeply grateful to all the people without whose 2020 Vision Statement 2030 Vision Statement focused initiatives, since the launch of the 13th Medium-Term support we would not have been able to overcome adversity. o t e t o p o t e t o p Management Plan, we have been evaluated by a third party So that the TS TECH Group can become a company — A company whose presence is appreciated by stakeholders — — Continued creation of new value — based on the Dow Jones Sustainability Indices (DJSI), which that will endure for 100 years and beyond, we will make full Management policy: Creation of a foundation for ESG management Management policy: Corporate evolution through ESG management assess corporate sustainability from the three perspectives use of all of our resources, including the technological de- of economic (including governance), environmental, and velopment and production activities that we have diligently Creation of a system for world-leading quality Commercialization of original technologies Sustainable social performance. Through the prioritized implementation worked on for many years, our strong financial base, the business World leader in component competitiveness Expansion of strategic commercial rights growth Evolution for of measures to address objectively identified weaknesses corporate culture that we have fostered, and our human business growth Establishment of a base for new customer operations Optimization of business operations structure in areas that would lead to increased corporate value, by the resources, as we strive to achieve the goals set forth in our Financial strategies to support business growth Contribution to a sustainable society th Medium-Term Medium-Term Medium-Term Medium-Term th Diversity th endpoint of the plan we were able to exceed the average for 14 Medium-Term Management Plan. management Cultivation of human resources to be promoted to management the transportation equipment industry, which was initially With a focus on ESG management, we will continue to Stronger business Recognition for top quality Creation of measures to promote diversity used as a benchmark, in all areas. create new value that goes beyond the present, and strive operations
Management Plan Management Plan Strengthening of continuous earnings structure Harmony with structure to In the area of governance, we are accelerating our ef- to be a company whose presence is further appreciated by the social Environmentally conscious business activities FY2021–FY2023 14 FY201 8– FY2020 13 support evolution Maximization of employee and structural ef ciency forts to enhance the transparency and fairness of the Board stakeholders, so we ask for your steadfast support in the environment CSR activities of Directors, including an amendment to our Articles of years to come.
12 TS TECH Report 2020 TS TECH Report 2020 13 Review of the 13th Medium-Term Management Plan
ESG Assessment FY2019 FY2020 3.7 1. 1 1. 2 3.7 1. 1 1. 2 3.6 1. 3 3.6 1. 3 th Aimed at creating a foundation for ESG management, our 13 Medium-Term Management Plan (fiscal 2018– In 2018, we received an ESG performance 3.5 1. 4 3.5 1. 4 rating conducted by a third party based on fiscal 2020) generally proceeded as planned, with steady improvements in each area of our corporate struc- 3.4 1. 5 3.4 1. 5 the DJSI questionnaire. 1. 6 1. 6 ture. Although some measures fell short or were behind schedule—for instance, the creation of a system for With an objective assessment of the 3.3 3.3 world-leading quality and the establishment of a base for new customer operations—we have identified the Group offering a clear understanding of our 3.2 1. 7 3.2 1. 7
strengths, weaknesses, and position in com- 3.1 1. 8 3.1 1. 8 related issues and incorporated solutions into our next medium-term management plan. TS score parison with other companies, the TS TECH Industry avg. 2.5 1. 9 2.5 1. 9 TS score 2.4 2.1 2.4 2.1 Group developed and implemented the mea- Industry best 2.3 2.2 2.3 2.2 Industry avg. Management Priority Evaluation sures needed to make improvements. Measure Notable initiatives 1.1 Corporate governance 1.6 Supply chain management 2.3 Operational eco-efciency 3.3 Human rights policy measure result 1.2 Materiality (material issues) 1.7 Tax strategy 2.4 Product stewardship 3.4 Human capital development Industry average: Average for transportation equipment 1.3 Risk & crisis management 1.8 Innovation management (environmental friendliness) 3.5 Talent attraction & retention companies by category 1.4 Codes of business conduct/ 1.9 Product quality and recall management 2.5 Climate strategy 3.6 Corporate citizenship and • Stronger product assurance capabilities through quality Industry best: Highest rating for transportation equip- compliance/corruption and bribery 2.1 Environmental reporting 3.1 Social reporting philanthropy Creation of a assurance tool maintenance and improvements ment companies by category (compiled 1.5 Policy in uence 2.2 Environmental policy & management 3.2 Labor practice indicators 3.7 Occupational health & safety (OHS) system for from figures for multiple companies) Average • Review and stronger management of unified global standards world-leading quality • Enhanced quality structure through reforms of supplier weaknesses Efforts to Improve Product Quality People We have worked to Structure We have Manufacturing We have worked Distribution of
• Creation of innovative production technology accommodate a diverse workforce by worked to raise the level to completely eliminate automat- Good TS TECH Group Locations’ - Higher ratio of automated production lines/Launch of improving and expanding our range of of product quality by per- ed welding equipment malfunc- Overall Quality Rating automation project available tools, such as videos for our forming audits to verify tions, and we have focused on A Discrepancies in product quality - Introduction of next-generation seat frame/Shift to in- work manuals in multiple languages the enforcement of rules preventing defects by strengthen- B were found among our worksites. World leader house production equipment and molding technology and a review of standards for critical and make any necessary ing areas of weakness in facility Our aim is to further raise the
in component Good • Development of new products such as the Aisareru Seat® work processes based on product improvements at both our design. Quality target base level of quality at all sites competitiveness defects, and to increase awareness of locations and those of C and ensure a uniform • Promotion of plans to reorganize domestic and overseas Issue: Underdeveloped auto- Quality Control Product target Good production product quality. our business partners. mation technology level of high quality. (See p. 21) Sustainable business • Enhanced distribution strategy growth • Stronger supply chain management High-Efficiency Production Lines Next-Generation Seat Frame Original Value Creation through Automation • Aggressive sales initiatives targeting Japanese, European, Through increased use of ultra-high tensile steel and uti- With automated driving and other technologies marking Establishment of and Chinese automakers We are working on automating production lines in every lization of thin-plate welding and other technologies that a period of great change in the automotive industry, we a base for new • Establishment of new offices in Detroit and Chongqing region in anticipation of the challenges we expect to reduce weight, we have significantly reduced the weight are focused on creating new value that can contribute to Average customer face in the future, such as a decline in the manufacturing of our next-generation seat frame when compared to our the mobility of the future by incorporating the technolo- • Smooth launch of new order models workforce. existing core frame while simulta- gies we have long cultivated and open innovation. operations Start of production of 3rd row seats for a new SUV from We have also launched neously maintaining and improving Volkswagen group subsidiary SEAT, S.A. (Hungary) a project to fully automate strength and safety performance. production lines based on a This next-generation frame is Creation of a • Stronger global fund management thorough review of product among the lightest in the world (in- foundation for Financial Consideration and development of guidelines on business specifications and the use of house research), thereby helping to INNOVAGE ESG manage- strategies to next-generation Value Creation Good operations, risk management, growth investment, etc. AI and other technologies. improve fuel efficiency. cabin space Aisareru Seat (See p. 47) ment support business • Stronger region- and country-specific risk management Fiscal 2018– growth fiscal 2020 • Formulation of the TS TECH Group Tax Policy Stronger Sales Structure for New Customers Production Launches Cultivation of • Construction of successor training system to develop local We have begun production of products for SEAT, S.A. human resources TS TECH e t H Good management new customers, including 3rd row seats GM Taracco 3rd row seats to be promoted to Changan Guangzhou Automobile Ford FCA management • Implementation of management development programs for the Volkswagen group. Some orders, Automobile Co., Ltd. Group Co., Ltd. Volkswagen however, did not progress as planned, and U.S. Trim cover Diversity we fell short of some targets. S e o China Detroit Japanese management • Introduction and promotion of flextime system Issue: No orders for target models Chongqing of ce H TS TECH of ce manufacturer Creation of • Expansion of system for shorter working hours for childcare New customer sales: T T E TER R RESE RCH E E E T C T Trim cover measures to Good • Introduction of an elective retirement system Fiscal 2020 18.4 billion yen TS TECH S C T Foot lamps promote diversity • Promotion of workplaces conducive to the advancement of Harley-Davidson female employees TS TECH ER C S C S e e Motorcycle seats New Customers e e e (See p. 18)
• Stronger initiatives to reduce CO2 emissions (lighter products, installation of energy-saving equipment) Environmentally- • Certification at all domestic locations for energy management Very Work-Style Reforms to Meet the Needs of a Selected as a CDP Leadership Level Company Number of Social Contribution conscious system ISO 50001 Diverse Workforce Activities good In a climate change survey released by the international business activities • Completion of a new global Head Office (Saitama Prefecture) As part of our work-style reforms, we introduced a flextime non-profit organization CDP, TS TECH was selected as an A- com- 13th Medium-Term Management Plan Harmony with that is environment- and community-friendly system with no core time. We also encourage flexible and varied pany, which corresponds to leadership level, for our outstanding (Fiscal 2018–fiscal 2020) the social • Revision of the Basic Environmental Policy environment work styles to improve worker productivity and support employ- efforts to reduce greenhouse gas (GHG) emissions and disclose Result ees balancing work with childcare, information. • Implementation of social contribution activities in each nursing care, and other personal obligations. 820 Very country tailored to regional characteristics activities CSR activities good • Stronger support for activities in communities surrounding Diversity Environment Social Contributions business locations (See p. 40) DISCLOSURE INSIGHT ACTION (See p. 34) (See p. 44)
14 TS TECH Report 2020 TS TECH Report 2020 15 TS TECH’s Value Chain th 14 Medium-Term Management Plan Overview Development and Engineering
th The 14 Medium-Term Management Plan (fiscal 2021–fiscal 2023) has been formulated in light of challeng- • Create and provide products that exceed global expectations es that arose under the previous plan and medium- to long-term changes in the external environment. We • Accelerate development of advanced technologies that can- will use our foundation for ESG management to contribute to a sustainable society while aiming for further Basic Policies on not be imitated by competitors Value Creation • Create original technologies that contribute to a sustainable corporate evolution. society • Ens ure reliable quality assurance from the outset of development
Management Priority Measure Notable initiatives Internal Environment policy measure • Development and technological capabilities • Development framework aimed at that support a wide range of products from global expansion of sales • Acceleration of development of sensing and other technologies that product planning through development and lead to attractive products Commercialization performance evaluation • Active incorporation of joint development and other types of open of original • Expanded development of products innovation technologies that add new appeal and value via • Application of advanced processing technology, such as production dedicated projects Strengths Weaknesses line automation projects, in mass production S W Opportunities Threats • Provision of new value for car • Intensification of global-scale com- interiors in line with new visions O T petition accompanying acquisition for automobiles related to the of commercial rights for new • Steady receipt of orders from major customers for target commercial advent of CASE and MaaS customers rights through spec proposals that leverage our strengths and en- Expansion hanced development collaboration of strategic commercial rights • Strategic order development through precise selection of target mod- Evolution for els for new customers and establishment of a large project leader (LPL) system for key commercial rights Takahiro Kobori business growth External Environment Director, Corporate Development and Engineering Division Executive General Manager Optimization of • Streamlining and increased efficiency through allocation reviews and business opera- restructuring of business operations both in Japan and overseas based tions structure on reorganization of production efforts. We have been launching dedicated in-house projects Overview of Our Value Creation and working to create new products and value with a series of
• Stronger global CO2 emission reduction activities and related manage- workshops in collaboration with outside experts. ment to help achieve a low-carbon society We believe it is essential to provide products that respond to INNOVAGE and the Aisareru Seat®, which we exhibited at Contribution to a Corporate • Maintenance of recycling-oriented operations through risk analysis of the changes in customer needs and values related to cars in the 46th Tokyo Motor Show 2019, represent examples of the evolution sustainable society water resources a speedy, flexible manner. For some time, TS TECH has been achievements of these activities. INNOVAGE, a next-gener- through ESG • Implementation of social contribution activities in line with local needs management pursuing, researching, and developing product appeal that ation car interior space designed with CASE in mind, serves Fiscal 2021– goes beyond the boundaries of cars through the development as a bridge to connect people, cars, society, and the future by fiscal 2023 of projects dedicated to the creation of new appeal and value fusing and evolving conventional technologies such as sensing • Enhanced know-how and support from startup base during global rollout of new models that exceed customer expectations. In addition, we are seek- technology and seat arrangement technology to provide value Recognition for • Prevention of defects by strengthening verification in the beginning ing to enhance our technical competitiveness and develop that transforms a “space” into a special “place.” top quality stages of development new business models by strengthening our electronics-related Additionally, the Aisareru Seat®, which is a seat that in- • Stronger quality control systems at Group and business partner development systems in areas such as sensing, and engaging corporates the IoT, is a new communication tool that utilizes locations in the active expansion of open innovation through collabora- the seat as a controller to embody the concept of bringing tion that pairs elements or pieces of our own technology with enjoyment to people, things, society, and the environment. other industries or development partners to complete the We have been able to widely publicize the possibilities of the • Establishment of a lowest-cost procurement structure by enhancing technology required to commercialize this new appeal. Aisareru Seat® to provide an enjoyable experience for people our global procurement system regardless of age, sex, and physical ability at various events Stronger • More efficient administrative and indirect operations through active business opera- Strengthening use of IT including Yuru Sports Land 2019. tions structure to of continuous Going forward, we will continue to identify social trends support evolution earnings structure • Strengthening of our consolidated earnings management system through the continued evolution of financial strategy aimed at Our Approach to Value Creation and Its Results and engage in product development activities with an eye to medium- to long-term growth becoming a 100-year-old company through products that are • Minimization of global tax risk TS TECH deploys initiatives related to its “Project to Create Excit- truly appreciated by all customers throughout the world. ing, Attractive Products” as part of its new product development
• Establishment of a system to promote advancement of diverse human Maximization of resources employee and • Evol ution of our evaluation system to accommodate various work styles structural efficiency • Review of our training system for next-generation human resources development
16 TS TECH Report 2020 TS TECH Report 2020 17 TS TECH’s Value Chain Corporate Sales and Purchasing
Consolidation of Sales and Sales Purchasing Corporate Purchasing Divisions • Offer appealing products that exceed customer expectations • Mut ual trust with business partners through fair and equitable Corporate Sales Division at competitive prices transactions based on the Four Principles of TS Procurement Purchasing Division Basic Policies on Basic Policies on • Permanently secure customers’ unwavering trust • Work with business partners to strengthen their procurement Function Sales Function Procurement Value Creation Value Creation • Provide added value to customers in line with the changing structures and create a sustainable supply chain Integration times by integrating regional and functional departments • Joint CSR activities with business partners Corporate Sales and Purchasing Division Functions Sales and procurement creation of added value Internal Environment Internal Environment Synergistic effect
• Maintain production bases throughout the • A high degree of dependence on • Development of activities to strengthen struc- • Inflexibility of an aging purchasing Faced with extremely rapid changes in the world and offer high-quality products a specific business model and tures together with business partners structure environment surrounding the automotive • Sales proposal capabilities based on close co- insufficient independent growth • Global information gathering capabilities that • Slow conformity with rapidly industry, we consolidated the Sales Divi- operation between global information gathering maximize purchasing resources changing customer needs and sion and Corporate Purchasing Division and systems and QCDDM-related departments • Practice of ESG-focused purchas- social trends *1 established the new Corporate Sales and • Corporate stance that supports ing to help build a sustainable research and development of new society Purchasing Division with the aim of creating products that match next-generation Strengths S WWeaknesses a synergistic effect in terms of efficiency, needs Strengths S WWeaknesses Opportunities Threats connectedness, and effectiveness of opera- • Proposal and adoption of new • Competition for orders with high-value-added components competitors intensifying on a tions through an integration of functions. Opportunities Threats O T • Increasing reliance on component • Changes to the profit-sharing by finished vehicle manufacturers global scale Through this new organization, which manufacturers by finished vehicle O T structure in the automotive compo- due to changes in resource alloca- • Disruption of supply chains world- possesses a sense of speed, we will create manufacturers due to changes in nent industry due to the rise of tion aimed at the development of next-generation wide due to natural disasters and resource allocation aimed at the smart mobility a foundation for maximizing our competi- technologies the COVID-19 pandemic development of next-generation technologies Kenichi Hasegawa tiveness and further strengthen the Group. Senior Managing Director * Added value = Product appeal and profit (Representative Director), External Environment External Environment Corporate Sales and Purchasing Division Executive General Manager *1 ESG-focused purchasing: Purchasing activities that take ESG factors into account
needs in a process of close cooperation among various depart- departments in 14 countries work with our business partners Overview of Our Value Creation ments across the Group, including development, quality con- Overview of Our Value Creation to build a foundation for mutual prosperity. trol, and production. The Sales Division also offers proposals The TS TECH Group has achieved continuous growth while to create new value for customers, adding original, one-of-a- We must develop our procurement structure based on trust- Leveraging Industry Reform to Bolster Our Purchasing Structure gaining customers’ trust by constantly proposing and provid- kind TS TECH ideas that make the most of the different special ing relationships with business partners in order to respond With the automotive industry in a transitional period, we con- ing new value as a system supplier. The Sales Division, which characteristics of each Group business location. As a result, appropriately to technical innovation in the automotive indus- tinue to work with existing business partners to strengthen stands at the forefront of the market expansion that serves we enjoy a higher level of trust from our existing customers try, trade friction, natural disasters, and other changes in the their structures while simultaneously moving to gather infor- as the foundation of our growth, strives to achieve a great- and receive business opportunities from new customers. component purchasing environment to sustain growth. mation on competitive new business partners. We will contin- er share of our major customers’ business and win orders *1 Targeting: Narrowing down objectives/scope Toward this end, we are deploying initiatives such as ue to develop our purchasing structure to use this transitional from new customers. It does so by working to create original developing measures to strengthen our structures together period as an opportunity to increase value. technology and cost competitiveness by swiftly approaching Contributions to a Global Society with our partners; joint development of appealing and compet- customers and reaping the benefits of these initiatives. We High-quality sales activities result in contributions not just to itive products; CSR activities that include further reduction of Perpetual Cost Reduction Activities will also strategically expand markets and maximize profit with customers but to society as a whole. Since customers’ product- environmental impact throughout the supply chain; and legal We continue to develop initiatives such as VA/VE*2 to make us competitive sales proposals based on analyses of our own related needs vary by region, unnecessary products will get compliance. We also work with our business partners to build more cost competitive. We will utilize the strengths of each company and our competitors so that we can respond flexibly rejected without even being used, which is a big loss for the management systems for early recovery to facilitate stable business partner, and we will work with these partners to cre- to the changes resulting from the rise of smart mobility. environment and for society. This is why we work so hard to procurement in the event of incidents such as natural disas- ate and develop mechanisms and strategies not only for on-site offer products that satisfy needs around the world. ters. By implementing ESG-focused purchasing that balances improvements but also for next generation models, including environmental, social, and governance factors, we create val- measures aimed at realizing this from a business perspective. ue all stakeholders can appreciate. *2 VA/VE: VA refers to value analysis, a method for improving existing Our Approach to Value Creation and Its Results products. VE refers to value engineering, a method to improve prod- uct value by reducing the cost of purchased materials. Global Sales Proposal Efforts In order to accurately ascertain the diverse needs of our cus- Our Approach to Value Creation and Its Results Implementing ESG-Focused Purchasing tomers around the world, our sales staff, primarily at overseas The TS TECH Group asks its business partners to cooperate locations, sometimes use targeting data*1 collected from ex- Stronger Partnerships with Our Business Partners with its CSR initiatives as well, and we engage in co-creation isting customers to research their needs. When approaching In order to strengthen partnerships with our business part- of corporate value. Going forward, we will aim for an even new customers, they rely on unique targeting data that starts ners, we regularly hold briefings on purchasing policy and stronger supply chain with excellent comprehensive capabili- with analyses of the automobile market. Based on the results discussions with our business partners to share information ties, including cost, technological prowess, quality, and risk- of those analyses, we design products suited to customers’ on medium- and long-term business policies. Our purchasing response capability.
18 TS TECH Report 2020 TS TECH Report 2020 19 TS TECH’s Value Chain TS TECH’s Value Chain Manufacturing Quality Control
• Restructure competitive manufacturing systems and functions • Build resilience measures*1, create and share examples of • Provision of safety and security to customers Basic Policies on high-productivity lines Basic Policies on • Earn top quality rating from customers all around the world • Disseminate manufacturing technology through a “global and establish TS-Q brand Value Creation Value Creation mother plant” in Japan • Stable provision of products with the same high level of • Develop global managers by cultivating global players able quality worldwide to compete worldwide
Internal Environment Internal Environment
• A QCD*2 structure that ensures a minimum of • Still in the process of building a • A globally consistent quality control and assur- • Inadequate mechanisms to re- above-average QCD at all locations worldwide resilient manufacturing framework ance system based on international standards spond to changes in manufacturing • Advanced technology development and mass and advancing core manufacturing • Development of TC Circles*1 world- and maintain stable production production verification capabilities through a technologies wide • Shortage of human resources department for self-manufacture of • Defective output from manufactur- • High ratings in initial quality with expertise in global quality production equipment ing processes due to weak points surveys (IQS) assurance in the system to assure defect-free Strengths S WWeaknesses processes Strengths S WWeaknesses Opportunities Threats • Increasingly sophisticated • Increased market problems and Opportunities Threats demands for quality assurance delivery defects accompanying • Greater market expansion in • Response to changes in demand O T accompanying a trend toward globalization emerging countries due to shrinkage and diversifica- O T multifunctionality in products • Shrinkage of the workforce due • Further expansion of profit through tion of Japan’s market • Diversifying customer demands for quality on to a declining birthrate and aging acquisition of commercial rights • Intensifying cost competition expanding relations with new customers population from new customers in Japan and overseas with competitors • Quality control for changes in manufacturing systems as typified by Industry 4.0*2 Yasushi Suzaki Masashi Takezawa External Environment Director, External Environment Managing Officer, Corporate Manufacturing Division Corporate Quality Assurance Division *1 Resilience measures: Measures to create a financial structure that generates a certain amount of Executive General Manager *1 TC Circles: Improvement activities undertaken by small groups. Generally referred to as a “QC Executive General Manager profit even when earnings drop (Quality Control) Circle,” the activities are aimed at developing human resources who can use the *2 QCD: Quality, Cost, and Delivery QC method to solve problems and manage and improve operations. *2 Industry 4.0: A term referring to a technological strategy that the German government came up with in 2012. In Japan it is also called “The 4th Industrial Revolution.” Based on uniform manufacturing framework indicators, all Overview of Value Creation TS TECH Group manufacturing sites assess their own weak- nesses and strengths. improve quality at all locations by verifying the status of rule Going forward, it is forecast that the Japanese market will shrink, Each site identifies points for improvement by under- Overview of Value Creation implementations and promoting improvements through periodic and there will inevitably be a trend toward high-mix, low-volume standing its own position within the Group and works to fur- QAV-1*4 inspections. manufacturing even if we can acquire other commercial rights. ther raise productivity. In order to provide high-quality products around the world, we *4 QAV-1 refers to a Quality Assurance Visit. Given this situation, it is of the utmost importance to are developing a system to assure defect-free processes, ver- “build a resilient manufacturing framework,” and it will be par- Deploying Advanced Technology ification of functions, and market feasibility of products, along Offering Products with the Same High Level of Quality Worldwide ticularly essential to improve the efficiency of personnel who At our Engineering Center, we build original manufacturing technol- with measures to improve the quality structure of TS TECH We believe that it is the responsibility of a global company to are directly involved in manufacturing as well as those indirect- ogies which we deploy around the world once the global mother locations and business partners. These efforts all aim to earn provide customers around the world with high-quality products. ly involved through support positions. plant in Japan has verified their performance in mass production. additional trust from our customers. In the midst of the globalization of production and increasing Each department is actively making efforts directed at op- In terms of seats, we are implementing efforts to fully We strive to achieve stability in the manufacture of our prod- local development, our Corporate Quality Assurance Division erational reforms to enable efficient production planning that automate the process spanning frame manufacture and as- ucts by developing quality standards that are consistent from de- distributes a quality standards manual that details requirements is not affected by customers’ production volume, automated sembly through inspection. With respect to door trim, we are velopment through production, and by incorporating the results regarding standards, facilities, work operations, and techniques production lines with the minimum number of people, and actively working to achieve labor-saving assembly lines with of analyses of complaints from the worldwide market into new to our locations around the world to ensure the same high level centralized, efficient indirect operations. the adoption of new equipment that uses high-speed molding specifications. We also use TC Circles to coordinate production of quality worldwide. We receive high marks from our custom- In addition, we are disseminating our know-how of au- and modularization of small components. site reform activities, leading to greater awareness of quality. ers thanks to our stable provision of high-quality products. tomation and manufacturing equipment technology to each We are working to raise the level of our quality structure Group site through means such as holding WEM*3 events and Achieving a Sustainable Manufacturing Environment at locations around the world with the support of ISO 9001/ Providing Safety and Security to Customers will continue to accelerate our efforts to raise manufacturing As part of our environmental conservation efforts, we are IATF 16949*3, global standards on quality. “Delivering products that can be used safely and securely”
technology to a uniform level globally. committed to reducing CO2 emissions at manufacturing facili- *3 IATF 16949: International management system standards of the auto- —that is the role of the Corporate Quality Assurance *4 motive industry *3 WEM: World Industrial Engineering Meeting ties. We are striving to implement karakuri improvements so Division. We are working to raise the quality of our prod- we can perform operations without using electricity. uct manufacturing by sharing analysis results based on Going forward, we will develop the Karakuri Presentation worldwide market quality data with development depart- Our Approach to Value Creation and Its Results Conferences held at the global mother plant in Japan into Our Approach to Value Creation and Its Results ments and providing feedback for upcoming models. We national- and global-scale conferences to share knowledge and also plan to work toward consistent quality control from Raising the Manufacturing Framework to a Uniform Level ideas created on the factory floor with the aim of enhancing Earning Top Rating for Quality development to production using means such as reflect- Under the QCD framework assessment, which we deployed manufacturing efficiency as well as achieving a sustainable We are working to bolster our quality systems globally, aiming to be ing manufacturing requirements identified through fault globally starting in 2004, we have been able to raise the manufacturing environment through the realization of environ- a company that is recognized by customers all around the world. tree analysis (FTA) and failure mode and effects analysis framework up to a level that is largely in line with plans. mentally responsible manufacturing plants. In addition to helping locations acquire ISO 9001 and (FMEA)*5 in the manufacturing process at production sites. *4 Karakuri refers to equipment that uses levers, gears, gravity, linking IATF 16949 certification, we are working hard to maintain and *5 FTA and FMEA are both analysis tools used to prevent product defects. mechanisms, etc., instead of electricity or compressed air.
20 TS TECH Report 2020 TS TECH Report 2020 21 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth Dialogue with the Outside Directors
Evaluations of the Effectiveness of the Board of Directors forward in order to overcome changes in the operating environment, such as a shift in customer or market needs. Because building a new business model also requires the The intrinsic elements of governance demanded creation and establishment of a new corporate culture, it by society are in place. (Mutaguchi) might be a struggle using internal capabilities alone. In such I hope to make useful proposals about management a situation, I hope to give my opinions as an Outside Director issues aimed at sustainable growth, such as the so that TS TECH can use its potential to create new value. training of successors. (Ogita) Mutaguchi: In order to create new value and continue growing, it is necessary to venture into new businesses, Mutaguchi: In 2018, TS TECH introduced third-party evalua- and, at the same time, it is important to pursue increased tions of the effectiveness of the Board of Directors. Looking customer satisfaction across all aspects of quality, cost, de- at the results, I feel that the effectiveness of the Board of Di- livery, and service (QCDS), which is a permanent challenge rectors is improving steadily every year. I believe the results for a manufacturer. In addition, I think it will be necessary to of executive training are the main reason for this progress. be at the forefront in research and development to be com- Teruyasu Mutaguchi Takeshi Ogita Over the past few years, there has been a generational petitive in the automotive industry, which is experiencing Outside Director, Chairperson of the Board of Directors Outside Director change of the Internal Directors at TS TECH, so, as a global a once-in-a-century transformation. At the moment, we corporation, I think TS TECH needs to conduct additional are facing a revolution in the way we work triggered by the April 1973 Joined Fuji Electric Co., Ltd. April 1980 Joined Sankyo Co., Ltd. training regarding awareness of various issues and expert COVID-19 pandemic, so I think we have to thoroughly in-
Profile April 2008 Dire ctor, CTO, Fuji Electric Retail Systems Co., Ltd. (now Fuji Electric Profile July 2004 Corporate Officer,Head of New Drug Development Division, Sankyo Co., Ltd.) Co., Ltd. knowledge. Also, based on the results of the third-party crease efficiency in each business domain, thereby paving April 2010 Dir ector, CTO, Managing Executive Officer, Fuji Electric Retail Systems April 2007 Exe cutive Officer, Head of Pharmaceutical Technology Division, Daiichi evaluations, we will place an even greater focus on issues the way to an increase in corporate value. Co., Ltd. Sankyo Co., Ltd. regarding corporate governance structure, the decision-making Ogita: There are many issues that need to be tackled, and April 2011 Head of Saitama Industrial Technology Center June 2009 Memb er of the Board, Senior Executive Officer, Daiichi Sankyo Co., Ltd. April 2015 Innovation Coordinator at the Kanto Regional Collaboration Office, April 2014 Member of the Board, Senior Executive Officer, Head of Vaccine processes for the nomination and remuneration of directors, times are tough due to COVID-19. However, I believe that Regional Collaboration Promotion Division, Research and Innovation Business Intelligence Division, Daiichi Sankyo Co., Ltd. and diversity on the Board of Directors. TS TECH is a com- in tough times companies should be especially determined Promotion Headquarters, National Institute of Advanced Industrial President, Kitasato Daiichi Sankyo Vaccine Co., Ltd. pany with a Board of Auditors, and, although it differs from to work on building the foundations for growth. Accurate Science and Technology April 2017 Gues t Professor, Graduate School of Creative Science and Engineering, Industry-Academia-Government Collaboration Senior Coordinator at Waseda University (current) the Western-style standard corporate governance structure identification of future market trends, the targeting of key the Comprehensive Open Innovation Center, Saitama University June 2018 Outside Director, Japan Hades Co., Ltd. (current) that is being called for of late, my evaluation is that both the customers for growth, and a clearer growth strategy will June 2016 Outside Director of the Company (current) June 2020 Outside Director of the Company (current) necessary transparency and fairness, which are the intrinsic impact post-COVID-19 growth. I think that TS TECH already elements of governance, are in place. has the assets for growth, so how it will use those assets Ogita: You mentioned corporate governance structure. will be both important and extremely interesting. For me, An organizational framework should be arranged so that it the automobile industry is a business sector that I had not Continuing to Support “Corporate Evolution through ESG Management” matches a company’s actual circumstances and substance. previously experienced, so I may sometimes give opinions If a company’s current framework is functioning properly, that the Internal Directors find a bit outlandish. However, I from an Outside Perspective with Knowledge from Different Fields I think it is a very positive thing. However, considering the regard this as being one of the things I am expected to do, sustainable growth of TS TECH going forward, I think that so I will continue actively making proposals to contribute to TS TECH actively works to enhance corporate governance in order to achieve sustainable business growth and improve cor- some changes are necessary. In particular, successor train- building the foundations for the further growth of TS TECH. porate value. For this year’s report, Teruyasu Mutaguchi, who was appointed as TS TECH’s first Outside Director and serves ing for the management team is a key management issue, Mutaguchi: As the Chairperson of the Board of Directors, as Chairperson of the Board of Directors, and Takeshi Ogita, who was appointed as a new Outside Director in fiscal 2021, dis- so I am hoping to closely monitor human resource recruit- I will continue working to further enhance its effectiveness cussed their evaluations of the Board of Directors and governance as well as the challenges for further growth. ment mechanisms and make some useful proposals. through such means as invigorating the discussion at the Board of Directors and making proposals on matters brought The Atmosphere of the Board of Directors explanations of the agenda, and I feel that the atmosphere of Improving Corporate Value up for debate. I also intend to continue expressing my opin- the Board of Directors enables the Outside Directors to make ions without hesitation as an Outside Director as necessary. comments freely without any worries. Although the type of A balance of “execution” and “supervision” is indispensable I am free to comment from an outside perspective. (Mutaguchi) We need to work on carefully building a foundation for growth, product was different, I pursued a career in the manufactur- for sustainable corporate growth, and I believe this balance particularly in tough times. (Ogita) There is greater fairness and objectivity because an Outside ing industry to which TS TECH belongs. Based on that expe- is achieved by bringing external perspectives into the Board Director serves as Chairperson of the Board of Directors. (Ogita) rience, I provide my frank opinions on initiatives in production A balance of “execution” and “supervision” supports of Directors. I will conduct Board of Directors’ meetings so management and quality control, which are indispensable for sustainable corporate growth. (Mutaguchi) that we take full advantage of the special qualities of the Mutaguchi: I think the roles that are expected of an Out- the manufacturing industry, as well as the validity and timeli- Outside Directors as well as contribute to “corporate evo- side Director of the Board of Directors are centered around ness of responses to various management issues. Mutaguchi: Stability and growth are both needed to increase lution through ESG management,” which TS TECH has set “pressure” and “cooperation.” I try to create a “sense of Ogita: Since I was appointed during the current fiscal year, corporate value. Looking at the consolidated balance sheet, forth in its 14th Medium-Term Management Plan. pressure” for each of the Directors by expressing opinions there may be a number of things with which I am still unfa- I can see that TS TECH does not have any problems in terms from an outside perspective that is not just an extension of miliar. However, I feel there is an extremely positive atmo- of stability, but what will be important in the future is growth the conventional TS TECH point of view, and I also strive for sphere in terms of “freedom of speech.” Also, I have the strategy. The Board of Directors continues to discuss the fea- “cooperation” by communicating effectively with all of the impression that there is greater fairness and objectivity in sibility of the growth strategies proposed by executives. executives. the proceedings because Mr. Mutaguchi, an Outside Direc- Ogita: I also consider stability to be one of TS TECH’s When meetings of the Board of Directors are held, tor, serves as the Chairperson of the Board of Directors. strengths. However, looking ahead to medium- and long- the secretariat provides us with thorough preliminary term growth, a new business model may be required going
22 TS TECH Report 2020 TS TECH Report 2020 23 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth Board of Directors
DIRECTOR DIRECTOR Directors Yasushi Suzaki (Outside Director) Joined TS TECH Co., Ltd. in 1990 Teruyasu Mutaguchi Director, TS TECH Co., Ltd. Director, TS TECH Co., Ltd. PRESIDENT SENIOR MANAGING DIRECTOR Corporate Manufacturing Division (2016–present) Executive General Manager (Representative Director) (Representative Director) Number of shares of the Company held: Masanari Yasuda Yoshitaka Nakajima Number of shares of the Company held: 300 shares 377 shares Meetings of the Board of Joined TS TECH Co., Ltd. in 1982 Joined TS TECH Co., Ltd. in 1982 Meetings of the Board of Directors attended: President (Representative Director), Senior Managing Director Directors attended: 100% (13/13) TS TECH Co., Ltd. (Representative Director), —% Global Operations Supervisor, TS TECH Co., Ltd. Quality Assurance Supervisor Corporate Administration Division Executive General Manager, Number of shares of the Company held: Compliance Officer, 28,846 shares Officer in Charge of Public Relations Meetings of the Board of Directors attended: Number of shares of the Company held: 100% (13/13) 9,059 shares Meetings of the Board of Directors attended: 100% (13/13) DIRECTOR (Outside Director) Takeshi Ogita Guest Professor, Graduate School of SENIOR MANAGING DIRECTOR SENIOR MANAGING DIRECTOR Creative Science and Engineering, Waseda University (current) (Representative Director) Akihiko Hayashi Outside Director, Japan Hades Co., Ltd. (current) Kenichi Hasegawa Joined TS TECH Co., Ltd. in 1978 Director, TS TECH Co., Ltd. (2020) Joined TS TECH Co., Ltd. in 1982 Senior Managing Director, Senior Managing Director TS TECH Co., Ltd. Number of shares of the Company held: (Representative Director), President of TS TECH AMERICAS, INC. 0 shares TS TECH Co., Ltd. Meetings of the Board of Corporate Sales and Purchasing Division Number of shares of the Company held: Directors attended: Executive General Manager, 6,810 shares —% Risk Management Officer Meetings of the Board of Directors attended: Number of shares of the Company held: 100% (13/13) 4,334 shares Meetings of the Board of Directors attended: 100% (13/13) Auditors
SENIOR MANAGING DIRECTOR MANAGING DIRECTOR AUDITOR (Full-Time) AUDITOR (Full-Time) Yutaka Arai Atsushi Igaki Tatsuo Sekine Akihiro Miyota Joined TS TECH Co., Ltd. in 1982 Joined TS TECH Co., Ltd. in 2016 Joined TS TECH Co., Ltd. in 1982 Joined TS TECH Co., Ltd. in 1976 Senior Managing Director, Managing Director, TS TECH Co., Ltd. Auditor, TS TECH Co., Ltd. Auditor, TS TECH Co., Ltd. TS TECH Co., Ltd. Corporate Business China Executive General Manager, Administration Division Number of shares of the Company held: Number of shares of the Company held: Chairman and President of Executive General Manager 3,862 shares 300 shares TS TECH (HONG KONG) CO., LTD. Meetings of the Board of Meetings of the Board of Number of shares of the Company held: Auditors attended: Auditors attended: Number of shares of the Company held: 2,110 shares —% 100% (14/14) 4,472 shares Meetings of the Board of Meetings of the Board of Directors attended: Directors attended: 100% (13/13) 100% (13/13)
MANAGING DIRECTOR DIRECTOR AUDITOR (Outside Auditor) AUDITOR (Outside Auditor) Eiji Toba Takahiro Kobori Tatsuya Motoda Hajime Hayashi Joined TS TECH Co., Ltd. in 1994 Joined TS TECH Co., Ltd. in 1994 President of Motoda Tax & Sazanka Law Office Managing Director, TS TECH Co., Ltd. Director, TS TECH Co., Ltd. Accounting Office Auditor, TS TECH Co., Ltd. (2020) Asia and Europe Corporate Development and Auditor, TS TECH Co., Ltd. (2014–present) Executive General Manager, Engineering Division Number of shares of the Company held: President of TS TECH ASIAN CO., LTD., Executive General Manager Number of shares of the Company held: 0 shares Chairman of TS TECH BANGLADESH 1,126 shares Meetings of the Board of LIMITED and TS TECH UK LTD Number of shares of the Company held: Meetings of the Board of Auditors attended: 1,381 shares Auditors attended: —% Number of shares of the Company held: Meetings of the Board of 100% (14/14) 2,110 shares Directors attended: Meetings of the Board of —% Directors attended: —%
24 TS TECH Report 2020 TS TECH Report 2020 25 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth Efforts to Improve Corporate Governance and Compliance
strengthen its own governance system while keeping it Governance System Diagram Basic Policies aligned with the intent and spirit of the Code. When the Code was revised in December 2018, we re- General Meeting of Shareholders (1) Securing the Rights and Equal Treatment viewed and revised the content disclosed in our corporate Election of Shareholders Election We respect the rights of all stockholders, who are import- governance reports. We have currently adopted an “explain” ant shareholders, and shall maintain an environment that approach with regard to Supplementary Principle 4.10.1 Global Risk Management Reports 1 Audit 5 ensures that all shareholders, including non-controlling inter- Risk Management Of cer Board of Directors Board of Auditors (Use of Optional Approach) and are in compliance with all Committee Directors Auditors ests, are treated equally and can fully exercise their rights. other codes. (2) Appropriate Cooperation with Shareholders Responses In regard to Supplementary Principle 4.10.1, although TSCG Of ce and reports Audit report We shall cooperate appropriately with all shareholders while Monitoring less than half of TS TECH’s directors are outside directors, Coordination working to achieve sustainable growth and an increase in we endeavor to ensure the transparency and objectivity 2 mid- to long-term corporate value. Ethics and Compliance Compliance Of cer Executive Committee Accounting Auditor of the decision-making process when appointing directors Committee Representative Directors Accounting (3) Ensuring Appropriate Information Disclosure audit Internal control audit and Transparency and making decisions on compensation and other matters.
We shall actively disclose information in order to be a com- These matters are discussed by the Executive Committee Responses Coordination and reports pany sincerely welcomed by all of our shareholders, and we with monitoring by full-time auditors, and decisions are Regional 4 Reports shall manage our business with transparency and good faith. made at Board of Directors’ meetings after outside directors Management Committees Executive General 3 Regional General Managers/ Business Audit Of ce (4) Responsibilities of the Board Managers Committee have been briefed and their opinions heard. Presidents of Af liated Companies Executive General Managers, etc. Reports Reports (Americas/China/Asia and Europe) The Board shall take appropriate responsibility for the At present, this system is functioning effectively, and establishment of mid- to long-term management policies we thus have no urgent plans to establish voluntary commit- Responses Responses and oversight of directors, and it shall work to build sys- and reports and reports tems to enable transparent, fair, and resolute decision- tees, but TS TECH will continue to actively work to strength- making. Business audits en its governance system in line with the Code’s intent. Divisions and departments in Japan TS Corporate Ethics Compliance Consultations (5) Dialogue with Shareholders Consultation Of ce The company shall engage in constructive dialogue with Group Governance Structure Domestic af liates shareholders and investors through the annual General Meeting of Shareholders and other avenues with respect Corporate ethics hotlines Consultations Overseas af liates to management principles and other issues as it works to The TS TECH Group has established a sound corporate gov- set up by each company achieve sustainable growth and an increase in mid- to long- ernance system. It includes a Group-wide commitment to term corporate value. the Vision Statement and Mission Statement that comprise ❶ Board of Directors ❷ Executive Committee ❹ Regional Management Committees ❺ Board of Auditors The Board of Directors comprises 11 The Executive Committee comprises the These committees consist of directors and The Board of Auditors comprises four the TS TECH Philosophy, a basic policy on corporate gover- directors, including two outside directors. company’s three representative directors. presidents of subsidiaries and affiliated members, including two outside auditors. It convenes at least once per month in It conducts preliminary deliberations on companies in our three business regions of Each auditor audits the directors’ execution nance, and a three-year medium-term management plan. principle. The Board of Directors makes such matters as resolutions to be put to the the Americas, China, and Asia and Europe. of duties in accordance with the audit decisions regarding management policies, Board of Directors, and, within the scope They deliberate on important matters policy determined by the Board of Auditors Basic Policy on Corporate Governance Affiliated companies also have their own effective, efficient important management issues, and of the authority assigned to it by the Board affecting management in their respective through attendance at important meetings corporate governance systems that are based on the laws of matters mandated by laws and regulations. of Directors, discusses important matters regions, as well as measures to promote such as meetings of the Board of Directors, It also supervises the execution of the relating to the execution of the duties of the independence of these regions and various examinations, and the regular The TS TECH Philosophy calls for us to be a company sin- their respective countries and their respective businesses. company’s operations. The outside the directors. companies and to strengthen the system exchange of opinions with the directors. directors are elected based on their wealth for the execution of operations. Outside corporate auditors are elected cerely appreciated by all of our stakeholders—from share- Important management issues at affiliated companies of professional experience because they ❸ Executive General Managers Committee to utilize their professional experience will be consulted regarding management The Executive General Managers outside of TS TECH and to make audit holders and investors to customers, suppliers, employees, must be reported to and approved by TS TECH in advance policies and important company decisions. Committee is made up of nine executive functions even more objective and general managers. This Committee independent. and local communities. We are working hard to enhance based on the standards stipulated by TS TECH. Affiliated discusses policies, plans, and governance corporate governance as an important step toward fulfilling companies must also report business plans, sales results, related to operations in each division to maintain efficient operations. our social responsibility and achieving sustainable business and financial status as well. growth and increasing corporate value over the medium to Furthermore, affiliated companies participate in routine Appointments of Outside Directors long term. compliance and risk verification measures known as the Name Reason for Appointment TS TECH endorses the Tokyo Stock Exchange’s Corpo- TS TECH Corporate Governance (TSCG) self-verification rate Governance Code and has set the above basic policies system. This ensures that the entire TS TECH Group acts as Mr. Mutaguchi’s abundant experience as a corporate manager of a manufacturing company qualifies him to provide valuable insight and advice relat- accordingly. one in promoting compliance and reducing risk. Teruyasu Mutaguchi ed to our management practices and help ensure the soundness of the company. Since we have determined that an appointment of Mr. Mutaguchi poses no risk of conflict of interest with shareholders, he was selected to serve as an Outside Director. TS TECH’s internal audit department conducts audits of Complying with Japan’s Corporate Governance Code affiliated companies and works with internal audit depart- Mr. Ogita’s abundant experience as a corporate manager of a pharmaceutical company qualifies him to provide valuable insight and advice related to ments set up at the head offices in each region to enhance Takeshi Ogita our management practices and help ensure the soundness of the company. Since we have determined that an appointment of Mr. Ogita poses no risk of conflict of interest with shareholders, he was selected to serve as an Outside Director. Since the Tokyo Stock Exchange established the Corporate the internal audit structure of the entire TS TECH Group. Governance Code in 2015, TS TECH has endeavored to Appointments of Outside Auditors
Name Reason for Appointment
Mr. Motoda’s specialized knowledge and abundant experience as a tax accountant will enable him to monitor the company’s management from an Tatsuya Motoda independent and objective perspective and help ensure the soundness of the company and strengthen its auditing system. Since we have determined that an appointment of Mr. Motoda poses no risk of conflict of interest with shareholders, he was selected to serve as an Outside Auditor.
Mr. Hayashi’s broad knowledge and abundant experience as an attorney-at-law will enable him to monitor the company’s management from an Hajime Hayashi independent and objective perspective and help ensure the soundness of the company and strengthen its auditing system. Since we have determined that an appointment of Mr. Hayashi poses no risk of conflict of interest with shareholders, he was selected to serve as an Outside Auditor.
26 TS TECH Report 2020 TS TECH Report 2020 27 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth
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Operation of an Internal Control System into consideration factors such as candidates’ independence Global Risk Management Committee Response to the COVID-19 Pandemic from the Company and their past performance and insight Following the inclusion of regulations on internal controls in in their particular areas of expertise. This Committee was formed in September 2014 as an advi- In light of the global COVID-19 pandemic, the Company’s Japan’s Companies Act in 2006, TS TECH passed a resolu- TS TECH has appointed Mr. Teruyasu Mutaguchi and sory committee for the Executive Committee to help ensure Risk Management Officer is spearheading the Group-wide tion on the basic policies of its internal control system at a Mr. Takeshi Ogita as Outside Directors, and Mr. Tatsuya Mo- appropriate identification and control of the various risks emergency response. Board of Directors’ meeting held in May 2006. toda and Mr. Hajime Hayashi as Outside Auditors. affecting global business activities and to solidify the sus- On January 29, 2020 a Group-wide COVID-19 emer- Additionally, in accordance with Japan’s Financial In- tainability and stability of the business. gency response committee was established in Japan to struments and Exchange Act, the TS TECH Group has es- Remuneration Policy The following year, regional risk management commit- quickly collect information from all Group companies. For tablished an internal control system to ensure the reliability tees were formed in each region to manage the risks spe- parts where the supply chain was considered vulnerable to of its financial reporting. The effectiveness of this system is TS TECH’s basic policy on executive compensation is to en- cific to these geographic segments and promptly advance the impact of COVID-19, various efforts to maintain produc- maintained and internal control is enhanced through regular sure that it is transparent and reasonable, with the potential risk mitigation measures. Since then TS TECH has worked tion, including alternate production of parts and intra-Group evaluations of improvements and operations and corrective to further motivate sustained business growth. to further enhance its risk management structure, including supply, were implemented from an early stage, and these actions as needed. The Board of Directors has the authority to make deci- conducting emergency response training that anticipates efforts helped to prevent shortages and other issues. sions on the executive remuneration system, and decisions the most frequently occurring natural disasters in each geo- Although fixed costs continued to be incurred at Compliance Framework on the review of socially justifiable remuneration levels and graphic region where the Group does business. sites that had to suspend operations due to the impact of calculation methods, as well as the establishment and revi- In fiscal 2020, TS TECH identified five major risks and -pur COVID-19, the Group was able to respond to the situation Based on the TS TECH Philosophy, the Group established sion of the remuneration system, are made by resolutions sued the appropriate corresponding risk mitigation measures. using funds in hand in accordance with Group-wide safe the TS Standards for Conduct—TS TECH’s norms and ideals of the Board of Directors after deliberations by the Execu- funding guidelines, and, as a result, no production sites ex- as an organization—and TS Guidelines for Conduct—ex- tive Committee. perienced major cash flow issues. pectations for day-to-day conduct for individual executives, Approximately 60% of directors’ remuneration is 1) Parts supply As it strives for continued business growth, not only officers, and employees. Efforts are made to familiarize the classified as base salary, with the remaining 40% being 2) Natural disasters will TS TECH continue to monitor the situation closely and entire Group with this code. performance-linked compensation, while outside directors Five Major Risks 3) Labor management review capital-investment and cost-containment measures, A director is appointed as a Compliance Officer in order and part-time auditors are paid only a base salary as their 4) Information systems it will also implement thorough measures to prevent the to promote compliance initiatives, and steps are continually role is to supervise and audit management from an inde- 5) Equipment safety spread of infection in line with guidance from national and taken to prevent legal violations before they occur through pendent perspective. local governments. regular TSCG self-verifications and deliberations of import- ant ethics and compliance issues by the Ethics and Compli- Risk Management ance Committee. We have established a whistleblower hotline called the Important management issues are carefully deliberated TS Corporate Ethics Compliance Consultation Office, which upon by TS TECH’s Executive Committee as well as various Risk Map enables employees to bring issues before compliance offi- advisory committees. Through these discussions, TS TECH cers, who respond with rapid, effective investigations and makes every effort to avoid and mitigate business risks. corrective guidance in the event of a problem. The Office In addition, a Risk Management Officer is appointed Magnified View of the Risk Map handles approximately 15 complaints per year, and its con- from among the representative directors and placed in tinuous availability has been effective in resolving internal charge of risk management. The Global Risk Management issues and maintaining compliance. Committee, comprising directors and other officers, has been set up to deliberate regularly on the results of TSCG Appointments of Outside Directors and Outside Auditors self-verifications and discuss responses to serious risks affecting management, ensuring that efforts are continually TS TECH appoints outside directors and outside auditors made to mitigate potential risks. who possess extensive experience in corporate manage- Findings obtained through TSCG self-verifications are ment to provide objective, independent advice and oversight shared with internal auditors so that they can be applied in of the Group’s business operations in light of the charac- risk approach auditing. teristics of the Group’s business, and to help ensure the soundness of the Group and strengthen its auditing system. When selecting outside directors, in addition to satisfy- ing the criteria for independence set forth in the Companies Act, the Ordinance for Enforcement of the Companies Act, and by Tokyo Stock Exchange, Inc., the company makes its decisions in accordance with internal regulations, taking Emergency response training
28 TS TECH Report 2020 TS TECH Report 2020 29 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth
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Tax Policy Policy and Action against Antisocial Forces Basic Policy on Procurement Supply Chain Management Policy
The TS TECH Group’s tax policy aims to fulfill the appro- The TS TECH Group’s basic policy for internal control re- The TS TECH Group’s products are made from a wide vari- In order to coexist harmoniously with society and be a com- priate tax obligations and social responsibilities, minimize quires individual officers and employees to diligently avoid ety of materials and components provided by its suppliers. pany sincerely appreciated by all whose presence is valued by tax risks while maintaining transparency, and contribute to any type of relationship with antisocial groups that can In order to reliably offer quality products at competitive pric- all of its stakeholders, management focused on ESG-related the development of the communities in which the Group threaten a safe, orderly civil society, and to work together as es to our customers, solid partnerships with our suppliers issues, not just the pursuit of profit, is necessary. operates. In order to achieve these objectives, the Group an entire group to demonstrate uncompromising attitudes are indispensable. Based on the TS TECH Philosophy, the TS TECH Group has established the TS TECH Group Tax Policy based on the against such forces. Specific measures include making as- The Group has established the Four Principles of TS aims to realize a sustainable society with its worldwide TS TECH Philosophy. sessments in advance of the start of new transactions and Procurement, explained below, to ensure fair, just transac- business partners by promoting initiatives that consider the incorporating provisions for excluding the influence of anti- tions as well as to construct and maintain win–win relation- environment, safety, human rights, compliance, and social social forces in preparing agreements. ships with suppliers globally. By following these principles, responsibility not only independently but throughout its sup- TS TECH Group Tax Policy we strive to build a supply chain that can be relied upon by ply chain. Intellectual Property Management all stakeholders. (1) Tax Governance The Group positions the reinforcement of tax governance as Application of TS TECH Supplier one of the most important management issues. This policy The TS TECH Group respects intellectual property rights. In Sustainability Guidelines was approved by TS TECH’s Board of Directors, and the Board developing products and technologies, we take the utmost Four Principles of TS Procurement of Directors bears final responsibility for tax governance. care to ensure that the Group does not infringe on the in- We established the TS TECH Supplier Sustainability Guide- (2) Compliance tellectual property rights of others. At the same time, the (1) Fair Trade lines in May 2019 to share and promote our views on sus- The Group works to promote and instill awareness of com- Group asks others to respect its intellectual property rights. When selecting a supplier, we offer our business to tainability with our business partners. We ask all business several candidates irrespective of their nationality, size, pliance among its employees. This enables the Group to In cases where an infringement is identified, the Group partners to comply with these Guidelines in the following comply with and always ensure the correct understanding or past transactions and finalize our choice in a fair man- of tax laws and regulations, etc., in each country and region takes all necessary measures, including demanding that ner by comprehensively evaluating their ability to offer five categories: (1) Safety and Quality, (2) Human Rights and in which it operates, and to meet the appropriate tax decla- infringing parties immediately discontinue any offending ac- superior quality, expertise, price, delivery, and other ele- Labor, (3) The Environment, (4) Compliance, and (5) Informa- ration and tax payment obligations. ments, as well as competitiveness, rationality, efforts for tivities and offering such parties an opportunity to negotiate business security and other relevant matters. tion Disclosure. (3) Tax Planning and Tax Havens in the signing of license agreements. Through actions such These guidelines are posted on our website and shared (2) Mutually Beneficial Transactions The Group will determine investment and business activ- as these, the Group works to maximize intellectual property with all business partners. We use a survey to verify compli- We share with our trade partners business challenges ities according to its business objectives and economic value and minimize loss. ance by our major business partners with these guidelines, rationality. The Group will avoid tax planning that is not in such as development and competitive pricing, set goals line with business purposes or operations, as well as tax from a common perspective, and conduct joint efforts and in fiscal 2020, we surveyed a total of 40 partners. As a activities that use tax havens. Disclosure Policy to achieve targets. We afford the highest priority to mu- result, we were able to confirm that all 40 partner compa- tually beneficial transactions in terms of results thus ob- (4) Transfer Pricing tained and make continuous efforts to strengthen trust nies maintain the same understanding of these guidelines The Group will abide by international tax frameworks such The TS TECH Group promptly and fairly discloses accurate as the basis of mutually beneficial relationships. as the TS TECH Group. We will continue to implement as the OECD Transfer Pricing Guidelines and the Base corporate information to its stakeholders, individual investors (3) Environmental Responsibility this survey annually to ensure widespread observance of Erosion and Profit Shifting (BEPS) Action Plan, and will including shareholders, institutional investors, and analysts. these guidelines. strive to ensure tax transparency. International transactions In our corporate activities, we attach the greatest im- between Group companies will comply with the OECD In addition to disclosing information in accordance with the portance to global environmental preservation under all Transfer Pricing Guidelines, and transaction prices will be Financial Instruments and Exchange Act and the Timely Dis- circumstances. Accordingly, we practice “green purchas- determined based on the arm’s length principle. ing,” granting preference to environmentally responsible closure Rules, even when these provisions do not apply, we products, services, companies, etc. (5) Minimal Tax Risk adopt a proactive approach to the disclosure of information (4) Legal Compliance and Confidentiality The Group will conduct the appropriate accounting and deemed useful and appropriate to our stakeholders. tax measures in accordance with the tax systems and tax We respect the principle of legal compliance and thor- Our primary means of disclosing information include administrations of each specific country and region. In the oughly observe relevant laws and regulations and gener- event of complicated, unclear tax matters, the Group will press releases and the Timely Disclosure Network (TDnet) ally accepted norms. We handle with the greatest care consult in advance with external experts and tax authorities provided by the Tokyo Stock Exchange. This information is all kinds of information obtained from our customers and to minimize tax risks. trade partners and make the utmost effort to prevent the also posted on TS TECH’s website. loss or misuse of such information. (6) Relationship with Tax Authorities To protect the Company and its employees from legal The Group will provide timely, accurate information to tax liability under the Financial Instruments and Exchange Act authorities in each country and region in order to reduce and other legislation, the Public Relations Section of the tax risks, and will respond in good faith to maintain trust and good relations. Administration Department responds to all inquiries from stakeholders. In addition, this Disclosure Policy is shared and fully enforced throughout the TS TECH Group. Workflow for handling major business partners
Designation Con rmation as a major Written of facts Reforms/ business investigation through improvements partner interviews
30 TS TECH Report 2020 TS TECH Report 2020 31 Initiatives to Achieve ESG Management Section 1 Corporate Governance Sustainable Business Growth
Efforts to Improve Corporate Governance and Compliance
TS TECH Philosophy Other Major Initiatives for Survey on Conflict Minerals Compliance with the Antimonopoly Act and Supply Chain Management Prohibition of Corruption Vision Statement The Group checks whether conflict minerals* originat- Mission Statement ing in or near the Democratic Republic of the Congo, as TS TECH has prepared and put into use its own Anti‑ Operational Directives Annual Conference with Major Business Partners designated by the Dodd–Frank Wall Street Reform and monopoly Act and Subcontract Act Compliance Manual, The TS TECH Group facilitates communication with busi- Consumer Protection Act of the United States, are used in which sets forth the approach and considerations related TS Standards for Conduct—TS TECH’s norms and ideals ness partners by providing opportunities to share informa- our products. We prevent the flow of money used to fund to Japan’s Act on Prohibition of Private Monopolization and tion regarding purchasing strategies and policies. We hold armed forces and/or illegal conduct such as human rights Maintenance of Fair Trade (“Antimonopoly Act”) and the TS Guidelines for Conduct—Expectations for day-to-day conduct an annual conference with major business partners to ex- violations in conflict zones. We also refuse to use conflict Act against Delay in Payment of Subcontract Proceeds, plain the purchasing policies for the period and to exchange minerals in order to avoid supporting such armed forces in etc., to Subcontractors (“Subcontract Act”). The relevant information. any way. departments utilize the manual in day-to-day operations In addition, we have conducted a survey on the origins in conjunction with an accurate understanding of the two TS TECH Supplier Sustainability Guidelines of conflict minerals annually since 2013 to fulfill our social laws and a thorough, close examination into the legality of responsibility in procurement. Through the survey, regard- individual events. less of its country of origin, we implement the appropriate TS TECH has created mechanisms that allow relevant Category Content measures with a business partner if a questionable mineral departments to liaise with the department responsible for is found during an investigation. legal affairs and consult as needed with attorneys on events • Supply of products and services that satisfy * Conflict minerals: Tin, tantalum, tungsten, and gold are defined as con- that cannot be definitively decided based solely on the consumer and customer needs flict minerals, and they are collectively abbreviated as “3TG.” manual. Moreover, TS TECH provides proper, appropriate • Provision of appropriate information concern- 1. Safety and Quality ing products and services training on the Antimonopoly Act and the Subcontract Act • Guarantee of safe products and services Promotion of Environmental Initiatives in accordance with its stratified training programs to foster • Guarantee of quality products and services awareness of compliance among employees. Annual conference with major business partners TS TECH presents its business partners with targets for In March 2016, the Group issued new anti-corruption
• Elimination of discrimination lowering CO2 emissions to reduce environmental impact guidelines and anti-cartel guidelines as part of its continuing • Respect for human rights Supply Chain Surveys and works with these partners to achieve them. effort to build a solid framework for ensuring fair, honest • Prohibition of child labor We are also working with business partners to comply business operations across all Group operations. • Prohibition of forced labor To address procurement risks, the TS TECH Group works to with all laws and regulations concerning all materials and 2. Human Rights • Wages prevent all “events that impact production,” including natural components that comprise products, and to manage chem- and Labor • Labor hours disasters, fires, and financial challenges affecting its business ical substances to reduce impact on the global environment • Communication and negotiation with employees partners. The company considers procured components, and ecosystems. • Safe, healthy work environments etc., for which production is concentrated at a single supplier • Handling of conflict minerals to be “high-risk components” and is working with business partners to prepare for emergencies (natural disasters, etc.) • Environmental management and secure alternate suppliers. • Reduction of greenhouse gas emissions For business partners who are especially important to • Prevention of air, water, soil, and other forms us from a production reliability standpoint, we confirm infor- of environmental pollution 3. The Environment mation on risk countermeasures both in writing and through • Resource conservation and waste reduction interviews, and we work with partners who are experiencing • Management of chemical substances challenges to implement improvement activities. These steps Compliance education at rank-specific training • Protection of ecosystems are effective in strengthening our risk management structure and enhancing business continuity. • Compliance with laws and regulations • Compliance with competition laws comment • Prevention of corruption Business Partner Assessments Further Strengthening Relations as a Reliable Partner • Management and protection of confidential We started doing business with TS TECH in 1970, and we mainly supply urethane pads for seats 4. Compliance information In order to continuously supply high-quality products to our and seat wadding material laminated with film. With encouragement from TS TECH, we have also • Management of export transactions customers, we evaluate business partners once a year. We expanded our business not just in Japan but also in China and Brazil. • Protection of intellectual property assess them in terms of Quality, Cost, Delivery, Develop- As a reliable partner, we are committed to contributing to a mutually beneficial relationship, • Rejection of antisocial forces ment, and Management (QCDDM) to arrive at an evaluation operating under strict guidance in the areas of quality, development, on-site improvements, and of the total strength of each business partner. For business cost. With regard to our ESG initiatives, such as the resolution of social issues that we have been 5. Information • Disclosure of information to stakeholders partners that need improvement, we work to improve their working on since the company’s founding, we are determined to fulfill our role as a member of the Disclosure supply chain and respond in accordance with the TS TECH Supplier Sustainability Guidelines. overall capabilities with the cooperation of each department. Given that the aftereffects of COVID-19 are expected to be prolonged, it is likely that various post-COVID changes will also occur in the automotive industry. We will share challenges with TS Toshio Baba TECH and the Group will work together to resolve them with a sense of urgency. Representative Director, Managing Executive Officer Kurabo Industries Ltd.
32 TS TECH Report 2020 TS TECH Report 2020 33 Initiatives to Achieve ESG Management Section 2 Environmental Harmony with the Social Environment Initiatives That Help Make Us a Leading Environmental Company
ordinary buildings. The new building was certified as an make operations even more efficient through such means as energy-saving building and received a “Nearly ZEB”*1 rating analyzing monthly energy data and reflecting the results in the under the Building-Housing Energy-efficiency Labeling Sys- settings of equipment, including air conditioning and lighting. tem (BELS).*2 During its first year of operation, the actual an- nual primary energy consumption for the new building was ISO 50001 86.9% less than that of a standard building. It also earned the highest ranking of “S” in the Comprehensive Assess- ISO 50001 is an international standard for energy management ment System for Built Environment Efficiency (CASBEE),*3 systems (EnMS) published in June 2011. The standard is based which rates environmental performance. Additionally, an on- on the achievement of better energy performance, namely en- site digital signboard displays the building’s target values ergy conservation and energy cost reductions, through improve- and real-time usage information for electricity, gas, and wa- ments that use visualization of energy use and efficiency to ter, encouraging employees to be mindful of saving energy. eliminate unreasonable, inconsistent, and wasteful operations. *1 Certification rank Since the standard configurations of ISO 50001 and ISO ZEB: A building with zero or negative net annual primary energy 14001 are similar, organizations that have implemented ISO consumption Nearly ZEB: A building that comes as close as possible to ZEB by 14001 can incorporate ISO 50001 into their environmental man- nearing zero annual primary energy consumption agement systems and solidify an approach that emphasizes ZEB Ready: An advanced building with a ZEB focus that is fur- performance based on quantitative data as well as create syn- Received the Minister of Economy, nished with an exterior with superior insulation properties and high-efficiency energy-saving equipment ergies that stimulate an environmental management system. Trade and Industry Award (METI Minister’s Award) Selection for CDP A- Rating *2 Building-Housing Energy-efficiency Labeling ystemS (BELS): A system in the Energy Conservation Grand Prize Project in which a third party evaluates and certifies the energy-saving perfor- mance of new and existing buildings based on the Ministry of Land, ISO 50001 Initiatives Based on its outstanding GHG emission reduction efforts Infrastructure, Transport and Tourism’s guidelines for indicating the In the fiscal 2020 Energy Conservation Grand Prize project energy consumption performance of buildings organized by the Energy Conservation Center, Japan (ECCJ), and information disclosure initiatives, TS TECH was selected *3 Comprehensive Assessment System for Built Environment Efficiency TS TECH began its ISO 14001 initiatives in 1999, and it ob- TS TECH received its first METI Minister’s Award, the project’s as an A- company, which corresponds to leadership level, (CASBEE): A comprehensive evaluation system for building quality tained ISO 50001 certification at all of its sites in Japan in that not only takes into account environmental considerations such as top award, in recognition of its new Head Office building, a in the Climate Change Report 2019: Japan edition, a climate energy conservation and use of materials that have low environmental March 2019 in order to promote more efficient, faster reduc- *1 impact but also indoor comfort and scenery ZEB that also delivers economic efficiency. The Energy Con- change study published by NPO CDP, based in the U.K. tion activities amid a movement to reduce CO2 emissions Under our 13th Medium-Term Management Plan, we focused globally, exemplified by the Paris Agreement*4 and the SDGs*5. servation Grand Prize project recognizes outstanding initiatives Major Initiatives Leading to the Receipt of the Award for energy conservation at enterprises and on the “creation of a foundation for ESG management,” and We have created the Global EnMS Guideline, a compi- workplaces that serve as a model for others we worked on climate change countermeasures Group- The TS TECH project team and Takenaka Corporation (design lation of management techniques and TS TECH’s operational as well as products and business models with wide in terms of both capital investment and management. and construction) worked together from the outset to con- know-how, and we are deploying it throughout the Group, outstanding energy conservation features. Initiatives include upgrades to LEDs and air conditioning, sider an optimal combination of energy-saving technologies starting with our affiliates in the Americas and Japan. We will Following receipt of the prize, State Min- the incorporation of renewable energy, reconstruction of the with outstanding versatility and cost performance and to continue our commitment to implementing and consolidating ister of Economy, Trade and Industry Hideki Head Office building to save energy, and the introduction of balance comfort with energy-saving performance while ISO 50001 in collaboration with af- Makihara visited the Head Office in February ISO 50001. Going forward, we will continue expanding our achieving an economical ZEB without installing special filiates while taking into account dif- 2020 to get a firsthand look at the office’s environmental initiatives with the aim of contributing as a technologies or expensive equipment. As cost is one of the ferences in culture, approach, and ZEB features. Group to the realization of a issues of ZEB, this idea of “accessible ZEB” garnered high management level at each location. *1 ZEB (Zero Energy Building): A building that delivers significant energy sustainable society. praise and led to receipt of the award. savings while maintaining the quality of its indoor environment and is Outstanding energy savings that exceeded the target *4 Paris Agreement: A globally agreed upon long-term commitment to designed to achieve net zero energy consumption through the use of keep the increase in global average temperature well below 2 degrees renewable energy DISCLOSURE INSIGHT ACTION values at the time of design were also well received. Even Celsius above pre-industrial levels after the building’s completion, TS TECH and Takenaka have *5 SDG s (Sustainable Development Goals): A set of international goals for proceeded to work on continuous energy management to 2030 established by the United Nations for sustainable development
Overview of the New Head Office Building Voice The new Head Office building, completed in March 2018, is an environmentally and community-friendly structure As a result of developing Group-wide environmental initiatives in line with ESG management, TS that was built with highly-efficient operations and superior TECH received a range of positive external evaluations in fiscal 2020 such as the top award in the Energy Conservation Grand Prize project and a CDP A- rating. I feel that the sum of our individual hospitality in mind. In addition to a range of energy-saving initiatives resulted in these accolades. Individual initiatives include third-party verification of GHG equipment, such as a system to efficiently operate air con- emissions, the installation of LED lighting, a switch to high-efficiency air conditioning, the acquisi- ditioning and lighting using photovoltaic sensors and oper- tion and roll out of ISO 50001, and the completion of the new Head Office building. ating schedule programs, the new building maximizes the Nevertheless, I believe we have yet to achieve our goal. use of renewable energy through solar power generation, At the new Head Office building, which was recognized for high-level energy savings at a low reducing the volume of electricity purchased by around 40% cost, we are exploring further energy reduction measures such as improving air conditioning effi- ciency by circulating air between areas and optimizing lighting levels. In addition, we have only just compared to the old building, where we had been working Ikuo Kageura begun to deploy ISO 50001 management techniques throughout the Group. on energy conservation for some time. General Affairs Section, As a leading environmental company, TS TECH will continue to vigorously push forward with Administration Department The new building also incorporates the reuse of rain- various measures that focus on the three areas of low carbon, resource recycling, and social con- water for general service water and more on-site greening. tribution in order to contribute to a sustainable society. Photo by Shigeo Ogawa of Shigeo Ogawa Studio As a result, annual energy consumption was 78% less than
34 TS TECH Report 2020 TS TECH Report 2020 35 Initiatives to Achieve ESG Management Section 2 Environmental Harmony with the Social Environment Environmental Protection Efforts
Internal Environmental Audits Environmental Impact of Business Activities and Environmental Initiatives Basic Environmental Policy TS TECH has established an environmental and energy audit TS TECH identifies and strives to reduce Environmental Impact Domain Environmental Protection Efforts Policy program that consists of annual audits of each site. The au- the environmental impact of its business Global warming • Design products with a lighter weight and improved recyclability In the interest of protecting the global environment, Product dits take into account the environmental and energy impact activities in each region of the globe. • Do not use materials containing regulated chemicals Development the TS TECH Group will work to reduce the Resource depletion • Employ energy-saving and resource-saving equipment and of the sites and the results of past audits. These internal Technology environmental impact of all aspects of its corporate process design Ozone depletion activities, especially the production of interior audits examine measures to reduce environmental impact components for automobiles, and help create and energy consumption, the effect of these measures, Air pollution • Employ energy-saving and resource-saving manufacturing Manufacturing • Control and reduce the amount of volatile organic a sustainable society, aiming to be “a company compliance with regulations, and the status of the adminis- Water pollution Management compound (VOC) emissions into the atmosphere sincerely appreciated by all,” which is one of the • Promote proper disposal and recycling of industrial waste tration of ISO international standards, among other items. Soil pollution beliefs enshrined in the Group’s philosophy. We promote swift, proper correction of deficiencies and Purchasing • Improve distribution ef ciency Waste materials associated with business operations non-compliance items detected in audits, aiming to improve Reduce global environmental impact Distribution • Promote green purchasing Environmental Action Plan our environmental management. (1) Compliance with Legal and Other Requirements Strive to prevent environmental pollution and protect bio- diversity and ecosystems primarily through compliance Environmental Education Main Environmental Targets and Results in Fiscal 2020 and Targets for Fiscal 2021 with requirements, such as environmental laws and regu- lations and environmental standards, and proper chemical With the introduction of the ISO 50001 energy manage- Under the 13th Medium-Term Management Plan (fiscal 2018– Medium-Term Management Plan (fiscal 2021–fiscal 2023), management. ment system at our development and production sites in fiscal 2020), TS TECH engaged in emissions-reduction ini- we will add a Group target for water usage to the existing (2) Reduction of Environmental Impact fiscal 2019, the functions of the Environmental Experts tiatives and focused on reducing the level of CO2 emissions targets for CO2 and waste and promote these initiatives. Aim to mitigate the impacts of climate change and realize a *1 th sustainable recycling-based society by striving to save en- Committee, which had pursued CO2 reduction measures, and waste output per unit of production . Under the 14 ergy and resources through collaboration across the supply were transferred to our energy management team, which Environmental Targets and Achievements chain, based on life cycle assessments that cover all stages is fine-tuning energy management, analysis, and reduction in the product lifecycle, from development through sourcing, efforts to make them even more effective. Since 2015, we FY2020 FY2021 production, logistics, marketing, disposal, and reuse. Item have also been developing our own “energy-saving profes- Targets Measures Results Targets Measures (3) Continuous Improvement of Environmental Management sionals” by attending seminars organized by the ECCJ and • Shift to energy-saving production Endeavor to continuously improve environmental and energy • Shift to energy-saving production equipment strengthening our development of personnel who specialize Basic unit per vehicle equipment Basic unit per vehicle CO2 emissions reductions performance by setting environmental targets based on en- 2% lower than FY2018 1.6% lower than FY2018 935 t-CO2 lower than FY2020 • Promote a shift to LEDs *2 • Promote a shift to LEDs vironmental and energy management systems, and regularly in energy conservation at production sites. Learning not CO2 • Shift to energy-saving FY2018 performance: • Shift to energy-saving FY2020 performance: Basic unit per vehicle air conditioning reviewing them. Provide the information and management air conditioning only the basic concepts of energy conservation but also de- 0.0085 t-CO2/vehicle 0.0083 t-CO2/vehicle 1% lower than FY2020 • Introduction of renewable energy resources needed for such improvement and also work • Shift to hybrid company vehicles tailed facility management methods leads to opportunities • Shift to hybrid company vehicles toward the utilization of products and equipment that will improve energy efficiency. to create more efficient measures. We will continue with Basic unit per vehicle • Promote recycling Basic unit per vehicle • Promote recycling 3% lower than FY2019 • Reduce product defect rate 1.8% lower than FY2019 • Reduce product defect rate these types of environmental education initiatives moving Recycling rate Waste*2 • Reduce packaging materials 3% higher than FY2020 • Reduce packaging materials forward, using highly knowledgeable, experienced person- FY2019 performance: • Group-wide rollout of effective FY2020 performance: • Group-wide rollout of effective nel to convey initiatives throughout the entire Group. 0.00180 t/vehicle solutions via case studies 0.00177 t/vehicle solutions via case studies Basic unit per vehicle Initiatives to Strengthen Environmental Management Basic unit per vehicle Lower than FY2019 • Conserve water at all worksites 33% higher than FY2019 FY2020 • Conserve water at all worksites performance Water*3 • Inspect and repair water supply Maintain water intake level • Inspect water supply equipment Our Group is promoting environmental management system FY2020 performance: (Consolidated target) FY2019 performance: equipment for leakage for leakage 0.117 m3/vehicle ISO 14001 certification not just in Japan but at all of our fa- 0.088 m3/vehicle cilities around the world. We are united in our efforts to con- *1 “Per unit” figures are calculations performed according to TS TECH’s standards and indicate CO2 emissions, volume of waste generated, and water use relative to production tinuously reduce the burden on the environment. Seeking volume during business activities. *2 We are working to deploy reduction efforts at 38 locations (including some unconsolidated companies) selected using internal standards. additional measures to efficiently reduce CO2 emissions, TS *3 Water: Figures for FY2020 represent the results for TS TECH Co., Ltd. on a non-consolidated basis. TECH adopted the ISO 50001 energy management system at all of its sites in Japan in fiscal 2019 and obtained certifi- ISO 50001 seminar The TS TECH Group’s Environmental Data cation in March 2019. Going forward, we will continue with
efforts to bolster our environmental and energy manage- Compliance with Environment-Related Laws and Regulations Total日本 CO2 Emissions米州 中国 ア ジ ア・欧 州 Total日本 Waste 米州Output 中国 ア ジ ア・欧 州 Total日本 Water Usage米州 中国 ア ジ ア・欧 州
3 ment not only to reduce the burden on the environment but (t-CO2) (t) (m ) also to decrease costs by using resources more efficiently. Under our environmental and energy management systems, 00 000 94,250 93,631 0 000 00 000 84,297 TS TECH has prepared a list of legal and other requirements 0 000 16,489 15,44915,449 605,893 12,599 22,199 20,420 00 000 14,197 14,74514,745 20 000 3,029 18,423 529,535 at each site and reviews the laws and requirements that we 0 000 14,602 2,4532,453 143,005 480,814 1,241 1,4201,420 1,841 120,731120,731 must comply with at the beginning of each fiscal year. We 1,348 00 000 122,130 116,461 0 000 41,481 41,65541,655 115,885115,885 38,358 0 000 119,747 also evaluate the status of compliance every six months. In 15,524 200 000 192,153 20 000 13,77313,773 12,835 159,078159,078 105,278 fiscal 2020, there were no omissions of notifications under 22,084 21,78121,781 18,738 148,604 133,841133,841 139,329 relevant laws and regulations, deviations from mandatory 0 0 2,404 2,7742,774 2,399 0 FY2018 FY2019 FY2020 FY2018 FY2019 FY2020 FY2018 FY2019 FY2020 standards, or submissions of external complaints. Total CO2 Emissions from Reporting Sites Total Waste Output from Reporting Sites Total Water Usage from Reporting Sites Scope of data: Consolidated sites excluding TS TECH Scope of data: Consolidated sites excluding TS TECH Scope of data: Consolidated sites excluding TS TECH ASIAN CO., LTD. ASIAN CO., LTD. and TS TECH (HONG KONG) CO., LTD. ASIAN CO., LTD. and TS TECH (HONG KONG) CO., LTD.
Japan Americas China Asia and Europe
36 TS TECH Report 2020 TS TECH Report 2020 37 Initiatives to Achieve ESG Management Section 2 Environmental Harmony with the Social Environment
Environmental Protection Efforts
Efforts to Reduce Our Environmental Footprint a plant-wide framework that aims to automate work without Task Force on Climate-Related Financial Disclosures (TCFD) Installing Environmentally Friendly Equipment consuming energy. Development-Focused Measures In fiscal 2020, we exhibited three karakuri mechanisms Climate-related risks and opportunities will have a signifi- In line with international efforts to reduce the impact on the from the Saitama Plant at Japan’s Karakuri Kaizen Exhibition*2 cant financial impact on corporations over the medium to global environment, such as the regulations of the Minama- Efforts to Reduce Product Weight 2019, organized by the Japan Institute of Plant Maintenance, long term. ta Convention on Mercury and the CFC emission controls The TS TECH Group understands that reducing the weight and showcased examples of our in-house improvements to The TCFD is a task force established by the Financial set forth in the Montreal Protocol, we are moving forward of our products is one of the most effective ways in which scores of visitors. Stability Board at the request of the G20 in order to reduce with efforts to remove mercury lamps, switch from fluores- we can reduce our impact on the environment. For example, Since fiscal 2018, Karakuri Presentation Conferences the risk of financial market instability. The Task Force studied cent bulbs to LEDs, and replace equipment that uses R-22 our seat frames account for a large portion of the weight of have been held twice a year at the Saitama Plant to present methods of information disclosure that would enable finan- CFCs. We focused on implementing Group-wide efforts as our products, so we strive to apply weight-reducing tech- examples of successful in-house improvements. Starting in cial markets to properly evaluate climate-related risks and part of the 13th Medium-Term Management Plan that ran nologies wherever possible while further improving safety fiscal 2021, TS TECH will hold in-housekarakuri conventions opportunities, and it released its recommendations in a final from fiscal 2018 until fiscal 2020. As a result, on a non- and comfort in line with changes in specification needs. The in Japan as an effort to implement successful improve- report. The Task Force recommended the disclosure of infor- consolidated basis, TS TECH completely removed mercury next-generation seat frame installed in the new 2020 Honda ments at other sites and to encourage further activities. mation centered around the four elements of governance, lamps, switched to LEDs, and replaced air conditioners that Fit has reduced weight by about 28% compared our exist- *2 The Karakuri Kaizen Exhibition is held every year in Japan to showcase strategy, risk management, and metrics and targets as use R-22 CFCs. We are continuing to promote initiatives ing core frame*1 through increased use of ultra-high tensile improvements using karakuri mechanisms. these areas will help give investors an accurate understand- aimed at completing these changes for the entire Group as steel and thin-plate welding technology, thereby contributing ing of the financial implications of climate-related risks and soon as possible. to a significant reduction in the environmental impact of the opportunities when making decisions. car as a whole. The TS TECH Group recognizes that the risks and Green Ecosystem Conservation Activities We are also keeping an eye on the future, reviewing opportunities that climate change and climate change the use of aluminum and other materials and proceeding countermeasures bring about for the Group is an import- The TS TECH Group conducts forest and biodiversity pres- with research into technology that fuses different materials. ant management issue and began initiatives related to the ervation activities in regions around its business facilities in We are working to develop frames that will be the lightest recommendations from the TCFD in 2020. We will continue Japan and overseas. These efforts are driven by the concept in the world yet improve safety and comfort. The TS TECH working to enhance our disclosure of information based on of creating new green spaces from company grounds bor- Group will not simply use lighter materials; it will use the our ESG management approach. rowed from the earth for the TS TECH Group to conduct its optimal designs for those materials and conduct research business activities around the world and give greenery back and development via state-of-the-art facilities and CAE to Verification of GHG Emissions to the earth through environmental preservation activities. cut out even a single extra gram. TS TECH has participated in the Green Wave Move- *1 Core frame: TS TECH’s global standard seat frame has been used in a TS TECH has received third-party verification from SGS Ja- ment*1 annually since 2012. In 2016, the TS TECH Afforesta- wide range of vehicle models pan Inc. in order to ensure the reliability of environmental tion Program, an initiative undertaken by the Saitama Plant data disclosure. and TS TECH Head Office, received an Excellence Award at The scope of verificationuses data from fiscal 2019 for the 17th Saitama Environmental Excellence Awards*2. GHG emissions at TS TECH’s 10 production sites in Japan As of the end of fiscal 2020, TSTECH had exceeded its Saitama Plant Karakuri Presentation Conference and 28 sites outside of Japan and includes Scope 1 and 2 target to conduct forest and biodiversity preservation activ-
(CO2 emissions from energy) as well as Scope 3 Category 1 ities on an area of land worldwide equivalent to two million Fostering Social Sustainability (procurement of raw materials and components). m2 by 18%, but the company will continue with these activi- ties in and outside of Japan.
The TS TECH Group is focusing its efforts on reducing CO2 *1 Actions by groups and organizations that lead to an understanding or emissions with the aim of achieving a sustainable society. increased public awareness of biodiversity through contact with for- ests, trees, etc. However, the products handled by the Group contain a *2 Awards are bestowed upon individuals, organizations in the prefecture, great number of components from a wide range of suppli- and businesses that set an example through environmental initiatives to promote public environmental awareness and eco-friendly behavior. ers. Therefore, we make relevant calculations based on the Evolution of parts using ultra-high tensile steel (shown in blue) Scope 3*3 standard in order to encourage the entire supply chain, not just TS TECH, to undertake initiatives as a whole. Production-Focused Measures TS TECH is formulating long-term reduction targets for CO2 emissions in the spirit of the Paris Agreement and the With a policy to “build production plants that are sincerely SDGs. The company recognizes that continuing to grow welcomed by the local community,” environmental conser- its business while also making substantial reductions in
vation is a key component of our social responsibility and a CO2 emissions will be challenging, but it is determined to matter of great importance to our Manufacturing Division, address this problem in order to contribute to the planet’s which oversees our production plants. Accordingly, our sustainability.
Manufacturing Division aims to contribute to a recycling- *3 Scope 3: The amount of CO2 emissions produced indirectly by a busi- oriented society and promotes efforts to build “people- ness, such as in the supply chain friendly, environment-friendly production plants.” Through the use of Japan’s traditional karakuri mechanisms, we have been able to simultaneously save energy, reduce workloads, and improve production efficiency through the promotion of TS TECH Afforestation Program event
38 TS TECH Report 2020 TS TECH Report 2020 39 Initiatives to Achieve ESG Management Section 3 Social Diversity Management Creating Workplaces That Are Even More Employee Friendly
A Company Dedicated to Realizing People’s Potential in employment, and does not accept any form of child labor Workplaces Where Women Can Thrive — Part of the TS TECH Group Vision Statement or forced labor. We also conduct fair hiring practices in line with the TS TECH Philosophy. After hearing from a wide range of female employees, we As part of the corporate philosophy in which its business To foster a greater awareness of human rights, all introduced maternity uniforms and established an on-site activities are rooted, the TS TECH Group is dedicated to employees, including new hires, receive educational day care center. We have also created a child-rearing sup- realizing people’s potential, believing that “people are the training and a copy of the Corporate Principles Manual, port handbook and are working hard to ensure that TS TECH decisive factor in a company.” This conviction underpins which includes TS TECH’s Code of Conduct. Our Group is a company where everyone can thrive. our stance on a diverse range of issues, including human companies outside Japan base their own manuals on our The manual distributed to all employees In recognition of these efforts, we were certified in rights, human resource development, evaluation and treat- Corporate Principles Manual, tailoring them to reflect local 2015 by the Minister of Health, Labour and Welfare (Kurumin ment of personnel, benefits, and the workplace environ- culture, customs, and laws in each region. All overseas Certification) as a company that supports childcare based on ment. Under our corporate philosophy, we strive to create employees also receive training to foster a deeper under- Diversity Initiatives the Act on Advancement of Measures to Support Raising safe, comfortable environments where every employee standing of human rights. Next-Generation Children. In addition, we were certified in can thrive. The TS TECH Group recognizes the importance of diversity, 2016 by the Minister of Health, Labour and Welfare (highest- Human Rights Due Diligence and promotes various initiatives in accordance with TS level Eruboshi Certification) as a company with outstanding Fostering A Greater Awareness of Human Rights TECH’s Code of Conduct as a means to share this concept measures to promote participation by women in the work- In accordance with the UN Guiding Principles on Business with employees. In order to promote even more active roles place based on the Act on Promotion of Women’s Participa- Based on international standards such as the Universal Dec- and Human Rights, the TS TECH Group has established a for women, individuals with disabilities, and non-Japanese tion and Advancement in the Workplace. laration of Human Rights, the TS TECH Group has incorpo- risk verification framework to prevent or mitigate negative employees, in particular, we implement medium- to long- rated human rights and work environment standards into its societal impact with regard to human rights. term measures related to improving hiring and the work Code of Conduct. The Group respects human rights, does All affiliates participate in routine compliance and risk environment to ensure that gender, nationality, and other not practice discrimination, strives for equal opportunities verification measures conducted by TS TECH (the TSCG factors are no impediment to advancement. Our long-term self-verification system). The Group is also involved with goal is to expand these efforts to regions outside of Japan initiatives to reduce human rights risks. as well, tailoring them to suit each specific country. TS TECH’s Code of Conduct Items related to diversity have been added to the annu- Educating Employees Globally about al employee satisfaction survey, and our Human Resources 1. Providing safe, comfortable, and high-quality Department conducts interviews with our younger employ- products and services the TS Philosophy ees. TS TECH uses these and Tekuteku Kids Day Care, an on-site day care center 2. Human rights and work environment Since 2015, the TS TECH Group has provided TS TECH Phi- other measures to gather a full 3. Protection of the environment losophy Education through TS TECH Philosophy promoters range of opinions. Our diversity Kurumin Certification: May 2015 4. Relationship with society selected by Group companies outside Japan. Promoters training for management is an- We have been certified as a company that and the managers they train regularly provide educational other example of our initiatives 5. Compliance supports childcare and promotes measures opportunities to local staff to familiarize them with the TS to promote diversity. We are to support the development of next- 6. Protection of company assets and information TECH Philosophy. In line with our initial goals, we plan to working to develop environ- generation children. 7. Fair and clean business practices complete promoter training in fiscal 2021. We will continue ments in which our diverse 8. Proper disclosure of information to strengthen Group unity by sharing and establishing a pool of talented employees can common understanding (values) on a global level. make the most of their respec- Eruboshi Certification: October 2016 tive knowledge, experience, We have been certified as a company with outstanding implementation of measures and abilities in order to thrive in Hiring pamphlet about women to promote women’s participation in the the workplace. in the TS TECH workplace workplace. We received the highest rating of three stars. Initiatives for Hiring Persons with Disabilities
comment Diversity Generates Innovation In addition to regularly communicating with Hello Work*, Extension of Retirement Age (Elective retirement system) employment support centers, and special needs schools, I work at TS TECH AMERICAS, INC. (TSAM), the U.S. subsidiary that oversees TS TECH’s opera- we actively recruit persons with disabilities through partici- The TS TECH retirement age was extended to 65 in fiscal tions in North and South America. Since we operate in the U.S., which is home to people from all walks of life, we are a very diverse team of many different nationalities and ethnicities. We may in pation in job-hunting events for persons with disabilities. 2020. Prior to this, all employees were required to retire be- fact be the most diverse worksite within the TS TECH Group. As part of our employee retention efforts, we regularly tween the day they turned 60 years old and the end of that In the Americas region, we have focused on training based on the TS TECH Philosophy to conduct interviews with and surveys of employees with fiscal year. Under the new system, however, employees create a workplace environment of mutual respect where individuals can make full use of their disabilities. We also strive to create employee-friendly work- may choose their own retirement age between the day they th strengths. For example, under the 13 Medium-Term Management Plan, TSAM conducted gender places by acting on feedback about the issues our employ- turn 60 and the end of the fiscal year immediately after they sensitivity training for all Associates in the Americas to examine unconscious biases regarding ees face at work. turn 65 years old. gender and other personal attributes, as well as barriers to the advancement of women in the The change in the retirement system is intended to workplace. We are also looking into implementing a workplace mentoring program for Associates * An employment service operated by the Japanese government that Hiromi Lambert has offices nationwide who have a heightened awareness of career advancement following these training sessions. provide employees with opportunities to continue working Section Manager, Diversity generates new ideas and innovation and promotes corporate growth. We will con- Career Development as the population ages and the birthrate falls, as well as to tinue to work to improve the workplace environment and support each of our Associates at TSAM. TS TECH AMERICAS, INC. maintain business continuity by providing a time frame for veteran employees to pass on their skills and knowledge.
40 TS TECH Report 2020 TS TECH Report 2020 41 Initiatives to Achieve ESG Management Section 3 Social Diversity Management
Creating Workplaces That Are Even More Employee Friendly
Human Resources Development School, TS Camp, or TS Trainee programs. personal obligations. In addition, we extended our system Promoting Occupational Safety & Health In the future, we plan to introduce new forms of train- for shortened working hours for parents to cover children In addition to labor policies designed to ensure employees ing that use an online platform to meet the needs of diver- until they graduate elementary school. Our basic safety and health policy is based on a dedication can thrive in the workplace, TS TECH has also established sifying work styles and further improve efficiency. We are We also expanded our paid leave system to allow for to realizing people’s potential and prioritizing safety in our a system to help motivate and empower each employee to also reviewing our current training system and focusing on six days taken in half-day increments in April 2016. As a business activities. Under a management system led by achieve their individual goals. developing the next generation of management candidates. result of this and other efforts, TS TECH placed seventh in safety and health officers, TS TECH continually performs a We have created our own unique training system to a 2020 ranking by Toyo Keizai Inc. of the 300 companies in plan–do–check–act (PDCA) cycle in accordance with its oc- cultivate human resources based on two types of training: Work–Life Balance Japan with the highest rate of paid leave use. cupational safety and health management system (OSHMS) Rank-Specific Training that is tailored to years of service or In addition to the measures above, we have also es- to achieve three goals: injury prevention, better employee position, including Mid-Level Training (Fifth-Year Training for TS TECH has established a system that enables employees tablished a childcare and nursing care leave system and health, and a more comfortable workplace environment. Employees) and New Manager Training; and Selective Train- to balance work and family life and adopt a variety of work are working to diversify work styles and raise awareness Specific initiatives include risk assessment,kik en yochi ing, where employees styles to suit their particular stage of life. of a work–life balance. training (KYT; hazard prediction training) and hiyari-hatto who are selected by the In fiscal 2019, as part of our efforts to accommodate (near-miss reporting) activities*, which we conduct at all company or nominate a diverse range of work styles, we introduced a flextime Fair Assessment of Personnel business sites. We take countermeasures like these in themselves are placed system with no core time. Promoting flexible, varied work anticipation of potential workplace risks as part of our ef- into courses, such as styles makes it possible to improve work productivity TS TECH Group personnel assessments do not take factors forts to prevent work-related accidents. We have also held the TS Executive Busi- through efficient time allocation and helps support employ- such as age, educational background, or gender into ac- training sessions led by lecturers from the Japan Industrial ness Management Online new employee training ees balancing work with childcare, nursing care, or other count. Safety and Health Association annually since 2007, helping In Japan, for example, we have adopted a system to enhance the skills of risk management advocates (safety Education and Training Programs for evaluating how well an employee “demonstrates and officers, production site managers, etc.). Self- applies their abilities compared with what is expected In addition to the stress checks prescribed by Japan’s Rank-Speci c Selective Dispatch By Age Development of them.” With a precise understanding of the skills and Industrial Safety and Health Act, we focus on employee TS Executive Business Management School accomplishments of our individual employees and com- health through a system that includes affiliations with men- Third-Year pensation provided through salary, rank, and other forms tal health specialists to ensure that employees who are con- Management Training Training
New Line of remuneration, we are able to motivate employees and cerned about mental health issues can work with company Managerial New Manager Training Top Management Top Manager Training encourage them to fully demonstrate their abilities and take staff to promptly receive care from outside specialists. We on new challenges. We also incorporate elements of the TS also regularly conduct internal seminars and other programs Management TS Camp Assessment TECH Philosophy into our assessments in order to encourage to promote a proper understanding of mental health. Since Training the behavior and practices we expect from our employees. fiscal 2020, influenza vacci-
Management Training In addition, employees receive feedback from superiors at nations have been provided
Preparation Training Pre-Appraiser
Life Plan Seminars least twice a year regarding work performance and the ac- on-site to interested employ- Career Design Training Correspondence Courses quisition and demonstration of skills in order to make them ees. By subsidizing the cost, Mid-Level Training
Training Prior to Overseas Postings Training aware of their performance and encourage growth. we promote individual risk Non-Managerial Second-Year Training for New Employees management and help to TS Trainee Program TS Trainee Career Development Training prevent the spread of infec- New Employee Training Communicating with Employees tion within the company. Training session Conducting Employee Satisfaction Surveys *Hiyari-hatto (near-miss reporting) activities: Safety-minded activities regarding incidents in which no accident actually occurred, but involved parties report the near-misses; from the Japanese hiyari (feeling a sud- We conduct an employee satisfaction survey annually den chill) and hatto (having one’s breath taken away). at TS TECH. The survey assesses job satisfaction, work- comment Taking an Interest in All Things Leads to an Even Better Workplace Group-Wide OSHMS Diagram place atmosphere, the depth of education provided, inter- I first thought about childcare leave when my wife became pregnant with twins. When we decid- organizational communication, and more. Through these Officer in Charge of OSH Corporate Administration Division Exec. ed that she would be at home after giving birth rather than staying at her parents’ house, as is the surveys, we gauge levels of satisfaction with the company OSH Council Division in custom in Japan, I knew that I needed to be at home, too! OSH Officer from a broad, diverse range of perspectives. Chair: Corporate Charge of OSH The first thing I did to prepare for my leave was to talk with my co-workers. Thanks to the Council We believe that continuing to survey employees, iden- Administration Division Exec. Administration Dept. understanding and cooperation of my supervisors and colleagues, I was able to seamlessly hand tify issues, and make improvements helps to bolster em- over my work to them. I am very grateful for their help. Regional Plant managers/Admin. General safety and ployee motivation and organizational strength. committees After the twins were born, the burden on my wife was much greater than I had imagined, so I division managers health officer was really happy that we were able to tackle challenges together. By changing diapers and bathing (General safety and delegation the babies, which I had to learn how to do, I was able to really experience how they grew. I will health officers) Talking with the Union always cherish this time spent together. Safety and Toshiaki Kitajima health departments Although it is common for women to take maternity leave at our company, men are still un- Manufacturing Section 1, The company respects basic labor rights and regularly Admin. division managers familiar with the concept. Many do not know much about the system. That was true for me, too, Production Department, communicates and consults with the TS TECH Workers’ and I had to do a lot of research before I took childcare leave. I think if more people, both men and Saitama Plant Safety officers women, were to become familiar with this system and not regard it as something that has nothing Union in a mutual effort to improve labor conditions and Health officers Safety and Occupational physicians to do with them, we could create even better workplace environments. This is another reason why the workplace environment, and to promote a better work– Health Committee Fire safety officers I want to share my experience with everyone. Safe driving officers life balance. Organizational structure
42 TS TECH Report 2020 TS TECH Report 2020 43 Initiatives to Achieve ESG Management Section 3 Social Philanthropy
Based on our Vision Statement of being a com- Stockholders/ Business Society/ Natural Customers Employees pany “dedicated to realizing people’s potential” Sta eholders investors partners communities environment China and “sincerely appreciated by all,” the TS TECH o t pro ot o o t t e Group strives to be a community-based compa- Cultural exchange with the elderly Departments Asia and ny. It engages in philanthropic activities tailored conducting social Japan Americas China Subsidiaries in the China segment hold regular visits with senior citizens living in nearby areas Europe to regional characteristics around the world contribution activities and provide financial assistance to nursing homes in local communities. through means such as providing support for chil- S r o o o or t o GUANGZHOU TECH INTERIOR TRIM MANUFACTURING CO., LTD. and TS TECH (HONG dren’s education, teaching traffic safety, perform- Department in charge KONG) CO., LTD. collaborated with local food banks and visited local senior citizens to make of oversight of Group General Affairs Section, Administrative Dept., Corporate Administration Div., Head Office ing relief work, and protecting the environment. company activities Japanese-style bento lunch boxes with them. This event gave the seniors the opportunity to The implementation of these activities is experience and enjoy Japanese bento culture and deepened the connections between the el- S r o o o or t o shared with and documented by the Head Office derly and our employees. Department in in Japan, and this information is used to coordi- charge of releasing Public Relations Section, Administration Dept., Corporate Administration Div., Head Office nate and collaborate among our locations around activity reports Donations to low-income households the world. Segment locations routinely donate books and daily necessities to students from low-income We will continue to strive to implement Number of Fiscal 2020 Philanthropic Activities families. unique activities that make the most of the Japan Americas China Asia and Europe Consolidated In cooperation with a local volunteer organization, employees from GUANGZHOU TSK Group’s resources. AUTO PARTS CO., LTD. visited needy families in the region, donating rice, other food, and daily 74 152 26 33 285 Note: Activities reported here generally took place be- necessities to help these families get by. tween April 1, 2019 and March 31, 2020. However, some activities were conducted after this time frame.
Japan Asia and Europe
Future Creation University for Children in Tochigi Collection and distribution of food (Germany) TS TECH held an interactive workshop for children in the Tochigi district in collaboration with TS TECH Deutschland GmbH participated in a food drive/distribution program organized by the Future Creation University for Children in Tochigi sponsored by the Tochigi Prefectural Board a local welfare organization. In addition to sorting food donated by local grocery stores and of Education. During the workshop, the children thought about and discussed the human im- other volunteers and distributing the food to those in need, employees also raised funds in pact of car accidents. The workshop concluded with an up-close simulation of a car crash to the workplace. raise the children’s awareness of traffic safety and deepen their understanding of the safety functions of automobile seats. Donation of a water dispenser with purifier (India) TS TECH SUN RAJASTHAN PRIVATE LIMITED held a lecture on health and hygiene at a local Donation of original cushions public school. The company also donated a water dispenser equipped with a water purification As part of its efforts to give back to the community, KYUSYU T∙S CO., LTD. donates cushions system to ensure that the children have safe water to drink. to local facilities annually. In 2019, the company donated original cushions to the central library in Kikuchi City, Kumamoto, where KYUSYU T∙S is located.
Americas Donation of Original Masks to Help Prevent the Spread of COVID-19 Toy donation TS TECH’s subsidiaries in the Americas regularly donate items such as toys and school supplies We believe that, in addition to philanthropic activities tailored to the characteristics of each region, it is important to uti- to children. lize TS TECH Group resources to meet the needs of the times. In fiscal 2021, in response to the COVID-19 pandemic, TST NA TRIM, LLC. purchased toys to be donated to a local children’s hospital with funds we created original masks using our seat sewing technology and donated them to the communities where our opera- raised by employees. Some of the toys were distributed as Christmas gifts to children in the tions are located. hospital, while others were added to the hospital’s play area for visiting children.
Workplace tours for employees’ children As part of the company’s philanthropic activities, TRIMONT MFG. INC. held an event for children of employees in grade nine. Through a tour of their parents’ workplace and hands-on activities, the event provided the children with an opportunity for a variety of experiences, including games that focused on improvements and the 5Ss*, as well as a workshop corner for building a small chair. Lincoln, Nebraska, U.S.A. Ouro Fino, Minas Gerais, Brazil Kikuchi City, 5S: A workplace organization method comprised of the five elements ofseiri (tidiness), seiton (orderliness), seiso Kumamoto, Japan (cleanliness), seiketsu (cleanliness standards), and shitsuke (discipline)
44 TS TECH Report 2020 TS TECH Report 2020 45 TS TECH’s Products Original Value Creation Story
Working to help build a sustainable world At the TS TECH Group, we offer products that are appreci- For nearly 60 years, the TS TECH Group has been involved with the development and manufacture of ated by all due to their safety, environmental performance, Safety seats and interior components for automobiles, seats and resin-based parts for motorcycles, and more. and attractiveness, and we work together as an entire We offer a wide range of products related to seating that makes the most of our strengths, which include Vision Group to create value that contributes to a sustainable so- Environmental statement Social contribution conservation efforts A company dedicated to activities a wealth of techniques and specialized knowledge acquired over the years, a global network that spans realizing people’s potential ciety. Here, we introduce the TS TECH value creation story, A company sincerely 14 countries around the world, and a highly efficient manufacturing process that takes advantage of appreciated by all from the mass-produced products we deliver to customers Environment Attractiveness regional characteristics. Manufacturing to the new products we are developing for the future. process
Seats for the Honda Fit Main Products for Automobiles Comfortable seats that give all Fit passengers a pleasant ride The Honda Fit revolutionized the compact car segment with practical features such as a spacious cabin interior and a multitude of possible seat arrangements, as well as excellent fuel economy. A full model change led to the creation of a completely redesigned seat. As compact cars are used for everything from er- rands around town to longer journeys, the new Fit seats are designed to provide Rear seat enhanced comfort in addition to usability.
POINT! Seats so comfortable you feel the difference the moment you sit down
Mid seat The Honda Fit features a next-generation seat frame that Next-generation seat frame Improvements to the front seat frame had been developed with an eye to providing comfort when One of the lightest Change from a spring structure to a surface seated, and was intended for installation in high-end models. designs in the world support structure (Based on in-house re- Previous New To ensure that the seats in the newest Fit model firmly sup- search of mass-produced model model Honda Step WGN seat port passengers’ bodies yet gently cradle them, the surface seat frames in compact and larger vehicle size Front seat support structure in the seat comprises a suspension mat classes) that uses a resin plate developed together with our customer, instead of the springs used in conventional seat structures. Unlike a spring structure that uses “lines” for support, the seatback and seat bottom are outfitted with suspension mat “boards” that firmly support passengers from their spine The seats are also much lighter in weight, which is essential for improving fuel efficiency. down to their lumbar and pelvic regions. The result is a seat By designing the frame to be as lightweight as possible through means such as the use of strong, lightweight materials, the resulting front seat frame is approximately 28% lighter that not only feels great to sit in but also helps to prevent fa- * Door trim than our standard core frame . tigue when driving long distances. * TS TECH’s global standard seat frame is used in a wide range of models.
POINT! Multiple variations, all with a superb, high-quality finish
The new Fit is available in five different trims to suit a range of lifestyles. By designing two primary seat Honda NSX seat Honda Elysion seat Honda Civic specifications—fabric and genuine leather—and using a range of “universal” parts, it not only becomes Note: Model for the Chinese market Type R seat possible to efficiently produce a wide selection of seat variations but also to keep development costs Home specification down. In addition, as the thickness of the genuine leather used is inherently uneven and differs from batch to batch, simply aligning stitching with the shape of the seat can cause the stitching to become loose or wrinkled. We utilized TS TECH know-how related to the creation of aesthetically pleasing products to avoid this problem through means such as applying a special process to the backside of the leather, or adjusting Main Products Main Types of the firmness or thickness on the cushion side to create uniformity. Luxe specification Meter panel Luggage box Seats for for Motorcycles Seat multipurpose Other Products off-road vehicles comment The Seats’ Firm Support Is Indicative of Their Evolution
The newest Fit is a model that is popular with people of all ages for its spacious interior, great fuel economy, and nimble, user-friendly drivability. Many customers (end users) consider good ride comfort an important feature, and we have heard from so many people that they also love the waterproof finish and the large range of seat choices that are available. When owners of the pre- vious model of the Fit take a seat in the new model, they comment on how completely different Rear fender the new seats feel from the previous ones. I, too, was amazed that the seats were so comfortable that they give users the sensation of being cradled, and I felt that these comfortable seats would Floor step Mitsumasa Uemura Radiator cover help me to avoid fatigue when driving for long hours. I can recommend this product to customers Honda Cars Utsunomiya-kita Front fender with confidence. Seats for personal watercraft Takanezawa Dealership Chairs for medical use
46 TS TECH Report 2020 TS TECH Report 2020 47 Aisareru Seat®
An amazing seat with the power to make anyone smile once they experience it for themselves
The Aisareru Seat combines the automobile seat technologies cultivated over many years by TS TECH with the IoT to sense the movements of the person seated. It provides new forms of entertainment by using the seat as a controller linked with apps. By changing the app used, the seat can be used in a wide range of scenarios including sports, healthcare, and events.
Scene from a Yuru Sports Land event “Kankyuso” Hiroyuki Kaku Tomohiro Sawada 2019 marked the fourth installment A virtual player runs based on the movements of a seated of the event and provided a forum person. There are races requiring both slow and fast move- Aisareru Seat Representative Director for people to experience more than ments, with a “slow course” where the seated players must Development Project Leader World Yuru Sports Association 20 types of yuru sports provided not move their bodies and a “fast course” where players through World Yuru Sports. must vigorously move their bodies.
Discussion to bear in mind is that you don’t get persons with disabilities. I remember it can be divided into that which is to the heart of essential issues simply going up to introduce myself right after place-dependent and that which is not. World Yuru Sports Association × Aisareru Seat by interviewing people who are not his lecture ended. I would say that the more unforgetta- good at sports because they may feel Sawada: Mr. Kaku spoke with tremen- ble experiences that remain so deeply TS TECH and the World Yuru Sports Association (World Yuru Sports) worked together to develop and defensive talking about such things. So dous enthusiasm as he showed me an etched in our memories are ones that launch “Kankyuso” (Slow/Fast Running)*1 in May 2019 as a new type of “yuru sports”*2 that anyone we worked to befriend such people. introductory video, telling me that he are place-dependent. In that sense, can enjoy sitting down using the Aisareru Seat, which combines seat technologies with the IoT. By working closely with them to devel- was starting to think about sports- as the Aisareru Seat itself is a place, op content, it was possible to identify related content using the Aisareru “Kankyuso” can become a more mem- Tomohiro Sawada, Representative Director of the World Yuru Sports Association, and Hiroyuki Kaku, unique challenges and create unique Seat. His enthusiasm was infectious, orable type of experience. In what kind the Aisareru Seat Project Leader, provided some background to and their thoughts on the development output (sports). so we continued our discussions, and of places would you like to use the of the new type of yuru sports. Kaku: So in the case of “Kankyuso,” when I got to try the Aisareru Seat at Aisareru Seat, Mr. Kaku? *1 Kankyuso: A new type of World Yuru Sports Association event developed together with the World Yuru Sports Association that can be played sitting the involvement of “Beyond Girls,” a the start of 2019, I really felt that this Kaku: I think it would be interesting to down. The Aisareru Seat is used as a controller, and users compete by shifting their center of gravity to move a virtual runner on a screen. *2 Yuru sports: Sports that anyone can enjoy in a fun, easygoing manner, regardless of age, gender, athletic ability, or physical ability dynamic trio of women in wheelchairs, could provide a new experience. see people sitting in a car or on a train was vital, wasn’t it? Kaku: The period from that point until enjoying themselves in an Aisareru Seat. Sawada: Absolutely. The three women May, when we unveiled “Kankyuso,” Sawada: I think cars may be a surpris- Aisareru Seat Concept in a vehicle from simply “moving” to of sardines, and they could be gobbled helped us in our trials for “Kankyuso” was one where we were able to over- ingly good option. Today, when we’re “enjoying,” then we could change the up by whales like Google or Tesla. I get and assisted us in fine-tuning it so it come all the barriers that we had found all sitting in a car, each of us is fiddling Kaku: My initial thought was that I meaning of “sitting,” which would be a the feeling that we are both small fish, would be easy to use for women in ourselves up against. Our encounter with our smartphones separately, mak- wanted people to use our seats for true example of innovation! However, swimming away from the main school wheelchairs. We then let everyone at with Mr. Sawada and the World Yuru ing it difficult to maximize the value of years to come, so, therefore, we must there was initially a tepid response to and starting to head out together into Yuru Sports Land 2019 try it out. Devel- Sports community enabled us to bring the cabin space as a communication ensure our seats become a “well- this idea, with people thinking that it the great blue sea. opment of “Kankyuso” really started in perspectives and ideas that we tool that builds human relationships. loved presence” (Aisareru means “to would be difficult to evaluate. with these three women, so it means didn’t have ourselves. So, for example, if you had the “Kanky- be loved” in Japanese) in which people Sawada: If we could change people’s The Concept of Yuru Sports that everyone can get a good result in uso” game in the car, you might get want to sit. That was the inspiration views, that would be the greatest this sport. The Future of the Aisareru Seat the value of everyone looking in the for the name Aisareru Seat and the compliment, wouldn’t it? I think that Sawada: I’m not very good at sports, same direction. It could create a situa- starting point for developing the seat it’s important to steer away from the but when Tokyo was awarded the 2020 How the Joint Development of Kaku: Looking to the future, our aim tion where everyone in the car is laugh- system. Beginning with the concept mainstream when creating something. Olympic and Paralympic Games in “Kankyuso” Began is to increase the amount of socially ing loudly, even though there might be of “enjoyment,” we sought to add new What’s popular in the sports industry 2013, I decided to come up with some- meaningful things we do and for the a frustrating traffic jam outside. value to the experience of sitting. The right now is the use of the latest tech- thing that would allow people to enjoy Kaku: It all started in the autumn of Aisareru Seat to become a technology- Kaku: That would be brilliant. Linking trend in the automotive industry is to nology to expand spectatorship, but I sports. In 2015, I founded the World 2018, when I was in the process of nurturing platform in the midst of the people together—that is truly the vi- propose such things as being able to feel like everyone is simply moving in Yuru Sports Association based on the developing the Aisareru Seat, and I community that has been created. If sion of the Aisareru Seat. sit back and watch a movie or work in the same direction. “Yuru sports” is concept of “creating a world where happened to hear a lecture by Mr. the concept of “enjoying sitting” be- the cabin of a self-driving vehicle, but based on the belief that if you are go- no one is disadvantaged at sport.” Sawada. At the time, I was thinking comes widespread, more people will the value of “sitting” has not really ing to use technology, then it’s better Our starting point for thinking about that we needed a new community want to use the seat, which will inev- In August 2020, we unveiled our sec- changed. We are, of course, research- to use it to create a new sport, so you sports that everyone can enjoy was different from the automotive industry itably lead to business opportunities. ond type of yuru sports, “Bobisleigh,” ing such things in-house, but the basic can say that we’re also outside of in- the people who are not good at sports, to further promote the Aisareru Seat, What we are trying to do is increase which enables people with visual meaning of “sitting” itself has not dustry trends and the mainstream. For and we sought to develop ideas with and this sparked my interest in Mr. new content that goes beyond the au- impairments to have fun together us- changed. We discussed the fact that if better or worse, our competitors are all the aim of creating sports that these Sawada’s work on fashion shows and tomotive domain. ing the Aisareru Seat. Stay tuned for we could change the image of sitting swimming together like a great school people can take part in. The key point productions from the perspective of Sawada: When thinking of content, further news in the future.
48 TS TECH Report 2020 TS TECH Report 2020 49 and vibrates as needed to keep that person alert. A variety of other features Masao Eriguchi were carefully selected for inclusion Deputy General Manager in INNOVAGE. Business Strategy Department Although we ended up not install- AI Robotics Group ing it in the INNOVAGE interior, we Sony Corporation also have a seat known as the Exer- Ride Seat, which is an evolved form Shin Takanashi of the Aibou Seat. When in a relatively Project Manager stable driving environment, the part of SC Project the seat cushion that is in contact with Business Strategy Department Takahiro Kobori AI Robotics Group the pelvis moves, allowing the rider Director, Corporate Develop- Sony Corporation to replace driving time with exercise ment and Engineering Division Executive General Manager time. In today’s lifestyle, many of us TS TECH Co., Ltd. don’t get the ideal amount of exercise, but these seats can help people to burn calories during driving time. Eriguchi: Fixing a lack of exercise by driving? If these seats could actually be installed in vehicles, more people A seat you can exercise in? Also, although the INNOVAGE*2 would probably get into their cars to do New possibilities through cabin interior has a steering wheel, I some exercise! advanced technologies think it would be even more interest- Kobori: One of the keywords in the Discussion ing if you could take out the steering concept plan for INNOVAGE was What was it like to experience wheel and allow people to control the “health.” It would be great if you could Sony × TS TECH the Aisareru Seat*2? INNOVAGE interior from the comfort of not only manage your health with sen- an Aisareru Seat. sors to monitor breathing and heart What Are the Future Needs for an Automobile’s Interior Space? Takanashi: It was a lot of fun. It’s so Kobori: A fusion of INNOVAGE and the rate but also address a lack of exercise innovative to be able to use the seat Aisareru Seat certainly sounds inter- and get healthy just by sitting down. In April 2020, level 3*1 self-driving vehicles were permitted on the roads in Japan for the first time, as a controller. If you shift your center esting. Incidentally, the seats installed In addition to meeting needs related giving a real sense of the arrival of a society with autonomous driving. Automated driving systems of gravity to the right, your virtual play- in INNOVAGE are also filled with to the advent of CASE (Connected, will change the way we move around as well as the value demanded of cars, so if travel time can be er turns to the right, and if you move TS TECH technology. Autonomous, Shared, Electric) vehicles, to the middle, it goes straight ahead. The INNOVAGE seats are based we also want to give value to “sitting” made into an enjoyable experience, it could become a source of great added value. Masao Eriguchi You can move forward or backward, on the Aibou Seat, which acts as a kind and transform travel from simply be- and Shin Takanashi of Sony Corporation, who have made proposals to turn “necessary movement” right or left while remaining seated the of partner for the driver. The Aibou Seat ing a period that you spend getting to into “enjoyable movement” by combining entertainment and automated driving, and Takahiro Kobori, whole time. I thought that if we could senses the physique and posture of your destination into a time that takes Executive General Manager of the Corporate Development and Engineering Division at TS TECH, dis- create a new UI*3 that enables you to the person sitting in it and automatical- on a new meaning through the use of cussed their ideas on and approaches to a car’s interior space in the age of automated driving. move around depending on the way ly adjusts accordingly to a comfortable seat technology. you sit, it would really change the way driving position. It has one function to we think about a vehicle’s cabin space. adjust to an ideal posture for a driver, *1 Level 3: A standard for automated driving technologies formulated by the Society of Automotive Engineers (SAE) *2 See next page International of the U.S., comprising six levels from 0 through to 5. Level 3 driving automation is classified as It would be interesting to try out these and another that determines whether *3 UI (User Interface): The connection point “conditional automation,” where “an automated driving system operates all aspects of the driving task in specific *2 between users and products or services situations, with the expectation that the human driver will intervene in emergency situations.” seats in the SC-1. the person sitting in the seat is drowsy
50 TS TECH Report 2020 TS TECH Report 2020 51 It looks like this could transform interior manufacturers could become the entire concept of automobile able to make seats that are both com- seats, doesn’t it? fortable and also look good. TS TECH’s INNOVAGE and Aisareru Seat Eriguchi: In terms of automated driv- Providing new value for seating Kobori: Protecting lives is the top ing, the SC-1 has sensors in all direc- priority for automobiles, and TS TECH tions so it won’t veer off course while INNOVAGE Aisareru Seat has continued to provide products that driving, but it does occasionally make Designed with the advent of CASE vehicles in mind, IN- A seat system that combines automobile seat technolo- comply with the laws and regulations an emergency stop even at speeds of 3 NOVAGE is a fusion of TS TECH’s advanced sensing, com- gies with the IoT. Sensors housed inside the seat detect of each country, as well as the dura- km/h. Even in a fully automated vehicle, fort, seat arrangement, and other technologies. INNOVAGE the movements of the person sitting in it to provide new bility and comfort standards unique I feel that it will still be necessary to bal- automatically adjusts the seat position and firmness ac- forms of enjoyment using the seat. By linking with various cording to the physique of the person seated to disperse applications, the seat can also be utilized in a wide range to each auto manufacturer. Today’s ance both safety—with seats that keep body pressure and deliver customized comfortable seating. of activities so that anyone, regardless of age or physical vehicles ensure safety through the de- riders safe in the event of emergency Featuring automatic air conditioning and lighting control condition, can enjoy sports and recreation while seated. signs of their chassis and seats. If fully stops—and entertainment. I think this functions, INNOVAGE also enables the driver to select automated driving becomes a reality in will really prove to be valuable. from nine different seat arrangements to meet their needs, the future, and if cars are no longer in Kobori: Yes, it is likely to be a long if you have a comfortable seat and fun such as getting in and out of the vehicle, driving, or com- any danger of crashing, conventional time before collision-free driving be- entertainment, you can turn that plane municating with others. notions may be dramatically altered. comes a reality in society as a whole, ride or any other situation, even an irri- It could mean that not only dedicated so I think our biggest challenge will be tating traffic jam, into a fun time and a seat manufacturers but also home how to maximize a car’s safety while fun place to be. also providing an interior space with a Kobori: The INNOVAGE concept in- reasonable amount of freedom. cludes the key phrase “making time,” and we are thinking about how to transform the interior space of a car The changing meaning of from one that has, until now, just been travel time for the purpose of movement, and give that time spent on the move new Given changing expectations and meaning and value. values related to mobility, Eriguchi: That’s a similar idea to the what kind of concepts SC-1, a vehicle that actually dares to do you think will be required? travel at a slower speed than normal. This is based on the idea that even if Eriguchi: For example, long journeys by the speed is as slow as walking, if the are comfortable, you’ll feel like you’ve up a track record and gained a reputa- Takanashi: I sense some real possi- plane can be very draining. However, content during the ride is fun and you reached a distant place in no time at tion for unmanned automated driving, bilities here because if the SC-1 itself all. Our aim with the SC-1 is to provide we now want to create even more could be driven using the Aisareru movement that makes people forget appealing content. What I would like to Seat, this would mean that we could about time. do someday is create a concept that build cars that can be operated by any- is completely different from current one, regardless of their physical health. What are your future plans and norms, where the ride to your destina- It would be good to think a little more goals for your products? tion is free—in other words, the phys- about how we can use the SC-1 and Sony’s SC-1 ical movement is free—and revenue the Aisareru Seat to assist society. Kobori: Until now, cars have never is instead generated from the content Kobori: I agree completely. I felt that Transforming mobility into an entertainment experience really been personalized because that is used in the cabin space. the goal of bringing smiles to people’s The SC-1 is a low-speed entertainment vehicle that com- they are industrial products that are faces during their travel time was com- bines Sony’s imaging technologies with Yamaha Motor Co., mass produced in the same way from mon ground for us. What I want to do Ltd.’s automated driving technology. The concept of the ve- a productivity standpoint. One of my now is move beyond the confines of hicle is “smartphone-driven,” and the idea behind develop- dreams is to provide the best possible automobiles and consider how we can ment was to see what would happen if mobility functions solutions to specific requests for seat develop problem-solving applications were added to smartphones, just like the proliferation of functions so that new value in the for facets of communities like schools, camera and payment functions that have continued to in- crease on mobile devices. cabin interior also becomes a factor for hospitals, and nursing facilities to pro- The SC-1 is capable of automated driving via the electro- consideration when people purchase a vide new value, joy, and fun to society. magnetic induction method. The windshield is not a window, vehicle. but a monitor that displays external images taken by the on- Eriguchi: Collaborations with univer- board camera and superimposes CG on the actual scenery. sity researchers and experts from dif- Pilot tests for payable services using this technology are ferent industries have resulted in novel underway, including “moonlight cruises” that are offered as a night-time tourist attraction on hotel grounds or at golf clubs. ideas that we would never have come up with on our own. Since we’ve built
52 TS TECH Report 2020 TS TECH Report 2020 53 Fact Book The TS TECH Group’s Business Operations
Contents
55 The TS TECH Group’s Business Operations
Financial Reporting We will strengthen business management 57 Management’s Discussion and Analysis to increase capital and asset efficiency and 58 Consolidated Statement of Financial Position enhance corporate value. 60 Consolidated Statements of Profit or Loss and Comprehensive Income
62 Consolidated Statement of Changes in Equity
63 Consolidated Statement of Cash Flows Atsushi Igaki Managing Director, 65 Notes to Consolidated Financial Statements Corporate Business Administration Division Executive General Manager 109 Independent Auditor’s Report
112 Financial Highlights
113 Non-Financial Highlights
114 Financial Information Responding to Risks with a Global Cash Management System 115 Non-Financial Information As the TS TECH Group operates globally (79 locations in 14 in the Americas and Asia and Europe segments. However, 119 Corporate Data countries), we have formulated “safe funding guidelines” that we have been able to manage the situation using cash on take into account risks in each region, country, and location hand in line with the “safe funding guidelines,” which have so as not to affect the production activities of our customers. been implemented throughout the Group. At present, none We have also developed a cash management system that of our locations are experiencing any cash management ensures reserve capital is retained at all times and facilitates issues. We believe this is the result of prioritizing business flexible procurement of funds in an emergency. continuity and financial stability based on a sound financial As a result of government-directed restrictions on op- foundation (interest-bearing debt ratio of 0.03% in fiscal erations due to the COVID-19 pandemic, the Group’s pro- 2020) supported by high profitability. duction plants suspended operations first in China and then
Initiatives Under the 14th Medium-Term Management Plan
Under the 13th Medium-Term Management Plan, the Group Medium-Term Management Plan, the company will strive to established “Use of financial strategies to support business enhance corporate value while focusing on capital and asset growth” as one of its corporate initiatives and worked to so- efficiency indicators more than ever before. lidify the foundation for the company’s further growth from As we work to achieve a greater share of our main a financial point of view. As a result of working on measures customers’ business and acquire new customers and com- focused on balancing shareholder returns, utilizing funds mercial rights, the Group will not only expand production for strategic investment, and stable finances, many of our capacity and establish new locations, it will also formulate indicators, including capital and asset efficiency, have out- strategic investment plans with a view to engaging in M&A performed the industry standard, and we have developed activity that includes developing advanced technologies that a sound, solid business structure with indicators that show create new value and boosting cost competitiveness. stability at particularly high levels. The Group will continue working to enhance capital Nevertheless, faced with a rapidly changing business and asset efficiency and continuously improve corporate environment, the effective and efficient utilization of funds value over the medium to long term by proactively engaging accumulated annually, as well as cash generated by the in such investment while maintaining its sound financial previous year’s operating activities, is an issue for the foundation. Group’s sustained growth going forward. Under the 14th
54 TS TECH Report 2020 TS TECH Report 2020 55 The TS TECH Group’s Business Operations Management’s Discussion and Analysis
of 12,954 million yen year on year. This comprehensive cost-cutting measures. t er e e 1.6 to o e e t 85.8 E rope 13.5 p 19.5 1. Analysis of Financial Condition primarily re ects a net change in both However, revenue for the scal year otor e 1.4 Assets at the end of scal 2020 stood at payments into and proceeds from under review amounted to 359,682