YKK AP Integrated Report 2019 *FH19-207-1* CONTENTS Part I Part I: YKK AP Value Creation 04 History of YKK AP YKK AP Value Creation 06 The Value Creation Process at YKK AP to Support Sustainable Growth “No one prospers without rendering benefit to others.” 08 The YKK AP Value Chain for a More Sustainable Society YKK's Founder, Tadao Yoshida, named this philosophy the "Cycle of Goodness" and made it central to all business activities as he built the 10 YKK AP Sustainability Management System YKK Group into what it is today. Our mission at YKK AP is to carry on this 12 YKK AP Monozukuri Extends Across Japan and the World philosophy and provide our customers with windows and other architectural products to lead healthy and comfortable lifestyles. Going forward, we will 14 Putting the YKK PHILOSOPHY “Cycle of Goodness” into Practice continue refining the technical skills we have accumulated over the years to Top Message: Hidemitsu Hori offer products that will bring happiness to people around the world. 18 The Entire Company Comes Together to Realize YKK AP Monozukuri Dialogue with Our Executives 20 Column The Future YKK AP Creates-1 Part II: Sustainability Management 22 Monozukuri Perspective 24 Monozukuri Practice 26 Monozukuri and Environment 29 Column The Future YKK AP Creates-2 Tadao Yoshida YKK's Founder 30 Corporate Governance (1908-1993) 32 YKK AP in Numbers 34 Major Awards 35 Company Outline The photograph features the YKK AP R&D Center (located in Kurobe, Toyama) where region for the integration of the YKK AP’s technology. This is home to approximately 370 engineers, who delve into research and deepen their knowledge as they deliver high quality monozukuri (the art 2 of manufacturing and craftsmanship). 3 Part I: YKK AP Value Creation AP Value YKK I: Part History of YKK AP YKK MANAGEMENT PRINCIPLE YKK PHILOSOPHY “YKK seeks corporate value of higher significance.” The YKK Group Management Principle is based on the philosophy of the “Cycle of Goodness” and states: “YKK seeks corporate value of higher significance.” YKK CYCLE OF GOODNESS Group companies seek to delight our customers, earn the high regard of society and “No one prospers without rendering benefit to others.” make our employees happy and proud. We are improving the quality of our products, technology, and management as the means to achieve this. We make fairness the fundamental standard for all YKK Group business operations, and this is the basis for our management decisions. CUSTOMERS PRODUCTS SOCIETY Society FAIRNESS Activity TECHNOLOGY As an important member of society, a company survives through coexistence. When the benefits are shared, the value of the company's existence will be recognized by society. When pursuing his business, YKK's Founder, Tadao Yoshida was most concerned with that aspect, and would find a EMPLOYEES MANAGEMENT path leading to mutual prosperity. He believed that using ingenuity and inventiveness in business activities and constantly creating new value would lead to the prosperity of clients and business partners and make it possible to contribute to society. This type of thinking is referred to as the Seeking corporate value of higher significance, "Cycle of Goodness" and has always served as the foundation of our business activities. We have YKK will pursue innovative quality in the seven key areas shown above. inherited this way of thinking, and have established it as the YKK Philosophy. The Management Principle inherits Tadao Yoshida’s philosophy and Tadahiro Yoshida Current Director was formulated in 1994 by Tadahiro First President of YKK AP Yoshida, who was the president of YKK and YKK AP at the time. It epitomizes our resolve to relentlessly strive toward creating value based on fairness, which forms the fundamental standard of all our decisions. YKK AP is established The company is renamed YKK Architectural Products Inc. (YKK AP) and Tadahiro Yoshida is YKK's Architectural appointed as the first president. History YKK Industries (Singapore) Products Manufacturing Pte. Ltd. (current YKK AP About AP (Architectural Products) Group is integrated into Yoshida Shoji Co., Ltd. (current Manufacture and FACADE PTE. LTD.) is Embedded within the company name is a YKK AP Inc. and the The window business YKK AP Inc.) is established in sale of interior established as the first Manufacture promise to always continue pursuing the highest architectural products brand APW series is Nihonbashi-Bakurocho, Tokyo aluminum overseas affiliate of YKK’s and sale levels of art and technology – two elements that business of the YKK Group launched, carried by YKK AP FACADE PTE. Operations begin at (mainly sales and exports of interior products architectural products of double have formed the basis of architectural culture becomes a fully integrated a desire to improve LTD. is established in the Saitama MADO fastening products). begin. business. glazing begin. throughout history. organization. windows in Japan. Singapore. (window) Plant. 1934 1957 1959 1961 1962 1976 1983 1984 1986 1990 2002 2003 2005 2006 2007 2008 2009 2011 2016 YKK is founded Architectural products business begins From sash manufacturer to window manufacturer San-S Shokai (current YKK Aluminum casting Manufacture and sale Manufacture YKK Alumico Indonesia The company is Proclamation YKK AP AMERICA Sales of The YKK AP R&D Corporation) is founded by Tadao and extrusion of aluminum window and sale of (current PT. YKK AP renamed YKK AP to promote INC. begins sales APW 330 Center is opened. Yoshida in Nihonbashi, Tokyo, works begin at sashes begin. vinyl sashes INDONESIA) is established as Inc. double glazed of residential vinyl residential and the production and sales of Ikuji Plant (current begin. the first overseas plant with an residential windows. vinyl windows fastening products begin. Kurobe Plant). integrated production system windows. begin. for architectural products. 4 5 Part I: YKK AP Value Creation AP Value YKK I: Part Value Creation Process Fifth Mid-Term Management Plan (FY 2017 – FY 2020) The Value Creation Process <Business Policy> Sustainable growth at YKK AP to Support of the AP business through added-value Technology Sustainable Growth and demand creation Oriented The “Cycle of Goodness” is the DNA inherited by all of us at YKK AP and forms the foundation of all our business activities. Value Creation Key Measures Fifth Mid-Term Management Plan <Primary Management Focus> YKK PHILOSOPHY <Residential Business> —Product appeal & proposal capability Promote windows with high thermal —Technology & manufacturing capability insulation performance —Human resource development CYCLE OF GOODNESS <Exterior Business> “No one prospers without Residential Reinforce sales through expanding products rendering benefit to others.” Business range and increasing product appeal Industrial YKK MANAGEMENT PRINCIPLE Exterior <Renovation Business> “YKK seeks corporate Products Create demands and boost growth value of higher significance.” Business Business CUSTOMERS PRODUCTS <Commercial Products Business> Increase engineering capability and SOCIETY FY 2020 Society FAIRNESS Activity TECHNOLOGY promote high thermal insulation YKK AP Businesses products Mid-Term Plan EMPLOYEES MANAGEMENT Renovation Facade Business Business <Overseas AP Business> Reinforce business foundation and MISSION To devote everything expand business in the target market Net sales we have to the culture of Commercial Overseas <Facade Business> architecture and train our sights on Products AP Expand presence of Facade business 458.9 the future Business Business <Business Process Re-Engineering> billion yen VISION From living spaces to urban spaces, Standardize and optimize business YKK AP has kept pace with the times process and leads the way into the future Operating income 31.3 Shifting demographic and household trends Lifestyle Shortage of craftsmen billion yen Social Issues Residential housing policies Regional revitalization Abandoned houses and Needs Resources and energy Crime and disaster prevention Etc. Environmental issues Health and comfort The photograph features an aerial view over Kurobe, Toyama, where YKK AP's R&D and manufacturing centers are focused. 6 7 Part I: YKK AP Value Creation AP Value YKK I: Part SDGs in Our Value Chain About the SDGs The YKK AP Value Chain The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 and are comprised of 17 goals and 169 targets to be for a More Sustainable Society achieved by 2030. The SDGs require actions to be taken by everyone involved, from corporate entities The “Cycle of Goodness,” which forms the foundation of our business activities, is in itself contributing to the to government agencies and the country as a whole. development of a sustainable society. While continuing to provide architectural products that bring joy to our customers, YKK AP is also engaged in resolving social issues. Research, Material Manufacturing development and Sales Installation Product use procurement and logistics verification Creating technologies to Responsible material In pursuit of manufacturing User-friendly and Product appeal and In pursuit of greater support monozukuri procurement and delivery quality social-friendly proposal capability construction quality }P.22-23 }P.31 }P.24-25 products •YKK AP R&D Center •YKK Group Procurement Policy •Integrated production system •Technical proposals to address social issues •Research, development and proposals of •Healthy, comfortable, energy-efficient •Elemental technology development •Green procurement •Optimal