Corporate Strategy 2012

Corporate Strategy
2012
Corporate Profile
TSUGAMI continues to provide
world-leading high precision, high speed,
high rigidity machine tools at all times.
As a result of the Company's relentless pursuit of
ultra-precision machining technology ever since it
was first established in 1937, TSUGAMI provides
machine tools that offer high precision, high speed
and high rigidity.
As a comprehensive manufacturer of compact
ultra-precision machinery, TSUGAMI boasts a
wide range of products, including automatic
lathes, grinding machines, machining centers and
thread rolling machines, all of which combine to
create total production system solutions.
Other businesses
2.1%
Machine tool business
97.9%
Sales by sector (FY2011)
We will continue to focus all of our energies on
developing compact, high speed, high precision
machine tools capable of quickly catering to
demand within the manufacturing industry in the future, including demand for
vehicular components with environmental, energy saving and safety capabilities,
demand for compact terminals and handsets in the increasingly precision-oriented
telecommunications sector and demand for ultra-precision machined items in the
medical sector.
CONTENTS
Corporate Profile
P. 1
Our Products
P. 2
Core Markets
P. 3
Topics
P. 4
Medium and Long-Term Management Strategies / Interview with the CEO
P. 5
Global Network
P. 7
Company Directors / Corporate Governance
P. 8
Company Overview
P. 9
PRECISION TSUGAMI 2012
1
Our Products
Machine Tool Business
CNC Precision Automatic Lathes
Other businesses
The special arrangement of tools
minimizes the heat effect and the
cast iron base suppresses vibrations
during high-speed operation. Hence,
it enables stable and accurate
processing for a long time. The model
is best suited to high-precision,
mass-production of automobile parts,
hard disk drive components, office
automation equipment, medical and
dental equipment, digital cameras,
mobile terminals and other small parts
in a wide range of fields, including
optical communications.
Rolling machines and
specialized machines
2.1%
Machining centers
8.4%
2.9%
Grinding machines
8.2%
Automatic lathes
78.4%
Sales by machine types (FY2011)
CNC Precision Cylindrical Grinding Machines
This machine enables cylindrical grinding processing of small and medium components
in the fields ranging from unhardened material to highly rigid parts made of hardened
steel and ceramics.
The device can handle diverse items, ranging from single components, such as mold
pins, to a fully automatic processing system equipped with an autoloader automatic
checker for processed products such as automobile engines, transmissions and
oil hydraulic parts, IT components, and medical and dental equipment. With these
capabilities, the machine can meet all of our customer's manufacturing needs.
CNC Precision Machining
Centers
We operate a range of machining
centers that are equipped for
a diverse array of processing,
on components including small
aluminum parts for IT products
such as household electronics
and office automation equipment,
and steel parts for automobiles
and industrial machinery. We
propose the optimal system for
all our models both the vertical
and horizontal types which have
a space-saving design that makes
factory layout easy.
Precision Thread Rolling
Machines and Other Items
We supply plastic working
machines that transfer
the shape of rolling dies
onto materials, either
via hydraulic pressure
between a pair of rotating
rolling dies or by clamping
the material using a servo motor.
As part of the rolling die manufacturing
process, we also handle items such as screws,
knurls, high precision lead screws, worms and
formings.
Other Business
We manufacture and sell precision instruments and tools produced
based on superior precision machining technology and advanced
quality control, including gauge blocks, and rolling dies.
PRECISION TSUGAMI 2012
2
Core Markets
Reliable high precision, high speed and high rigidity,
even when operating 24 hours a day
TSUGAMI’s superior ultra-precision machining technology
is of such a high standard that it even leads the field in the
rapidly evolving IT sector.
Hard disk drives (HDD), as used in computers and other
equipment, are a prime example. Having developed CNC
high precision automatic lathes capable of handling
machining at a microscopic submicron level on a mass
production basis, we are playing a crucial supporting role
in the evolution of HDD and have secured a large share of
the market.
Technology developed by TSUGAMI in this sector
is also essential for purposes such as processing
peripheral engine components for vehicles so as to meet
environment, energy saving and safety requirements.
Other
Industry
IT Industry
Automotive
Industry
Sales by Industry (FY2011)
In the medical sector too, our technology is also used to
process difficult-to-cut materials for items such as artificial bones and dental implants.
On other fronts, we continue to develop new products capable of quickly catering to demand for compact
terminals and handsets in the increasingly precision-oriented telecommunications sector and a wide
range of other manufacturing needs.
Our strength stems from the fact that, in addition to machine tools, we have a wide range of peripheral
technologies designed to facilitate high-precision machining, including work material, tooling technology
and tools.
Components manufactured by TSUGAMI
Automotive parts
HDD FDB parts
processing
Digital camera and mobile phone parts
Bone screws and implants
and more
PRECISION TSUGAMI 2012
3
Topics
Production in Japan concentrated into three factories in Niigata
Factories in Japan - R&D and high-mix low-volume production.
Nagaoka Factory
Takami Factory
Niigata Factory
Investments to improve Production Efficiency
– Suspend Shinshu Factory – Add a new wing to Niigata factory
Niigata Prefecture
Nagaoka Factory
38,259 m2
Takami Factory
5,620 m2
Niigata Factory
6,283 m2
Expanded 1.5 times to 9,033 m2
New wing
2,750 m2
A new wing was added on the current site of Niigata Factory,
which is located about 1 km from Niigata West Port.
Completed in May.
(Note) m2 is a building area.
Production capacity of 1,000 units per month is completed
for China factory to meet the growing demand.
New factory site was acquired.
Factories in China - low-mix high-volume production.
Production Capacity- units per month
1,200
1,000
800
PRECISION TSUGAMI
(CHINA) CORPORATION
Established in Zhejiang
province, China in September
2003 as a 100% subsidiary
Shinagawa Precision
Machinery (Zhejiang)
Foundry
Factory
600
400
200
0
PRECISION TSUGAMI
(CHINA) CORPORATION
Office
Factory
Office
Factory No. 1
Office
Factory No. 2
Factory
No. 4
Factory No. 3
Chinese factories Total Area
Land: 100,350 m2 Building: 47,071 m2
Factory No. 5
FY2007 FY2008 FY2009 FY2010 FY2011
In production
Completed in FY2011,
in production
Contract signed
Leasing 1.5 km away
an outside storehouse
Parts
+ Storehouse
7,800 m2
PRECISION TSUGAMI 2012
4
Medium and Long-Term Management Strategies /
Interview with the CEO
Medium and Long-Term Management Strategies
TSUGAMI CORPORATION ("the Company") is pursuing three key
challenges as its medium and long-term management strategies.
Introduction of new products targeting areas with high growth potential
We are committed to launching new products that fully meet customer needs in areas with strong growth
potential, such as automotive components required for ecological and energy-saving initiatives, IT with
greater precision including hard disk drives (HDD) and smartphones, and medical field.
Business strategies focused on growth regions
Over the medium and long term, we will seek to further enhance our production, sales and after-sales
services systems in markets such as China, Southeast Asia, and India where capital spending is robust.
Higher management efficiency and customer satisfaction
To strengthen the Group, we will bolster our sales, production, and administrative systems and maximize
management efficiency at all Group companies.
We will also dedicate ourselves to a management approach that earns the trust of our customers, constantly
aiming to increase customer satisfaction through continuous efforts to provide new products and enhance
services that meet their needs.
Actively engaging in corporate social responsibility (CSR) activities, such as environmental conservation
and compliance, in addition to the activities described above, we will exert every effort as a company
trusted by all stakeholders, including our shareholders and customers.
Interview with CEO
Review of operations in FY2011
Q: Please describe the results for fiscal 2011
The Japanese economy in fiscal 2011 continued to
face a challenging situation, reflecting the prolonged
strength of the yen, the slowdown in the Chinese
economy—which had been supporting exports from
Japan—and the effect of economic instability in
Europe and the United States. Nonetheless, production
activities, which had declined after the Great East Japan
Earthquake, were improving.
In the machine tool industry, overseas demand from
grew steadily, especially from China and other emerging
economies in Asia, and there were some signs of a
recovery in domestic demand. Nonetheless, future
uncertainty remained given the persistent economic
insecurity.
In this environment, TSUGAMI CORPORATION (the
“Company”) and its affiliates (the “Group”) launched
new products and raised the local content ratio,
thereby reducing costs, to deal with the prolonged
strength of the yen and make the Group’s products
more price competitive. Meanwhile, the Group raised
production capacity at Chinese factories in preparation
for entering the smartphone market, which took place
in the third quarter. The market entry and orders for
products for the reconstruction from the flooding in
Thailand contributed to sales in the second half of the
fourth quarter.
To increase the capacity of our Chinese factories and to
secure funds for a strong balance sheet, in the fourth
quarter, the Group increased capital through a public
offering and a third-party allotment to maintain a sound
financial position.
As a result, consolidated net sales for the fiscal year
under review came to 35,739 million yen (down 0.5%
year on year).
Consolidated operating income and ordinary income
were 4,086 million yen (up 9.5%) and 3,875 million
yen (up 10.6%), respectively. Consolidated net income
was 2,281 million yen (down 19.6%).
Strategies for FY2012
Expansion of the Business Size
Q: For fiscal 2012, you have forecasted a
PRECISION TSUGAMI 2012
5
significant increases in net sales to 55,000
million yen (up 53.9% year on year) and in
operating income to 8,800 million yen (up
115.3%). What are the factors for such large
increases?
We believe that the increase in the capacity of Chinese
factories and the effect of the entry into the smartphone
market we undertook in fiscal 2011 will make a full
contribution to our business performance in fiscal
2012. Demand for reconstruction from the flooding in
Thailand will also contribute to sales.
Monthly production capacity increased from 600 units
to 1,000 units at Chinese factories in November 2011
and reached full capacity in the first half of fiscal 2012
to meet full-scale orders for products for smartphones
that began at the end of 2011.
Sales Strategies and Restructuring of the
Production System
Q: It seems that TSUGAMI has moved to
a new level in terms of sales, profits, and
production capacity. What are your strategies
for the current fiscal year?
We launched new products to expand sales in the IT
area, where we have historically had strength, and
increase sales of products for the automotive industry.
We have also established TSUGAMI Universal, a
regional sales headquarters, in Singapore.
We will further strengthen our efforts in growth
regions as we set out in our medium- and long-term
management strategies, with TSUGAMI for the
Japanese market, PRECISION TSUGAMI (CHINA)
for the Chinese market, and TSUGAMI Universal
presiding over the remainder of the Asian region,
namely the Southeast Asian and Indian markets.
In terms of production, although we increased
monthly production capacity at Chinese factories
to 1,000 units in fiscal 2011, we have acquired a
new factory site next to the current factory to meet
demand quickly when it increases, as we think that
the Chinese market will continue to grow over the
next five to ten years.
We have also restructured the production system of
Japanese factories. Although Japan is the base for
R&D and important for high-end model production,
we need to improve production efficiency still further
given the historic strength of the yen.
Sales breakdown by region (FY2011)
Overseas 69.1%
Japan
30.9%
Asia 53.3%
America 7.8%
Europe 8.0%
From a production system of three factories in
Niigata and one factory in Nagano, we suspended
production in Nagano and concentrated production
bases in Niigata by adding a wing to the Niigata
Factory. We will be able to carry out flexibly highmix low-volume production by concentrating our
factories in nearby locations.
Return to shareholders
Q: What is your basic stance on returns to
shareholders?
With respect to dividends, we would like to focus
on boosting returns to shareholders with the aim of
continuing stable dividend payments, while considering
the link with operating results.
I ask our shareholders for your continued support and
encouragement in the years to come.
Takao Nishijima
Chairman and C.E.O.
PRECISION TSUGAMI 2012
6
Global Network
Japan
TSUGAMI CORPORATION
Head Office :
12-20, Tomizawa-cho Nihonbashi,
Chuo-ku, Tokyo
Factories :
Nagaoka Factory
Takami Factory
Niigata Factory
Nagaoka City, Niigata Pref.
Nagaoka City Niigata Pref.
Niigata City Niigata Pref.
Group Companies :
TSUGAMI MACHINERY CO., LTD.
TSUGAMI GENERAL SERVICE CO., LTD.
TSUGAMI PRECISION CO., LTD.
Sales & After Sales Offices :
East Japan Marketing Division
Tokyo Office
Nagaoka Office
Takasaki Office
Sendai Office
Central Japan Marketing Division
Nagoya Office
Suwa Office
Shinshu Office
Hamamatsu Office
West Japan Marketing Division
Osaka Office
Fukuoka Office
Hiroshima Office
U.S.A.
Affiliates REM SALES, LLC
Europe
TSUGAMI GmbH (GERMANY)
Asia
China
TSUGAMI CORPORATION Shanghai Office
PRECISION TSUGAMI (CHINA) CORPORATION
Shinagawa Precision Machinery (Zhejiang) Co., Ltd.
Singapore
Korea
Thai
India
TSUGAMI Universal Pte. Ltd.
TSUGAMI KOREA Co., Ltd
TSUGAMI (THAI) CO., LTD.
TSUGAMI PRECISION ENGINEERING INDIA PVT., LTD.
TSUGAMI TECH SOLUTIONS INDIA PVT., LTD. (INDIA)
PRECISION TSUGAMI 2012
7
Company Directors / Corporate Governance
Company Directors
Directors and Auditors :
(as of June 18, 2012)
Representative Director, Chairman and CEO
Takao Nishijima
Representative Director, COO
Kiyoshi Tauchi
Representative Director, COO
Toshiharu Niijima
Director, COO
Yoshihiro Miura
Director, Senior Executive Officer
Byun Jae-Hyun
Director, Senior Executive Officer
Donglei TANG
Outside Director
Takeo Nakagawa
Outside Director
Kenji Yamada
Outside Director
Kunio Shimada
Standing Statutory Auditor
Toshio Honma
Outside Statutory Auditor
Yoshifumi Miyata
Outside Statutory Auditor
Hiroaki Tamai
Outside Statutory Auditor
Ryuichi Kimura
Corporate Governance
The basis of the management of the Company is to contribute to society by constantly anticipating the needs of the market
and to create new value underpinned by the precision technologies we have been developing since our founding. Under
this basic policy, we seek to strengthen legal compliance and practice sound and transparent management to properly
execute our duties and sustain long-term growth.
TSUGAMI recognizes that the return of profits to shareholders is one of its most important business tasks. Under the
principle of steady dividend payments and retaining treasury stocks, we will return profits based on improvements in our
consolidated earnings.
1. Corporate Governance Framework
The Company has adopted the corporate auditor system, consisting of the Board of Directors and the Board of Statutory
Auditors. The Board of Directors and the Board of Statutory Auditors are our basic structure of corporate governance.
The Board of Directors of the Company is comprised of nine directors, with three outside directors, as of June 18, 2012. The
term of directors is set at one year to better clarify management responsibility.
The Board of Statutory Auditors is made up of four statutory auditors, including three outside statutory auditors. The statutory
auditors always attend the meetings of the Board of Directors and other major meetings, and audit the execution of duties by
directors as well as company-wide business and financial conditions.
2. Internal Control System and Risk Management Framework
As one of its most important business tasks, the Company is committed to creating a system for ensurnig proper business
operations and credible financial reporting (internal control system).
Specifically, TSUGAMI has set up an Audit Office, operating under the direct control of the President, to audit situations such
as compliance with laws, regulations, and Articles of Incorporation that are related to the Company and its subsidiaries. In
conjunction with these efforts, the Audit Office is striving to manage the risk of loss and secure proper business operations.
TSUGAMI has developed a basic policy to meet the requirements of a system to prohibit dealings with antisocial forces.
The Company is making all employees aware of the policy through the TSUGAMI Group Code of Conduct. To ensure that
all employees execute their duties in compliance with laws, regulations and the Articles of Incorporation, the Company has
established systems such as Information Security Committee, Business Improvement Committee, and the Whistleblowing
System.
TSUGAMI is creating a Risk Management Committee, aimed at identifying and managing any kind of risks inherent in its
business activities, and is building a system for preventing and preparing for potential risks.
PRECISION TSUGAMI 2012
8
Company Overview
Company Overview
(as of March 31, 2012)
Company History
Corporte Name : TSUGAMI CORPORATION
Established : March 15, 1937
June 1923
Research into gauge blocks started at Honjo Ohira-cho in
Tokyo by founder Taisuke TSUGAMI
March 1937
TSUGAMI Mfg. Co., Ltd. established in Nagaoka, Niigata
prefecture, and production of gauge blocks started
June 1939
Production of T-TML500 L-type thread milling machine
started
Production of T- UG300 hydraulic universal cylindrical
grinding machine started
Head Office : 12-20, Tomizawa-cho Nihonbashi,
Chuo-ku, Tokyo
October 1942
Paid-in Capital : 12,345 million yen
TSUGAMI PRECISION Engineering Industry Co., Ltd.
established and factory constructed in Saku, Nagano
prefecture
TSUGAMI PRECISION Engineering Industry Co., Ltd.
absorbed into TSUGAMI Mfg. Co., Ltd in February 1945
and renamed Shinshu Factory
1,733
Number of Employees : Consolidated Non-consolidated 475
June 1946
Production of grinding machines, thread rolling machines
and sewing machines started (ban on production of
machine tools issued)
Listed stock exchange : Tokyo (Code: 6101)
May 1949
Stock listed on Tokyo, Osaka and Niigata stock exchanges
November 1957
Production and sale of T7 sliding headstock automatic
lathe started
Shares : Authorized sharesres 320,000,000 shares
Issued shares
74,919,379 shares
Treasury shares
1,382,906 shares
April 1968
14th Okochi Memorial Production Prize awarded for
outstanding research and development results in the field
of thread rolling technology
November 1970
Company name changed to TSUGAMI CORPORATION
October 1972
2nd Okoshi Memorial Prize awarded for outstanding
research and development results in the field of gear
grinding machines
September 1973
VCL gang-tool type automatic lathe equipped with leadturner capabilities completed
June 1978
Mercury series CNC precision automatic lathes
developed and sales launched
March 1982
PAN1 CNC precision automatic lathe awarded 12th
Automation Machinery Prize for small and medium-sized
enterprises
October 1982
Company name rebranded in Japanese
March 1984
MA3 machining center awarded 14th Automation
Machinery Prize for small and medium-sized enterprises
July 1992
S20 series CNC precision automatic lathes awarded 22nd
Machine Design Award
March 1993
S20 series CNC precision automatic lathes awarded 23rd
Automation Machinery Prize for small and medium sized
enterprises
May 1994
Subsidiary TSUGAMI PRECISION CO., LTD. certified as
authorized proofreader for end standards (gauge blocks)
using the Traceability System measuring method
January 1999
Shinshu Factory certified under ISO 9001 (Quality
Control Management Systems)
February 1999
Nagaoka Factory certified under ISO 9001 (Quality
Control Management Systems)
October 2000
Automatic lathe assembly factory completed at Nagaoka
Factory
November 2000
Nagaoka Factory certified under ISO 14001
(Environmental Management Systems)
July 2001
Grinding machine assembly factory completed at
Nagaoka Factory
September 2003
PRECISION TSUGAMI (CHINA) CORPORATION
established
April 2004
Consolidated subsidiary TSUGAMI Machine Tool Trading
Corp. absorbed into TSUGAMI CORPORATION
November 2005
New factories completed at Nagaoka Factory and
Shinshu Factory
August 2006
PRECISION TSUGAMI (CHINA) CORPORATION
Shanghai Branch established
April 2007
TSUGAMI CORPORATION South Korea Branch
established
November 2007
European subsidiary TSUGAMI GmbH established in
Germany
February 2008
Machine tool production and sales alliance concluded
with Swiss company Tornos SA
December 2008
New factory extension completed at PRECISION
TSUGAMI (CHINA) CORPORATION
January 2009
Consolidated subsidiary TSUGAMI Shimamoto Ltd.
absorbed into TSUGAMI CORPORATION
February 2010
Subsidiary TSUGAMI KOREA Co., Ltd. established in
Korea
November 2010
Shinagawa Precision Machinery (Zhejiang) Co., Ltd.
established
April 2011
TSUGAMI PRECISION ENGINEERING INDIA PVT., LTD.
established in India
June 2011
TSUGAMI TECH SOLUTIONS INDIA PVT., LTD.
established in India
March 2012
TSUGAMI Universal Pte. Ltd. established in Singapore
Number of shareholders : 10,402
Major shareholders :
Owner ratio
Japan Trustee Service Bank, Ltd.
(Trust account)
Mizuho Trust & Banking Co., Ltd.
(Employee retirement benefit trust of Tokyo Seimitsu Co., Ltd.,
new trust custodian: Trust & Custody Services Bank, Ltd.)
6.6%
6.1%
Morgan Stanley and Company Inc.
4.3%
The Master Trust Bank of Japan, Ltd.
3.9%
SSBT OD05 OMNIBUS ACCOUNT - TREATY
CLIENTS
3.1%
(Trust account)
Business year : From April 1 each year to March 31
of the following year
Annual shareholders meeting : June each year
Surplus dividends :
The record date for the year end dividend shall
be March 31 each year.
When paying interim dividends, the record date
shall be September 30 each year.
Shareholder register and securities agent :
Mitsubishi UFJ Trust Banking Corporation
10-11, Higashisuna 7-chome, Koto-ku, Tokyo
137-8081
PRECISION TSUGAMI 2012
9
12-20, Tomizawa-cho Nihonbashi,
Chuo-ku, Tokyo 103-0012, JAPAN
TEL.03-3808-1172 FAX.03-3808-1175
http://www.tsugami.co.jp/