Hitachi, Ltd. | Integrated Report 2016

CREATING VALUEFOR SOCIETY
THROUGH RAILWAYS
Interest is rising in railway infrastructure as a way
to deal with the social issues that accompany global
warming and increasing urbanization. Hitachi is
now expanding its global railway system businessusing the considerable technological expertise it hasdeveloped over many years.

Hitachi’s Newton Aycliffe plant, where the new Class 800 trains arebeing manufactured for the UK’s Intercity Express Programme.

Meeting the Railway Systems Needs of Today’s Society

has an industry-leading track record for safety in operationThere is now great interest in role that railway systems can play inmanagement systems and in rolling stock. Hitachi has placed

dealing with the various social issues caused by global warming andparticular emphasis on environmental considerations, reducing

population growth. As the economies of developing nations rapidly

noise pollution and making increasing use of recycled materials,

grow, their populations concentrate in cities, causing serious

and is a market leader in bimodal and hybrid systems that switch

problems like traffic congestion and air pollution and increasing thebetween electric and diesel operation. Hitachi is also developing

need for environmentally friendly railway transport. Meanwhile,

technology for using big data to improve the efficiency andexisting transport infrastructure in developed nations has deteriorated

safety of railway logistics.

and is in urgent need of renovation to meet current requirements.

Hitachi is using these strengths to focus not just on specific

Previously, Hitachi focused mainly on manufacturing rolling

services—like rolling stock systems, signaling, and traffic manage-stock and electrical products, but in recent years it has expandedment—but also a full range of turnkey railway-system solutions

its business to provide a comprehensive range of services forincluding transport systems and Operations and Maintenance (O&M).

running railways, such as operation management systems andIn fiscal 2014, O&M accounted for 1% of railway-related revenue,

maintenance services.

but Hitachi’s aim is to increase O&M and turnkey combined to

The European Rail Industry Association, UNIFE has estimated

24% of the ¥640 billion in revenue targeted for fiscal 2018.

that the global railway-related market will grow from ¥13.2 trillion (2014–16) to ¥14.6 trillion (2017–19). We anticipate significant growth for the railway operations segment of our business.

Revenues for Railway System BusinessIn 2015 Hitachi acquired two Italian companies—AnsaldoBreda,Billions of yen

a rolling stock manufacturer, and Ansaldo STS, a transportation

800

system technology company—thereby enhancing its signaling
and railway operation businesses, as well as its turnkey solutions,

640.0
600

with an expanded product portfolio.
A Global Company with Comprehensive Offerings

500.0400

352.6

With the acquisition of the two Italian companies, Hitachi has
become one of only a few players in the global railway industry

200

that offers a full lineup including rolling stock and systems. As
well as various achievements in the global market to date, most
famously demonstrated by the Shinkansen bullet train, Hitachi

02015
Result2016
Forecast

2018
Target(FY)19

Meeting Needs in the Birthplace of Railway

Hitachi’s Pioneering Spirit at Work in the United Kingdom

Much of the United Kingdom’s rail infrastructure dates back toAs part of the IEP, Hitachi received an order for 122 trains andthe nineteenth century. This infrastructure is now deteriorating

866 cars, of which 110 trains will be produced at the Newton

and in urgent need of modernization. Meanwhile, the British

Aycliffe plant. The 43,000 m2 plant has a production capacity ofDepartment for Transport is currently implementing the Intercity

40 cars a month and, as the company’s European manufacturing

Express Programme (IEP), which will replace aged rolling stock on

operation, plays an important role in the global strategy of Hitachi’s

main lines. Hitachi is using the technology it has built up over therailway system business. In 2016, it began production of the firstyears to win further IEP orders.

three trains for the Great Western Main Line, ready to enter service

In October 2004, Hitachi was chosen as preferred bidder, andin 2017. Hitachi also plans to manufacture rolling stock for thein the following year received the order for 29 Class 395 trains,

East Coast Main Line and for the Abellio ScotRail (ASR) project atwith a total of 174 carriages, to run on the 109-km high-speed link

the plant.

between London and the Channel Tunnel. The first trains entered

Manufacturing Plant Manager Darren Cumner says thatservice in 2009. The successful completion of this project around

Newton Aycliffe was chosen for its transport links, availability ofhalf a year ahead of schedule was a huge boost to Hitachi’s busi-skilled workers, heritage, local heavy industry, and presence ofness in the United Kingdom. In 2007, Hitachi established theother Japanese companies in the area. The plant has introduced

Ashford Train Maintenance Centre in southeast England.

a state-of-the-art just-in-time (JIT) production system. As well as

In July 2012, Hitachi officially signed a comprehensive contract

fitting the whole production line in a single building, it has beenwith the U.K. Department of Transport, which was moving for-designed to allow rolling stock without production problems toward with the IEP, including maintenance services to be provided

overtake stock that needs extra attention. Thus, even if a problem

for 27.5 years, and began design work. In September 2015,

occurs production can continue to move ahead steadily without

Hitachi opened a train manufacturing and assembly plant inany need to halt the line.

Newton Aycliffe, in northeast England’s Durham County, to pro-

Meanwhile, at the new plant Hitachi places special emphasis on

duce rolling stock for the IEP. The plant is only a few hundred

two things in particular: dedication to the spirit of craftsmanshipmeters from the historic Heighington Station on the Stockton andand the training of staff with solid technical skills.

Darlington Railway, the first publicly operated steam train line in

There has been much interest in the region regarding the local

the world. The revival of railway manufacture in a place with suchrecruitment of staff. The plant received 16,000 job applications

importance to the history of rail has produced great expectations inin 2015, far more than the number of jobs available. To date, thethe United Kingdom.

plant has hired 550 people, selecting them according to theTo date, much of the U.K.’s railway traffic management has

Hitachi founding concepts of harmony, sincerity, and pioneering

been done manually, but in July 2015, as part of a project byspirit and prioritizing values over technical skills. The plant

infrastructure management company Network Rail to introduce

expects to increase its staff to 730 by spring 2017.

automatic systems and improve efficiency, Hitachi won an orderto provide operation management systems for Thameslink, amain London commuter line that suffers particularly serious traffic congestion. Hitachi was highly appraised for its 40-plus yearsof expertise managing routes including commuter lines in theTokyo area and the Shinkansen network.

The Newton Aycliffe plant uses cutting-edge production methods to build its trains.

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Hitachi, Ltd. | Integrated Report 2016

Back to Basics: Hitachi Training at the Plant
Production Manager Lee Nockels, who is in charge of staff trainingLocal Staff Who Trained at the Kasado Worksat the plant, joined Hitachi in January 2015 after spending 28
years in the army, rising to the rank of major. He notes that, likehimself, most of the locally recruited employees are not from therailway industry.
“Some people would see that as a negative,” he says. “But I
see it as a positive. We have got very little baggage and very few
bad habits.”
The training for the plant’s production employees is an abbreviated version of that implemented at the Kasado Works training
manufacturing plant in Yamaguchi Prefecture, Japan. The U.K.

Andy Crowe

program takes a minimum of five weeks, both in the classroom

Manufacturing Specialistand working on a real train, and covers the basic skills of piping,rigging, and wiring.
Many employees have existing technical skills but are strongly
encouraged to go back to the basics. “I always tell people: don’t
forget what you have learned before, but don’t be afraid to learnsomething new,” says Nockels.
As well as running this basic training, the Newton Aycliffe
plant is actively engaged in an exchange of technical skills withKasado Works in Japan. As Hitachi strives to transfer skills to its
U.K. operations, many of the plant’s staff have visited Japan for
training, and there are currently 20 staff from Japan working at
the plant. Hitachi’s policy is to expand such opportunities forskills transfer in the future.

Before joining Hitachi in August 2015, Andy Crowe spent 21 years
fitting kitchens into camper vans. He now leads a team of five
employees who install catering units into the trains. Soon after
joining Hitachi, he traveled to Japan for 12 days of training at
the Kasado Works. In addition to learning the procedures, herecorded photos and videos of them along with detailed
descriptions. The aim was to produce detailed standard operatingprocedures (SOPs) to be used by staff back in the United Kingdom.
Crowe says that he was particularly impressed by the accuracy of
the work in Japan. “Door gaps have got to be a certain measurement, and sometimes you are working to a precision of 0.5 millimeter,” he says. “It would be 3 or 4 millimeters for a camper van.”Andy Dick
Section Leader for the ASR Project

Andy Dick joined Hitachi in March 2015 and left for Japan after
just 21 days. Much of the training at the Kasado Works focusedon quality, he says, giving the example of a multicoil wire. Thewire might have 1,000 strands or more; if a scratch were foundon just one of those, the entire multicoil would be rejected. “Itwas unbelievable,” he says. Dick spent three months in Japanand observed about 900 different operations. “It was a difficultjob,” he says, “but made easier by the way we were welcomedby the Kasado staff.”
The Newton Aycliffe plant, pictured here, carries out ongoing technology exchange with
Hitachi’s flagship Kasado Works in Japan.

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New Systems to Ensure Japanese Quality

CSR Activities at the Newton Aycliffe Plant

in the United KingdomSenior HR Advisor Jacquie Smith was one of the first people hired

In Japan, employees often build up experience at the sameat the plant, where she has been deeply involved in its CSR activities.

company over many years, learning many different processes andAn early and key CSR project for the plant, she says, wasskills. But U.K. employees are much more likely to change jobs inbecoming a founding member of the South Durham University

search of promotion. It is also relatively rare for technical staff toTechnical College (UTC), together with the University of Sunderland

hone their skills in a single factory, and staff from a variety ofand Gestamp Tallent Ltd. The UTC is located just a short walk fromtechnical backgrounds tend to work together. In order to manu-

the Newton Aycliffe plant. Classes are due to start in September

facture rolling stock in the United Kingdom with the same assur-

2016 for students aged 14 to 19 specializing in manufacturing,ance of quality as in Japan, and to make that process easily

technology, and engineering. While some students may eventu-comprehensible to U.K. staff, Hitachi is systemizing procedures

ally work for Hitachi, others will be employed by other companies

and the technical skills of experienced employees in Japan andin the business park or fill skill shortages in the wider northeast

recording those skills in use. In this way, Hitachi aims to increase

England region.

product quality even further.

The plant is also working with the Durham Education Business

For the IEP rolling stock alone, some 700 SOPs have beenPartnership to offer career education in schools. A number ofdefined and recorded. At the Kasado Works in Japan, hundreds ofstaff members volunteer as “business ambassadors” visiting

hours of video and thousands of photos have been taken thenschools and explaining the plant’s work.

turned into manuals that are easily understandable by employees

The plant is also working hard to encourage as many job

in the United Kingdom. Staff in the manufacturing area at theapplications from local people as possible. As part of that, it is

Newton Aycliffe plant can consult them whenever they wish

cooperating with a social rented accommodation company calledusing tablets available throughout the plant.

Livin that helps its tenants find good quality employment. The

Manufacturing Engineer Fumio Fujinaga was transferred to the
Newton Aycliffe plant in August 2015. An expert in rolling stock

plant has also helped run workshops on writing CVs and fillingout online applications.

manufacture, he honed his skills at the Kasado Works in Japan.

Smith, who also has responsibility for recruitment, says that

While at Kasado, he was involved in the training of staff from theunfortunately the plant has received relatively few applications

United Kingdom, and since his transfer he has also had responsi-

from women seeking technical jobs. “The reason may be thatbility for staff development in the U.K. facility. At times, he has

while many women have applied for office-based jobs at thefaced challenges in the form of communication difficulties, differ-plant, train manufacturing seems to be seen as work for men,”ences in technical background, and contrasting cultural attitudes

she says. “Even women already working in manufacturing

to work. Nevertheless, he says that the skills transfer successfully

excluded themselves from working here,” says Smith. To help

achieved to date is thanks to the “pride of local staff in train

redress that balance the plant has held two women-only openmanufacture” and their “keenness to learn.”days to give females a taste of the working environment and thetype of work done. The team is also working closely with theUTC by holding events to encourage more girls to study STEMand become the engineers of the future.

Yusuke Oyama (left) and Fumio Fujinaga, dispatched to Newton Aycliffe from the Kasado Works.

22Jacquie Smith, who is in charge of CSR at the Newton Aycliffe plant