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External Directors Roundtable Discussion

Based on a Sure Grasp of the Issues, SupportingULVAC’s Growth from an External Perspective

Hiroyuki Nishi

Norio Uchida

Yoshimi Nakajima

Kozo Ishida

External Director

External Director

External Director

External Director

Having completed the previous mid-term management plan, which was launched in FY 2020, ULVAC
has launched a new plan targeting new growth. What did ULVAC achieve, what issues are left
unresolved, and what has changed in the past three years?

Hiroyuki Nishi External Director
Became an External Director of the Company in September 2020 after
serving as Director of Nippon Life Insurance Company, President andChief Executive Officer of Nissay Asset Management Corporation, andPresident and Chief Executive Officer of Nissay Credit Guarantee Co., Ltd.

Looking back on the previous mid-term
management plan, what is your takeon the achievements? Also, what are
the issues that remain to be addressed
under the new mid-term management
plan?
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Nishi: ULVAC achieved gratifying results until
the second year of the previous mid-term
management plan, although the profit target
for the final year was not achieved. Meanwhile,ULVAC formulated Vision 2032, clearly plotting
its long-term trajectory, which is noteworthy.
I think the ability to get the job done (abilityto execute) was insufficient. In terms of theirmentality, ULVAC Group companies should
be predisposed to share their respective
problems, risks, strengths, etc. throughout
the Group. “Visualization” of quantitative
management of initiatives is necessary so thatdepartments and employees take ownership.
In terms of risk awareness, the impactof longer parts delivery lead times wasalready evident two years ago. ULVAC shouldhave been more acutely aware of this andtaken action earlier. As for global businessdevelopment, it would be prudent to recognize
the need to mitigate geopolitical risks.
Given the continuing U.S.-China economic
confrontation, overdependence on business in
China should be avoided.

However, while these matters do require
attention and improvement, looking to thefuture, there is plenty of room for growth.
During the three years of the new mid-term
management plan, I expect ULVAC to undergo
a transition and strike out in new ways as it
advances to the next phase.
Uchida: During the three years of theprevious mid-term management plan, thedirection in which ULVAC should proceed has
been clarified through a top-down approach.
Although a “corporate culture of thinking” hasbeen inculcated, issues remain in terms ofexecution capabilities. I think ULVAC needs tocultivate a “corporate culture of getting things
done.”
New businesses such as equipment for EV
batteries have achieved growth. ULVAC has
engaged in several joint research projects with
universities and battery manufacturers while
maximizing the use of its internal resources.
Joint development and alliances with external
parties should be expanded in various forms
worldwide. I want ULVAC to maintain a longterm perspective and continue to create
innovation.
ULVAC’s financial constitution is sound.
However, I believe “visualization throughquantitative management” is necessary inorder to grasp the progress of initiatives,such as those to strengthen manufacturing
capabilities, in fine-grained detail.
Moreover, marketing will become
increasingly important amid accelerating global
business development. So, there is an urgent
need to develop and acquire global humanresources capable of envisioning scenarios
from a broad perspective.
Ishida: I completely agree with both of you.
ULVAC now has a good grasp of the various
issues it needs to address. Firstly, it iscommendable that ULVAC achieved the initial
target for net sales under the previous midterm management plan through its tenacious
efforts. Looking at the three-year performance,
not just the final year, we can say that ULVAC’sresults were quite good. In the past, poor
performance of a particular division would havea major impact, undermining the performanceof the company as a whole. This is no longer
the case. Indeed, ULVAC’s management has
become more resilient.
Secondly, ULVAC made steady progresswith regard to investment in development.
In FY 2022, R&D cost amounted to ¥13.8billion (6.1% of net sales) and R&D capital
investment was ¥11.9 billion (5.2% of netsales). Together they accounted for more than
10% of net sales. Concentration of resourceson the semiconductor-related business, which
is a growth driver, has been yielding goodresults.

Norio Uchida External Director
Became an External Director of the Company in September 2015 after
serving as Representative Director, President & CEO of TOPCONCORPORATION.

Thirdly, I think ULVAC’s absorption-typemerger of two Japanese manufacturingsubsidiaries is an astute move. As “ONEULVAC,” a sense of unity has been createdthroughout the company. I would like to see
ULVAC’s initiatives link this momentum toproductivity improvement of manufacturing
operations in Japan.
On the other hand, ULVAC is still oriented
toward Japan and the global perspective isweak. Regarding optimization of production,
it will be increasingly necessary to adopt a
global perspective, which means tackling
optimization of not only Japanese sites but
also overseas sites. I feel ULVAC is not up tospeed when it comes to integrating production
systems and sharing data across the Group,
including overseas sites. Faster action isdesirable to transform the portfolio of theFPD production equipment business and toimprove productivity of the electronic device
production equipment operation.
Nakajima: Several unexpected developments
occurred over the past three years. It isregrettable that ULVAC’s responses to them
have been inadequate.
Everyone has focused on the ability toexecute. Likewise, I also want to see ULVAC
adopt a “get it done” attitude. The numbers
show the results of initiatives. ULVAC should
enforce targets as yardsticks of progress andULVAC VALUE REPORT 2023

60

Inherited
ULVAC-Style

Corporate Governance

Message to OurReaders

About ULVACULVAC’s Vision

ULVAC’s Strategy

CorporateGovernance

Financial Data/
Corporate Information

Based on a Sure Grasp of the Issues, Supporting ULVAC’s Growthfrom an External Perspective
tackle them by setting priorities. Althoughinitiatives are diligently carried out, analysisof reasons for the achievement or nonachievement of plans seems to be insufficient.
To deal with this, management’s mindset must
be changed. I believe the corporate culture
will change if leaders speak up, expressing
themselves in their own words, and encourage
dialogue among organizations. ULVAC has
just become aware of such internal problems.
In order to facilitate proactive change, bothpersonnel and organizational approaches will
be necessary. This is an area in which I havehigh hopes that the HQ system will prove tobe effective.

Yoshimi Nakajima External Director
Became an External Director of the Company in September 2018 after
serving as Vice President of Citibank, N.A., Senior General Manager ofSociete Generale Securities Services, and President and Representative
Director of American Express Japan Co., Ltd.

So, what points should we keep in mind
in order to maximize the effectiveness ofthe HQ system introduced in FY 2023?
Nakajima: The HQ system introduced fromthe current fiscal year will be an effective
organizational strategy, only if authority
and responsibility are clarified and the skills
required of human resources are also clarified.
I think we must not lose sight of theseprerequisites for success.
Nishi: I have great expectations of the switch
to the HQ system that is designed to facilitatecross-organizational initiatives.
I believe ULVAC has established a system tofirmly implement the PDCA cycle. Of course,as Ms. Nakajima pointed out, care should betaken to ensure that the reorganization doesn’t
become simply a matter of form. At the sametime, it will be necessary to “visualize” theinitiatives and share them throughout the61

ULVAC VALUE REPORT 2023

company. The new mid-term management
plan continues several of the themes of theprevious mid-term management plan. In otherwords, the next three years will be a period
in which ULVAC will once again take on thechallenge of capturing growth opportunities
and improving the profit margin, and the entire
Group is urged to “get it done.” In regard tothe introduction of the HQ system, as well as
the timing of this move, President Iwashita’s
determination to make it a resounding success
was impressive.
Ishida: The introduction of the HQ system
is highly significant in terms of expanding
product fields and responding to global
business development. I have highexpectations of the HQ system. I would
like to see smooth collaboration amongorganizations to achieve results. “People”
are the key to success. Human resourcesmust be secured and deployed to maximum
effect. It is also important to promotemutual understanding and cooperation
among organizations based on priority
management for the entire Group. In orderto implement the planned production thatULVAC is working on under the new midterm management plan, the system needs
to be restructured, including the approach
to inventory management. I would like to
see ULVAC strengthen collaboration among
Group companies and HQs, and to designand establish a production system capableof contributing to further enhancement ofULVAC’s corporate value.
Uchida: Success in putting this organizational
theory into practice hinges on speedy
management decision-making and information
sharing. And as Dr. Ishida commented, ULVAC
has to get this done worldwide, not just inJapan. ULVAC should select and deploy humanresources who have what it takes to manage
the business, although this is easier said thandone.
Ishida: ULVAC needs to think about
deployment of global human resources.
Uchida: Developing human resources,
especially people who can handle marketingand global management, is a very timeconsuming endeavor. In my opinion, ULVAC
should vigorously promote excellent global
human resources to key positions and givethem room to demonstrate their full potential
in achieving an effective future-orientedorganization.

Nakajima: For those who have neverexperienced global management, I thinkit tends to be pie in the sky. Negotiations
between organizations based on priority
management are also very different from how
things are typically done in Japan.
Nishi: Going forward, there is an urgent
need for a break with the past as regards
assignment and development of humanresources.

to learn about the business and the corporate
culture by putting myself in the shoes of those
who work at ULVAC.
So, more opportunities for communication
with people in the company would bewelcome. I would like to vigorously exchange
opinions and offer advice with my interlocutors
to support the execution of the new mid-term
management plan.

As an external director, what
contribution do you hope to make to
ULVAC’s future growth?
Nakajima: In our roles as external directors,
I believe the four of us are deepening
discussion at the Board of Directors bydrawing on our respective expertise.
As indicated on the skills matrix, myexpertise as an external director centers on“corporate management,” “global,” and “salesand marketing.” I often express my opinions
on human resources systems, evaluation,and succession planning, and I also serve as
chairman of the Committee for Appointment
and Remuneration, etc. In addition, I havebeen encouraging ULVAC on diversity,
including the active participation of women,
and will continue to do so.
Nishi: As well as experience in management,
I have expertise in risk management gainedat an insurance group, including in asset
management. I would like to contribute toexecution of the new mid-term management
plan by offering advice based on myexperience and expertise. I have a particularinterest in identifying and managing risk andin the connection between risk and businessresults. That is the perspective from which I
intend to offer my opinions, rather than simply
being risk-averse.
Focusing on the PDCA cycle of initiatives,
I would like to make myself useful byhelping to identify the reasons why plans
remain unfulfilled and problems arise, and in
implementing measures to deal with theseissues.
Ishida: Concerning the stance of external
directors, I don’t think they should beconstrained by their formal role of “monitoringmanagement as a representative ofstakeholders.” Rather, by having as much
two-way communication as possible, I want

Dr. Kozo Ishida External Director
Became an External Director of the Company in September 2016 after
serving as Vice Chairman and Representative Director of HORIBA, Ltd.

Uchida: Many listed companies appoint
lawyers, accountants, university professors,
and the like as external directors, but all four ofus, who serve as ULVAC’s external directors,
have experience as corporate managers, which
is very unusual. This may be one reason why
in-depth discussion of management issues
is the norm at ULVAC’s Board of Directors
meetings and why those meetings are sovaluable, interesting, and meaningful.
I have experience in conducting M&A,
centering on overseas deals, as CEO ofa company. Mr. Nishi, Dr. Ishida, and Ms.
Nakajima also have extensive experienceand knowledge. As ULVAC moves forwardwith its initiatives under the new mid-term
management plan, I think we can support
ULVAC by offering a good advice.
We can also offer advice on complianceand corporate governance, making timely
interventions to confirm that all is as it shouldbe. Each of us is committed to fulfilling ourresponsibilities as an external director, aiming
to be someone whom the younger generation,
the future leaders of ULVAC, will consult andseek advice from.

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