Good spinfor our society

CSR
Report2017
Activities ReportEditorial policy
NKC creates the CSR report with the purpose of disseminating as widely as possible the vision and content of initiatives in CSR activities toall relevant parties both inside and outside the company.
In the preparation of this report, the opinions provided by the questionnaire survey of the previous year’s report have been incorporated into
this report for improvement of appearance and ease of reading.
The report is prepared in two versions, the “Digest” and the “Full report,” effective in the FY2017 report, so that the necessary information
can be efficiently delivered to the people who need it.

About the full version of the CSR Report 2017
■Organization reported■Report medium

This report is basically meant for the CSR activities ofThis report is the “full version.” The “Digest,” which contains selectedannual topics and feature stories, is available in a hard copy uponrequest or is downloadable from NKC’s corporate website.

NKC.
When the report covers the activities of any affiliate of* The contents of the feature stories in the Digest are the same as thoseof this report.

the NKC Group, the name of such an affiliate isshown in the relevant article.

■Report period
FY2016 (April 2016 to March 2017)■Reference guidelines

Full version

Digest* This report

The Digest contains selectedannual topics and featurestories from the full version.

It carries the annual topics and feature stories
as well as the detailed results of the activities by theme.

UN Global Compact■Issuance

Request of a hard copy (contact)

CSR Group, CSR Management Division,
Nakanishi Metal Works Co., Ltd.
3-3-5, Tenmabashi, Kita-ku, Osaka
TEL +81-(0)6-6351-4832

This report: August 1, 2017
Previous report: August 1, 2016
Next report: August 1, 2018 (scheduled)

Page of the NKC corporate website
where the CSR Report is downloadable:

http://www.nkc-j.co.jp/eco_csr/csr_dl.html

Major Opinions about the Report and Points of Improvement

Major Opinions

Points of Improvement

I want the outcomes to be expressed in an easy-to-understandmanner.
I expect continuation of the ongoing activities and better
progress of some activities that didn’t work out well.

Until our 2016 CSR Report, we self-rated our activities using
marks of ○ and ╳. However, this system is not employed inthis report, or in the “Summary of FY2016 CSR Activities” onpages 6 and 7. Instead, we express results and outcomesusing specific descriptions. (Some results are shown in values
where it is appropriate.)

The font is generally small in size, and there are a lot of texts
to read. Thus, it is difficult to read it through and understand.
Graphic descriptions, using illustrations and photos, should
be used.

We used a larger font size than in the previous report.
Another attempt to make the report more readable is to havea feature page that gives a graphic description of some major
events.

I want to know more about the various business activities of
the NKC Group and the activities of each site inside andoutside Japan.

This report carries the activities of the domestic and overseas
sites of NKC and each member of the NKC Group (including
individuals).

This report is a waste of paper.
How about making an improvement in the paper quality,
the number of pages, or the number of copies?

The report is published using paper that is not involved in any
act of forest destruction and is composed of and issued inpages and copies in the smallest necessary number.

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NKC CSR REPORT2017

Message from the President
We are moving ahead as one fora brighter future toward the 100th
anniversary of our foundationin 2024.
Tatsuo Nakanishi, President
The NKC Group takes various actions to fulfill its social
responsibilities through various CSR activities so far conducted.
On the other hand, society has come to emphasize theconcept of “corporate sustainability.” A company needs to makecontributions to society and enhance its own value in awell-balanced manner in three aspects i.e. the environment,
society, and economy, and have a long-term strategy that helps
make all of society sustainable. In order to respond to thesechanging times, we integrated departments engaged in CSR
activities into a single department “CSR Management Division” in
April 2016, and established an appropriate system for CSR
promotion. In response, we are going to put more emphasis on
the following six themes.

raised the level of safety and health efforts on the global level.
In the environmental management field, continuous
maintenance and improvement activities are conducted under theenvironmental management systems integrated under the NKCGroup’s environmental policy.

In April 2015, we signed up for the UN Global Compact to startaction to solve global tasks as a member company.
To clarify the policy on implementation of these action efforts,
the NKC Group renewed its Code of Conduct in 2016. Under the
new Code, we will do our best to create a sustainable society
while aiming to achieve our goal, or sound corporate activity withhigher ethical standards.
We also decided to apply the NKC Standards, or theguideline for in-house action level, to the entire group to promoteinternal consciousness-raising so as to prevent our Code of
Conduct from becoming a dead letter.

More and more, society is expecting corporations to help solve
social tasks in foreign countries. When we increase theopportunities for communication with local stakeholders, we canidentify local problems and tasks and promote their solution in amanner with local roots, while respecting the initiative of ouroverseas sites. This will lead to us winning more new opportunities.
The NKC Group encourages and promotes local employees’
spontaneous and voluntary actions within the scope of CSR atoverseas sites, including recycling activities, food support, forest
preservation activities, tree-planting, support of orphanages andschools, and local cleaning activities.

Social Contribution Activities

We maintain open lines of communication with local communities
to deepen mutual understanding and reach out to help them toidentify and solve problems with a focus on aiding theirdevelopment. To help build a “sustainable society,” we contribute ina wide range of areas, including the global environment, local
communities, philanthropic corporations and organizations,culture, art, sports, and more.

Support of the UN Global Compact

Global Application and Ideal Status of CSR

Thorough Compliance

CSR Education and Consciousness-Raising

It takes the right awareness and action of each employee to fulfill
compliance. Even if we stay within the scope of legal
appropriateness, we believe it is essential for us to have aself-questioning attitude to realize fair business development.
Each and every director and employee must act in our daily
service with a high sense of ethics and responsibility to win thetrust of all stakeholders and live up to their expectations andprovide innovative products and services. In doing so, we aim togrow together with society.

We conduct CSR education and consciousness-raising activities
for the maintenance and promotion of the soundness of CSR
activities.
The NKC Group prepares the “CSR Report” and distributes itin the company every year. It is hoped that the promotion of
improvement and effective use of the “CSR Report” will encourage
employees to improve their CSR consciousness and take action
and help the stakeholders understand what we do for CSR.
Education and training in the safety and environment field aims
to improve employees’ consciousness. NKC also conductedtree-planting in Wakayama prefecture’s corporate forest, the “NKCGroup Eternal Forest,” in November 2016 as part of the events tocelebrate our 100th anniversary. I hope that those activities will
promote improvement of not only employees’ consciousness offorest protection and environmental preservation but also theirconsciousness of participation-based voluntarism.

Safety & Health and Environmental Management

The General, Safety, Health and Environmental Management
Committee, which supervises our plants inside and outside Japan,
is mainly engaged in improvement activities, information sharing,lateral application, and compliance with legal revision according to
the safety and environmental policies. The Committee promotes
compliance with the environmental management goals of theentire Group including its overseas sites.
In the safety and health field, the policy puts top priority on
safety in every kind of work. Under this policy, the safety andhealth management system is promoted and supervised in all ourplants inside and outside Japan. In 2016, the Global Safety
Conference was held, in which all safety and health personnel ofall plants in and out of Japan participated. This event successfully

The NKC Group will celebrate its 100th anniversary in 2024.
We are determined to enthusiastically take action from along-term viewpoint together with employees, always keeping in
mind NKC Group’s vision of becoming “a company that constantly
reinvents itself and one that its employees are proud to be a part
of.”

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NKC CSR REPORT2017

NKC Group’s CSR Policy
Participation in the UN Global Compact encouraged us to totally renew our CSR policy in November 2016.
True to the “NKC's Vision” as our corporate philosophy, we strictly comply with and follow the “NKC Group Codeof Conduct,” and each employee is determined to carry out the “NKC Standards” associated with the Code.

Our mission is to develop and provide
products and services that areeconomically, environmentally andsocially superior, and safe to provide
thorough satisfaction and earn publictrust. In addition, we respect thecultures and customs of the countries
and regions where we operate and wecontribute to their development.

NKC's Vision (Corporate Philosophy)

NKC aims to be a revolutionary company that encourages
all employees to take pride in their respective roles.
NKC Group Code of Conduct (Corporate Code of Ethics)
1. Principal Mission

6. Environmental Protection

Our economic, environmental, and social mission is to develop and supply safe,
high-quality products and services that satisfy our customers and consumers andearn their trust. We contribute to the development of the countries and communities
that host our businesses while engaging in business practices that respect thecultures and customs of particular localities.

We recognize that efforts to protect the environment are an indispensable aspect ofbusiness operations. We shall voluntarily and proactively practice environmental
protection and address environmental issues.

2. Compliance with Laws and Social Norms

7. Social Contribution

We shall comply with all laws and regulations as well as various international norms andshall engage in free and fair competition and appropriate dealings. We shall also maintainsound and normal relations with national governments and public administrators.

We shall actively pursue solutions to social issues through our business practices andshall contribute to the emergence of a society committed to sustainability.

3. Information Protection and Disclosure

8. Opposition to Antisocial Influences

We shall proactively communicate with the public and shall fairly and actively disclose
corporate information in a highly transparent manner. We shall also protect and safeguard
a variety of information including personal information and customer information.

We adamantly stand against antisocial forces and organizations that pose a threat to theorder or safety of civil society and thoroughly eliminate any relationship with such forces.

4. Respect for Human Rights

9. Adherence to Corporate Ethics

In respecting the human rights of all, we shall never participate in human rights
violations. We shall seek to identify and eliminate risks to human rights and potential
impacts of existing situations.

Senior management shall assume responsibility for implementing this Code of
Conduct and for taking all necessary steps to promote awareness of it throughout the
NKC Group and among its subcontractors. Moreover, senior management shall heed
the opinions of those inside and outside the company and shall seek to improve our
in-house system and adhere to the principles of corporate ethics.

5. Providing a Positive Work Environment

10. Problem-solving

We shall do our utmost to ensure safe, healthy, and welcoming work environments
free from discrimination while respecting the diversity of all engaged with the NKCGroup and shall not engage in illegal labor practices or child labor. We shall implement
a relaxed approach to enriched work practices.

Should a situation arise that violates this Code of Conduct, senior management shallannounce its intended response, clarify the details of the situation, investigate thecause of the violation, and work to prevent its recurrence. After prompt public
disclosure of appropriate information and adherence to accountability measures,rights and responsibilities shall be clarified and disciplinary action shall be taken,
including action with respect to senior management where necessary.

NKC Standards(Code of Ethics for Employees)
Relationship between the “NKC Group Code of Conduct” and the UN Global Compact
NKC Group
Code of Conduct

UN Global Compact

Human rights

Principle 1: Businesses should support and respect the protection of internationallyproclaimed human rights and4

Principle 2: make sure that they are not complicit in human rights abuses.
Principle 3: Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining,Labor

Principle 4: the elimination of all forms of forced and compulsory labor,

5

Principle 5: the effective abolition of child labor, andPrinciple 6: the elimination of discrimination in employment and occupations.
Principle 7: Businesses should support a precautionary approach to environmental challenges,

Environment

Principle 8: undertake initiatives to promote greater environmental responsibility, and

1.6

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

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NKC CSR REPORT
2017

2.8.9

Our CSR Activities

Thorough separation and recycling of waste

What are “CSR activities”?

Makoto Nomura, NKC OF CANADA, INC.

Corporate social responsibility (CSR) activities are initiatives thatcompanies implement to benefit their customers, employees,society, the environment, and to promote their sustainable growth.
“CSR activities” are basically the efforts required of a company.
However, we understand that there are many people who find it
difficult to understand.
In response, we present the readers easy-to-understandexamples, which are individual versions of CSR activities.

In an area in Canada where I live, there are strict rules about refuse
separation and sorting. Local people make no mistake in sorting refuse
using dedicated boxes. This year the rules
became stricter. Now they require more detailed
classification of “plastic” things. When I was living
in Japan, I obeyed the refuse separation rules.
Now my environmental consciousness has beenfurther enhanced. The small efforts of each citizen
lead to maintenance and improvement of the
global environment. I keenly feel this connection.

Active participation in local crime and disasterprevention activities

Promoting energy saving even in my private time
Fumihiko Omura, THAI NAKANISHI CO., LTD.

Tetsuya Hamaguchi, Tokyo Sales Office, C.T. Machinery Co., Ltd.
I give a helping hand to crime and disaster prevention activities held in myneighborhood. I actively participate in local cleaning activities in addition tonight-time patrol and disaster prevention drills to
help make our community a safe andcomfortable place to live in. When a local
community works, it can ensure mutual help toovercome risks such as crime and disaster. I
intend to continue local support to vitalize myneighborhood.

Our Thai base obtained ISO14001 certification. While energy saving is
promoted in the company, I myself try to promote energy saving even in my
private time. Since Thailand is a tropical country,
we use an air-conditioner all through the year. As I
am here alone, I use no air-conditioning in the day
time at home. After I come home, I only operate
one air-conditioner as the outside temperature has
already dropped. The set temperature is also about
28 to 29 degrees. When I am out, I make it a rule
to turn off the power of each electrical appliance.

Cooperating with “TABLE FOR TWO” activity

Environmental protection and money- and energy-saving
by commuting to work with a small motorbike

Ayaka Matsuda, Aichi Sales OfficeJunichiro Inaoka, Atsugi Branch Office

When I was a student, I chose a subject specialized in international issues.
This experience made me develop the custom of living my life with aconstant awareness of social contribution
activities. These days, when I dine out, I try tochoose restaurants that carry out a social
contribution program by the name of “TABLE
FOR TWO”*.

I used to use a car to commute to work or go shopping at nearby shops. But
I brought a small motorbike, which I used in my student days, from Osaka to
Kanagawa. Now that I changed to a small
motorbike for commuting, a lot of fuel has beensaved. Fuel-wise, it is certainly a contribution to
global environmental protection. Since themotorbike consumes a very small amount of fuel,it is also money-saving and energy-saving eventhough I use it everyday. I am planning to move on
to a bicycle to burn not gas but fat.

* A program promoted by a Japanese NPO. When one
buys a relevant set meal or food, a donation of ¥20 per
meal is used to provide meals to children in developing
countries through the organization.

Good things come from local production andlocal consumption

The serious attitude of students really moved me
Toshio Nagashima, Suda Shouji Inc.

Megumi Inoue, Banshu Nakanishi Metal Works Co., Ltd.

Suda Shouji donates wooden boards, which are otherwise disposed of, to a
special-needs school, from which the company’s employees graduated, forwoodwork teaching. I have been engaged in thisjob as part of my work and am always moved by
students’ serious and earnest dedication to
production. In addition to this activity, I also
attend a local employment support liaison
meeting as an adviser on safety matters andwork procedures.

In my home, we always use fresh local vegetables for meals. I go to nearby
stores where locally harvested vegetables are sold directly from theirproducers on holidays with my “eco bag.” I buy
not only vegetables but also jams, sushi andother hand-made foods at good prices. Using
those local farmers’ stores pleases me and myfamily members, which pleases producers, or
local farmers. This is the very case of “virtuous
circle.” I hope to continue connecting with local
people in this way.

Cooperating with resource recycling

Taking on ecological movement by myself

Shunsuke Asaba, Head Office, E-Globaledge Corporation

Masaki Mori, Head Office, Website Management Department

I think refuse recycling is very important in this resource-poor country ofJapan. In fact, Japan’s recycling ratio is higher than other countries. I have agood understanding of the recycling rules of thelocal government and separate waste in the rightway so that I can help promote recycling. For
example, what I try to be careful of is that I wash
the insides of plastic containers, cans and bottles
with water and that I remove staplers fromcardboard before dumping it for recycling.

Last year, I finally changed cars from the beloved one I drove for over 10
years. The new car I bought is a model equipped with an “ECO” mode forenvironmental consciousness. While I am driving,
the fuel consumption is always shown, which has
made me more aware of fuel consumption. It is
hard to run economically in an urban area, but I
enjoy driving as I take it as a challenge to improvefuel consumption of my car.

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NKC CSR REPORT2017

NKC Group’s CSR Policy■ Summary of FY2016 CSR Activities those problems as of FY2016.

Here is a summary of the major tasks of NKC Group’s CSR activities and the actions taken for

Key issue

Activity policy

FY2016 activity results

Page

Plan after FY2017

Human rights and labor practices

Human
resourcesdevelopment

Education and training
by purpose and theme

Fair and just hiring
and appointment

Diversity andinclusion
Promotion ofwork-life balance

Harassment prevention

Labormanagement
relationship

Establishment of a soundand good
labor-management
relationship

Occupational safety
and health management[New employees] Initial training for new employees held (company information session at
the head office, field study in the plant, overseas language training)

Continue the initial training including thefield study in the plant and language
training.

[Second year of employment] Follow-up training on basic business skills held

Continue follow-up training for second
year employees.

[Mid-career employees] New business start-up training for development of executive
candidates (management workshop) held, and one new business proposal submitted tothe management

Continue basic training on setting andprogress management of job targets.

Horizontal deployment of the measures for the hiring of excellent human resources
regardless of gender started, a review meeting including the president for the head officeand plants held, and visit to and interview with schools carried out.

Continue inter-site review meetings andhiring activity toward man-woman ratio
leveling.

Project members for empowering women were convened, and women employees wereinterviewed about the current status (Nadeshiko Project).

Start recruiting male members and thesecond phase of the Project.

Provision on childcare leave of male employees was added to our childcare leave
regulations (9 male employees took the leave). This revision led to our acquisition of“Kurumin Mark (single star).”Provide notification of the regulation in thecompany and encourage male employees
to take childcare leave.

Preparation for introduction of the stay-home work system was made (trial by the
managerial staff and some departments conducted).

13
･
15

Continue to aim at achieving the 9-daytarget.

Daily status of overtime work was checked, information shared with the labor union, andthe overtime hours reduced from the previous year.

Continue daily management and promote
consciousness-raising of the managers.

Results of a stress check of all employees (total numeric data) were disclosed to the
managers, and the contents analyzed.

Continue the ongoing activities andreview the new introduction of e-learning.

Labor-management council on management tasks and employment environment was
held, negotiation by the branch in the NKC Group held, and spring wage negotiations
held.

Continue to collect opinions of employees
through consultations and make effective
use of the opinions.

The “Subcommittee on Review of Post-retirement Re-employment System” was set up
on how to deal with re-employed retirees and improve job satisfaction, and sessions
held as required.

16

Conduct internal audits of overseas plants
and hold regular meetings as usual. Hold theConvention once every two to three years.

Internal audits by the head office staff were conducted (9 plants inside Japan and 4
plants outside Japan), and recommendations for improvement were made.

Share actions taken by each plant among
plants as successful examples.

17

Continue actions for zero accident effort
to increase the number of plants worth
being commended.

Various kinds of safety training (special training for licensed personnel, training by grade,and basic training at a morning meeting) were provided.

Continue providing education and training
based on lectures and others and enlightenmentby sharing information on a daily basis.

Risk assessment activities for mechanical equipment to be newly introduced or forchemical substances were thoroughly conducted.

Deepen the level of risk assessment ofchemical substances.

18

Fire-fighting drills based on fire scenarios were conducted.

Continue action for improvement of safety
consciousness.
Continue holding seminars for further
improvement of safety driving
consciousness.

Road safety seminars were conducted for company car drivers.

Mental healthcare

Hold the sessions on a regular basis, andsubmit the company’s response to thepending matters within the year.

The “Global Safety Conference” was held, in which all safety and health personnel of allplants inside and outside Japan participated.

Employees were encouraged to notice potential risks through various activities forconsciousness-raising including use of KY training, daily training, or use of KY cards.

Promotion of health

Review introduction of the system andincrease in the number of sites where thesystem should be introduced.

Employees were encouraged to take paid leave through cooperation with the labor
union, and the paid-leave taking target was chosen, which is 9 days per person.

Prevention of accidents

Comfortable workplacedevelopment· Continue review of the new businessproposal.
· Start training on a new theme.

[Employees with core positions] Target management training for employees newly
appointed to Grade 1 core positions held, and application of this training to two affiliatedcompanies started

Zero accident awards were given to a total of eight plants who achieved a zero accident
record for a given year (five plants in Japan and three plants outside Japan).

Occupationalsafety andhealth14

19

Start reviewing of a series of measures“prevention, early detection, andrestoration” (BCP).

Workplace environment improvement was conducted at all domestic plants from astructural viewpoint.

Aim for a workplace where every
employee can feel comfort in conjunction
with diversity activities.

Follow-up action was conducted based on the regular and special health examination
results.

Reinforce monitoring of employees’ healthcondition from the viewpoint of both
“body” and “mind.”“Health Notebook 2016,” a book for enlightenment on health promotion, was issued,and participation prizes were distributed to 888 employees at relevant events held intandem.
Stress check “Mental Health Examination” was made to all direct employees.

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NKC CSR REPORT
2017

20

Hold health-promoting events
simultaneously with the National Industrial
Health Week.
Continue to provide stress check to all
direct employees.

Key issue

Activity policy

FY2016 activity results

Page

Plan after FY2017

Environment
External audits were made at six domestic plants based on ISO certification, and points
recommended for improvement were put into practice.
Internal audits by the head office staff were conducted, and points recommended for
improvement were put into practice.
Environmental
management

Continue promotion of various activities fortarget achievement and progress management.

A field check was done at all subject companies to verify industrial waste disposal
contractors (and no problems found).

Continue systematic confirmation ofcontractors’ legal compliance.

Resource saving

Prevention ofcontamination(soil and water)

Environmental
consideration for local
community

22

Share actions taken by each plant among
plants as successful examples.

The CO2 emission reduction set by the industrial organization was achieved.

Continue achievement of the emission
reduction target through promotion ofenergy-saving activities.

New energies, including recyclable energy, were fully introduced at six plants.

Promote introduction and switch to moreenvironmentally friendly products to enhance
the use of introduced new energy.

We participated in the Fun to Share campaign, and implemented the Cool Biz andWarm Biz campaigns in the company.

Environmental
protection

Continue to accurately suggest recommendations
for improvement and provide progress
management for early improvement.

Basic unit management and demand management were conducted, and annual targets
achieved.

The Nabari Plant was given the environmental award as a plant that achieved particularly
excellent annual environmental performance.

Energy-saving

21

Continue to extend active cooperation withauditors.

23

Continue promoting “casual biz.”Company cars were gradually shifting to ecological cars.

Replace ecological cars, once introduced, withmore effective models where possible.

We achieved zero emissions for the tenth consecutive year.

Continue to maintain zero emissions status.

The total amount of waste was reduced by promoting “reduce and reuse” activities.

Promote further reduction in waste bycontinuing “reduce and reuse” activities.

Water quality survey was conducted at wastewater treatment plants in the compound,and the sewage was confirmed to satisfy the effluent standard.

24

Continue survey and improvement forcontamination prevention.

Effluent survey was conducted at nearby rivers, and the water was confirmed to satisfy
the effluent standard.

Continue survey and improvement forcontamination prevention.

The water quality of the groundwater was checked in the neighborhood, and no soil
contamination was confirmed.

Continue survey and improvement forcontamination prevention.

Noise, vibration, and odor were checked to examine the impact on the surroundingarea, and compliance with the standard level was confirmed.

Continue periodic inspection and improvement.

We operated a power supply business using recyclable energy (solar power generation)
and are working on start-up of another business (biomass power generation).

25

Wind turbines produced by C&F Green Energy started operation with the cooperation ofa cooperating company in Yurihonjo city, Akita prefecture.

Start to supply power from the biomass power
generation business.
Promote sale of wind turbines produced by
C&F Green Energy.

CSR Management
Reinforcement ofinternal control

Organizational
governance

The Code of Conduct was revised as CSR activity policy, and the code of behavior was
newly established.
Drills based on an earthquake scenario were conducted (including safety confirmation
test, disaster management HQ operation training, and normal rescue drill).

Risk management

Supplies and reserves for disaster situations were checked by stocktaking and were
further reinforced.

Make them fully known to our employees.

13
･
26

Application of the information security polity to domestic sites including subsidiaries wascompleted.

Fair businesspractice

Thorough compliance

Increase the number of training items and thefrequency of training and drills and apply themto various sites across the company.
Conduct systematic purchase of such supplies andapply them to various sites across the company.
Internal audits were conducted to checkcompliance with the regulations.

We set up an internal compliance hotline (no reports received) and informed the employees ofthe external compliance hotline (distribution of consciousness-raising cards to new employees).

Continue timely examination by internal personnel
and promote active cooperation with inquiries
from the competent administrative commission.
Inform the mid-career employees of the internalreporting system.

We met with local residents and organizations and asked them about what they wantedor required

Incorporate what we learn or the information
we gather from interviews into our activities.

We collected employees’ opinions through the internal questionnaire survey andincorporated them into the CSR Report.

Continue incorporation of the gathered opinions
to the CSR activities.

We cooperated with local disaster prevention activities (including donation of disastermanagement tools and participation in local fire brigades).

Continue donation of necessary items to local
communities.

Compliance with the subcontract act was confirmed and improved as appropriate(contracts, purchase orders, value of orders, etc.).

27

Social Contributions
Establishment ofrelationships
with contribution
recipientsInteraction and reflection
on activities

Support of activities
of local communities
and organizations

Promotion ofcontribution
activities

Biodiversity preservation

Social welfare

Promotion of education

We provided donation to the areas affected by the Kumamoto earthquake.

28

Continue the activities for damage-afflicted
areas in and out of Japan.

We continuously conducted cleaning activities in the neighboring areas of sites inside oroutside Japan.

Increase the number of sites inside or outside
Japan where employees participate in local
cleaning activities.

We supported (cooperated with) the Stop! Drunk Driving Project (SDD) and encouraged people supposed
to be newly employed or newly employed workers to be aware of the dangers of drunken driving.

Continue consciousness-raising of prospective
employees and new employees about safe driving.

We conducted five carbon offset actions (forest-absorption type) and set off a total of
102 tons of CO2
We signed an agreement with the forest preservation activity near Tanabe city,
Wakayama prefecture (“Corporate Forest” activity) and conducted the first tree-planting.

29

We supported the employment of the elderly and people with disabilities through thespecial job assisting facility (job order placement).
We donated foods to social welfare facilities (reserves whose expiration date was
expected to come in the middle of 2017).
We operated the scholarship foundation (¥42,165,000 provided as a scholarship to 113
students and ¥5,000,000 provided as research subsidy to five recipients).

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NKC CSR REPORT
2017

Conduct offsetting of CO2 that occurs during
the production stage of CSR Reports.
Continue environmental conservation activities
and holding of welfare events during tree-planting.
Continue utilization of job assisting facilities.

30

Continue the same activity and review implementationan action similar to “food bank” in our company.
Revise the procedures as required (designatedschools, amount of money, recruitment method, etc.).

Special
Features1

Entry to environmental business
Global environment issues are recognized as important tasks to solve in international society and are taken care ofaccordingly. The NKC Group has been promoting environmental management activities for many years now. We
entered the new power business, by means of a Group company, to put more emphasis on environmental
preservation activities through our business. In this special feature, we outline the new power business and the historyof how we have handled this business until today.

[Solar power generation business] NKC Murayama Solar Power Co., Ltd.

Murayama Power Plant

We entered the solar power generation businessand established the “Murayama Power Plant.”

The “Nabari Power Plant” started.
We purchased the solar power generation business conducted
at our Nabari Plant from its original owner SB Energy Corp. in
December 2015 and started the plant under the new name of
the “Nabari Power Plant.”

NKC Murayama Solar Power Co., Ltd. was founded in
October 2014 as a subsidiary fully financed by Nakanishi
Metal Works. This started our entry into the solar power
generation business.
This new company set up a large-scale solar power
generation system plant, “Murayama Power Plant,” inMurayama city, located at the center of Yamagata prefecture.
This is a rare solar power plant operated in a snowy area inthis industry.
Solar power generation is a clean power generation systemthat emits no carbon dioxide like biomass or wind power
generation. Murayama Power Plant is expected to save CO2
emission of about 730 ton per year.

■Total power output in FY2016* The total power output of “Murayama Power Plant”
and “Nabari Power Plant”* The power output is expressed in units of kilowatts.

300,000

200,000

March

January

February

November

December

October

SeptemberAugust

July

June

May

0

April

100,000[Biomass power generation business] NKC Nagai Green Power Co., Ltd.
The power generation system,
the second in Japan, was employed.
In July 2017, NKC Nagai Green Power Co., Ltd., which
conducts wooden biomass power generation, is to start
operation of its power plant.
“Nagai Power Plant,” established in Nagai city, Yamagata
prefecture, uses the wooden biomass gasification system for
power generation, the second case in Japan, and is capableof efficiently using chips of high water content.
The scheduled annual power output is 14,800,000 kWh, andthe expected CO2 saving is about 8,480 ton per year.
We procure materials from around Nagai city as part of ourcontribution to local environmental protection. We also intend
to employ workers from the local community to help create
jobs for local residents.

Nagai Power Plant

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NKC CSR REPORT2017

Environmental History of the NKC Group - Toward a Sustainable Society
We started undertaking environmental management activities in the 1990s and went into full-scale operation in the 2000s.
The scale of this activity has been increasing year by year.
Today, a lot of those activities have borne fruit, and the action still continues its expansion.
The NKC Group carries out what is really necessary based on our right understanding of global environmental issues andmakes contributions to the creation of a sustainable society.
Year

NKC’s actions

Social movement

2002

・Start of introduction of eco cars
・Introduction of the system for control of the number of compressor
units
・Start of introduction of energy-saving lights, such as LED

2003

・Launch of the action for zero emission to aim at “zero waste for
landfill disposal”
・Start of introduction of cogeneration

・Enactment of the “Environmental
Education Promotion Act”

2004

・Start of the introduction of amorphous transformers
・Full-scale start of switching to energy-saving production system
・“Osaka Plant” received the Director-General Award of the Kansai
Bureau of Economy, Trade and Industry

・Revision of ISO14001 andissuance of its 2004 version

2005

・Establishment of our environmental policy・Introduction of solar power generation in the “Tenma area”
・“Suda Shouji Inc.” acquired ISO14001 certification.

2006

・“Osaka Plant” acquired ISO14001 certification
・“Nabari Plant” acquired ISO14001 certification
・“Mie Plant” acquired ISO14001 certification

2007

・Start of sale of vertical shaft type wind power generation system
・Declaration of achievement of zero emission

2009

・Establishment of EPD Office that develops and sells
environment-related products
・“Tenma Sheet Metal Division” acquired ISO14001 certification
・“EPD Office” acquired ISO14001 certification

・Japan declared the interim
target for global warming gas
reduction.

2011

・“NKC Manufacturing Wuxi Corporation” acquired ISO14001
certification

・Japan established the “feed-in
tariff.”2013

・Second Osaka Traffic Eco Challenge Excellent Award received
・Start of the introduction of electronic manifest
・Start of the sale of raw garbage treatment machine and its
introduction in the “Tenma area”

・Japan revised its mid-termtarget for global warming gas
reduction.

2014

・Start of carbon offset activity
・The “Tenma area” introduced an automatic waste weighing
system2015

・“NKC Manufacturing Sweden AB”
acquired ISO14001 certification

2016

・Fuji Honing Industrial Co., Ltd. acquired ISO14001 certification
・Start of the sale of C&F Green Energy compact wind power generator

2017[Present]

・Revision of ISO14001 andissuance of its 2015 version
・COP21 held and “Paris
Agreement” adopted

・Zero emission record for the tenth consecutive year achieved.
・Environmental policy was revised.
・Compact wind power generators manufactured by C&F Green
Energy obtained NK certification (compatibility evaluation of windturbine performance and safety).

09

NKC CSR REPORT2017

Special
Features2

Global Safety Conference
Workplace safety and health has always been taken as a top priority issue in our over 90 year long history of the NKCGroup. We continue to gradually deploy and diffuse our effort from domestic plants to overseas plants to realizeenhancement of the safety and health standard. This special feature reports the first “Global Safety Conference” held
in FY2016 and outlines the measures taken by overseas plants for safety and health.

First Global Safety Conference
In our long years of safety and health efforts, we have promoted the efforts
mainly in domestic plants. For our overseas plants,we individually apply
the efforts and share information through meetings and internal audits.
While it is important to realize improvement based on the condition in aplant to improve the level of safety and health, we believe we can find andlearn new things by looking at the condition of other plants.
In September 2016, we held the “Global Safety Conference” at the head
office for the first time in the history of the NKC Group to share information
among plants and reinforce the mutual relationship across the Group.
All safety and health personnel of plants in and out of Japan weregathered at the Global Safety Conference. A variety of programs wereconducted in the two-day schedule.
The programs were composed of mainly “successful examples” of various
plants. Participants were also offered training to detect potential hazards
and visits to plants.
When a thematic free conversation program on safety and health was
conducted, the participants never stopped discussion even after thescheduled time expired. They effectively exchanged various opinions andideas.
We learned a lot from this Convention. The major benefits include
establishment of a good relationship and sharing of important information
among plants as well as improvement of the personnel’s consciousness
and knowledge and skills.
We plan to hold the Convention once every two years and make effective
use of this event by revising programs, sharing mutual successful
examples, and mutually enhancing our safety and health consciousness.

■Program of the Global Safety Conference

Major programs
Confirmation of the NKC Group’s “Basic Policy on
Safety and Health”
Sharing the information on no accident operation andaccident occurrences in the past five years
Analysis of accidents caused by human error
Introduction of successful cases of potential hazard
detection (detection of hazard factors)

Day 1

Implementation of potential hazard patrol (field practice)
Introduction of successful cases of measures taken byparticipating plants
Introduction of a successful example based on amorning meeting, “mini morning meeting”
Presentation of topics on safety and health activities byoverseas plants
Thematic free conversation

Day 2

Visit to plants (Osaka, Nabari, and Shiga Plants)[Global Safety Conference Remembered with Photos]

The Global Safety Conference, the first kind of event in thehistory of the NKC Group, was held.

Practical training of potential hazard detection using
an actual workplace

Participants were very enthusiastic during the thematic
free conversation session.

Participants visited plants and exchanged notes on Day 2.

Participants visited a “Safety Dojo” (space for education)
in a plant.

Souvenir photo (showing all participants)

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NKC CSR REPORT2017

Safety and Health Activities in Overseas Plants - Major Topics Narrated by Safety and Health Personnel
USA

NAKANISHI MANUFACTURING CORPORATION

Serious life-saving training to save life in an emergency situation
We have one AED each at three areas in our plant, and all members know it. Every employee can get to an
AED in each area within about one minute and sixty seconds. That means, we can start life-saving action with
AED within three minutes. All employees are also provided with AED operation training every year. All
employees take the training every year, which allows them to refresh their memory and act accurately andswiftly in the event of an emergency. Furthermore, we hold a workshop on first-aid procedures so that they can
improve their knowledge and skills of life-saving.

USA

Notice board to share information
on safety and 5S’s

Syouji TairaA scene in the Safety Week

Chen Baoyun

Employees during safety training
at a morning meeting

Bai Xuesong

6S posters and orderly andneat arrangement in the plant

Zhang Liu

Employees during a fire-fighting
drill

NKC MANUFACTURING DALIAN CO., LTD.

We achieved no accident operation for the 8th consecutive year. The target is 10 years.
Our plant continues to achieve zero accidents consecutively for 8 years. This is the outcome of all employees
being engaged in the 6S activities. We prioritize the 6S activities in the descending order of “discipline, orderly
arrangement, neat arrangement, cleanliness, cleaning, and custom.” What we mean is, thoroughly teaching therules helps employees continue the practice of “orderly and neat arrangement” and make it second nature sothat unsafe actions will be fully eliminated. We also focus on risk assessment and potential hazard detection.
Future plans include continuation of these measures to aim at achieving our first goal, the 10th consecutive
year of zero accidents.

China

Anna Sjastad

NKC MANUFACTURING WUXI CO., LTD.

Promoting improvement in both safety and the working environmental
In FY2016, we put a premium on improvement of safety consciousness. We first focus on consciousness
reform of management supervisors. To be specific, they are assigned to serve as the leader of any special
committee to settle each role. In addition, we started working on the improvement of the working environment.
We promoted (1) downsizing of the workplace by the 2S team, (2) classification of pedestrian roads in the plantcompound, and (3) application of safety covers to production equipment. We also focused on compliance andfully practiced how to comply with the fire defense law. We continue to work on improvement of safety and theworking environment in the future.

China

Education through practical drill

NKC MANUFACTURING PHILIPPINES CORPORATION

10th anniversary since the start of the “Safety Week”
The first week of every July is the Safety Week for our plant. We hold various events during this week. FY2016
is the 10th anniversary. The theme of this year is “Leadership and Risk Prevention by All Member Participation.”
During the week, a drill and lecture on earthquake and evacuation was held with the personnel from PAGASA(Philippine Atmospheric Geophysical and Astronomical Services Administration) as the lecturers, and a safety
quiz event, and a safety consciousness-raising poster contest were held. Many employees joined the event in ateam. The Week was successfully ended. This event is a valuable opportunity for our employees to realize
anew that it is very important to think about the safety of not themselves but also others.

China

Gene Bloodworth

NKC MANUFACTURING SWEDEN AB

Encouraging employees to be more conscious and fully participate in training
Industrial accidents can be reduced if every employee is constantly careful and prioritizes safety. We encourage
the participation of employees and aim to create a safer working environment. The following measures arecontinuously taken at our site: (1) Show how important safety is at the general meeting. (2) Share unsafe
information in the plant by putting it up on the notice board. (3) List the major risks of each workplace and takeresponsive action. (4) Conduct monthly internal audit on safety and 5S’s and disclose the results on the noticeboard. (5) Share information on a daily basis and provide education and training.

Philippines

Annual AED training

NKC OF AMERICA, INC.

Promoting safety education for dangerous work
At our plant, the leaders of the safety program hold monthly lectures on various themes related to safety andhealth. Movies and hand-outs are used for participants. When each lecture ends, questions are given to theparticipants at random to check how much they learned. Various ideas are used to make them learn effectively.
Among them, crane and forklift operation involves danger. For those operations, safety education is particularly
important. A practical drill is held three times a year. Drill participants learn the risk that carelessness will end up
a serious occupational accident the hard way.

SwedenMike Ramirez

NKC CONVEYOR FOSHAN CO., LTD.

Fire-fighting drill held in cooperation with the local community
We hold a fire-fighting drill every year, trying to improve fire-fighting safety consciousness and the sudden
response capability. In FY2016, our plant held a joint drill with a local government. We had such a full-scale drillthat we felt as if we had responded to the actual condition, with emergency vehicles put to use during the drill.
The drill was very effective in terms of acquisition of the basic knowledge on initial fire-fighting, evacuation, andrescue of the injured as well as improvement of the early response capability. Other than this drill, we takevarious other measures to enhance the level of fire prevention and safety, including workshops, teachingactivity, and maintenance of fire-fighting equipment.

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NKC CSR REPORT
2017

Series Feature

Toward the100th Anniversary

The NKC Group will celebrate the 100th anniversary of its foundation in 2024.
A company continuing its management is the major prerequisite of the CSR activity.
We present the efforts being made to realize continued growth beyond the 100th year offoundation in this series feature.

Annual Event Report: First Feature - “NKC Group Eternal Forest”

Signing ceremony at the Wakayama prefectural hallGroup photo of all participantsDistant view of “NKC Group Eternal Forest”

Participants during the event“NKC Group Eternal Forest” was born.

First annual event held

We participated in the “Corporate Forest” campaign
promoted by Wakayama prefecture in August 2016 to
improve our environmental contribution activities andwelfare activities.
The “Corporate Forest” is a campaign, initiated by
Wakayama prefecture, that promotes participation of
corporations for appropriate management and preservationof forests in the prefecture.
Participating companies areallowed to conduct theirown CSR activities by using
the human resources,
capital and other resources.
The NKC Group borrows aforest near Nakahechi-cho,Tanabe city, near the World
Heritage Kumano Kodo,
Nakahechi -cho,and named it the “NKC
Tanabe city,
Wakayama
Group Eternal Forest.”

In November 2016, the tree-planting event was held as
the first annual event toward the 100th anniversary offoundation in 2024.
A total of 53 people, including employees, with theirfamilies, of the head office and five domestic plants,
participated in the event and planted many young trees
with the help of the Nakahechi Forestry Cooperative.
The event was a very good opportunity for the participants
as they experienced wood chopping and chainsaw
operation and learned the power of nature and theimportance of protecting it by enjoying these programs.
It is our belief that CSR activities are established and growonly with the cooperation of employees. However, it is not
the idea to learn and carry out CSR in a stoic manner. The
thing is that it is important to create an environment where
we can voluntarily work on it while enjoying the activity
and feeling satisfaction.
We intend to hold these events for environmental
contribution every year to promote activities withparticipation of employees.

prefecture

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NKC CSR REPORT
2017

Promoting use of “human resources” and diversity
Support of child-rearing

Nadeshiko Project started

We conduct various activities to help employees choose the styleof working that fits them even during child-rearing.
In-house nursery centers in the head office and three plants areused as temporary day-care centers in case employees cannot
find their desired nurseries.
In addition, a provision on childcare leave of male employees wasadded to our childcare leave regulations, and we acquired “KuruminMark” in April 2016 as a “company that supports employees’
child-rearing.”

While the focus is put on improvement of the working environment,
we still have some problems to solve about the corporate culturethat prevents male employees from noticing the standpoint offemale employees.
In response, the company needed to incorporate the opinions of
women employees. The “Nadeshiko Project,” made up of women
members of various departments, was finally set up. In FY2016,
we shared the problems currently facing us in this respect.
In the future, we are going to recruit male employees to expand thesphere of activity for the Nadeshiko Project and help it continue its
activities.
Employee’s opinion

My participation in the Project
Moe Ohkura

Tokyo branch (Special Machinery Business Department)Children in a nursery

When people spoke to me as amember, I felt that this could lead tocommunication with other sections andso I participated with a positive attitude.
There are many men in my department.
They however have been very kind to me since I joined thecompany. So the personal relationship is very good.
On the other hand, when I think of my own growth, I still feelthere are a small number of women’s model cases.
I want to continue working even through various stages of mylife, including marriage and childbirth. I hope I can help improve
the working environment and make myself a model throughparticipation in this Project.

Kurumin Mark

Employee’s opinion

Using the childcare leave
Male employee, head office (management department)

After my wife gave birth to a child, I took a few days off as thechildcare leave to support my wife and the baby for a two-week
check. In the first place, our company has an atmosphere where
we can relatively easily take days-off. Now we have a flextime
system and a paid leave system, and I used them so that I andmy wife did our best to carry out our first child-rearing. My wife
was very pleased with my support. I myself felt the actual sense
and responsibility of what it means to raise a child.

Risk Management/BCP Activity
Status of the progress of earthquake damage BCP

BCM activity in peacetime

Since the outbreak of the Great East Japan Earthquake in 2011,
we have been preparing the earthquake damage BCP (disastermanagement plan) for each site.
The plan has been completed for all domestic sites, including ourGroup companies. For overseas sties, the BCP has been alreadycompleted for two sites in the Philippines.
In the future, we promote development of BCPs for overseas sites
while conducting BCP communication activities such as training.
While measures against earthquake events are emphasized inJapan, it is our policy to prepare plans that match the specific riskof each nation or region.

We take various measures to make the BCP effectively work in theevent of an emergency. For example, we provide information on the
BCP to our employees to help them know it. In addition, weestablished an emergency contact network and put it in place.
In FY2016, we held training on cardiopulmonary resuscitation so that
employees can cope with any emergency situation other than earthquakes.
In the next year, we plan to complete provision of training to apredetermined number of employees at each domestic site.
Employee’s opinion

My experience of cardiopulmonary
resuscitation training
Kanae Judai■Graphic illustration of how BCPs are developed for other sites

Head office (Special Machinery Business Department)(2012)
Head office’s BCP
completed(until the present day)
BCPs completed forall domestic sites inJapan and two sites in
the Philippines

In Japan and the Philippines, the BCP wasdeveloped based on the scenario of natural
disasters (mainly earthquakes).

I had training on cardiopulmonary
resuscitation when I was a student. At
first, I thought I remembered how to doit. But I realized there were many things I had forgotten. This wasa very good opportunity to refresh my memory. While I am
commuting to work, there are so many people on the way and in
the company. I think there is a high probability that I would use
AED. Now I learned how to use it again and memorized where it
is located in the company, I realized I became more aware of thiskind of danger together with my level of knowledge base.

(Future)BCPs aresequentiallydeveloped foroverseas sites.

The focus is not necessarily
put on natural disasters; risks
that specifically match eachnation or region are studied.

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NKC CSR REPORT2017

Human Rights and Labor Practices
NKC Group promotes a clear understanding of human rights issues and fosters respect for others while helping employees realize a healthybalance between work and life so that each one can be financially independent and lead a healthy and diverse lifestyle. We also maintain andpromote a company-wide occupational safety and health management system that puts safety first with a focus on achieving zero accidents.

Human resources development
Education and training by purpose and theme■ New employee training soon after joining the company■ Follow-up training for the second-year employees

In FY2016, new employee training was provided to a total of
32 newly employees hired by the Head Office and plants soonafter joining the company.
They learned the company rules and regulations and theappropriate mindset of a member of society in a week after
joining the company. Thereafter, the employees hired by theplants were assigned to their respective plant, while those
hired by the Head Office went through technical training andan about month-and-a-half long factory training course andcompleted one-month long language study course in thePhilippines. Although they were confused as they had to leadlife in English which they were not used to, they deepened themutual relationship through living together and learned English
the hard way, which became valuable training for them.

The follow-up training was provided to the second-year
employees. Trainees learn anew the basic attitude and skills
as members of society and set their future goals.
The last training course used a program based on a scenariothat a job is assigned to prepare a poster that advertises
recruitment. Trainees gathered information including survey ofvarious documents and interviewing various people, andactively exchanged ideas about how to impress the audience.
At the end of the program, the trainees received a message
from their manager, reconfirmed the expectations of thesurrounding people and their own tasks, and summarized
their future goals.

■ Management workshop for mid-career employees

Employee’s opinion

Some selected mid-career employees, among those
supposed to lead the company in the future, were provided
six-month training in which they were given the assignment ofproposing a new business.
This year, the theme of the training was materialization of a new
business plan developed by the participants of the same training
in the previous year. The trainees examined the hypotheses,
repeatedly verified them, and decided the concrete details of the
proposed new business while interviewing or negotiating withother companies or local governments.
Their deliverable, or the business plan, was actually submitted
to the top management who are currently reviewing the plan
to decide whether or not the plan is worth being practicallycommercialized.
The participants were able to acquire various skills, including
the capability of developing ideas and plans, as they went
through this practical training.

What I learned from overseas
language training
Ayako Tajima
Head Office (Bearing Business Department)

The language training was very meaningful forme as I felt the culture of a different country,
had the practical study in a Philippine factory,
and learned quite a lot of things.
What was good about the training at the language school is that we wereable to learn English on a one-on-one basis depending on the proficiency
level of each person. Although I had been learning English, this training
was so useful that it allowed me to improve my communication ability.
All the things I learned there actually help me a lot as I do my job right now.
I had rarely thought about working at an overseas site before, but I cameto have an interest in it as I went through this training.

■ Target management training for employees with core
positions

The target management training was provided to employees
newly appointed to Grad 1 core positions.
The training program helps the trainees understand the
purpose of the target management system used by the NKCGroup or the effective use of the system as they are shownspecific case examples, and ultimately prepare the target andits action plan according to the role of each trainee at theirrespective workplaces.
This training provides a good opportunity to trainees toreevaluate their job from a broader perspective as the trainees,
who come from various sections and jobs, such as
production, management, and sale, give each other advice onan objective basis.

Lessons in the language school

Group photo during Philippine factory training

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NKC CSR REPORT2017

Diversity and inclusion
Fair and just hiring and appointment■ Start of the review for equalization of the■ Empowering women

men-women ratio

The Nadeshiko Project for FY2016 was launched at the Head
Office. Our activity for woman empowering continues toestablish a cultural environment where diversity is honoredand everybody can work energetically.
Currently the activity is promoted only by female members.
Male members are going to be recruited to further spread theactivity.

We are discussing employment of women at factories so as tofulfill the goal of men-women employment ratio equalization.
In FY2016, we visited nearby high schools to let female students
know about us.
We continue to communicate with students and promote
development of an environment where men and women in theyoung generation can perform excellently.

Work-life balance■ Revision of the childcare leave regulation■ Operation of in-house daycare facilities

Revision of our childcare leave regulation led to earning of the“Kurumin Mark” in April 2016 by the Ministry of Health, Labourand Welfare as certification that NKC is a company that
supports the child-rearing of its employees.
Nine male employees have so far taken the childcare leave.

We set up an in-house daycare facility at a total of four sites,
including the Head Office and the plants. Those facilities takecare of children on a daily basis as well as a temporary basis.
They are treasured by our employees as a short-term daycare
facility until their children can be accepted by their desired
kindergartens or nurseries nowadays where there are many
children on waiting lists.

■ Preparation for introduction of the stay-home work

■ Optimization of work hours

systemAs part of the work style reform, we are promoting introductionof the stay-home work system to realize the work style thatallows every worker to do their job anywhere.
In FY2016, the system was used for some employees on a
trial basis. To make employees have a better understanding of
the system, all managers of the Head Office took part in thesystem on a trial basis for a short period.
It is intended that the system be fully introduced in the next
year to promote use of the system.

We set up numerical goals for reduction of the average total
working hours by the end of 2017. To be specific, the goal is1750 hours for the indirect departments and 1840 hours forthe technical departments.
To ensure its progress management, the personnel section
provides each department and the labor union with a monthly
report of the results of the total working hours.
We take various measures to optimize work hours, including
work style reform by institutional systems such as flextime or
stay-home work, and improvement of work efficiency by work
streamlining or use of IT.

Employee’s opinion■ Promotion of paid leave

My participation in the trial-based
stay-home work system
Shuji Nanba

Measures are taken to encourage employees to take paid
leave. In this respect, it is important for employees to conduct
their work efficiently. The paid leave plan of each employee ismanaged by the department to help employees systematicallytake paid leave. A monthly report on how many paid holidays
were taken by the month is provided to the labor union toensure appropriate management of the progress.

Head Office (Transport Machinery Business Department)

I participated in this trial as my senior
employee suggested I do so. I felt
confused about how to proceed withmy job as this system makes me work in a different way.
When I worked from home, it was difficult to clarify what I wasdoing or when I was working and not working compared withmy working at office in a suit. On the other hand, I had nocommuting stress and applied the free time to doing
something else. These are the advantages of this system.
This is a very useful system for those who cannot go to work
because of various reasons including family matters but
cannot stay away from work either.

■ Analysis of stress check results

In response to the establishment of legislation, it is determined as
a company-wide rule that all directly employed personnel begiven a stress check, which has been in place for some time.
Feedback about the stress check result is given to each
employee, and a reporting session is held for the managers to
discuss the problems, if any, by workplace. Consultants provide
their account of the analysis results, which helps us noticeproblems that otherwise remain unnoticed. Sharing of information
among the participants also allows us to understand the overall
trend and reinforce response measures.

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NKC CSR REPORT2017

Human Rights and Labor Practices

Labor-management relationship
Establishment of a sound labor-management relationship■ Periodic negotiation and information sharing■ Start-up of the Subcommittee on Review of
Post-retirement Re-employment System

A labor-management council is regularly held to improve theemployment and working environment for employees.
We receive a wage hike request from the NKC Labor Union
Federation, which supervises the labor unions of all sites,
every year and negotiate with them for the next year.
The management representatives of each site negotiate withthe site’s labor union branch on working conditions and othermatters.

For re-employment of employees after their retirement at age
60, each individual employee is allowed to make a choice byhimself or herself according to the law.
The Subcommittee on Review of Post-retirement
Re-employment System was set up between the company
and the labor union to discuss ways to make treatment after
re-employment better and help re-employed persons
continue working till the end feeling satisfaction andmotivation at work.
A review has been made on full-time employment during aperiod of no retirement pension and on revision of the wage
reduction system. The management’s answer is planned to
be provided to the labor union within FY2017.

A union member handing a wage hike request to a management member

Occupational safety and healthOccupational safety and health management■ Sharing of information among plants (meeting)■NKC Group Safety and Health promotion system

The “General Safety, Health and Environmental Management
Committee,” in which nine domestic plants participate, andthe “Safety and Environment Teleconference” are respectively
held four times a year. The “General Safety, Health andEnvironmental Management Committee” is held at sites thattake turns serving as a host. A field patrol is also conducted toensure safety, health, and environmental management at eachsite. The level of safety and health activities is improved bysites’ mutual checking of each other’s status of activity andsharing each other’s successful cases.
For seven plants outside Japan, a teleconference is held six
times a year to grasp and share each other’s activities for
improvement of the level of activity. The Safety and Health
Secretariat of the Head Office visits those overseas sites once
every two years to check the actual status of activity.

Top Management
General Safety and Health Chairman
Secretariat (Safety and Health
Office of the Head Office)General Safety, Health and Environmental
Management Committee

16

All domestic plants(including plants of affiliated companies)

All overseas plants

Safety and HealthCommittee of each plant

Safety and HealthCommittee of each plant

Each specialty subcommittee

Each specialty subcommittee

NKC CSR REPORT2017

■ Patrol■ Internal audit

There are various types of patrol conducted in our sites. The
Safety and Health Committee and Safety Subcommittee
conducts a “safety patrol,” the Disaster Prevention Subcommittee
conducts a “disaster prevention patrol,” the 5S Subcommittee
conducts a “5S patrol,” and the Environmental Health
Subcommittee conducts a “health patrol.”
These patrols are reinforced at appropriate occasions
including National Safety Week, National Industrial HealthWeek, National Fire Prevention Week, and the days before andafter the long holiday season.

Internal audits are conducted once a year in each plant by the
Safety and Health Secretariat of the Head Office.
We check the legal compliance and examine each workplace
according to the priority audit themes determined by the year.
Audit themes determined for FY2016 include the status ofmanagement of chemical substances, safety measures forrotating machines, measures for the prevention of dust
explosion, and the status of safety management of theequipment team’s workplace. Items suggested for improvement
are listed, and a follow-up check of improvement is made.

Prevention of accidents■ No accident awarding■ Basic education at a morning meeting

The numbers of accidents of near-injury or worse are annuallytabulated at each plant. Plants that achieve a zero accident
record for a given year receive an award, and all of that plant’s
employees are given a memento of the achievement.
The award winners for FY2016 include five plants in Japanand three plants out of Japan.

Basic education on safety and health is promoted by using
the morning meeting time so that employees can be
repeatedly exposed to the basic knowledge and awareness.
Basic education is provided based on specific programs
determined by the workplace. The materials to choose from
include the “Safety and Health Handbook,” delivered to all
employees, a collection of accident cases of other plants,
One-Point KY (see page 17 “Promotion of hazard prediction(KY)”), and close call and potential hazard cases. The day’s
priority safety point is determined as “one-person hazard
prediction,” and all members practice pointing and calling at
every morning meeting.

■ Special training for licensed personnel
Employees engaged in priority 7 jobs (operation of forklifts,
operation of cranes, slinging, pressing work, operation ofrobots, gas and arc welding, and changing of grindingstones) and hazardous jobs (high-place work, electric
installation work, or jobs handling dust, rolls, or chemical
substances) are internally certified as those speciallyengaged in those jobs and provided with special safety
education and training once a year. We set up a rule thatthose who do not take the training are not allowed to dothese jobs so that every relevant employee should take thecourse.

Commendation certificate for no accidents during the year

■List of award-winning plants

Domestic

Mie Plant, Shiga Plant, Nakanishi Kako,
Banshu Nakanishi Metal Works, and Fuji Honing
Industrial

Overseas[USA] NAKANISHI MANUFACTURING CORPORATION[China] NKC MANUFACTURING DALIAN CO., LTD[China] NKC MANUFACTURING WUXI CORPORATION■ Education according to grade
Education according to employee grade, namely including
education for safety managers, education for foremen,
education for foreman candidates, and education for new
employees, is provided to help every employee improve theirsafety consciousness in their own capacity. Employees arealso encouraged to take the RST courses to obtain thelecturer license for foreman education.

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NKC CSR REPORT2017

Human Rights and Labor Practices■ Collection of safety slogans■ Fire prevention activity

Each plant calls for safety slogans from all its employees
every year. Slogans gathered during the period are screened
to pick up the most outstanding slogans for awarding.
Since employees themselves are involved in coming up withsafety messages, it is effective in promoting consciousnessraising among employees.

We conduct inspection and follow-up inspection offire-fighting equipment, thorough control of hazardous
materials, and fire prevention patrol as part of our effort toensure prevention of fire and mitigation of fire damage.
Employees both in the day shift and night shift are provided
fire-fighting drills including notification, fire-fighting, andevacuation drills. The same drills are also conducted in plant
employee dormitories.

Employee’s opinion

My first award
Seiko Kyota Manufacturing Group, Nakanishi Kako

■ Promotion of hazard prediction (KY)
Hazard prediction training using training sheets is provided
as needed to improve employees’ hazard prediction
capability.
We have in place the “One-Point Hazard Prediction”
technique that concisely visualizes what each worker should
be careful about in their respective work. This technique isused when instructions are given or during basic education
at morning meetings.

I was very surprised that I was given the award, the first timeever since I joined the company. I had constantly been hopingthat all workers, including our plant as well as any other plant,
have a safer workplace as we often saw or heard cases of
injury or near-injury. That was the background that prompted
my coming up with this slogan.
I constantly feel that the NKC Group is very enthusiastic about
ensuring our safety and health. It is important that weourselves be always careful, but I hope that all the people inany workplace will be more conscious about safety.
Winningslogan■ Use of “Potential Hazard Report”

Is everything OK?
The work that you do
Requires that we look out foreach other to ensure a safe workplace.

Employees are instructed to notify their managers of any
danger point or location at their workplace with a “Potential
Hazard Report.” Our particular focus is put on detection or
identification of minute things that only workers directly
involved in them can notice.
Identified hazards should be corrected with improvement
measures. This information is shared among all plants andspread across the Group.
Submitted “Potential Hazard Reports” are evaluated, and thescores are summed up once a year. Plants whose reports
show many excellent findings are awarded.

Three winners of Nakanishi Kako (Kyota at the center)■ Risk assessment
Measures for prevention of industrial accidents by risk
assessment are always taken when equipment is newly
introduced or repaired.
We have a rule that equipment can never be operated unless
all risks have been eliminated. Using this rule, we endeavor
to eliminate potential sources of danger by implementing
appropriate procedures and methods.

Employees gathering for a morning meeting18

NKC CSR REPORT2017

■ Promoting safe driving
We make regular checks to see if employees wear seat belts
or helmets as they commute on vehicles, motorbikes orbicycles. We hold in-house road safety seminars with thehelp of the competent police department.
We also ensure that car, motorbike and bicycle users haveappropriate insurance coverage, thereby promoting safety
operation.
The Head Office annually participates in a no-accident andno-violation driving contest sponsored by the Osaka Prefectural
Police to raise employees’ awareness of safe driving behaviors.

Employee’s opinion

After taking a road safety seminar
Tsuyoshi Fukayabu
Service and Production Management Group,
Osaka Plant

After I took the seminar, I came to havea very good understanding of safe
driving methods, such as rear-end
collision avoidance or crossing collision avoidance. I realized I
was more aware of the importance of safe driving.
You never know when you might be involved in an accident
involving a collision even if you think you have the right following
distance. I am determined to be more conscious of what itmeans to drive safely.

Employees taking an in-house road safety seminar

Comfortable workplace development■ Improvement of facilities andequipment

We promote comfortable working
environments across the Group
based on the policy of the Ministry of
Health, Labour and Welfare.
We revisit our working environmentsfrom the four viewpoints
recommended by the Ministry’s
policy, or “management of theworking environment,” “improvementof the working methods,”“establishment or improvement offacilities or equipment to ensure
recovery of workers’ physical andmental fatigue,” and “maintenance ofother facilities and equipment.”
Various improvement activities aregoing on at each site.
This action is now being spread toaffiliated companies according to thesafety and health promotion system.

■Improvement cases of affiliated companies (selected)

Beautification of space byimprovement of shower room
equipment(Banshu Nakanishi Metal Works)

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NKC CSR REPORT
2017

Mental health advice office for
employees(Suda Shouji Inc.)

Beautification of the waste deposit area
and reduction in dumped waste byplacing buckets for refuse separation(Fuji Honing Industrial)

Improvement of the comfort of officespace by installing a hypochlorous
space cleaner(E-Globaledge Corporation)

Improvement of 5S’s by total renewalof storage racks(C.T. Machinery Co., Ltd.)

Promotion of health■ Health examination and its follow-up■ Promoting health

We annually conduct regular and special health examinations
in compliance with the relevant law. Feedback about theexamination results is given to each individual employee. In
addition, a follow-up measure is also taken for prevention oflifestyle-related diseases by means of one-on-one consultation
with industrial doctors.
The in-house clinic also regularly provides all employees withinformation on the prevention of heat stroke in summer or
prevention of influenza in winter for better seasonal healthmanagement, thereby encouraging employees to be more
careful about their health.

We encouraged all our employees to do “what is good for ourhealth” according to the philosophy that “shifting from an era
when diseases are found and treated at an early stage to an
era when the lifestyle is improved in the stage before having a
disease.”
We made the “Health Handbook 2016,” a guidebook that
contains specific things to do for health improvement such as
eating, physical practice, or resting. Using this Handbook asa fitness guideline, I did many things that I can to improve myhealth for one month. As a result, the self-check point
improved from 20.2 to 25.0 by 4.8 points.
We plan to continue promoting “doing things good for ourhealth” every year as a consciousness-raising activity for
employees’ better health.

■ Mental health examination
Revision of the Industrial Safety and Health Act now requires
every worker to be given a stress check.
While the NKC Group had been engaged in mental healthmanagement of its employees before legislation (“mental
health examination”), we now apply this rule to all employees
directly employed by us.
Feedback about the examination results is given to eachindividual employee. The group analysis results by the
workplace are disclosed to the managers to discuss problems
for improvement.
Individual employees can have further support with the helpof in-house nurses or external consultants.

“Health Handbook 2016” and “Lifestyle Improvement Book”

Employee’s opinion

After participating in the“Health Handbook 2016 Event”
Masatomo Tamura
Management Group, Shiga Plant

As I grow old, whenever I feel a bit out of shape, it bothers me.
This event was a very good opportunity for me to think anew
about my own health. I read the book distributed to employees
and understood what I should do to maintain or improve myhealth. During the event period, I was very conscious of myhealth and came to lead a life conscious of health condition.
I make it a rule to go easy on salt and sugar in my daily life. I
think I am relatively physically active at work or in my private
time. I continue to increase what I can do to improve my healthand act while envisioning my better health condition.

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NKC CSR REPORT2017

Environment
We set high goals for maintaining and improving the environment. Our business operations focus on using technologies that reduce
environmental load throughout the product life cycle and ensuring that saving energy, reducing waste, recycling, and other environmental
initiatives are implemented across the company. We also place importance on working with local communities, and we try to help improvethe environment in everything we do, regardless of its relationship to our business.

Environmental protection
Environmental management■ Sharing of information among plants (meeting)■NKC Group Environmental Management promotion system

Headed by the chairman of the Environmental Management
Committee, the General Safety, Work, and Environmental
Management Committee is held four times a year, eachconvening environmental managers and environmental
management promoters of each plant.
This organizational system is designed to quickly act withrespect to environmental policies for such purposes as sharing
of information on environmental improvement activities andlateral deployment of actions to respond to legal revision.
An environmental management committee is held monthly ateach plant inside and outside Japan, with environmental
managers taking the lead role in managing and promoting the
progress of activities according to the environmental policy andenvironmental improvement action plans. This is how weensure continuous improvement of environmental management
across the Group.

Top Management
Chairman of the General Safety, Health andEnvironmental Management Committee
Secretariat (Environmental
Management Departmentof the Head Office)General Safety, Health and Environmental
Management Committee
All domestic plants (including
plants of affiliated companies)

All overseas plants

Environmental Management
Committee in each plant

Environmental Management
Committee in each plant

Each specialty subcommittee

Each specialty subcommittee■ Internal audit

We promote acquisition of ISO14001 certification particularly
for domestic plants and affiliated companies.
In Japan, ISO14001 certification holders include the Osaka Plant,
Mie Plant, Nabari Plant, Temma Sheet Metal Division and EPD
Office of the Head Office, and affiliated companies of Suda Shouji
Inc. and Fuji Honing Industrial. We put in place the environmental
management system at each site according to the NKC Group’s
environmental policy, continuously improve the system, andensure the improvement of environmental performance.
According to the result of periodic audits by a third-party
certified organization, none of our sites were judged to havefailed in FY2016. The effectiveness of our system iscontinuously verified. In response to the revision of ISO14001
in September 2015, the certification holding plants are planningto complete shifting to the year 2015 version within FY2017.

In addition to audits by an external organization, internal audits
are regularly conducted by our internal environmental auditors
to evaluate the effectiveness of the environmental management
systems and enhance improvement activities.
Our domestic plants that have not achieved ISO14001
certification have established environmental management
systems comparable to those of the ISO-certified plants. Internal
audits are regularly conducted at these non-ISO-certified plants
to help them to consistently implement environmental
improvements.
Our overseas plants also are working to improve theenvironment as they see fit in their respective area. The activities
and the progress are checked once every two months throughteleconferences. Head Office environmental management
personnel visit our overseas plants every two years for on-site
assessments of their specific activities and follow-ups andsharing of information.

External audit under way

Internal audit under way■ External audit

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NKC CSR REPORT2017

Environment■ Patrol■ NKC Group “Environmental Grand Prix”

Various specialty subcommittees are set up at each plant topromote specific environmental improvement activities under
the initiative of the environmental management committee.
The environment-related subcommittee regularly conducts
environmental patrol in each plant to help promote
improvement activities. To be specific, noise and lighting
levels of each site are assessed to ensure comfortable andhealthy working environments and promote energy-saving
efforts. Refuse sorting and separation is also checked.
Action is swiftly taken if any problem is found.

The Environmental Grand Prix was launched to promote andembed environmental activities across the Group. The award
is given to business sites that have achieved excellent results.
This Grand Prix was launched in 2001 (to reward initiatives
implemented in FY2000). 2016 is the 16th anniversary of thisaward. Business sites are annually rated by the dedicatedmembers, with the Head Office secretariat playing the core role,on their environmental performances in terms of (1) energy
conservation, (2) waste recycling ratio, (3) cases ofenvironmental improvement, and (4) other noteworthy initiatives.
The business site with the highest score wins the award.
In FY2016, the winner is the Nabari Plant, which wasawarded a memento of their achievement.

■ Onsite verification of industrial waste disposal
contractors

It is the responsibility of the waste-discharging enterprise toensure appropriate treatment or disposal of industrial wastes.
It became an internal rule to conduct onsite verification ofcontractors who dispose of waste. This verification has been
continuing since 2008.
We visited 12 contractors in FY2016 and confirmed theirappropriate treatment or disposal of waste.
We also promote more use of the electronic manifest
system. We also promote hiring of government-certified
industrial waste disposal companies and actively encourage
non-certified service providers to become certified.

Energy-saving■ Basic unit management and demand management■ Energy-saving activity and utilization of new power

Each site has been trying hard to reduce emissions of CO2
for many years to prevent global warming.
The NKC Group achieved the target value proposed by theJapan Bearing Industry Association (reduction by 23%
relative to the FY1997 results in basic unit by FY2020) as theentire group in FY2016.
All plants also introduced a demand monitoring system toreduce power loads, thereby promoting energy-saving for
reduction of maximum demand power.

Every plant systematically revises production equipment andancillary equipment to reduce CO2 emissions for global
warming prevention.
The Nabari Plant is effectively reducing energy consumption
by optimizing compressors and recycling waste heat. The
efforts of other plants include enhancement of efficiency of
blower motors at an effluent treatment plant in the Osaka
Plant and introduction of energy-saving vulcanizing
equipment in the Mie Plant.
The NKC Group as a whole already started switching to andutilization of new energy and is taking various measures tofurther reduce CO2 emissions.

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NKC CSR REPORT2017

■ Small-group initiatives■ Promoting use of eco cars

In addition to company-wide efforts to improve theenvironment, the NKC Group focuses on environmental
initiatives at the factory floor level. Whenever employees
working at the work floor feel something as a waste, it shouldbe led to practical action for improvement. These eco-team
activities together with the improvement suggestion program
are conducted at each workplace. Some examples of initiatives
undertaken so far include (1) improvement of transport service
efficiency and integration of transport by revision of shipping
procedures, (2) shifting of stretchable film used in packaging
in-process items for transport to recyclable air caps where
possible, and (3) repair of used wooden pallets for reuse.
We intend to continue promoting ecologically minded
workplaces through small-group improvement initiatives.

The NKC Group is making a group-wide effort to reduce thefuel consumption of company cars toward creation of a low
carbon economy. We started switching to eco cars in 2003,
and over 90% of company cars currently in use are eco cars.
These activities were recognized by the prefectural governmentof Osaka and led to winning of the excellent prize in the
category of promotion of eco cars, etc. in the “Osaka Traffic
Eco Challenge Award” in 2013.
Employees driving company cars are provided with eco driving
training and encouraged to drive ecologically for prevention of
air pollution and global warming and safe driving.
All CO2 emissions associated with use of fuel by our company
cars are offset by means of the “Toki’s Forest Credit” of Niigata
prefecture, which started in FY2015. This offsetting contributes
to not only reduction in emissions but also biodiversity.

Employee’s opinion

What I learned from a small-group activity
Resin Shipping Team
Service and Production Management Group, Nabari Plant

Our plant used regular services to deliver products to customers on adaily basis. We paid our attention to the quantity of loads on trucks
varying from shipment to shipment and tried to solve this variance toimprove transport efficiency.
To begin with, we checked the carrying loads every day. Products vary inshape and size depending on the type. The number of products in a box
also varies from box to box. Therefore, we set the number of pallets, on
which boxes are placed, as the basic reference. Since regular service
trucks also carry products of our other plants, we contacted the sales
sections of the Head Office to gather the data. We then reviewed how to
optimize the number of regular services based on the survey results andmade arrangement with the shipping contractors with advance approvalof customers.
The revised transport service arrangement successfully resulted in
reduction of CO2 emissions and reduction in man-hours of our own
workers.
This activity was made with our younger staff leading the review team forthe first time. To be specific, one young employee was assigned to be theleader, while the other was to be the sub-leader. They had a goodunderstanding of the cycle of “plan, do, check, and act” and did a very
good job. They presented the final activity report, which impressed thepeople present at the reporting session as the presentation clearly
showed the forward-looking attitude and performance of the two leaders.

An eco car used by the Head Office

Company car sticker■ “Fun to Share” and “COOL CHOICE”
The NKC Group supports the “Fun to Share” program andthe national movement “COOL CHOICE” for global warming
promoted by Japan’s Ministry of the Environment toward
creating a low carbon economy. These activities aresupported by companies, organizations and local
governments as registrants and intended to carry out
effective “wise choices” against climatic changes while widely
sharing technologies, wisdom, and measures for low carbon
economy.
Also in FY2016, the NKC Group participated in the Cool Biz
and Warm Biz campaigns and continued other actions,
including AC temperature management and eco drive
promotion, for reduction in CO2 emissions.

People of the Resin Shipping Team
Right end: Minami (leader); middle: Maekawa (sub-leader);left end: Nakamoto

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NKC CSR REPORT2017

Resource saving■ Zero emissions■ Reduce and Ruse activities

In FY2007, we achieved zero emissions at all domestic sites
as a result of the efforts to reduce industrial waste. Since
then, we have maintained the zero emission status for 10
years.
Following the catchphrase “Resources if separated,trash if
mixed,” each site of the Group takes active steps forrecycling, including separation of wastes according to thewaste separation standard to turn them into valuable
resources. This effort is to aim at minimizing the emission ofgeneral waste, or the type of refuse put to disposal byincineration. According to the record of the Head Office, theamount of general waste generated per day is about 15
grams per person.

Our focus is not only achieving zero emissions but also
continuous reduction in the total amount of waste, including
industrial waste or valuable resources put to recycling.
Reduction in surface treatment with chemicals reduces theamount of sludge generated to treat the effluent used in such
surface treatment. Revision of style of packing for items to bedelivered to customers reduces the consumption of
packaging paper. These are some of other efforts being
taken to reduce waste generation.
Use of rainwater to clean floors is also another way of
reducing consumption of resources. Furthermore, we reuse
waste pallets released from the Head Office to create
decorations for the external wall as a trial recycling loop.

■ Prevention of contamination
Specific plants of ours not only monitor and evaluate thequality of effluent but also regularly monitor groundwater tomake sure the soil is not contaminated by leakage ofhazardous substances or oils.
The emergency response procedure assuming leakage ofhazardous substances to outside is put in place, andemergency response testing is annually conducted to
employees who handle subject substances, thereby
preventing environmental contamination. This test assumes an
emergency situation not only in the day time but also at nighttime.
In addition, the NKC Group also has a monitoring systemthat strictly manages transformers or other items that may becontaminated by low concentration PCB according to the
Waste Management Act or Act Concerning Special Measuresagainst PCB Wastes and ensures early neutralization of those
items.

■ Wastewater management
Release or leakage of hazardous substances or oils from aplant to the external environment results in watercontamination of the surrounding environment and poses agreat threat to local society. The wastewater discharged fromeach plant is relatively small in quantity but it is all treatedaccording to the right procedure. Each plant has its own
voluntary standard more strict than the relevant standards orregulations including those of the Water Pollution Control Act,
Sewerage Act, and local governments’ ordinances andmonitors and evaluates the quality of its wastewater. In
FY2016, any wastewater released from all plants of ours not
only complies with the regulatory level of administration but
also our own voluntary standard.

Examples of waste pallets reused as external wall decorations

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NKC CSR REPORT2017

■ Management and consumption reduction of

Employee’s opinion

chemical substances

Elimination of chemical grinding
Masaaki Tamada

In order to appropriately cope with laws and regulations on
the use or content of chemical substances, which arebecoming stricter and stricter year by year, we use andregularly revise the relevant in-house standards and monitor
prohibited or controlled chemical substances in all processes
from procurement of raw materials to product shipment.
Among our measures taken to reduce consumption ofchemical substances themselves, the Mie Plant decreased
the number of surface treatment processes and greatly
reduced consumption of the substances used for suchtreatment and the substances used for treatment effluent in
FY2016.
In addition, the Osaka Plant revised its cleansing process andreduced the consumption by shifting to substances of lower
hazard level and use of the closed system.

Quality Assurance Group, Mie Plant

When we use a press machine to drill ametal plate, unnecessary burrs occur.
Grinding with chemicals is a conventional
method of burr removal (chemical polishing). However, we madean effective use of the press machines in our plant, changed theprocess, and successfully eliminated chemical grinding.
However, changing the process was not as easy as it sounds.
When you change something, you will have various problems
in its process and need to solve them to go ahead. That
required the power of not only our own plant but also many
related departments. Use of those joint forces was the key toour success. I greatly appreciate the effort and cooperation of
all those people involved.
For the effect of the process change, since consumption ofchemicals is reduced, the amount of effluent and the amountof treated sludge are reduced, which is an environmental
benefit. The procedural benefit is improved productivity as the
production process is completed without separation.
I keenly felt the difficulty in taking on a new challenge from thisexperience. I believe all the steps we took to achieve thissuccess will be effectively applied to any future need.

Consideration for local community■ Noise, vibration and odor survey■ Recycled energy business and environment-related
products

Noise or vibration generated from a plant directly affects thesurrounding area and degrades the comfortable environment
in the neighborhood. We conduct regular monitoring andevaluation of those nuisances at the frequency specified by
the local government’s regulation and standard, thereby
ensuring the environmental protection around the plant.
For our plants that handle specific substances, they haveappropriate exhaust treatment and regularly measure odors.
All the relevant noise, vibration and odor regulations andstandards were complied with by all our plants in FY2016.
We had no complaints or requests about those nuisancesfrom the neighboring communities.

The NKC Group actively uses recyclable energy, such asenergy generated by wind power, solar power, or biomass
fuel, to contribute to creation of sustainable society throughenvironmentally conscious actions and safe and stable supplyof energy.
Recent specific efforts include EPD Room’s sale of C&F’s
compact wind turbine generators and NKC Nagai GreenPower’s plan to start supply of a wooden biomass power plantin June 2017.

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NKC CSR REPORT2017

CSR Management
In addition to ensuring compliance with the relevant laws and internal regulations, we fulfill confidentiality obligations to our suppliers and clientsin good faith to build healthy relationships with them. We use information related to our operations only to properly conduct and manage ourbusiness to prevent loss, theft, or leakage. We disclose information in an adequate and timely manner while ensuring transparency. We also
ensure that every employee maintains high ethical standards and strictly draws the line between private and public interests.

Organizational governanceInternal controls■ Establishment of the NKC Group’s CSR policy■ Internal control in support of the code of behavior of
the UN Global Compact.

We established the CSR policy anew to act in support of thephilosophy of the UN Global Compact while executing ourown business activities.
The “NKC's Vision” stays the same, the “NKC Group Code of
Conduct” was revised, and the “NKC Standards” was newly
established as the action guideline for our employees. In thisnew institutional arrangement, we set up rules that ouremployees accept diversity of employees themselves as well
as all other people with respect to human rights about which
the Group had no detailed regulation and that they abolishcompulsory labor and child labor practices and respecthuman rights.
Our CSR policy is publicly disclosed in our corporate website
and in this CSR Report.
We will make our new policy better known to all our
employees across the Group and set up a system where theGroup can work together with its employees.

The NKC Group participated in the Global Compact initiatedby the United Nations in April 2015.
The UN Global Compact encourages businesses to act as amember of society from global viewpoints to aim atsustainable development of the international society. The Ten
Principles in the four areas, i.e. human rights, labor,
environment, and anti-corruption, are established as the codeof conduct for the said goals. Businesses in the world
participating in the Compact are required to implement themwithin their respective range of impact.
We are approaching the system that complies with theseprinciples by collecting information from relevant organizations
and revising internal regulations. We steadily continue taking
action to carry out specific action.
* We provide a report to theheadquarters of the UN
Global Compact through thisreport as a demonstration of
our ongoing action incompliance with theprinciples of the Compact.

Risk management■ Preparation of disaster management supplies■ Drills based on the earthquake damage scenario

We constantly ensure availability of disaster management
supplies including regular purchase of reserves and otheremergency supplies. We have a purchase plan for a few years
ahead. For items with the best before date or expiration date,they will be purchased only in the quantity required so that theamount of purchase in a year is leveled.
In FY2016, we purchased the supplies as planned andincreased the number of AED installed. Seven AED were
newly installed in addition to the existing three at the Head
Office. AED units were newly purchased or renewed at someplants of the Group companies. At the same time, employees
were provided with training when the units were installed. It
was also decided that our AEDs be used for local residents
whenever necessary.
Following the Head Office’s example, overseas plants
additionally installed AEDs. Each site came up with their own
ideas of effective use of the units including installation at theright locations accessible in a short time from any workplace.

We attach importance to education and consciousness-raising of
employees as part of the BCM (business continuity management)
activities in preparation for occurrence of a major earthquake.
In FY2016, safety confirmation tests were conducted as in theprevious year. Cardiopulmonary resuscitation training was newly
included in the drill. The Headquarters for Emergency Disaster
Control was set up in the Head Office and operated as training.
A series of action flows that will occur after occurrence of adisaster were simulated.
Next year and on, we will continue the ongoing measures andimprove them and establish a workable system that allows us toreact to actual emergency situations while implementing new
training.

Employees during simulated training of setting up and operating headquarters for
emergency disaster control at the Head Office

AEDs installed in our facilities are available for use to local residents.
Trainees taking a lesson on ordinary life-saving by the fire department staff

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NKC CSR REPORT2017

■ Information security measures
The “Security Safety Management Regulation” is being applied
to each domestic site to make them respond to various risks of
information security that threaten our company or organization.
This regulation specifies comprehensive (human-based,
physical, or electromagnetic) information handling procedures
covering external use of materials, storage management, entry
control, access control, and contractor management.
Currently the regulation is effective at the Head Office, Nabari
Plant, Osaka Plant, Mie Plant, Nakanishi Kako, and Tokyo branch.
In the future, we plan to spread internal audits and theirfollow-up operations to sites where they are yet to be conducted
and continue action toward reinforcement of the information
security measures for the entire NKC Group.

Security measures being spreading to domestic sites
including Group companies

Compliance■ Compliance with the Subcontractors Act
Violation of the Act against Delay in Payment of Subcontract
Proceeds, Etc. to Subcontractors is an act of defaming thecorporate value amid calls for corporations’ stricter
compliance. Recently, the Ministry of Economy, Trade andIndustry and the Fair Trade Commission promote optimizationof transactions with subcontractors. Understanding theirintention, the NKC Group endeavors to promote thatmovement.
We promote improvement of safe transactions by checking thepayment conditions of new accounts more strictly than before
and making thorough management of existing suppliers orvendors.
In pursuing or conducting a new business, we take precautions
to prevent any violation of the Subcontractors Act at an earlystage.
Since it is urgently necessary to cope with the revisions of the“use standard” of the Subcontractors Act, and the “promotion
standard” and “notification” related to payment of subcontractor
fee of the Small and Medium Subcontractor Promotion Act, weare currently reinforcing the rules on in-house survey andimprovement activity.

■Concept of compliance for the NKC GroupThe purpose is to protect laws or regulations, but thisunderstanding is in the past. Today, it is a general
understanding that the area where “legal compliance” isrequired is wide, covering social norms, manners, and morals.
The NKC Group takes various measures to improve
employees’ consciousness under this concept.

“Legalcompliance”
in the past

Laws andordinances• Social norms• Code of Conduct• Internal regulations• Manners and morals■ External compliance hotline
Internal and external compliance hotlines are available for
employees’ easy access to reporting means. The external
hotline is available in two kinds: one for mental issues and theother for harassment matters. Employees are provided with acard that describes the reporting procedure when they join thecompany.
In-house nurses also move around our sites to accept
consultation from employees prior to their use of the hotline.

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NKC CSR REPORT2017“Legalcompliance”
in the future

Social Contributions
We maintain open lines of communication with local communities to deepen mutual understanding and reach out to help them to identify andsolve problems with a focus on aiding their development.

Establishment of relationships
Interaction and reflection■ Collection of opinions from employees■ Interviews with local residents and organizations

While development of social contribution activities definitely
requires the cooperation of employees, we believe it is also
important that participants themselves feel pleasure orsatisfaction. In this respect, we are developing ideas for activity
from the standpoint of employees.
We gathered opinions and requests from employees throughthe CSR Report questionnaire survey in FY2016. Some of themwanted support of voluntary activities conducted by themselvesin their private time. As a company promoting work-life balance,
we are keenly aware of the importance of such support.
In FY2017, we will plan and implement “activities that can be
conducted together with employees” serving both as social
contribution and employee welfare.

We aim to make local contributions that are continuously
feasible and highly effective. To this end, we interview local
governments and organizations.
This action allows us to know the needs of the recipients andapply various resources, including money, materials, andhelping hand, to the very activities that truly need them.
In FY2016, we interviewed organizations that manage local
activities, welfare aid providing facilities, and food banks andasked mainly about food donation.
In FY2017, we plan to review new activities based on theinformation on conditions and requests gathered fromvarious people.

Contribution activities
Support of activities of local communities and organizations■ Support of disaster-hit area (Kumamoto Earthquake)■ Disaster prevention for local communities

The NKC Group donates relief money to areas affected bynatural disasters inside and outside Japan. The relief donatedmoney includes the money by the Group as well as the money
voluntarily gathered from Group employees.
In FY2016, relief money was donated to help restore thedamage of the Kumamoto Earthquake from domestic sites
including the Group companies.

We have a “disaster prevention partner agreement” with
Kita-ku ward office, where the Head Office is located. With
this agreement, we promise to extend our cooperation to the
local administration in case of emergency as well as inpeacetime for preventive action. In FY2016, we donatedmedical kits to elementary schools (designated evacuationsites) in Kita-ku, Osaka city, and donated instant rice fordisaster prevention learning for junior high schools.
We intend to voluntarily hold disaster prevention education to
local students as part of our effort to promote disastermitigation in the entire community.

■ Cleanup activities in local neighborhoods
Many sites of our Group, including the Head Office, plants andbranch offices are involved in cleanup activities in local
neighborhoods as one of familiar social contributions.
Cleanup directly results in neighborhood beautification to be
sure. It is also effective in crime prevention.
In FY2016, we conducted preventive measures against
snatch cases that occurred in the neighborhood by finding
evidence and installing security cameras.

We donated instant rice to a disaster prevention workshop held at a local school.

■ Support of SDD
We started supporting SDD (Stop! Drunk Driving Project) initiated by FM OSAKA in 2009. This
project calls for society’s sympathy for elimination of drink driving. One of the major activities is to
distribute SDD stickers calling for elimination of drink driving. As part of our action in support of the
project, some of our prospective employees participate in an SDD live performance sponsored by
FM OSAKA to think deeply about the meaning of drink driving.
Official logo of SDD

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Biodiversity preservation■ Carbon offset■ Rooftop vegetable garden

The NKC Group has been promoting carbon offsetting since
2014.
In FY2016, the Group offsets 20 tons of carbon emissions
resulting from operation of raw garbage treatment machines,
produced by EPD Room, through Mie prefecture’s forest
conservation project. 32 tons of emissions associated withthe operation of company vehicles of the Head Office wereoffset through Niigata prefecture’s Toki's Forest Project.
A total of 50 tons of carbon dioxide emissions were also
offset through the projects offered by Kiso town, Nagano
prefecture, Odai town, Mie prefecture, and Kumamoto
prefecture as part of our cooperation with carbon offsetting
promoted synchronously with holding of the G7 2016
Ise-Shima Summit in May 2016.

The rooftop of our Head Office is now used as a rooftop
vegetable garden. It is used as a place of dietary education forchildren using the in-house daycare facility.
Vegetables cultivated in FY2016 include mini tomatoes, sweet
peppers, green peppers, and crown daisies. When frequentwatering was necessary in the summer season, caretakers
were recruited from among the employees. Grown vegetables
were harvested by daycare facility children. Some were taken
home by those children, and others were also offered to
employees at the in-house restaurant.
We intend to maintain the vegetable garden as a valuable
place of exposure to greenery for in-house daycare facility
children so that they can have various experiences in the same
way as children in general nurseries. At the same time, we will
think up various ways to use it for employees’ fun.

Vegetables grown in the rooftop vegetable garden

Employee’s opinion

My experience as a caretakerof the rooftop vegetable garden
Hitoshi Zuisen

Memorial plaque received from the major of Kiso town, Nagano prefecture■ NKC Group Eternal Forest

Environmental Management Department,
CSR Management Division, Head Office

The NKC Group signed up to the “Corporate Forest” offeredby Wakayama prefecture in August 2016 as part of our effort
in forest preservation activity. With this agreement, we rent two
hectares of forest land near the Kumano Kodo mountain trailin Nakahechi-cho, Tanabe city. In November 2016, the NKCGroup held a tree-planting event as the first of the annual
events toward celebration of our 100th anniversary. More than
50 people including our employees and their family members
enjoyed the tree-planting event, whose program also included
a log chopping experience.
We intend to watch the growth of the rented forest land while
using it for our employees’ welfare as well as a field study site
to promote our employees’ environmental awareness
improvement.

I saw a billboard in the company andlearned that the company was looking
for rooftop vegetable garden caretakers.
I applied for it because I thought I would be able to experience
vegetable harvesting that I cannot generally experience when I
live in an urban area and I was attracted by the idea ofmingling with other employees that I don’t usually meet in myday-to-day work. Then my caretaker work started. I saw
children of the in-house daycare facility happily harvesting
vegetables and colleagues joining with their children showing
pleasant expressions I rarely see at work. That was a very
valuable experience for me. Harvesting vegetables was a very
unusual experience for me in the first place. In addition, it wasso pleasant. In total, it was extremely satisfying.
When we experience harvesting vegetables or sowing seeds
on the rooftop vegetable garden, it surely helps improve ourown awareness of in-house environmental protection as well
as deepen internal communication among employees. It also
helps promote dietary education for daycare facility children. I
am looking forward to the growth of all these benefits from therooftop vegetable garden.

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Social Contributions

Social welfare■ Donation of foods■ Placing orders to job assisting facilities

We store food stocks as part of the BCP activities. All thosefoods have expiration dates that run out in three to five years.
It is a matter of course that stocked foods whose best before
date expired cannot be provided to anybody. We need to thinkup ways to make effective use of those foods without throwing
them away.
In FY2016, the stocked foods were delivered to ouremployees and donated to local governments and food banks
as relief supplies to those who need such support in their daily
life. However, food stocks purchased by a company for its
own reason are not necessarily accepted with open arms by
those who need support. In the future, we decided to assume
how to dispose of the stocked foods when their expiration
date draws near when we purchase them. It is also necessary
to plan collecting foods that our employees think are no longer
necessary and donate such foods rather than just using thestocked foods for donation.

The NKC Group purchases products from welfare facilities
and sells their bread at the in-house restaurant to promote
vocational independence and the stabilization of employment.
In FY2016, we sold bread at the Head Office and the Shiga
Plant. Employees gathered to buy home-made bread
produced by the welfare facility users.
We believe it is a very important social contribution activity toprovide a place with job satisfaction and support employment
stabilization through these activities.

Bread on sale in a company restaurant

Promotion of education■ Nakanishi Scholarship

Employee’s opinion

The Nakanishi Scholarship Foundation established in 1971
has been supporting a large number of students since its
foundation.
Scholarship funds were provided to a total of 50 students,
including high school students, vocational school students,
and undergraduate and graduate students, in FY2016.
Nearly ¥40 million in scholarships was provided to a total of
105 students, including the students receiving thescholarship since the previous year. In June 2016,
scholarship recipient undergraduate and graduate students
were invited to a gathering party. The gathering program
included a consultation meeting on employment with NKC
employees serving as advisers and a fellowship party withFoundation directors.
Separate from this scholarship, the NKC Group also provides
research subsidies related to industrial science. In FY2016,
we received 17 proposals, a record-high number, andprovided a total of ¥5 million in subsidies to five of them.

Visiting elementary schools inpoverty-stricken areas forconsolation started
Jiang Jinhua
NKC Manufacturing Dalian CO., LTD

Our plant celebrated its 14th anniversary in 2016. In its history, we
have been making local contributions coupled with production
activities according to the CSR policy of the NKC Group.
Cleanup activity in the neighboring areas is one example of thecontribution activities so far conducted by our plant. In FY2016,
we started visiting an elementary school in a poor area for
consolation. The majority of employees working in our plant comefrom rural areas in the suburbs of Dalian. In their home, there arestill many homes finding it difficult to lead daily life because ofvarious reasons. The Chinese government provides student aids tothose needy families, but since these aids are not enough to cover
their expenses to buy items for daily life or study tools necessary at
school, these families are in a fix for money. Based on our belief
that support for their education is the best social contribution, we
visited an elementary school (Deshen Zhongxin Elementary
School, Wafangdian city) in a rural area for consolation anddonated charitable contribution from the plant as well as funds
raised from plant employees. In addition, stationery and gymnastic
supplies
were
also
presented to 21 childrenof the school.
We continue these activities
to help those children see abrighter future.

Scholarship students enjoying the gatheringGroup photo during a visit to an elementary school

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Corporate profile
Company name: Nakanishi Metal Works Co., Ltd.

Number of employees: 3,115 (including Group companies)

Established:

June 19, 1941

Head Office location:

Capital:JPY 2,512.50 million

3-3-5 Temmabashi , Kita-ku, Osaka

Lines of business: Manufacture and sale of bearing retainers, conveyor systems, automatic controlling
equipment, sash rollers, residential housing products, rubber seals, precision tooling,
automatic guided vehicles (AGV), pressed metal products, injection-molded plastics,
cold-rolled products, and so on
Representative:

Tatsuo Nakanishi, President

Domestic Business Sites●●

Head Office
Plant

BranchSales Offices● Sub-Offices●●

Head Office (Osaka city, Osaka prefecture)
Osaka Plant (Neyagawa, Osaka), Nabari Plant (Nabari, Mie), Mie Plant (Tsu, Mie),
Shiga Plant (Konan, Shiga), Nakanishi Kako (Neyagawa, Osaka)
Tokyo Branch (Chuo-ku, Tokyo)
Aichi Sales Office (Chiryu, Aichi)
Aichi Sub-Office (Chiryu, Aichi), Kosai Sub-Office (Kosai, Shizuoka), Atsugi Sub-Office (Atsugi, Kanagawa),
Kyushu Sub-Office (Miyako-gun, Fukuoka)

Overseas Sites●●●

North America, Middle America, and South America
NAKANISHI MANUFACTURING CORPORATION (USA)NKC OF AMERICA INC. HEADQUARTERS (USA)NKC CONVEYORS INSTALLATION CO. (USA)NKC OF CANADA, INC. (Canada)
NAKANISHI CONVEYOR DE MEXICO S.DE R.L.DE C. V (Mexico)
Asia and Oceania
NKC MANUFACTURING PHILIPPINES CORPORATION(Philippines)
NKC CONVEYORS PHILIPPINES CORP. (Philippines)
NKC MANUFACTURING WUXI CORPORATION (China)
NKC MANUFACTURING DALIAN CO., LTD. (China)
NKC CONVEYOR FOSHAN CO., LTD. (China)
NKC CONVEYORS (AUSTRALIA) PTY. LTD. (Australia)
TAIWAN NAKANISHI CONVEYORS CO., LTD. (Taiwan)
NAKANISHI CONVEYORS ENGINEERING (MALAYSIA) SENDRIAN BERHAD(Malaysia)
THAI NAKANISHI CO., LTD. (Thailand)
NKC CONVEYOR INDIA PRIVATE LTD. (India)
NKC CONVEYOR INDIA PRIVATE LTD. SALES OFFICE (India)
PT. NAKANISHI INDONESIA (Indonesia)
EuropeNKC CONVEYORS (UK) LTD.(UK)NKC CONVEYORS (UK) LTD., HUNGARIAN OFFICE(Hungary)
NKC CONVEYORS BARCELONA(Spain)
NKC MANUFACTURING SWEDEN AB.(Sweden)

Affiliated companies

Kolec Co., Ltd., Nakanishi Kosan Co., Ltd., NEUES Co., Ltd., Banshu Nakanishi Metal Works Co., Ltd.,
C.T.Machinery Co., Ltd., E-Globaledge Corp., Fuji Honing Industrial Co., Ltd., Suda Shouji Inc., ISA Co., Ltd.,NKC Murayama Solar Power Co., Ltd. NKC Nagai Green Power Co., Ltd.

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Annual NKC Topics
in FY2016
April(1) All the new employees (Part 1)(2) All the new employees (Part 2)(1) and (2): Entry ceremony in FY2016(3) “Sakura Garden Hotel” opened(ISA Co., Ltd.)May(4) “Arimakaido Yuuwa” joined the NKCGroup (ISA Co., Ltd.)(3) Sakura Garden Hotel (Miyakojima, Osaka)(4) Arima Kaido Yuuwa (Kobe city, Hyogo)June(5) and (6): Production and sale ofwooden furniture started, and a
dedicated website, “NKC fineterior,”
openedJuly(5) A sample layout of the “Growing Furniture” series(6) A sample layout of the “murdeco COCOON” series(7) Farming work support robot “Agbee”
debut(8) Sale of C&F Green Energy’s windturbines started, and Yurihonjo city,
Akita prefecture, introduced the windturbines.
(9) The Philippines office celebrated its
15th anniversary

December(7) Farming work support robot “Agbee”(8) A case example of introduction in Yurihonjo city, Akita prefecture(9) Employees of the Philippines office

Robots selected by Haneda Robotics Lab(10) Automatic floor washing robot“ROBO Cleaper” adopted for the
Haneda Airport Robot Experiment
Project