Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

Chapter 2

1.
Toward "Global Kawasaki"—Living in Harmony with People, Society, and thePlanet2007–2013

In 2007, the Kawasaki Group drafted a mission statement, "Kawasaki,
working as one for the good of the planet," to guide the entire Group in
making the leap forward to become a global leader in the 21st century.
Following fiscal 2006, the company posted record profits in fiscal 2007,
but due to the global economic recession and slowdown caused by the
Lehman Brothers collapse, sales and profits declined for the first time infive years in fiscal 2008.
In April 2010, it formulated the Kawasaki Business Vision 2020 andMedium-term Business Plan (MTBP) 2010 (FY2010–2012). In Octoberof the same year, Kawasaki Heavy Industries, Ltd., Kawasaki
Shipbuilding Corporation, Kawasaki Precision Machinery, Ltd., andKawasaki Plant Systems, Ltd., were reintegrated to efficiently andrapidly consolidate and utilize group-wide intellectual assets. The new
Kawasaki Heavy Industries, consisting of seven internal companies thatemerged from this reintegration then decided to strengthen its solutions
business and focus on the development of its environmental and energy
systems business. In moving toward the coming low-carbon society andhydrogen society, the company also started to work on demonstrating its
CO2-free hydrogen supply chain technology while building acooperative consortium.
Overseas, the company opened production bases for ships, plants, andprecision machinery in China, which was experiencing rapid economic
development, and successively opened production and sales bases formotorcycles in the emerging economies of Southeast Asia, Brazil, andIndia.

Reaching New Heights

1) Establishment of the Kawasaki Group Mission
Statement
The Kawasaki Group celebrated its 110th anniversary in October 2006.
In September of the same year, the company formulated its mediumterm business plan, Global K, aiming to “become a leading global
enterprise that enriches lifestyles and helps safeguard the environment
through its core businesses” in ten years. In May 2007, the company
drafted the Kawasaki Group Mission Statement which underscored its
vision for the next decade that was outlined in the Global K mediumterm business plan. This mission statement would help the entire Groupnavigate through the rapidly changing social and business environment
as it made the most of its comprehensive technological capabilities inmaking the leap toward becoming a global leader in the 21st century.
Kawasaki had established its Management Principles in 1966 to spell out
the corporate culture and management standards it stood for. The new
mission statement incorporated all the good that came from thoseprinciples over the years and recast them in the light of a new era.
The mission statement incorporates the Kawasaki Group's social mission
and the values that underlie the Kawasaki brand, as well as the GroupManagement Principles and Group Action Guidelines.
In January 2012 and April 2016, the mission statement was revised tomake it easier to understand and more concise without compromising
any of the meaning behind the original wording.

Positioning of the Mission Statement in Management

Mission Statement

Kawasaki Group Mission Statement
Group Mission
Kawasaki, working as one for the good of the planet- We are the Kawasaki Group, a global technology leader withdiverse integrated strengths.
- We create new value—for a better environment and a brighter futurefor generations to come.
The Kawasaki Group Core Values
Value Creation: We are globally driven to create new value—bothfor our customers and for the benefit of society as awhole
Originality:
We thrive on originality, innovation and leadership
Excellence:
What we produce is of exceptionally high quality
and functionality, as we constantly strive to be at the
global cutting edge
Mission Statement card distributed to employees

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Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

The Kawasaki Group Management Principles(i) Trust: As an integrated technology leader, the Kawasaki Group iscommitted to providing high-performance products and servicesof superior safety and quality. By doing so, we will win the trustof our customers and the community.
(ii) Harmonious coexistence: The importance of corporate social
responsibility (CSR) permeates all aspects of our business. This
stance reflects the Kawasaki Group's corporate ideal of
harmonious coexistence with the environment, society as awhole, local communities and individuals.
(iii) People: The Kawasaki Group's corporate culture is built on
integrity, vitality, organizational strength and mutual respect forpeople through all levels of the Group. We nurture a global teamfor a global era.
(iv) Strategy: The Kawasaki Group pursues continuous enhancementof profitability and enterprise value based on three guiding
principles—selectively focusing resources on strategic
businesses; emphasizing quality over quantity; and employing
prudent risk management.
The Kawasaki Group Code of Conduct(i) Always look at the bigger picture. Think and act from a longterm, global perspective.
(ii) Meet difficult challenges head-on. Aim high and never be afraid
to try something new.
(iii) Be driven by your aspirations and goals. Work toward success byalways dedicating yourself to your tasks.
(iv) Earn the trust of the community through high ethical standards
and the example you set for others.
(v) Keep striving for self-improvement. Act on your own initiative
as a confident professional.
(vi) Be a part of Team Kawasaki. Share your pride and sense offulfillment in a job well done.

2) Weathering the Global Financial Storm andEconomic Slowdown
Kawasaki's consolidated net sales in fiscal 2007 reached 1,501 billion
yen (up 4.3% year on year) mainly due to an uptick in sales for the
shipbuilding, consumer products, and machinery businesses. A
turnaround in the shipbuilding as well as plant and infrastructurebusinesses pumped up profits. Operating income hit 76.9 billion yen(up 11.2% year on year) and recurring profit 63.9 billion yen (up30.4% year on year), while both net sales and profit figures hit record
highs.
In fiscal 2008, the global economic slowdown triggered by the collapseof Lehman Brothers took a significant toll. Consolidated net sales fell
to 1,338.5 billion yen (down 10.8% year on year) as operating income
and recurring profit both dropped sharply, to total 28.7 billion yen(down 62.6% year on year) and 38.7 billion yen (down 39.4% year onyear) respectively. Sales and profits declined for the first time in five
years.
The bleak business environment cast a dark shadow over the horizon
and left no hope that Kawasaki’s performance would bounce back in
fiscal 2009. Among its produce-to-order businesses, Kawasaki had anabundance of backorders for the rolling stock, gas turbine andmachinery, and shipbuilding businesses, which gave it enough work forthe foreseeable future. However, new orders for the shipbuilding andother businesses were drying up.

74

The aerospace business was also in rough shape due to delays in both thedevelopment of the next-generation C-X transport aircraft as well as themass production of the Boeing 787.
Meanwhile, among the mass-production businesses, the consumer
products and machinery business, which had been a cash cow for theentire company, was hit hard by lagging performance in developed
countries that were its key markets. It was the same story for the
precision machinery, robot, and construction machinery businesses
where production also declined rapidly. On top of that, the yen's
appreciation against all currencies in the foreign exchange market had an
inevitable impact on earnings.
The consumer products and machinery business as well as the robot
business, in particular, suffered significant sales declines. Theiremployees were reassigned or seconded to further reduce fixed costs.
Production workers in the consumer products and machinery businesswent to other companies to assist with their operations.

3) Building a Solid Revenue Base for Sustainable
GrowthContinuing Reforms to Cultivate a Sustainable Growth
Cycle
The Kawasaki Group decided to firm up its business foundation in order
to withstand the worsening recession caused by the global economic
downturn. President Tadaharu Ohashi noted that it was a critical time for
the Group, and that they would work hard to rebuild the revenue baseand return to a sustainable growth path. He laid out an urgent business
management strategy focusing on: (1) ensuring quality over quantity andstrict risk management; (2) bolstering the business foundation; (3)investing in growth; and (4) getting business back on a growth trajectory.
He emphasized that Kawasaki should closely monitor changes in themarket environment, be selective about what orders it accepted andmake discerning investments based on thorough risk assessments ofbusinesses that were likely to experience a decline in demand, and all thewhile focus on reducing the break-even point, improving cash flow, andstreamlining the balance sheet. He decided to invest resources in growthareas such as energy and the environment as well as research anddevelopment vital to building the Group’s future technologicalfoundation as planned. He also planned to continue strategicallyinvesting in key markets with a keen eye to selecting the right targets,the amount and speed of resource input needed, etc.
In addition to that, he compiled a list of tasks to be done for massproduction businesses, including quickly optimizing inventory levels,
bringing fixed costs down to where they were commensurate with themarket size, and improving marginal profit ratios. When it came to
produce-to-order businesses, the focus was placed on enhancing the
profitability of large mass-production projects and promptly responding
to foreseeable loss risks.
Ohashi said, "We will temporarily hold back on investing in businesses
and products that are in jeopardy as we strive to maintain a stable
operating foundation upon which the Group as a whole can move ahead
with preparations for our leap forward into a bright new future."

President Ohashi's 2009 New Year's
address in the company newsletter
describing his business management
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Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

Measures Taken by Business Divisions

Through the implementation of the above measures, the Kawasaki
Group aimed to enhance profitability in all aspects of its business,increase enterprise value by ensuring compliance, and build a trusted
brand.

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Consolidation of Affiliates[Table I] Changes in the Number of Affiliates
Japan

Overseas

Total

January 1, 2007

86

50

136

Change● Aim of consolidation
Kawasaki worked to clearly define the boundaries of its businessdomains, thoroughly implement the selectivity and concentration
strategy, and focus on strengthening Group management capabilities, thepriority measures outlined in the Global K medium-term business plan
which went into effect in fiscal 2006.
As part of these efforts, the company identified where its affiliates andtheir businesses fall in its Group operations as well as the direction theyshould be headed, and started implementing action plans in 2007 toachieve goals set in Global K.
Specifically, the company determined the future direction of its affiliates'
businesses in terms of synergies they would generate within the Group,
their future profitability and strategic value, and in light of the originalnature of these businesses. The company also looked at consolidatingcompanies that didn’t fall squarely under the business domains listed in
the medium-term business plan as well as businesses (affiliates) withoverlapping functions.
The purpose of consolidating affiliates was threefold.
(i) Reduce indirect costs through the integration of affiliates andeffectively use management resources, such as people, goods, andmoney, to enhance synergies and improve management efficiency
and quality.
(ii) Increase the number of affiliates above a certain size throughconsolidation so they could also be used as centers of strategic
human resources development for the future of the Kawasaki
Group.
(iii) Further enhance group-wide legal compliance and strengtheninternal control functions by reorganizing and consolidating
affiliates.
The combined effect of the above reasons would enhance the overall
quality of management and further strengthen the Group's earning power
through centralized organizational management, faster business
operations, etc.
● Changes in the number of affiliates after consolidation
As of January 1, 2007, Kawasaki had 136 affiliates (86 in Japan and 50
overseas). After looking at their status with an eye to consolidating
affiliates operating under the same business division, eliminating
overlapping businesses, and ensuring profitability and a competitive
advantage in comparison with other specialized companies, Kawasaki
worked on consolidating them as necessary until the end of fiscal 2008.
The company continued to review the operations of its affiliates beyond
fiscal 2009, and as of the end of March 2014, the number of affiliates
totaled 127 (64 in Japan and 63 overseas). The number of affiliates inJapan had been whittled down by a total of 22 (after cutting 32 andadding 10). The number of overseas affiliates, on the other hand, grewby 13 (after cutting 7 and adding 20) due to the expansion of global
operations (see Table I).

-32

-7

-39

Decrease
Increase

10

20

30

Total

-22

13

-9

March 31, 2014

64

63

127

[Table II] Changes in the Number of Affiliates That Are
Consolidated Subsidiaries
Japan

Overseas

January 1, 2007

58

Change

The following measures were implemented by individual businesses sothey could boost their bottom line amid the global economic downturn.
[Rolling Stock]
Strengthen business operations in the three major markets of Japan,
North America, and the rest of Asia, with the huge backlog of orders
for projects in North America and elsewhere[Aerospace]
Move ahead with large-scale projects, such as moving into the mass
production of next-generation fixed-wing maritime patrol aircraft,completing the development of the next-generation transport aircraft,
and meeting mass production requirements to supply components
for the Boeing 787[Gas Turbine & Machinery]
Proceed with the development of new jet engines for commercial
aircraft, work on developing new products and models for industrial
gas turbines, high-efficiency gas engines, etc. to strengthen
Kawasaki’s position in the energy and environmental engineeringbusiness, and boost overall productivity to gain a bigger competitiveedge[Consumer Products & Machinery]
Increase the profitability of motorcycles sold in developed countries,
which constitutes Kawasaki’s top priority business, despite theglobal recession Strengthen development and production systems on
a global basis with the aim of making Kawasaki products morecompetitive[Robots]
Strengthen development capabilities and expand customer base[Construction Machinery]
Improve development and sales capabilities through alliances with
Hitachi Construction Machinery and TCM[Shipbuilding]
Step up efforts to optimize Kawasaki Shipbuilding Group
production systems, including its China operations, to pave the way
for better earnings in anticipation of new orders in the future[Plant & Infrastructure]
Accelerate the development of the energy and environmental
engineering business as set forth in the Global K medium-termbusiness plan, under the leadership of Kawasaki Plant Systems[Precision Machinery]
Make strategic investments of corporate resources while lowering
the breakeven point, and strengthen global operations covering thefive key markets (Japan, U.S., Europe, China, and South Korea)

Decrease
Increase

Total
36

94

-21

-3

-24

7

15

22

Total

-14

12

-2

March 31, 2014

44

48

92

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Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

The number of affiliates that were consolidated subsidiaries totaled 94(58 in Japan and 36 overseas) as of January 1, 2007, then 92 (44 in
Japan and 48 overseas) as of March 31, 2014, with a decrease of 14(after cutting 21 and adding 7) in Japan and an increase of 12 (after
cutting 3 and adding15) overseas(see Tables II and III).
[Table III] Among Affiliated Companies as of January 1, 2007, Consolidated Subsidiaries That Were Eliminated or Added by March 31, 2014 (Excluding Spinoffs, Mergers, and Waste Treatment Facility Operation and Maintenance Companies)• Eliminated companies (21 in Japan and 3 overseas)

Overseas

Japan

Company Name

Month/Year

Description

Kawasaki Helicopter System, Ltd.

March 2007

Partial share transfer

Fukae Powtec Co., Ltd.

March 2007

Transfer of shares to EarthTechnica Co., Ltd.

Technica Corp.

October 2007

Merged into Shinko Die Casting Co., Ltd. (the trade name remained Technica Corp.)

Kawasaki Construction Co., Ltd.

January 2008

Merged into Kawasaki Heavy Industries

KRT Co., Ltd.

April 2008

Merged into Kawasaki Rolling Stock Component Co., Ltd.

Sakaide Ace Co., Ltd.

April 2008

Merged into Kawajyu Sakaide Service Co., Ltd. (which was renamed Kawasaki Techno Wave Co., Ltd. on January 1, 2009)

K-Point Co., Ltd.

July 2008

Merged into Kawasaki Motors Corporation JapanKAA Co., Ltd.

January 2009

Merged into K-TEC Corp.

Kawajyu Hyogo Service Co., Ltd.

April 2009

Merged into Kawasaki Rolling Stock Component Co., Ltd.

Nisseki Service Consultant Co., Ltd.

April 2009

Merged into Nichijo Manufacturing Co., Ltd.

Enetec Co., Ltd.

April 2009

Merged into Kawasaki Engineering Co., Ltd.

Kawasaki Oita Manufacturing Co., Ltd.

August 2010

Kawasaki Gas Turbine Research Center Ltd.

August 2010

Akashi Ship Model Basin Co., Ltd.

April 2011

Liquidation completed on August 18 following the approval of dissolution on March 31
Operations ceased at the end of March 2009, and liquidation completed on August 23, 2010 following the approval of dissolution
on December 31, 2009
Merged into Kawasaki Marine Engineering Co., Ltd.

Ship Partners Limited
Kawajyu Steel Works & Engineering Co.,Ltd.
Fukae Powtec Co., Ltd.

April 2011

Merged into Kawasaki Marine Engineering Co., Ltd.

October 2011

Merged into Kawaju Facilitech Co., Ltd.

April 2012

Merged into EarthTechnica Co., Ltd.

Kawasaki Shipbuilding Inspection Co., Ltd.

July 2012

Merged into Kawajyu Kobe Support Co., Ltd.

Kawaju Tokyo Service Corporation

July 2012

Merged into Kawasaki Life Corporation

Kawasaki Metal Industries, Ltd.

July 2012

Liquidation completed on July 6, 2012 following the approval of dissolution on December 31, 2011

K-GES Co., Ltd.
Kawasaki Aeronautica do Brasil Industria
Ltda.
KHI Europe Finance B.V.

April 2013

Merged into Kawasaki Motors Corporation Japan

March 2007

Liquidation completed on March 20

March 2009

Liquidation completed on March 31, 2009 following the approval of dissolution on December 8, 2008

Kawasaki Motors Racing B.V.

April 2010

Merged into Kawasaki Motors Europe N.V.

• Added companies (* indicates companies that became consolidated subsidiaries due to changes in stock holdings) (7 in Japan and 15 overseas)

Japan

Company Name

Month/Year
April 2008

Made into a wholly owned subsidiary through stock purchase*EarthTechnica M&S Co., Ltd.

April 2008

In connection with EarthTechnica becoming a wholly owned subsidiary*Fukae Powtec Co., Ltd.

April 2008

KCM Corporation

January 2009

Kawasaki Motors Racing B.V.

In connection with EarthTechnica becoming a wholly owned subsidiary
Established to take over the operations of the Construction Machinery Business Center (Kawasaki’s construction machinery
division was spun off and transferred to KCM Corporation on April 1.)
Established to take over the construction machinery division operations of Kawasaki Machine Systems, Ltd. (KMS)
January 2009
(KMS’s construction machinery division was spun off and transferred to KCMJ Corporation on April 1.)
Established to take over the robot division operations of Kawasaki Machine Systems, Ltd. (KMS)
January 2012
(KMS’s robot division was spun off and transferred to Kawasaki Robot Service, Ltd. on April 1.)
Special-purpose subsidiary for the employment of persons with disabilities
September 2013Engaged in contracting employees who perform general clerical work, real estate maintenance, management and cleaning, etc.
March 2007
Engaged in the operation of MotoGP races, acquisition and storage of operational equipment, and administrative work

KCM Receivables Funding LLC

September 2007 Engaged in the acquisition, holding, and sale of KCM dealer receivables for the purpose of securitization of receivables

KCMJ Corporation
Kawasaki Robot Service, Ltd.
Kawaju Heartfelt Service Co., Ltd.

Kawasaki Motores do Brasil Ltda.
October 2007
Kawasaki Heavy Industries Middle East FZEJuly 2008(United Arab Emirates)

Overseas

Description*EarthTechnica Co., Ltd.

*KHITKAN, Co., Ltd.

February 2009

Kawasaki Trading do Brasil Ltda.

April 2009

Kawasaki Chunhui Precision Machinery(Zhejiang) Ltd.
Kawasaki Precision Machinery Trading(Shanghai) Co., Ltd.

August 2009
February 2010

Kawasaki Trading (Shanghai) Ltd.

April 2010

India Kawasaki Motors Private Limited

July 2010Engaged in the production and sales of motorcycles, ATVs, PWCs, and related businesses in Brazil
Engaged in the marketing and sales of Kawasaki products and providing related support in the Middle East and North Africa● Consolidation and integration of service divisions in
the Kansai Region
In October 2008, service operations and functions of service companies
in Hyogo Prefecture, including Kawaju Kobe Support Co., Ltd.,
Kawajyu Hyogo Service Co., Ltd., Kawaju Akashi Service Co., Ltd.,
Kawaju Facilitech Co., Ltd., and Kawasaki Life Corporation (Office
Support Division), were consolidated and integrated into Kawaju Service
Co., Ltd. (renamed Kawaju Akashi Service Co., Ltd.) to enhance andstreamline management.
● Withdrawal from the bridge and floodgate business
Kawasaki had been carrying out structural reforms of its businesses since
2000, including spinning off its shipbuilding, precision machinery, andplant businesses, and forming a joint venture for its crusher business. As
part of this process, the company was also looking into spinning off its
bridge business. With little hope left for maintaining and expanding thebusiness in light of diminishing public investment in Japan, its primarymarket, Kawasaki finally decided to withdraw from the bridge andfloodgate business altogether in June 2007.
● Restructuring of the construction machinery businessIn the construction equipment industry, where global cooperative
relationships were beginning to blossom, competing companies were
ramping up the scale of production while aggressively making inroads
into overseas markets and strengthening their IT capabilities in theservice sector. While Kawasaki’s Construction Machinery BusinessCenter also looked to expand its operations, a lack of management
resources made it difficult to do in the rocky business environment. As asolution Kawasaki sought partnerships with other companies and signed
a tripartite business alliance agreement in the wheel loader business with
Hitachi Construction Machinery Co., Ltd. and TCM Corporation(currently Mitsubishi Logisnext Co., Ltd) in October 2008.
In April 2009, Kawasaki spun off its construction machinery division
into KCM Corporation specializing in construction machinery design,
manufacture, sales, and repair. In the same month, the domestic
construction machinery sales and service division and other operationsof Kawasaki Machine Systems, Kawasaki’s wholly owned subsidiary,
were spun off and transferred to KCMJ Corporation, Kawasaki’s otherwholly owned subsidiary established in January 2009.
In June 2010, Hitachi Construction Machinery took a stake in KCM in
the form of a third-party allocation of new shares, bringing KCM's
shareholder composition to 66% for Kawasaki and 34% for Hitachi
Construction Machinery. Kawasaki subsequently transferred all its
shares in KCM to Hitachi Construction Machinery in October 2015.
KCMJ, a subsidiary of KCM, was transferred to Hitachi Construction
Machinery Japan Co., Ltd. on the same day.

Kawaju Service Co., Ltd. head office building

Became Kawasaki’s wholly owned subsidiary after Kawasaki Motors Enterprise (Thailand) Co., Ltd.
acquired all shares in the company
Engaged in the sales of steelmaking, power generation, marine, hydraulic, transport, and other related equipment in the Brazilian
market(wholly owned by Kawasaki Trading Co., Ltd.)Engaged in the manufacture and sale of hydraulic pumps for construction machinery
Engaged in the sales of Kawasaki Precision Machinery, Ltd. products (including products made by joint ventures) as well as
customer service and customer satisfaction management activities in China
Engaged in the sales of power generation equipment as well as steel-related, marine, hydraulic, and civil engineering machineryplus other related equipment in the Chinese market (wholly owned by Kawasaki Trading Co., Ltd.)Engaged in the production and sales of Motorcycle & Engine Company products and related operations

Kawasaki Componentes da Amazonia Ltda. November 2011 Engaged in the production and sales of motorcycle, ATV, PWC, small engine parts and engines (wholly owned by KMB)
Wipro Kawasaki Precision Machinery Private
February 2012 Engaged in the manufacture, sale, and servicing of hydraulic pumps for construction machinery (74% owned by Kawasaki)
LimitedKawasaki Hydrogen Engineering Australia
August 2012Engaged in design work for the CO2-free hydrogen energy supply chain project
Pty Ltd
Kawasaki Robotics (Kunshan) Co., Ltd.
January 2013Engaged in the procurement of industrial robot parts and peripheral equipment
PT.Kawasaki Motor Sales Indonesia

78

February 2014Engaged in the import and sale of finished motorcycles and parts (99.90% owned by KMI)

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Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

4) Crane Accident at Kawasaki Shipbuilding's Kobe
Works and Kawasaki’s Commitment to Safety
On August 25, 2007, at the Kobe Works of Kawasaki’s subsidiary,
Kawasaki Shipbuilding, a 30-meter-long arm of a shipbuilding crane(elevated approximately 50 meters high and weighing about 800 tons)
collapsed, killing three of nine workers who were repairing the crane,
and injuring four others.
Kawasaki Shipbuilding set up an emergency headquarters toinvestigate the collapse of the crane that occurred at its Kobe Works
No. 4 Building Berth. Under the president’s direction, the company
worked to uncover the facts, determine the cause of the accident, andimplement measures to prevent a recurrence. The company promptly
cut the amount of compensation paid to all full-time directors as ameasure of accountability for the terrible accident and harm it caused
to all involved.
Working to strengthen its management structure, Kawasaki
Shipbuilding created a new position of chairman and, to fill it,
appointed Masatoshi Terasaki, senior executive vice president of its
parent company, Kawasaki Heavy Industries, in December 2007.
In response to this accident, Kawasaki president, Tadaharu Ohashi, in
his 2008 New Year's address, assured all employees that he would
strengthen the safety management system of the entire Kawasaki
Group. He pledged to put safety first for all employees, products, andequipment, with an aim to eradicate serious accidents, and prevent suchan incident from ever occurring again.

2.

Achieving the Group Mission andConsolidating Four Companies

1) Inauguration of Satoshi Hasegawa as President
In June 2009, Kawasaki president, Tadaharu Ohashi, became thechairman, and Satoshi Hasegawa, the senior executive vice president,
became the president. Hasegawa took over the helm in the midst of a
global recession the likes of which they say could only occur once in 100
years. He made clear exactly where he stood on management policy rightfrom the beginning, saying, "Kawasaki operates a wide range ofbusinesses that support the development of public infrastructure aroundthe world. As a company living in the 21st century, we should operatewith a broad awareness of our corporate social responsibility, focusing
not only on environmental issues with our products and manufacturing
processes, but also on our relationships with all our stakeholders,
including shareholders, customers, employees, and local communities.”

2) Formulation of the Medium-Term Business Plan
2010 and Kawasaki Business Vision 2020
Kawasaki worked on expanding operations in North America, Asia, andother overseas markets as well as improving its financial position under
the Global K medium-term business plan (FY2006–2010), which waslaunched in fiscal 2006, and achieved significant results, including
record profits for two consecutive years in fiscal 2006 and 2007.
However, the global economic recession that began in the fall of 2008
forced the company to revise this plan. Then, in April 2010, it
formulated the Kawasaki Business Vision 2020 and the Medium-TermBusiness Plan (MTBP) 2010 (FY2010–2012), outlining the Group's
vision for 2020 and a roadmap for achieving that vision. In an attempt toadapt quickly and flexibly to the changing business environment, themedium-term management plan was shortened from the conventional
period of five years to three. The summary of the Kawasaki Business
Vision 2020 and MTBP 2010 is as follows.

<Kawasaki Business Vision 2020>[Business Vision]
Aiming to achieve the Group Mission, we will move toward becoming acompany that provides products and services designed to meet thediverse needs of people around the world by leveraging our advanced
technological capabilities in three principal business sectors: transportsystems, energy and environmental engineering, and industrial
equipment.
[Basic Strategy](1) Strengthening of the business base
• Classify each business as a “developing business,” a “core profitmaking business,” or a “business requiring review” and concentrate
management resources on developing businesses and core profitmaking businesses. On the basis of careful examination of market
trends, implement structural reform or downsize or withdraw frombusinesses requiring review.

80

Chairman Ohashi (left) and President Hasegawa (right)

Formulate new product andnew business concepts

Medium-Term Business Plan
(FY2010-2012)

Kawasaki Business
Vision 2020

Anticipate societal needs
until 2030

—Strategic Moves
toward the Future—
Action plan

FY2010FY2012• Return to a growth path
• Strengthen business foundations in
preparation for future growth

FY2020

FY2030• Sustain a growth path
• Achievement of the Group mission

The Relationship between the Kawasaki Business
Vision 2020 and the Medium-Term Business Plan

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Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet[Quantitative Vision of Consolidated
Performance] (FY2020)
Net sales

2 trillion yen

Recurringprofit

100 billion yen or higher(Ratio of recurring profit to sales:
5.0% or higher)• In the existing businesses that constitute the Group’s earnings
structure, maintain and increase competitiveness as well as create
stable earnings and cash flow. Furthermore, actively pursue
expansion into new products and new markets to develop an
earnings structure for the future.
(2) Reinforcement of development and technological capabilities andmonozukuri (manufacturing) capabilities• Anticipate developments in society until around 2030 and
identify business sectors where needs will increase in the medium
term to long term. On that basis, utilize the Group’s intellectual
assets to nurture and reinforce competitive new products andbusinesses.
• Position the Group’s plants in Japan as development andproduction bases that integrate advanced technologicalcapabilities and reinforce development and technologicalcapabilities and monozukuri capabilities.
(3) Global business development in overseas markets• In overseas markets that offer prospects for expansion,
principally developing countries, formulate regional market entry
strategies based on existing products and technologies while
simultaneously pursuing market development through productdevelopment adapted to regional needs.
(4) CSR and environmental response• Enrich lifestyles and improve the global environment throughproducts that incorporate the ultimate in energy-saving, lowenvironmental impact technologies.
• Establish the Environmental Vision 2020 and engage inenvironment-friendly business operation. Be conscious ofcorporate social responsibility in all business activities andsteadily implement CSR activities.
(5) Implementation of personnel policies• Develop and improve such systems as personnel and educationand create a corporate climate in which employees strive toimprove their skills and can take maximum advantage of theirabilities.
• Build a safe, worker-friendly work environment that reflectsconsideration of work-life balance and diversity.

<MTBP 2010>[Basic Objectives](1) Return to a growth path
• Rebuild the earnings structure during the term of the MediumTerm Business Plan and return to a growth path in preparation forachievement of the Kawasaki Business Vision 2020.
(2) Reinforce overall Group profitability• Pursue radical cost reduction and productivity improvement in all
development, design, procurement, and monozukuri processes
and reinforce overall Group profitability by implementing bold
structural reform of businesses experiencing or expected toexperience demand shortages.

82(3) Strengthen business foundations in preparation for future growth• Steadily nurture new products and new businesses in preparation
for achievement of the Kawasaki Business Vision 2020 and engage
in business overseas, focusing on developing countries.
(4) Reinforce the Group’s collective strength• Reorganize the business structure through the re-merger of Group
companies and establish an internal company system withcompanies to operate in seven business segments: Shipbuilding,Rolling Stock, Aerospace, Gas Turbines & Machinery, Plant &Infrastructure, Motorcycle & Engine, and Precision Machinery. In
this way, accelerate the upgrading of existing products and productdevelopment in new business sectors. In particular, maximize thebenefits of establishing a Plant & Infrastructure Company.
• Reinforce the Group’s collective strength by promoting the sharing
and utilization of intellectual assets within the Group related totechnology, marketing, and human resources.
(5) Achieve a worker-friendly work environment• Develop such systems as personnel and education that place
importance on work-life balance and diversity.
[Key Strategies for Returning to a Growth Path](i) Reinforce the capability to respond to changes in the businessenvironment by lowering the break-even point for mass-production
businesses through means including fixed cost reductions andoptimize inventory levels. Make putting the motorcycle business inthe black an especially important priority.
(ii) For businesses that produce custom-built products based on
individual orders, emphasize profitability, increase costcompetitiveness by implementing rigorous risk management inbusiness operation, and achieve the profit target.
(iii) Improve the financial position through cash flow improvement andreduction of interest-bearing debt.

[Consolidated Quantitative Targets] (FY2012)
Net sales
Operating income

Recurring profit
Before-tax ROICInterest-bearing debt

1.4 trillion yen
52 billion yen(Ratio of operating income
to sales: 3.7%)
56 billion yen(Ratio of recurring profit tosales: 4.0%)
8.5%
430 billion yen(FY2012 year-end balance)[Key Policies and Measures](i) Reinforce and nurture businesses that will constitute the future
earnings structure(ii) Accelerate global business development(iii) Share and utilize intellectual assets across the Group(iv) Strengthen technological capabilities(v) Strengthen product development and monozukuri capabilities(vi) Promote effective use of plants and business sites(vii) Develop human resources, personnel systems, and the workplaceenvironment(viii) Implement environmental management(ix) Develop IT strategy and systems(x) Implement group-wide risk management

83Part 2/The Last 25 Years (Overall History)

Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet(xi) Improve the quality of headquarters departments

3) Integrating Four Group Companies toConsolidate Technologies and Know-how andCultivate New Businesses

Firm handshake to mark the merger of the four Group companies

Kawasaki worked on transforming itself from a heavy industry
company into a flexible enterprise and strengthened its businessfoundation by implementing the principal management policies ofquality over quantity, selectivity and concentration, and increased
autonomy for business divisions, as set out in the medium termbusiness plan formulated in 2000. In following through on thesepolicies, Kawasaki spun off its shipbuilding and precision machinery
divisions on October 1, 2002, and the plant engineering division on
April 1, 2005, making them its wholly-owned subsidiaries. After the
spin-off, the three subsidiaries strived to strengthen theircompetitiveness with an eye to becoming independent and achieving
profitability.
As a result, the Kawasaki Group was able to achieve its original goalof transforming its corporate structure and strengthening its businessfoundation.
Guided by its mission statement adopted in 2007, Kawasaki had
worked to create new value for a better environment and brighter
future by leveraging its advanced technological capability across a
broad range of fields. Creating new value involves making existingproducts smarter through innovation and developing new products intotally new fields. To do this Kawasaki had to work quickly toefficiently integrate operations and make the most of the entire
Kawasaki Group’s intellectual assets.
That’s why, in October 2010, Kawasaki decided to remerge Kawasaki
Shipbuilding, Kawasaki Precision Machinery, and Kawasaki Plant
Systems and achieve maximum efficiency by leveraging the Group’s
technological assets and human resources, while removing any of thelimitations caused by being subsidiaries.
The new Kawasaki born as a result of this re-merger was now poised
to use this opportunity as a springboard toward reaching the goalproclaimed in its mission statement to be a profitable global corporategroup working as one for the good of the planet.

4) Reorganizing Corporate Divisions and Internal
Company Operations
Corporate Divisions
In fiscal 2010, when the four group companies were integrated,
Kawasaki also reorganized its corporate divisions. The Corporate
Technology Division established a company-wide system fordeveloping new businesses. It focused on the early involvement ofinternal companies and budgeting part of the costs at the head office,while conducting research on hydrogen-related and other futurebusinesses.

84

The office functions of the plant complexes were incorporated into thehead office which would carry out overall plant operations with a longterm perspective. It was an independent corporate organization that acted
as an external representative of all plants and performed operations
common to all plants.
The Procurement Division was newly established with an eye tostrengthening the Kawasaki Group's procurement capabilities. It
established a centralized purchasing system in order to share information
about domestic and overseas procurement across the organization anddeliver advantageous purchasing terms based on the company-wideorder volume. In addition to that, the Infrastructure Strategy Office was
newly created to share information across the company that would
contribute to management decisions regarding the infrastructure market.
It focused on next-generation energy and provided relevant divisions
with specific information that would help them identify opportunities
and cultivate new businesses. The new division would facilitate
Kawasaki’s efforts to build stronger ties with the public and academic
sectors, gather information on the market as well as related internal
departments, and expand its business in the promising infrastructure
market.
In November 2012, after leasing the entire TIS Takeshiba Building
located at Kaigan 1-chome, Minato Ward, Tokyo, the company moved
its Tokyo head office there (which was tentatively named theHamamatsucho Building) from the World Trade Center Building at
Hamamatsucho 2-chome, Minato Ward, Tokyo. At the same time, it
merged the Tokyo Office (plant and infrastructure business operations)in Minamisuna, Koto Ward into the new head office location. The
Marketing Division, which was established in April of the same year,
seized this opportunity to spearhead the sharing of intellectual assets
within the company. In gearing up its comprehensive efforts aimed atcreating markets in Japan as well as overseas, it went a long way tohelping the Kawasaki Group create further value.

Ship & Offshore Structure Company
The prolonged slump in the shipping market since the collapse of
Lehman Brothers had resulted in a decline in demand for new vessels.
On top of that, the ultra-strong yen and weak won blunted Japanese
shipyards’ competitive ability and pulled the plug on new shipbuilding
orders. Kawasaki’s Ship & Offshore Structure Company had also seen asignificant decline in merchant shipbuilding volume since the second
half of fiscal 2012. As a result, the company decided to downsize theworkforce at its Sakaide Works. It then laid out strategic business
management plans for the plant with a focus on: (1) maintaining its
operational foundation for years to come since it serves as the key
factory; (2) developing the LPG-fueled vessel and offshore development
businesses into future profit engines, with the aim of building two LNG
carriers and one LPG carrier every year; and (3) minimizing losses after
the second half of fiscal 2012, when the utilization rate would inevitably
take a precipitous dive.
As part of this strategy, the production staff at the Sakaide Works weretransferred to other internal companies, with some assigned to the
Machinery Business Center in December 2012, and others to the
Aerospace and Precision Machinery Companies in May and June of2013.

President

Corporate Planning DivisionCorporate Planning Department
Corporate Business Planning Department
Subsidiaries & Affiliates Control Department
Information Planning Department
Public Relations Department
Finance & Accounting Division
Finance Department
Accounting Department
CSR Division
CSR Department
Legal Department
Environmental Affairs Department
Personnel & Labor Administration Division
Personnel Department
Human Capital Development Department
Labor Administration Department
Safety & Health Management Department
Kobe Works Office
Akashi Works Office
Harima Works Office
Procurement Division
Planning & Control Department
Material Procurement Department
Indirect Material Procurement Department
General Administration Division
General Administration Department
Secretarial Department
Property Administration Department
Construction Control Department
Corporate Business Development Division
Administration Department
Marketing Department
Overseas Administration Department
International Business Department
China Department
Branch office
Infrastructure Strategy Office
Corporate Technology DivisionCorporate Technology Planning Center
Technical Institute
System Technology Development Center
Intellectual Property Department
Manufacturing Improvement Department

Organization chart (As of Oct.1, 2010)

Hamamatsucho Building where the Tokyo
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Clerical and engineering personnel were transferred to the head officeand other internal companies between October 2012 and March 2014.

Plant & Infrastructure Company
In 2011, Kawasaki decided to strengthen organizational functions andimprove efficiency at the Plant & Infrastructure Company. It would dothat by consolidating its engineering and common back-office
functions, which were dispersed throughout the Kobe and Harima
Works, into a new administrative office at the Kobe Works, andtransferred Harima Works employees to the Kobe Works in Septemberof the same year.
As a result, the manufacturing division of the Harima Works was
positioned as a common production base for all business units (BUs)of the Plant & Infrastructure Company, and all BUs were poised tojoin hands in better utilizing the plant.

Precision Machinery Company (Robot Division)
In April 2012, the Robot Division incorporated the sales division of
the Kawasaki Machine Systems (KMS) robot business to establish anorganizational structure that would enable it to work closely with thedevelopment, design, and engineering divisions in developing
strategies and quickly delivering solutions that would fulfill customer
needs via better product development and improvement. In April 2012,
the service division was transferred to Kawasaki Robot Service, Ltd.,
which was established in January of the same year by spinning off
KMS’s robot division. The move would enable the division tosupervise and engage in overall service operations across the globe.
KMS continued to sell and service gas turbine power generation
systems.

5) The Great East Japan Earthquake and Helping
Build Back
Aiding Disaster Areas and Victims

D-Tracker X and D-Tracker 125 motorcycles donated to
Iwate Prefecture

At 2:46 p.m. on March 11, 2011, a massive earthquake with amagnitude of 9.0 struck off the northeast coast of Japan. The quake
triggered a towering tsunami measuring more than nine meters that hit
the Pacific coast of Japan’s Tohoku and Kanto regions, leaving a trail
of death and destruction in its wake. Although the Kawasaki Group did
not suffer any human casualties, some of its sales and service bases in
the Tohoku region were severely damaged, where the head office andvarious other divisions came together to help with reconstruction
work.
Meanwhile, the Group donated a total of 100 million yen spread acrossthree prefectures and one municipality as well as the Japanese Red
Cross Society to support the disaster areas and victims.

As part of its efforts to be a good corporate citizen, Kawasaki reached
out to numerous local government officials and other relevant parties tofind out exactly what kind of equipment they needed. It donated 30 of its
motorcycles to help responders in the disaster areas get around moreeasily and efficiently transporting goods to those in need. In addition to
the motorcycles, Kawasaki also donated five KCM wheel loaders and an
EarthTechnica crusher for use in debris disposal. Beside the vehicles,
whose sum total value added up to 100 million yen, the company also
provided a helicopter, which became the community’s eye in the sky, at
no cost. Kawasaki’s domestic and overseas group companies also
provided a total of 38 million yen to assist in relief efforts. In 2013 and2014, the company donated two of its Jet Ski® watercraft.

Revising Business Continuity Plan
The Kawasaki Group had developed disaster prevention measures basedon the lessons learned from the January 1995 Great Hanshin-Awaji
Earthquake and had worked on business continuity planning (BCP) since
the outbreak of a new influenza virus in 2009. Following on the heels of
the Great East Japan Earthquake, Kawasaki revised its business
continuity plan for large-scale earthquakes and set forth a basic corporate
policy to clarify courses of action to take in the event of an emergency.

EarthTechnica crusher<Basic Corporate Policy>● Ensure the safety and health of employees and theirfamilies.
● Ensure services and products that are essential to thefulfillment of corporate responsibility go on without
interruption.
● Get Group operations back to normal.
● Acknowledge responsibility to local communities andcontribute to each region.
Working with this basic corporate policy in mind, Kawasaki was to: (1)designate functions to be maintained at the head office and internal
companies in the event of disaster; (2) consider the appropriate actions totake in the wake of a disaster and prepare for the eventuality of such
events during normal times; and (3) conduct drills regularly and revise
the BCP based on the outcome of the drills.
In order to respond quickly and flexibly to emergency situations, theCorporate Command Center, Integrated Plant Command Center,
Company Command Center, and Local Command Center were alsoestablished as the Group’s crisis management system.

6) Overseas Production and Sales
Overseas Sales Exceeds 50% of Overall Group Sales
Since the 1960s, the Kawasaki Group has been aggressively expanding
its business overseas. In 2010, its overseas sales ratio reached 55%, andemployees working overseas accounted for 25% of the total workforce.

86

Wheel loader used for debris disposal and land leveling

Section of CSR Report 2012 on therevised BCP

Crisis Management System
Location
Office that has notsustained any
damageIn principle, either
the Kobe Head
Office or the
Tokyo Head
OfficeIntegrated Plant Determines issues related to all plants; Plant facilities ofCommandcoordinates with internal companies. several internal
Centercompanies
Company
Provides internal company support in Appropriate
Commandareas devastated by the disaster;
location at eachCenterdetermined responses to affectedinternal company
suppliers and customers.
Local
Determines responses for business
Office that
Commandsegments and business offices.
sustained damage
CenterCorporate
CommandCenter

Key Role
Set up in the event of a crisis that
requires a companywide response;
determines measures to be
implemented throughout the Groupand basic policy on action plans.

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Overseas Sales, Sales Ratio, and Number of AffiliatedCompanies

Overseas sales
Overseas sales
ratio
Number ofoverseas
affiliatedcompanies

1990

2000

2010

223 billion
yen

432 billion
yen

669 billion
yen

25%

41%

55%

13

29

46

Kawasaki used the lessons learned from motorcycle production in the
United States that had begun in 1975 to expand the operations of otherbusinesses overseas. As a result, the company now boasts full-scale
overseas production facilities for everything from rolling stock toconstruction machinery, precision machinery, general-purpose
gasoline engines, ships, and marine machinery, while also supplying
high-quality products all around the world.
From around 2007 to 2013, the company sought to make further
market inroads encompassing a wide range of businesses, including
shipbuilding, plants, and precision machinery, in China, which was
experiencing rapid economic growth at the time. In emerging
economies such as Southeast Asian countries, Brazil, and India, thecompany’s motorcycle business grew by leaps and bounds.

Growth of Kawasaki Operations in China

Nantong COSCO KHI Ship Engineering Co., Ltd. (NACKS)

Wuhan Kawasaki Marine Machinery Co., Ltd. (WKM)[Shipbuilding]In 1995, Kawasaki and China Ocean Shipping (Group) Company(COSCO) signed an agreement to establish a joint venture company
that would serve as a production base for the shipbuilding business in
China, and in January 1999, incorporated Nantong COSCO KHI ShipEngineering Co., Ltd. (NACKS) in Nantong City, Jiangsu Province,
China. In 2008, it became one of the top shipbuilding companies in
China with the completion of its second dock (measuring 500 meters
long, 80 meters wide, and 12.8 meters deep and equipped with 5
cranes) in addition to its first dock (measuring 350 meters long, 68
meters wide, 12.8 meters deep and equipped with 5 cranes) which was
already in operation.
At the same time, NACKS established a joint venture with Wuhan
Marine Machinery Plant Co., Ltd., Wuhan Kawasaki Marine
Machinery Co., Ltd. (WKM), in Wuhan, Hubei Province to produceside thrusters.*2 Production increased nearly threefold in the five years
from 2002, reaching a total of 1,000 units in June 2006.
In 2007, Dalian COSCO Shipbuilding Industry Co., Ltd. (DACOS)
was established in Dalian City through joint investment from NACKS
and COSCO Shipbuilding Industry Company (COSIC). Production
facilities such as the first and second docks as well as the fabrication,
block assembly and block paint shops were built on the newcompany’s vast site measuring about 1.9 million square meters.
Since then, the Kawasaki Group has been conducting shipbuilding
operations at four different locations, including the Kobe Works,
Sakaide Works, NACKS, and DACOS.*3
*1
*2

*3

Nantong COSCO KHI Ship Engineering Co., Ltd. changed its Chinese tradename slightly in 2018.
A side thruster is a propulsion device (generally a screw propeller) installed
within a tunnel built into the bow or stern of a ship below the waterline. It
enables a vessel to turn or move sideways when maneuvering in port.
DACOS was renamed Dalian COSCO KHI Ship Engineering Co., Ltd. in2012 and its Chinese trade name was changed slightly in 2018.

[Plant Engineering]
Dalian COSCO KHI Ship Engineering Co., Ltd. (DACKS)

Kawasaki joined hands with the Anhui Conch Group, the parent
company of Asia’s largest cement company, Anhui Conch Cement Co.,
Ltd., to establish two joint ventures in Wuhu, Anhui Province, Anhui
Conch Kawasaki Engineering Co., Ltd. (ACK) in 2006, and Anhui
Conch Kawasaki Energy Conservation Equipment Manufacturing Co.,
Ltd. (CKM) in 2007. ACK designed, procured, and sold waste heatrecovery power generation systems for cement plants, and CKM
manufactured PH boilers for waste heat recovery power generation
systems needed to fill orders ACK received.
ACK steadily gained orders in China after combining the advanced
technical capabilities of Kawasaki Plant Systems with the sales force andreliability of the CONCH Group and its expertise in local procurement
and operations. Its products earned a good reputation among users andhelped establish awareness of energy conservation and environmental
protection among the Chinese public as a whole.
In July 2007, CKM started manufacturing PH boilers for waste heatrecovery power generation systems at its 27,000-square-meter Plant 1. In
2008, CKM’s second plant (measuring 18,000 m2) and third plant(measuring 27,000 m2) were completed to respectively produce highly
efficient vertical cement mills and AQC boilers for waste heat recovery
power generation systems and waste treatment facilities that can be
added to existing cement plants.
[Precision Machinery]In the 2000s, the Chinese market for hydraulic excavators became thelargest in the global construction machinery industry with further growth
on appearing on its horizon.
Operating against this backdrop, in December 2005, Kawasaki
established Kawasaki Precision Machinery (Suzhou) Ltd. (KPM
Suzhou), as a wholly owned subsidiary located in Suzhou, Jiangsu
Province, to produce hydraulic components for construction machinery
in China. The company kicked off full-scale production in 2011 with thecompletion of a new plant (with a total area of 13,500 m2) fitted withproduction lines transferred from the old plant and additional new
facilities for increased production capacity. The new plant had an annual
production capacity of approximately 110,000 units, including 60,000
hydraulic pumps and 50,000 hydraulic motors, double that of the oldplant.
In August 2009, Kawasaki and China’s Zhejiang Chunhui Group Co.,
Ltd. jointly established Kawasaki Chunhui Precision Machinery(Zhejiang) Ltd. (KCPM) in the Zhejiang Shangyu Economic
Development Zone as a new production base for hydraulic components.
By 2012, the company was producing 40,000 hydraulic pumps annually.
In March 2011, Kawasaki Precision Machinery Trading (Shanghai) Co.,
Ltd. (KPM Shanghai) opened the CS Center in China to provide services
for hydraulic construction machinery components, including products
made by both companies. In China, where sales of hydraulic excavators
increased sharply in 2010, from about 100,000 the previous year to about
170,000, Kawasaki’s hydraulic components enjoyed the lion’s share of
the market.

The office where Anhui Conch Kawasaki Engineering Co.,
Ltd. (ACK) originally operated

Anhui Conch Kawasaki Energy Conservation Equipment
Manufacturing Co., Ltd. (CKM) plant buildings

Kawasaki Precision Machinery (Suzhou) Ltd. (KPM
Suzhou) when it was first launched

Kawasaki Chunhui Precision Machinery (Zhejiang) Ltd.
(KCPM)

Overhauling hydraulic equipment at Kawasaki
Precision Machinery Trading (Shanghai) Co., Ltd. CS

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Paving Inroads into Motorcycle Markets in Brazil, India,
and China

Kawasaki Motores do Brasil Ltda.(KMB)

India Kawasaki Motors Pvt. Ltd.(IKM)

Motorcycle dealer in China (Xi'an)

Kawasaki started selling its motorcycles in Indonesia, Thailand,
Malaysia, and other Southeast Asian countries in the 1960s and1970s. Sales of medium- and large-size motorcycles, which are
Kawasaki’s specialty, increased as the economies of these countries
grew.
Later the company turned an eye to Brazil, India, and China as newmarkets for its motorcycles. In October 2007, it set up Kawasaki
Motors do Brasil Ltda. (KMB) in Sao Paulo, Brazil and in October ofthe following year, began selling motorcycles that were imported
from factories abroad. A Brazilian factory was built in Manaus in
October 2009 and started knockdown production of Kawasaki’s
major medium and large size models, such as Ninja and Z series.
In India, India Kawasaki Motors Pvt. Ltd. (IKM) was established inJuly 2010 to import and sell motorcycles. The company
commissioned Bajaj, a major local motorcycle manufacturer, toproduce and sell the Ninja 250R. In February 2013, it established its
own factory to begin full-scale production of the Ninja 300 as well as
the Ninja 650. It then opened a dealership in September.
In China, Kawasaki started selling medium and large size models,
including the Ninja ZX-14R, Ninja 650, Ninja 250, and Z250,
through Kawasaki Heavy Industries Management (Shanghai), Ltd. inAugust 2013. In September 2016, it established Kawasaki Motors(Shanghai), Ltd. (KMSH) to independently operate the motorcycle
business there. The company went on to open stores in major cities
such as Shanghai, Beijing, and Chengdu.
Kawasaki aimed to put the motorcycle business in high gear byboosting sales in the maturing markets of Southeast Asia andcultivating the promising markets of Brazil, India and China.

3.

Corporate Social Responsibility andEnvironmental Management

1) Formulation of MTBP 2013
After looking back on the initiatives implemented under MTBP 2010
(FY2010–2012), Kawasaki formulated the medium-term business plan,
MTBP 2013 (FY2013–2015), in April 2013 in light of the subsequentchanges in the market. Since fiscal 2015, the final year of the plan,
marked the halfway point of Kawasaki Business Vision 2020, the work
to be done under the medium-term business plan was key to achieving
the Group’s vision.
MTBP 2013 focused on forging a foundation for the future and building
a business structure designed to bend with any winds of change ahead,
while steadily building on the progress made under MTBP 2010.
[Basic Objectives](1) Ensure efficient business management to survive the severebusiness environment(2) Implement measures to reflect changing business environments(3) Implement specific measures to achieve the Vision(4) Promote earlier commercialization of new products andbusinesses(5) Aim to be a corporate group that enjoys sustainable growth, while
contributing to the growth of society[Key Policies and Measures]—Efforts to expand business foundations—(i) Provide solutions(ii) Expand the range of existing businesses(iii) Accelerate global business development aimed at growth markets(iv) Encourage early commercialization of new products andbusinesses(v) Enhance the competitiveness of existing businesses—Efforts to secure future revenue basis—(i) Promote R&D efforts and capital investments on a continuous
basis(ii) Promote the sharing of intellectual properties and education todevelop globally minded personnel, etc.
—Efforts to solidify the management system—(i) Reinforce the financial structure(ii) Increase the efficiency of the execution of common duties

FY2015 Halfway Point

MTBP 2010(FY2010-FY2012)
FY2010•Return to a growth path•
Strengthen businessfoundations in preparation
for future growth

MTBP 2013(FY2013-FY2015)
FY2013•

The Group mission to be achieved
KawasakiBusiness
Vision 2020

Actionplan

FY2020FY2016

Lay out a course to realize theKawasaki Business Vision
2020•

Sustainable growth

The Position of the FY2013-2015 Medium Term Business
Plan “MTBP 2013”[Quantitative Targets] (FY2015)
Net sales

1.6 trillion yen

Operating income

90 billion yen(Ratio of operating income tosales: 5.6%)

Recurring profit

85 billion yen(Ratio of recurring profit tosales: 5.3%)

Before-tax ROIC

11.0%

2 Building a Stronger Kawasaki Brand
Strengthening the Kawasaki brand was one of the keys to achieving the
Kawasaki Business Vision 2020. It entailed building up the Kawasaki
Group’s brand and communicating the value and mission of the brandboth internally and externally in an easy-to-understand way, with an aimof building stronger ties with existing customers and expanding thecustomer base across the globe.

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The Kawasaki Group faced several problems in implementing brandstrategies, including: (1) lost opportunities with the target audience due
to a low brand recognition and awareness in domestic and overseas
markets (particularly in emerging markets); (2) lack of a common
understanding of the value and intent of the Kawasaki brand within thecompany; (3) the need to develop a shared awareness of the Kawasaki
brand among employees in order to offer comprehensive solutions thatleveraged the collective know-how of all internal companies; and (4)lack of clear standards for unifying and distinguishing product brandsof the motorcycle business and corporate brands. To solve these
problems, it was necessary to develop a brand messaging system andtools.
Kawasaki adopted "Powering Your Potential"* as the group tagline in
April 2013. It was a powerful phrase that clearly differentiated the
Kawasaki brand from others in a way that was relevant to its target
audience, conveying where the company was headed both internallyand externally with integrity. The tagline embodied Kawasaki’s
aspiration to be the power that opens up new possibilities for customers
and communities as it works to achieve its Group mission.
*

Powering: Empowering and fueling
Your: Customers, society, and employees
Potential: Possibilities, capabilities, and prospects for growthGroup tagline

Environmental Philosophy
Kawasaki pursues business activities globally in key industries related
to land, sea, and air, guided by the desire to contribute to thedevelopment of society and nations through monozukuri
manufacturing. In this effort, we emphasize the “achievement of alow-carbon society,” “achievement of a recycling-oriented society,”and “achievement of a society coexisting with nature” to help solve
global environmental issues, and we strive to help build a sustainable
society through environmentally harmonious business activities andKawasaki-brand products and technologies that help improve theglobal environment.

Climate Change Mitigation
In fiscal 2010, which was the last year of the 6th Environmental
Management Activities Plan (FY2008–2010), Kawasaki launched the
7th Environmental Management Activities Plan (FY2010–2012) aheadof schedule to coordinate it with the formulation of a new businessplan.
The 7th plan also marked the beginning of the company's trial and error
efforts to accelerate measures against global warming in line with the
Kyoto Protocol that came into force in 2005.

Revising the Environmental Charter● Utilizing the domestic carbon credit system
In 2010, the Kawasaki Group participated in Hyogo Prefecture’s
partnership program aimed at reducing carbon dioxide (CO 2)
emissions. Kawasaki was the first to work on a carbon reduction
project under this program that made use of Japan’s carbon credit
system (currently the J-Credit Scheme). The Kawasaki initiative
replaced the heavy oil-fired boiler used at the Kobe Medical
Cooperative Association’s Akashi plant with its natural gas-fired boiler.
The project cut CO2 emissions by approximately 2,600 tons over four
years, which Kawasaki was able to credit as a reduction for all its
facilities throughout Hyogo.
● Buying a green power certificate
In 2011, Kawasaki purchased a green power certificate (worth 18,300
kWh) and used the green power generated by a photovoltaic power
generation system installed at the Kobe Municipal Resource Recycling
Center’s power plant to offset some of the electricity used at the Kobe
Head Office.

In 2010, Kawasaki revised the environmental philosophy stated in its
Environmental Charter to align it with its Environmental Vision 2020.

Bringing a Low-carbon, Recycling-oriented Society
Coexisting with Nature to Life

3) Environmental Management Initiatives
Formulating Environmental Vision 2020
Kawasaki incorporated the Group's environmental management policy
into the Kawasaki Group Mission Statement in 2007, and in 2010,
established the Environmental Vision 2020 (What Kawasaki Should Be
in the Year 2020). It was the company’s medium- to long-term
environmental vision that picked up where its Environmental Vision(What Kawasaki Should Be in the Year 2010), drafted in 2003, left off.
After looking at the environmental trends in Japan and overseas,
Kawasaki rooted its Environmental Vision 2020 in four basic
objectives: achieving a low-carbon society, a recycling-oriented
society, and a society coexisting with nature, while establishingenvironmental management systems that would serve as the springboards for reaching these three goals.

● Product development leveraging the Kawasaki
Group’s collective capabilities
Gigacell: Achieving high energy efficiency
The Gigacell is a high-capacity storage battery developed by Kawasaki
in 2005. Featuring quick charging and discharging capabilities, it canlevel the gap between the electricity generated from renewable energy
and the electricity consumed in distributed power generation systems
over a wide range of durations, from a few hundredths of a second toseveral hours.

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Green binary turbine

Kawasaki Green Gas Engine● Green binary turbine: Effective use of low-temperature
waste heat
Most of the low-temperature waste heat (such as hot wastewater andexhaust gas) generated in factories, waste incinerators, sewage
treatment plants, and power plants is discharged without being utilized.
Kawasaki’s green binary turbine released in June 2010 is a nice, neat,compact system that’s designed to recover this low-temperature waste
heat for generating electricity. In effectively utilizing the previously
unused low-temperature waste heat to generate electricity, the systemcuts CO2 emissions dramatically.
● Kawasaki Green Gas Engine: #1 in power generation
efficiency
The Gas Turbine & Machinery Company’s gas engine project teamand the Corporate Technology Division’s Technical Institute worked
together to develop the Kawasaki Green Gas Engine, incorporating
Kawasaki’s fluid analysis technology and more. The use of clean
natural gas as a fuel as well as the engine’s optimal combustion
chamber design, leaner burn, and optimized control systemsignificantly reduces the environmental impact. In July 2007, itachieved a world record-breaking power generation efficiency of
48.5% along with the world's highest level of environmental
performance that boasted all-time low NOx emissions.

4) CSR Initiatives
Establishment of the CSR Committee and CSR
Department
In October 2006, Kawasaki established its CSR Committee, chaired by
the president. It is the Kawasaki Group’s top decision-making body forinternal control and compliance. The committee makes sure thecompany toes the line in adhering to the basic principles of corporate
ethics stipulated in the Kawasaki Heavy Industries Corporate Ethics
Rules. Working to ensure internal control and compliance as well as
appropriate financial reporting in light of the internal control reporting
system to be adopted in fiscal 2008 under the Financial Instruments
and Exchange Act, the company also established the CSR Department,a specialized organization overseeing the entire Group’s effort toestablish a system of internal controls.

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The Kawasaki Group's Fundamental Approach to CSR
One of the goals set forth in the Kawasaki Business Vision 2020
formulated in April 2010 was to become “a company that places
importance on CSR and is trusted wherever it does business aroundthe world.”
That same year, as Kawasaki moved forward to meet the needs ofcustomers and “people everywhere today and tomorrow,” it adopted
the Kawasaki Group’s Fundamental Approach to CSR along with thefive themes, outlining the various goals it wanted to reach across theorganization.
In April of the same year, and in the same vein as the organizational
reforms involving CSR activities, internal controls, and internal
audits, the CSR Committee was renamed the Corporate CSR
Committee. The committee would discuss and decide on major CSR
policies as well as other important matters with an eye to making
Kawasaki’s commitment to fulfilling its corporate social
responsibility clear to all. The Compliance Committee was renamed
the Company CSR Committee to reflect the expanded scope of its
agenda, covering not only compliance but also overall CSR
activities.
<Fundamental Approach to CSR>
The Kawasaki Group’s CSR is reflected in our combined efforts toachieve the Group Mission on an even higher level.
We consider the future of human society and the global environment
to be an extension of the increase in value of the Kawasaki brand,
and promote the following five themes accordingly.
<Five Themes>(1) We will use our integrated technological expertise to create
values that point the way to the future.
(2) We will always act with integrity and good faith to merit
society’s trust.
(3) We will all create a workplace where everyone wants tocontinue working.
(4) We will pursue “manufacturing that makes the Earth smile.”(5) We will expand the circle of contribution that links us to society
and the future.

Kawasaki Named to DJSI for the First TimeIn September 2013, Kawasaki was listed on the Dow Jones
Sustainability Asia Pacific Index for the first time. The Dow Jones
Sustainability Indices (DJSI) are leading benchmarks for ESG
investing.* The U.S.-based S&P Global evaluates and selects
companies for the DJSI on the basis of their corporate sustainability
in economic, environmental, and social aspects. The DJSI is one of
the most important investment criteria for investors around the world
who are interested in companies' ESG initiatives.

Special feature on CSR in the company newsletter

CSR Committee Organization

Corporate CSR Committee Chair: President

SWIMO low floor, battery-powered tram

In August 2006, a test run of the SWIMO low floor, battery-poweredtram equipped with the Gigacell was conducted at Kawasaki’s HyogoWorks. The SWIMO is a ground breaking train that can run without
the use of overhead wires.
In 2009, Kawasaki received the 2009 Minister of the Environment's
Award for Outstanding Achievement in the Fight against Global
Warming (technological development and commercialization category)for the superior energy efficiency of its Gigacell. The following year,
Kawasaki won the Grand Prize in the 19th Global Environment Award(hosted by the Fujisankei Communications Group) for developing the
SWIMO.

Company CSR Committees

Departments

Chair: President of each company

Affiliatedcompanies

Head Office CSR Committee
Chair: Vice President

Departments
Affiliatedcompanies

CSR Liaison Conference
Secretariats of each Company CSR Committee
Compliance Managers Conference
Compliance manager of each company
Head Office CSR Planning Working Group
Corporate Planning Department, Public Relations Department,
Finance Department, Procurement Division, Personnel & Labor
Administration Division, General Administration Department,
Corporate Business Development Division, Corporate Technology
Division, Environmental Affairs Department, CSR Department

CSR Committee Organization (2010)95

Part 2/The Last 25 Years (Overall History)

Chapter 2 Toward "Global Kawasaki"—Living in Harmony with People, Society, and the Planet

As of 2021, Kawasaki has been listed on the DJSI Asia Pacific Index,
covering companies in the Asia and Oceania region, for nineconsecutive years.
*

ESG investing encompasses not only traditional financial analysis but also
looks at a company’s environmental, social, and governance initiatives inorder to analyze hidden risks and opportunities from a more in-depth
perspective.

5) Aiming to Commercialize CO2-free Hydrogen
Energy Supply Chain

Hydrogen liquefaction plant demonstration facility built at
Harima Works

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Following the announcement of its CO2-free hydrogen energy supply
chain project in the MTBP 2010 (FY2010–2012), Kawasaki
conducted research and development toward its achievement andworked on demonstrating the technology as well as building acooperative consortium with the aim of commercialization. The use ofhydrogen, one of the cleanest energy sources that can be produced
from fossil fuels, has been gaining momentum around the world.
Under the CO2-free hydrogen energy supply chain project, Kawasaki
positioned hydrogen as an important energy option along withrenewable energy. The project included plans to liquefy hydrogen,which was produced by gasifying and refining brown coal (an unused
resource that is abundant in Australia), and transport it to Japan via
liquefied hydrogen carrier. In order to achieve a CO 2-free hydrogenenergy supply chain, Kawasaki needed to make core technologies andproducts for producing, transporting, storing, and using hydrogenseamlessly available throughout the supply chain from upstream todownstream.
In 2011, the company launched the Harima Project, in which it built a
prototype liquefaction system (5 tons/day) and a demonstration plantat its Harima Works to test the technology in house. After repeateddemonstration tests, the first Japan-made industrial hydrogenliquefaction system was successfully developed in September 2014.
The company went on to conduct continuous operation and various
functional tests using an improved liquefaction system to demonstrate
its performance and reliability before completing the development
process. In June 2020, it began selling the first hydrogen liquefier
produced by a Japanese manufacturer.

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