Aichi Steel Report 2014
Aichi Steel Report 2014

More
Moreenthusiastically,strongly
enthusiastically,stronglyand
andstraightforwardly
straightforwardly

AICHI
AICHI STEELSTEEL REPORTREPORT 2014
2014

October
October2014
2014

Mission Statement
We will strive to make positive contributions to society by providing appealing products
from global perspectives and based on our vibrant and trustworthy corporate qualities.

Mission Statement/Corporate Profile/Editorial Policy …
Special Content 01 President Interview – Future of Aichi Steel …

CONTENTS

1
3
7
9
13
19
23
25
27
36
45

Special Content 02 Interaction with Society ……………

1. We will strive to make a positive contribution to society with safe, appealing, andSpecial Content 03 Stakeholder Dialogue

useful technology and products.

………………

Governance …………………………………………………
Human Rights and Working Practices ………………

2. We will nurture a corporate culture based on trust, reliability and the pursuit of excellence.

Quality Improvement ……………………………………
With Community and Society …………………………

3. We will be a good corporate citizen, ever mindful of our environment responsibilities.

CSR Policy

Environment …………………………………………………
Finance ………………………………………………………

We will contribute to the sustainable progress of society and the Earth through our soundcorporate activities.

Third-Party View ……………………………………………

CSR Vision 2015
We will gain the trust and confidence of and give satisfaction to our customers and all
our stakeholders.
We will develop employees who are open and fair, developing a corporate culture
characterized by a challenging spirit.

1S Culture

Seiso (Cleanliness)
Safety25,016 million yen (as of March 31, 2014)

Sales Offices: Tokyo/Osaka/Fukuoka

Representative

Takahiro Fujioka, President

Overseas Offices: Shanghai/Silicon Valley

Employees

2,391 (as of March 31, 2014)

Plants: Chita/Kariya/Forging/Higashiura/Gifu/Seki

Editorial Policy

Readers

Aichi Steel Report 2014 states efforts andThis Report is mainly intended for our customers, suppliers, other

Aichi Steel Group in fiscal 2013 incorporating

WEB

Specialty steel

Stainless steel

Forgings

Specialty steel is manufactured
by adding alloys and metallic
elements to iron to improvematerial properties, such as
strength, hardness, toughness,wear resistance, and corrosion
resistance.

Tough and corrosion-resistant
stainless steel is used in applications relating to water, such as
dams, sluices, and ships. It isalso used in chemical andnuclear power plants, as well as
in construction materials andeveryday utensils.

Forgings, produced by pressing
and forging specialty steel, areused in automobiles, construction machines and manufacturing machines that require
strength and durability.

and future measures for unachieved items as

The Report covers activities conducted by the Aichi Steel Groupmuch as possible. This fiscal year's Reportduring fiscal 2013 (April 2013 to March 2014). However, some
activities conducted before or after fiscal 2013 are also explained
where necessary.

higher social demand, by reviewing contents

Reference Guidelines

to better deal with global trends. As in the

The Global Reporting Initiative (GRI) "Sustainability Reporting Guide-theReportuses

universal

design1 typeface UD font2 to ensure visibility
and readability for many readers.
1. A design approach that maximizes the usability of products, service,homes and facilities for everyone, regardless of age, gender or disability.
2. A typeface design based on the principles of Universal Design.

[Example products]
stainless steel shapes, round bars, etc.

[Example products]
crankshafts, differential ring gears,
rear axle shafts, etc.

Electromagnetic products/
TetsuRiki-AgriUsing our know-how in specialty
steel manufacturing, we develop
electronic components, magnets
and sensors. In addition, “TetsuRikiAgri,” which promotes plant growththrough the latent power of iron,has also been developed.
[Example products]
MAGFINE, MI sensors, TetsuRiki-Agri,
TetsuRiki-Aqua, etc.

and our employees.

Report Period and Scope

including the revision of GRI guidelines withFor details, please see : http://http://www.aichi-steel.co.jp/ENGLISH/pro_info/index.html

business partners, shareholders and investors, affiliated companies

specific examples while describing causes

makes considerations to report on topics,

Offices Head Office: Tokai City, Aichi Pref., Japan

Major Products[Example products]
structural steel, free-cutting steel,spring steel, etc.

initiatives implemented by Aichi Steel and1

March 8, 1940

Capitalforgings and electromagnetic products

Shojiki (Honesty)

issues,Establishment

Business Description Production and sale of specialty steel products,

To be and to remain a globally valued
enterprise, we will promote our "1S" culture
with top priority on the three Ss:

past

Corporate Profilelines" (versions 3.1 & 4)
ISO26000 (Corporate Social Responsibility)

Information Available on Our Website
WEB

For topics with the "WEB" mark, please refer to our website forfurther details including figures.

http://www.aichi-steel.co.jp/envi_rep/report.html

Aichi Steel GroupWEB

9 companies in Japan

10 companies in overseas

Sales Mix

Aichi Forging Company of Asia, Inc. (AFC)Aichi Forge USA, Inc. (AFU)
Aichi Europe GmbH (Ae)Aichi International (Thailand) Co., Ltd. (AIT)Shanghai Aichi Forging Co., Ltd. (SAFC)
PT. Aichi Forging Indonesia (AFI)
Aichi Magfine Czech s.r.o. (AMC)
AMIT, Inc.
Aichi Korea Corporation (AKC)
Aichi Magfine Technology (Pinghu) Co., Ltd. (AMT)Electromagnetic
5.3%

Aiko Corporation
Aichi Ceratec Corporation
Omi Mining Co., Ltd.
Aichi Techno Metal Fukaumi Company
Aichi Steel Logistics Co., Ltd.
Aichi Information System Company
Aiko Service Co., Ltd.
Aichi Micro Intelligent Corporation
Asdex Corporation

For details, please see : http://www.aichi-steel.co.jp/ENGLISH/com_info/a_group.html

Forgings
44.7%

Others
1.7%

Steel
48.3%

AICHI STEEL REPORT

2

Special Content

01

President Interview – Future of Aichi SteelPursuing Aichi Steel's strengths and achieving

sustainable growthwith the unwavering approach of"I will/ rebuilding our business by changing ourselves"
Riding through sever changes inthe business environment witha focus on "integrated forging andsteelmaking solutions"
Under the severe business environment, what made you
reemphasize the slogan of "I will: rebuilding our business bychanging ourselves" in fiscal 2013?
Looking back at the last fiscal year, the depreciation of theyen had a major impact in terms of our business environment. This caused losses from fluctuation of the exchange
rate while the hike in materials and energy costs affected
our electricity cost which accounts for large portions of a
special steel electric furnace manufacture's costs.
Automakers, our main customers, are increasingly establishing production bases overseas, accelerating their trendof increased local procurement. The volume of special
steel used for a single car is on the decline as more andmore people now drive eco-cars.
In such a business environment, I have repeatedly said
that "such a challenging time makes it even more important for each of us to have a sense of ownership andhealthy sense of crisis and have an attitude to think what
to do on his or her own with a sense of speed."

President

Takahiro Fujioka

3

Could you elaborate on how Aichi Steel has been dealing
with severe business environmental changes based onyour "integrated forging and steelmaking solution"system?
One of our approaches to the severe changes in thebusiness environment is our "integrated forging andsteelmaking solution." For example, our manufacturing isbased on this "integrated forging and steelmaking"approach that allows us to participate in our customers
development stages through development of materials
and tailor our forgings to their needs. For TNGA1 projects,
in particular, we engage in the entire process from development of steel products to forgings engineering throughclose cooperation among our engineering, technology andproduction divisions.
Local procurement is increasingly becoming a common
practice as Japanese automakers increase overseas
production. This makes it extremely important for us todeliver products that satisfy our customers in terms of"quality, delivery time and price" to survive the severe
global competition. We are working to be a company that
1.

TNGA……(Acronym for Toyota New Global Architecture) A newdevelopment method launched by Toyota in April 2014 thataims to achieve both stronger product development power
and reduced development cost by using common parts andunits for different models of cars from development stages.

and "Return to the Basic."
is capable of offering "integrated forging and steelmaking"solutions not only in Japan but also globally.
Where are we heading?
In fiscal 2014, we put out a slogan "Return to the Basic
with Innovative Manner." This means "returning to ourroots" with whole new ideas and working on creating newvalues more aggressively. With a modern mission of"Great societies are made with great materials," whichcomes from the founding principle established by our
founder Kiichiro Toyoda, "Great cars are made with great
steel". we have been pursuing to "maximize Aichi Steel's
strengths" through our focus on the return to our roots.
One of the results achieved through such an approach is
new materials such as molybdenum-saving steel, which isused for ring gears and CVT shafts and is highly valued byour customers.

We will forge ahead with "WhatAichi Steel Group strives to be(Vision 2020)" at the core ofour business agenda
What exactly is the Aichi Steel that the Vision 2020 envisages?
Incorporating the Group's common vision "Company of
Choice Globally," Vision 2020 strives to deliver new andunderlying value which gives our customers "sense ofassurance globally as long as they are using products of
Aichi Steel Group." The products we make are directly
linked to the movements of cars including "running,turning and stopping" and ensuring security and lives ofpeople. This calls for trust in absolute quality.
We are also under pressure to strengthen our competitiveness on a global scale in terms of not only quality but
also delivery time and price.
We are also working to establish BCP and BAP (backup
action plan)2 systems to ensure earthquakes, heavy rains andother natural disasters will not affect our production
activities. I think it is important to provide this added value of
security to ensure steady supply of our products by producing them in other parts of the world even when our production facilities have stopped operating in a disaster.
To achieve this, we are creating a mother plant system thatallows us to support our customers' overseas businesses
as they expand and globalize their businesses. This system
is intended to systematically help overseas manufacturing
sites become more semi self-reliance through transfer ofmature technologies to overseas subsidiaries and dispatchof trainers from domestic manufacturing sites to suit theautonomous operation of overseas sites.
For example, we periodically around 10 trainees from ourThai subsidiary where, we have recently installed a 1,600ton forging machine, to our headquarters to give them an
opportunity to train using the actual machinery at ourmother plant and so that they can take mature technologies, skills and craftsmanship in a standardized format ofprocedure manuals home with them.
We are also looking to launch a framework called "ASEAN
Global" that allows us to utilize local steelmakers in India
and China to ensure stable supply of steel products madewith Aichi technologies to forging sites in ASEAN
countries based on our "integrated forging and steelmaking" system. One example of such approach is our signingof a technical partnership with Usha Martin Ltd. (UML) of
India last year. We are currently helping them with special
steel manufacturing technologies. If supplying steel materials from India becomes possible through this partnership, this will allow us to supply steel materials to forging
sites in Thailand, Philippines and other ASEAN countries.
2.

BCP………(Acronym for Business Continuity Planning) Plans andprocedures prescribed to ensure critical operations are notstalled during disaster and other occurrence of risks. It also
refers to a plan strategically prepared to ensure business
continuity to restore critical functions within the target
restoration time and minimize risks associated with disruptionof business operations in case they are interrupted.
BAP………(Acronym for Backup Action Plan) Securing facilities, procedures
and spare parts to allow for production at alternative facilities incase production becomes impossible due to failure of particularfacilities, in order to fulfill supplier's responsibilities.

Vision 2020
What Aichi Steel Group Aichi Steel Group's 'Values'that underline the Vision
strives to be"Company of
Choice Globally""Sense ofAssurance Globally"
As Long As Customers
Are Using Products of
Aichi Steel GroupAICHI STEEL REPORT

4

Could you tell us how the company is doing in
non-automotive businesses?
In terms of achievements, we have turned our electromagnetic business profitable. While our founder
Kiichiro Toyoda took on the new business of cars, we
are working on this new electromagnetic businesswhile maintaining the ambition and pride as a materialmaker passed down to us. This is significant in thesense that we have managed to make profits from our
new business by returning to our roots and ourapproach to pursue materials.
Let me also mention our focus on hydrogen society. As
there is increasing attention paid to next-generation
cars, FCV3 , in particular, the key to their permeation tosociety is hydrogen stations. Normally, metals getdamaged when in contact with hydrogen. However, we
havedeveloped
AUS316L-H2
whosehydrogenembrittlement resistance characteristics allows it to be
used for pipe joints and valves and therefore has great
growth potential. The accumulated sales of our stainless reinforced concrete bar SUSCON which is madetaking advantage of stainless' qualities of corrosion
resistance and non-magnetism has reached 2,500 tons.
As these examples show, we expect production andsales of stainless steel products to grow aroundelectromagnetic products and hydrogen society.
3.

and "Safety" as values to be shared by all employees of
Aichi Steel. We are an "environment/sustainable societyoriented company" that has established a recyclingoriented business model where we use advanced
steelmaking technologies to recycle automotive scrap
into specialty steel and then turn it into high-precisionand high-functionality automotive components.
We manage our manufacturing processes with extreme
care not to cause problems to surrounding communities.
Based on our "1S Culture" that encourages us to respondin a sincere manner should problems occur, I think this is
an important part of our corporate culture in terms ofboth environment and corporate compliance.
To achieve this, I believe it is important that each one ofus has more interest in and sense of ownership of social
challenges and understands that we can make contributions through our work and puts it into action, which will
eventually lead to the creation of true CSR management.
In 2013, we revised the "Action Guidebook for Directors"
and the "Aichi Steel Group Action Guidelines" anddistributed them to our employees together with a CSR
Card that briefly explains these concepts. Through suchconsistent activities, we have achieved near-100%
recognition among our employees.
We will strive to become a company that enjoys socialand global trust and demand through consistent promo-

Volunteers" project. Since fiscal 2013, we have started
participating in the "Forestation to Create a Forest for
Beetles" project in a cooperative framework amongindustry, government and academia. We will be making
continuous social contributions both in Japan andoverseas to promote bonds and coexistence with local
communities.
What kinds of efforts are under way in terms of diversity
management?
One of our diversity management initiatives is "Aichi
Global Meeting" which revolves around the concept ofdeveloping global human resources.
By taking this opportunity where all our overseas subsidiaries get together, share each other's ideas and efforts
and engage in active communication, they have become
more familiar with each other. And this has started tohave a positive impact on the sense of globalism of theGroup. We invite young employees who are in their thirdyear at Aichi Steel to this meeting as observers. We do
this because we want our young employees who will beleading our company in the future to communicate, ask
questions and discuss in English and be more global. I
think that getting inspiration in global settings allows us
to see how it is important for companies to expand
globally and what kinds of issues we need to tackle.

How are you working on the reform of the production
process (reengineering4)?
We plan to invest tens of billions of yen in reengineering by 2020. Our capital investment will evolve aroundthe concept of "4S," an acronym for simple, slim, shortand straight to enhance our productivity and create
integrated production lines that are highly efficient.
We will be ensuring improvement in heat efficiency,
yield and productivity through capital investment
planned until 2020.
Re-engineering……Drastically reviewing contents and methods ofoperation based on new ideas.

With a focus on maximizing
Aichi Steel's strengths, we will be
fulfilling our social responsibility
as a company that cares about
environment/sustainable society.
Please explain about CSR management based on the "1S
Culture."Since fiscal 2008, our company has been positioning andnurturing the concepts of "1S Culture" that puts thehighest priority on "Shojiki (honesty)," "Seiso (cleanliness)"

5

We think that "many of our factory workers will likely wantto continue working in factories till they reach retirement."
We are planning to create production lines tailored foraged employees so they will find it easy to work in manufacturing, in addition to the existing "Nice Senior System"that allows to choose one's style of working to suithis/her lifestyle.
I think it is very important for the future of Aichi Steel toprovide a working environment friendly to aged employees including the use of larger fonts in printed paper andthe creation of manufacturing lines designed to reduce

FCV…… (Acronym for Fuel Cell Vehicle)

To become a "global company
with value to society"4.

2nd Aichi Global Meetingtion of development of "1S Culture" and by ensuring it iscarried through, and strengthen our managementfoundation as a sustainably growing company.
What do you think is important to achieve better C S R
management?
What we should keep in mind above all else is thequestion of what a company has a social responsibility
toward. Corporate social responsibility lies in makingsocial contributions through products we make. And I
think the basis of Aichi Steel's original CSR consists ofmaking various efforts by raising a sense of ownership ofall our employees based on the concepts of "1S Culture"and "I will: rebuilding our business by changing
ourselves."
I also think that continuous efforts will lead to solvingsocial problems and creation of good relationships withlocal communities, and therefore, contribution to thecreation of a prosperous society.
For this reason, we focus on continuity in our social
contribution activities. Our outreach workshop "Lesson
about Iron" launched as part of our company's 70th
anniversary activities was held for the fourth time thisyear.
Our continuous efforts also include awareness-raising
activities and consultancies through the Volunteer
Center and participation in the "Forest-Developing

What efforts are you making to promote more opportunities for women playing a more active role?
I believe that women are an indispensable part of ourdiversity management-based growth strategy. When I wasworking for the Toyota corporation in the US, over half theoffice staff were women and around 12% of manufacturing staff consisted of women. As the number of female
employees in our company is not even on par with thelevel in those days in the US, we hope to continue
employing more women actively and I think, for that, there
is an urgent need to create a working environment thatencourages utilization of women. We already have asystem supporting childcare in place, with all female
workers who have given birth to children taking childcare
leave.
We have also established a system that allows female
employees to perform their roles with high level of motivation by revising the human resources system for clericalstaff the majority of which are accounted for by female
employees, to one that puts more emphasis on theperformance.

Special Content

01

burdens on their bodies while ensuring their skills andknow-how are passed on to younger employees andallowing them to continue working on manufacturing
sites until the day of their retirement.
Before concluding the interview, please tell us how you
are going to address CSR management.
For a company to grow sustainably, it needs to be willingto solve social challenges through active communication
with society. For this, it is necessary to provide information actively and make contributions while maintaining
harmony with all our stakeholders and it is also importantthat each employee carries these out with the concept of"I will/ rebuilding our business by changing ourselves" inmind.
As each one of us becomes aware of the need for social
contributions and starts taking actions with due consideration, this will evolve into contribution to creation ofprosperous society. We will continue to take steady steps
forward toward the achievement of our goal of becominga "Company of Choice Globally."

What is your view on utilization of retired humanresources?
Another big challenge we face is how to deal with thereemployment issue. This is an issue that we cannot
ignore and urgent measures need to be taken.

AICHI STEEL REPORT

6

Special Content

02Interaction with Society

Aichi Steel Group is committed to pursuing the infinite
possibilities of materials and creating new values.

Car

Hybrid vehicle
We are supporting theelectrification of environmentally friendly vehicles.

We are contributing to lower fuelconsumption and higher performance.

[Forging]

We are contributing to thesafety and reliability ofhydrogen station equipment
for shift to hydrogen society.

Crank shaft

We are contributing to various aspects of society by providing products that

Cold platematch the needs of our customers to ensure a comfortable life for people.

Input shaft

Hydrogen station

TunnelStainless steel is also used
for interior structures oftunnels for which durability and high-temperature
properties are critical.

Counter driven gear

[Electromagnetic]
Magfine seat motor
Power cards

Historical building
Aichi Steel's technologies
are utilized not only formodern buildings but also
for historical heritages.

Farm, vegetable garden

Hydrogen valves

Attachment in the tunnel ofcapital expressway

TunnelBridgeLinear motor train

StationSeismic strengthening works of afive-story pagoda

Building

Water gate

Safety first

Hydrogen station

Hydrogen station

Hybrid vehicle

Farming, greening

Car

Airport“Tetsuriki-Agri” and “TetsurikiAqua” activate plant photosynthesis by using ferrous ion.
Ensuring stable suppy of ferrous
ion essencial for plant growth.

DentistStorage tank

Chemical tanker

Crane

Home gardening

Power shovel

Farming

Ship, water gate, bridge, plant

Dump truck

PC, smart phone
We are supporting the evolutionof information terminals thatare increasingly becoming
more compact with higher
performance.

Building, store

Station, airport

Stainless steel is used for diverse applications
for its design and corrosion resistance, contributing to extended life of building appearancesand concrete structures.

Construction machinery

Our stainless steel is also used in stations andairports used by thousands of people everyday.

Stainless steel is also used forconstruction machinery that requires
strength and durability.

Dentistry
Small magnet developed by Aichi
Steel and used worldwide to affix
false teeth.

Wideapplication
for its rust-resistantproperties, including
dams, water gatesand plant.

Propeller shaft for ship

Electromagnetic
compass for
smart phone
Boss

High-sensitive MI sensor

7

Stainless steel concrete bar“SUSCON”

entrance eave, curtain wall

Station Skywalk

Handrail

Front idler

Propeller shaft

Dental magnetic attachment

Water gate

BridgeAICHI STEEL REPORT

8

Special Content

03

Stakeholder Dialogue

Facilitator

To become a "Company of Choice Globally"
Holding "Great society is made with great materials" as Aichi Steel's modern mission, employeesof different divisions and ages have gathered to exchange views on what the strengths of
Aichi Steel in pursuing to become a valued manufacturing company are as well as challenges inachieving this.

Dealing with changing business environments with
"Integrated forging and steelmaking solutions"
Facilitator: Aichi Steel holds "Integrated forging andsteelmaking solutions" as a key to dealing with challenging business environments associated with materials andenergy costs, rapid exchange rate fluctuations and othersocial situations as well as changes in automotive mechanism. What are your views on promoting this "integrated
forging and steelmaking solution"?
Tsubone: I feel that "Integrated forging and steelmaking
solution" is very important in terms of both production
processes and development. I think the biggest strengthof Aichi Steel is to be able to handle both material
development and component development for forgingsand steels internally.
Iizuka: I feel that we are increasingly expected to deliver
higher standards from our customers in the developmental stage. They expect us to design more lightweightautomotive components to help increase fuel efficiency. It
used to be easier to get our customers' approvals in thepast. Now, we are increasingly required to make andpropose something even better out of what our customers have designed. Otherwise, our proposals are rejected.
Niimi: I think Mr. Iizuka is referring to TNGA*. Traditionally, when a new car project was launched, we normallycame up with the best possible proposal by collecting
extensive information. In the new TNGA system, we are
expected to provide integrated proposals (systemengineering) that cover steel materials, forging to
product forms to help them solve their problems. These
are the type of projects where we can maximize our

9biggest strength, that is, integrated forging and steelmaking system. I expect orders to increase as we make thebest of our strength.
Kato: Aichi Steel is one of the few companies that arecapable of developing and manufacturing both steels
and forgings internally. I believe this is our biggest
strength and we can create great solutions throughclose collaboration with our customers while maximizing our position as a member of Toyota Group. In thisregard, "integrated forging and steelmaking system" andTNGA are inseparable. The concept of "integrated
forging and steelmaking solution" is a significant factor
that can turn our company's strength into our biggest
advantage.
Yoshimura: I would like to see more opinions and ideas
coming from our internal forging plants on our products. I
think we can truly pursue our strength of "integrated
forging and steelmaking system" if there are opportunities
where those actually working on the manufacturing sites
can closely work together by sharing and discussing
information.
Taguchi: I also think that, in terms of "integrated forging
and steelmaking system," there is still some room for
improvement in strengthening cooperation between the*TNGA (Acronym for Toyota New Global Architecture): A new development method launched by Toyota in April 2012 that aims to achieveboth stronger product development power and reduced development
cost by using common parts and units for different models of cars fromdevelopment stages.

Sun Messe Co., Ltd.
Director of IR/CSR Planningand Promotion OfficeSenior Consultant

Corporate Planning Div.
Corporate Strategy Dept.
Senior Chief Of Staff

Production Engineering Div. No.1
Resource-Recycling Technologies Dept.
Representative Manager

Nobuyasu Tanaka

Takamasa Kato

Akira Tsubone

steel segment and the forging segment. For example, wewould be able to make better products by providing
information of failures occurred during forging processes
to the steel segment. As for TNGA, while competition
will likely intensify as the number of "grouping development" and "bundled order" increases, it has some advantages for our company. As dies are more standardized,
for example, it will be possible to use common facilities
for different types of cars, reduce tools and jigs and cut
down on programming processes. For this, we will need
to obtain TNGA-related information more quickly andtake speedier actions.
Harrison: When I visited the showroom of an EV manufacturer during a trip to the US, a chassis was displayedin the center of the room. As I looked closely, I realizedthat so motors were used in many parts of the chassis. I

think that if this trend accelerates in the future, there
will be more demand for "electromagnetic products".
There is a lot of research and development going on in
the the EV field and I think electromagnetic products
will be indispensable in the automotive industry in thenear future.
Takatsu: Let me also point out the possibility that, aswork associated with assisting overseas technologicalassistance and facility introduction increases, managers
may be required to be out of office more frequently. I
think it will be important that the remaining staff help
each other to substitute for them to fulfill Aichi Steel'sfunction as a mother plant. Smart use of human resources
is essential as we need to further boost already launchedbusinesses while at the same time continuing to enhance
our strengths.

Practicing "1S Culture" is the biggest strength of Aichi Steel
Facilitator: Since 2008, Aichi Steel has been positioning
the "1S Culture", with "Shojiki (honesty)," "Seiso(cleanliness)" and "Safety" as a set of values of top priority,
which should be shared by all employees in the corporate
activities. What kinds of changes do you think have been
taking place in this regard?
Tsubone: I think that the value that had the biggest
impact was "honesty." I think that the 1S Culture taking
root in the company is best demonstrated by the principlethat nothing should be left ambiguous. The fact that wewere able to carry out our tasks based on the policy ofplacing top priority on proper disposal when dealing with

Ensuring reform in awareness/
way of thinking"Company of Choice Globally"
2020

Slogan for 2014
Each one of us contributing to business innovation,
reform and completion based on the philosophy of
I will: rebuilding our business by changing ourselves

1940-

2008Corporate activities
based on "1S Culture"

Principle of founder Kiichiro Toyoda"Great cars are made with great steel"resource recycling and wastes has clearly helped change
our awareness and marked a big turning point toward
improvements.
Kato: I personally interpreted "honesty" as consistently"making all things visible." I think that we can see whatshould be improved by making quality, production
activities and costs visible and then this leads to "honesty"
business activities which will eventually result in improving
and solving those issues. I think we have a good cycle
where we look at issues impartially and take steps for
improvements.
Taguchi: On the manufacturing sites, I think more andmore people are conscious of "safety." I feel thateveryone is paying more attention to "safety" to avoid
violating rules.
Niimi: I have had customers commenting that our slogan
sounds very much like Aichi Steel because our catchphrase had been "Honesty is the best of all". As wealready have a corporate image of being "scrupulous
and honest," I think the concept is effective also inhaving our customers understand our company better.
Harrison: If we look overseas, there are different ideas andways of thinking in different countries. It's hard to say as
there are varying reactions, but I can say that CSR audits are
becoming increasingly strict with respect to issues including labor law, child labor and human rights issues.

AICHI STEEL REPORT

10Electro-Magnetic Products, Management Div.
Global Business Management group
Chief Of Staff

Chita Plant
Engineering Service Dept．

Production Engineering Div. No.2
Process Technology Development Dept.

Technical Development Div.
Development Dept. No.1

Human Resources Div.
Global Human Resources Dept．
Planning Group

Toyota Sales Div.
Sales Dept. No.1
Chief Of Staff

Harrison Dereck

Shinji Yoshimura

Naoya Taguchi

Mitsuhisa Iizuka

Chie Takatsu

Yoshiaki Niimi

For example, we could even be asked where materials forthis electromagnetic product come from. I am often asked
about our company's CSR system myself. I feel that "1S
Culture" is in tune with the times in terms of appropriate
information disclosure and achievement of accountability
and this is something we should continue promoting.

Takatsu: The concept of "1S" already existed when I joined
the company. I feel that "1S" is implemented in a morenatural way in my section, including "1S Time" when weclean our desks or when I realized I had made a mistakeand reported it to my boss and the boss said "do notrepeat mistakes but I am glad you were able to perform"1S" (reporting honestly)."

Toward Achieving Vision 2020
Facilitator: Aichi Steel has come up with "Vision 2020."
What are the things that each of you is doing or considers
important in achieving this vision?
Tsubone: I think our approach as a recycling-oriented or
resource-recycling company is our strength. And we
don't just recycle. Our strength lies in our ability to not
only use our advanced steelmaking technology torecycle scrap iron that occurs while processing scrap
cars but also produce high-quality steelmaking in use of
nonmetal materials created in car recycling processes
including shredder dust.
To achieve this, we are aiming for 100% yield rate for raw
materials while adding technical factors to by-products
to create something that is as close to procured materials as possible. Through these efforts, I think we canplay a pivotal role in recycling cars and other metal
resources by creating high-quality automotive components out of scrap cars.
Yoshimura: In the steelmaking process where I work, I
think there are two kinds of perspectives that we need tokeep in mind. One is how we can operate efficiently
because this is the process that consumes the mostenergy by turning solid steel into liquid. The other is todevelop our plant into the world's best steelmaking
mother plant in terms of quality and safety and ensure ourfacilities, standards, human resources and products
represent our technological capabilities. These require us
to pursue both cost performance and put the No.1
priority on quality and safety.
Kato: Although the Vision 2020 sets some numericaltargets, we should not focus on just achieving the figures,
but should also see good work and performance ascontributing factors to our profits. Being reliable in termsof quality, cost and products is of course important but I
hope we can deliver comprehensive values globally bycreating solid foundations that satisfy our customers interms of service, BAP and other "non-price competitiveness."
I also think it important to create a system that provides
working environments women and elderly workers find
comfortable working in to deal with the expected "ageingof employees." This applies to both women and men andwill improve the company's overall productivity
significantly.

Takatsu: We can only become a truly global company
when employees with diverse backgrounds and ideas areallowed to use their abilities in various fields. One of theexamples is women. While our company has made quite
a lot of progress in assisting their "continuous employment,"
there is still a lot to be done in terms of promoting
women's employment and the career advancement that
follow. As it is increasingly becoming a natural course of
choice for women to keep working after marriage andchild birth, I feel that women need to enhance their own
awareness while at the same time men should be involvedin their private life more actively to improve their work-lifebalance. This is a challenge deeply related with the issueof declining birthrates.
Iizuka: I am proud of the fact that products we havedesigned and developed based on the principle of"Company of Choice Globally" are being used in carsaround the world. And I believe what we are doing isgood for both our company and the world. I think it isimportant for the development team to listen to theengineering team, work with the sales team in gathering
information and engage in discussion.

Future Aichi Steel that we aspire to be
Facilitator: Before closing this dialogue, please tell us
about your own aspirations and goals.

ity" to future-oriented work including planning andcreation.

Iizuka: I want to first focus on "presenting the world's
most lightweight designs and proposals" in the current
TNGA project I am working on. I would also like toexpand my scope of work by gearing up for processdevelopment.

Harrison: As I am involved with selling magnets andsensors in the electromagnetic department, I want to see
more overseas companies using our magnets and sensors.
We have the world's strongest bonded magnet in Magfine
and the most sensitive magnetic sensors with our MI
sensor and I want to understand them more deeply so I
can communicate their benefits more clearly.

Niimi: As a sales representative, I value my customers.
While employees cooperate with each other, we would
like to present good sides of our company to our customers as a liaison section. I believe that working with aprinciple of "winning as many Aichi Steel fans and my own
fans as possible!" will eventually lead to increasing fans of
Aichi Steel.
Yoshimura: As a steelmaking staff, I want to be able tohandle the entire process improvement from planning to
implementation and management. And in the end, I wantto achieve the goal of quality No.1 set out during thelaunch of No.3 BL/CC and contribute to reliable andstable supply of steel to our global customers.

Takatsu: I work with many male employees including myboss. I want to have more sense of ownership for the
success of our company and communicate my own ideas
from the perspectives of women.
Tsubone: Personally, I like the word "policy." I see each of
you here today has your own "will" and identity in yourwork. I like having my own policy and do my work throughcandid discussion with those with their own policies so
we can elevate each other.

Taguchi: I have mainly been in charge of development andimprovement of die machining and forgings and facility
planning in the production engineering division. In the
future, I hope to get involved in the company's corebusiness of forging design and production preparation
and become an engineer who can handle the entire
process from material/die to forging and secondary
processing.
Kato: I have always thought it important to improve ourtotal productivity. As the same time, we need to improve
the quality of our work. I hope to use the time madeavailable as a result of "speedy improvement of productiv-

11(Held in Aichi Steel Headquarters meeting room on July 23, 2014)

AICHI STEEL REPORT

12

Governance

GovernanceMid-term CSR Plan Achievements
Priority items

Basic policy

CSR system

We at Aichi Steel strive to pursue a business that places value on social morality

With our president as the chairperson, the CSR Committee meets once aand relations with local communities in order to fulfill our obligations in complianceyear (in March) to report on and check the progress of our CSR manage-with laws and regulations, as a good global corporate citizen. We practice CSR

ment efforts. Including those of the Aichi Steel Group companies.

management to gain trust from all our stakeholders through the establishment of

CSR committee

our Long-term CSR Vision and the implementation of our Medium-term CSR Plan

Chairperson: President
Members: Standing Directors,
CSR
Executive Officer,
committee
Officer,
Audit & Supervisory Board Member,
Secretariat: Corporate Planning Div.,
General Affairs Div.

CSR guidelines
In 2007, we revised the “Aichi Steel Action Guidelines” established in 1998
into the “Aichi Group Action Guidelines,” which are practical guidelines thatmust be followed whenever global business activities are conducted. (SeeWEB.) The Guidelines have served as a basis for the CSR management of
the Aichi Steel Group as a whole. We have also established the BasicManagement Rules (4 items in 2 categories), the Rules of Employment (15items in 2 categories), the Organization Rules (8 items in 2 categories), andRelevant parties
Our Company GroupOur major suppliers
Subjects discussed
1) Annual policy andits progress2) Compliance3) Risk management
4) Social contribution5) Other CSR-related
matters1) CSR education
For our directors and employees, directors of
our Group companies, executives of our major suppliers
Education2) Education regarding Action Guidelines(Mission statement, CSR Policy, compliance, risk management, etc.)
Education is provided commensurate with thepromotion to each new job ladder (eight ladders).

the Business Administration Rules (293 items in 10 categories). These rules
are revised whenever any changes are made to related laws and regulations
or environmental conditions, and they are also checked, audited andrevised on a regular basis.
Customers
Society, Earth

Suppliers
Improved corporate value

CSR management
Realization of mission statement

Shareholders

Companies Act
Financial Instrumentand Exchange Law (J-SOX)1

Disclosure of
information(Accountability)

Shareholders Meeting
Board of Directors

Report toExternal Accounting Auditor

Audit & Supervisory Board

Controls based on the “Basic policy on internal control systems”

Employees

2

Contributing to local communities and society/ Contributing to environmental preservation
Contribution through business activities
Sound corporate management
Labor Standards Act
Industrial Safety and Health Act
Worker Dispatching Act

Civil CodePharmaceutical Affairs Law
Antitrust Law
Other regulations

Continuous growth throughbusiness activities
Corporate ethics/Compliance
Risk management

Sound corporate culture that is brimming with a desire to take on new challenges“1S” Culture/AICHI Spirit /Action Guidelines
3

13

4

1. J-SOX: The Japanese version of the U.S. SOX(Sarbanes-Oxley Act). This Act was created using
SOX as a model and was designed to improve theaccounting auditing system and internal control
of companies in Japan.
2. Internal control: Activities and systems to control,
monitor, and secure the soundness and efficiency
of operations, as part of corporate governance,byfollowingstandards
andprocedures
established for individual operations.
In particular, standards and systems to prevent
improper financial accounting should beestablished, and auditing should be conducted toverify that they are operated properly.
3. AICHI Spirit: A slogan presenting, in aneasy-to-understand manner, the management
philosophy, sense of value, and other basic ideas
upheld by Aichi Steel as the corporate genes
inherited from its predecessors (established inJuly 2006).
4. Aichi Steel Group Action Guidelines: Practicalguidelines that must be followed during businessactivities (revised in October 2013)

Human resources development/corporate
cultureCSR Management

Risk Management/Compliance

Social contribution/business activities

Striving to contribute tosustainable developmentof society and the Earththrough healthy corporate
activities

Corporate governance: Target or significant result achieved: Target not achieved or poor activity result: Serious problems or important improvement suggested

Actions taken for priority issues

Targets

Achievements/challenges

Assessment

1.

Community
activities resulting inenvironmental/social
contribution

Continuous assistance for reconstruction and recovery
from the Great East Japan Earthquake
Increasing the number of participants in donations of
100 yen from the payroll
Participation in activities by the Toyota Group
Disaster Volunteer Net
Sales of products from the Tohoku region by Aichi
Group
Participating in activities to preserve bio-diversity in
the Chita Peninsula
Continuing to hold the workshop "Lesson about Iron"
for children in Tokai City
Taking measures to improve corporate value forstakeholders

Individual
implementation
plan
Individual
implementation
plan
November 2013
November 2013
Individual
implementation
plan
Individual
implementationplan

400 participants/ all money donated to Kamaishi City
One person participated in October (Rikuzen-takata City)
Held as part of internal events (Fureai Festival, Momiji
Matsuri)
Tree-planting ceremony for "Forestation to Create a
Forest for Beetles" in Nakashinden (200 participants)
Held at all 12 elementary schools in Tokai City
16 press releases issued

2.

Development andprovision of products/
technologies that cansatisfy eco-minded
customers

Development and sales of SUS steel for applicationin high pressure hydrogen equipment at hydrogenstations

November 2013

Development and sales of SUS steel for high pressurehydrogen AUS316L-H2 launched3.

Contribution throughshift to eco-friendly
manufacturing andresource recycling

Developing high-value added technologies by slugreform team individual implementation plan

Individual
implementation
plan

Installation of manufacturing equipment of slug grinder"AS Shot"
Implementation of efforts toward establishing mass
production system

4.

Ensuring CSR policy
is understood andfollowed in the entire
Group including
affiliates and business
partners

Fundamental review of risk map
Implementation of debt collection workshop to deal
with risk of bankruptcy of business partners
Implementation of employee satisfaction survey
subsidiaries

Individual
implementation
plan
December 2013
October 2013

Risk map for each domestic subsidiary created
Implemented with participation of sales, procurementand domestic subsidiaries
Survey conducted for domestic subsidiaries

5.

Response to risk
factors beyond thecompany's control,
such as natural
disasters and changes
in the external
environment

Updating disaster BCM policy and creating earlyrecovery framework

Individual
implementation
plan

Storing food, water and relief items
Designating evacuation areas and installing evacuationroute poles
Removing or strengthening dangerous funnels, frames, etc.
Promoting household disaster measures
Specifying issues for individual products and supply chains
Implementing company-wide disaster drill andheadquarters operation drill(Twice a year, in September and March)

6.

Response to risk
factors controllable by
the company

Response to risk incidents
Permeation of 1S Culture and compliance promoting
activities

As needed basis
September 2013
October 2013
March 2013
Individual
implementation
plan

O-CA/PD analysis of risk incidents(investigating the cause and prevention of recurrence)Media relations training for serious incidents(simulated press conference held assuming plant
explosion has occurred)
Revised versions of Action Guidebook for Directors andAichi Steel Group Action Guidelines distributed andbriefing held
Compliance workshop for directors held
1S workshop held (four times)

7.

Creating a safe andcomfortable workplaceenvironment

Declaration of safety priority by plant directors(Ensuring safety O- CA/PD)
All employee participation to ensure prevention ofrecurrence and horizontal deployment
Enhancing crisis and problem awareness of supervisors

Accident: 0
Serious accidents/
accidents
resulting in work
time losses

Serious accident: 1
Semi-serious accidents: 2
Activities aiming to eliminate serious accidents launched(ensuring basic safety rules are followed in manufacturing)8.

Human resources
development toimprove job quality andin response to global
business activities

Opportunities to develop global human resources andmaking one's vision
Establishing system to dispatch young personnel fortraining at overseas locations
Assisting in the improvement of language skills :radio course + continuous lessons
Taking measures at individual divisions based on
results of employee satisfaction surveys
Promoting QCC activities at overseas locations

Once a year
Individual
implementation
plan
April 2013
February 2014

One employee sent to AFC and AFU each (for six months)
Around 80 participants
Each department reported at inter-departmental policy
meeting
QCC cases reported by AITReview of CSR activities in fiscal 2013 and identifying issues
6. Response to risk factors controllable by the company

7. Creating a safe and comfortable workplace environment

Enhancing Group-wide risk management capabilities

Strengthening efforts to eliminate serious accidents

Follow up of identified risk cases and reducing
potential risks to improve response capabilities

Implementing KY*1 at the beginning and end of work to protect
the lives of staff
Creating a culture to follow and help each other follow rules.
Creating a safe workplace environment*1 KY…short for "kiken yochi," or risk prediction

AICHI STEEL REPORT

14

Governance

GovernanceCorporate GovernanceCompliance

Basic policy

Meetings of the Board of Directors and the Audit & Supervisory Board

Basic policy

Whistle-blowing system

With a basic CSR policy of "striving to contribute to sustainable

The Board of Directors, consisting of Directors appointed by sharehold-development of society and the Earth through sound corporate

ers, makes decisions concerning the Company’s critical issues from theactivities," we are managing our company in a way that enjoys

viewpoints of necessity, legality, efficiency, etc., after engaging in

extensive trust of society by establishing and maintaining an

discussions and mutual monitoring. Audit & Supervisory Board

organization capable of responding swiftly to changes inMembers, consisting of Audit & Supervisory Shareholders examine

business environments and a fair and transparent management

whether such decisions involve any violations of laws/regulations.

We aim to be a trusted company through the protection ofhuman rights and compliance with laws and regulations,and by respecting public decency. To enhance the overall
compliance of our Group, the CSR Committee—headed by
the President–sets and reviews compliance policies on aregular basis.

system.

Attendance rates in fiscal 2013

In fiscal 2013, a total of 6 cases were reported to the Aichi
Steel Group Compliance Hotline, the company's whistleblowing system.
We will continue promoting recognition and awareness of
our whistle-blowing system to further improve our internalability to govern ourselves. Necessary measures will betaken for improper actions reported, and the president will
be informed to the president for confirmation while saidmeasures are carried out. We will also lay out how thesystem is operated and protection of whistle-blowers toensure whistle-blowers are protected.

We also have "1S Culture" in place as part of our corporate

Audit & Supervisory Board
Members attendance rate
Director
Meetings attendance Full-time standing Outside Audit &Audit & Supervisory Supervisory
rate

culture that puts first priority on and acts act on the principles of
3 Ss, namely Shojiki (honesty), Seiso (cleanliness) and Safety.

Board Members

100%

97%

100%

100%

Internal control system
Whether the Basic Policy for internal control system requires

Compliance promotion system

Board ofdirectors

We have published two types of codes of conduct: the "Action

Audit &
Supervisory 11 times
Board

13 times

99%

Members" and the "Aichi Steel Group Action Guidelines," fordirectors and employees, respectively. We review and revise
them to match changes in the law.
In fiscal 2013, we revised the "Action Guidebook for Directors"
and the "Aichi Steel Group Action Guidelines" and distributed
them to all our directors and employees while providing related
training to freshman employees and those promoted to new job
levels.

Compliance guidelines
We strive to improve our compliance with laws and regulations as well as our social commonsense, based on the
Aichi Steel Group Action Guidelines. To enhance employees’
awareness of compliance, various workshops and training
sessions have been held at every opportunity, using compliance manuals, the Aichi Steel Group Action Guidelines, andthe 1S Guidebook.

Corporate governance guidelines
Guidebook for Directors and Audit & Supervisory Board

Board Members

the Board of Directors.
The shareholders' meeting held in June 2013 passed a resolution
introducing a new board of directors system, in order tobusiness executing function, promote rapid decision-making andstrengthening the function of business execution.

Director,
Executive
officer,Supervisoryboard member

Corporate governance system

Management Committee(Deliberation ofcritical issues, etc.)

15

Evaluates the appropriateness of the accout audit

2010

2011

2012

2013

Number of calls

9

9

6

3

6

Promotion of CSR activities throughout the supply chain

Compliance officer
General Legal
Compliance Site
General Affairs Div.

Compliance workshop
Various department

Compliance education program
Boerd ofSupervisory2009

As part of efforts to support our suppliers’ compliance activities, we have developed a CSR program for our supply chain.
(See page 24.) In fiscal 2013, CSR seminars for suppliers
were held (in October) to raise their awareness of ourcompliance. We will make continuous efforts to promote
CSR throughout our supply chain.

revision is reviewed every year, and operation status is report toseparate the management's decision-making function and

Fiscal year

To enhance the compliance awareness of employees, we
provide education on compliance to all employees. Compliance education is also covered in the Action Guidelines
workshop held for thosepromoted to each new job ladder. Moreover, we issue “Legal
Affairs News” to deliver information about complianceissues closely related to our daily lives, which enables
employees to check such information on our intranet.

A compliance workshop with a prominent lawyer as guest
speaker was held for directors, officers, executive advisory
engineers and division general managers to heighten theirawareness and understanding of prevent compliance deviations and how to respond if such a case happens. We will
actively and continuously promote compliance activities tofurther ensure employees' compliance and prevent theoccurrence of compliance deviations.

Stratified training

316 participants

Seminars for newly appointed directors

SeptemberCompliance workshop for directors

March

CSR lecture

October

1S workshop

4 times (April, July, October, February)

In fiscal 2013, there were no complaints or comments
concerning intellectual property.

Compliance Liaison Meeting

4 times (July, October, December, March)

Number of applications

Legal Affairs News

4 times (April, July, October, February)
Theme: Learning from other companies’
law violation cases (2 times)
Legal changes (2 time)

Number of our patentapplications in fiscal 2013

Intellectual property protection

Japan

Overseas

28

11

AICHI STEEL REPORT

16

Governance

GovernanceRisk Management System

Information Security

Basic policy

Risk management promotion system

Basic policy

Information security

We have established a risk management system led by the
CSR Committee, so that in the case that we face/predict a
serious risk, we can take prompt and appropriate action andensure sound business operation.

Risk management issues are delivered and discussed by the
CSR Committee. We have prepared a risk map, in which risk
items for each job ladder are organized according to thedegree of importance and urgency. The development of adisaster prevention/reduction scheme that enables a quick
response to emergencies is underway, including the setup of
emergency Company headquarters in the case of earthquakes
or other disasters.

Confidential materials shall mean any and all information,
products and facilities that may cause a disadvantage to theCompany or benefit a third party if made known to the public
or if leaked out, and the use and disclosure of which iscontrolled by people in charge of confidentiality management,
who are designated under the information security promotion
system. Confidential materials also include other companies’
confidential materials obtained by fair means.

Recognizing the importance of information security control, we
have provided education on information control, and raised
employees’ awareness of relevant rules and reviewed them, incompliance with the All Toyota Security Guidelines (ATSG).
The Risk Management Department conducts strict audits ofe-mails and baggage inspections to check whether internal
information has been carelessly leaked outside.

Risk management guidelines

Education/awareness-raising

Information security guidelines

We have established risk management rules and other various
rules that set forth the responses to be taken depending on
the type/level of risk. To secure a reliable risk management
system, these rules are reviewed on a regular basis and revised
whenever necessary to respond to changes in the businessenvironment and new potential risks.

We have newly developed a curriculum for "risk management"
designed for training of all job classes, where we explain how
risk management is positioned and emphasized in CSR andactual cases of crisis at Aichi Steel to heighten employees' risk
awareness and ensure they understand what to do to prevent
crisis occurrence/recurrence and initial actions to take when acrisis occurs.

We have established the following rules to control confidentiality and prevent leakages of private information.

Auditing of e-mails Cases detected: 15

Document control rules
Information security control rules
Information disclosure rules
Private information protection rules, etc.

Failure to set a
password for a file
Inclusion of a password
in an e-mail message
E-mailing to a terminal
unit for private use

Baggage inspection

Incomplete permit application

Disaster prevention measures

Human Safety Subcommittee
With the goal of allowing for safer evacuation, measures
were taken including:
1) Laying and simulating the usage of equipment emergency supplies
introduced in fiscal 2012 to secure the safety of employees.
2) Installing speakers to ensure emergency earthquake warnings reachthose working outside.
3) Taking shatter-proof measures for windows to prevent injuries whileevacuating.
4) Evacuation guidance sign pole with flashing lights that are visible atnight to indicate primary and secondary evacuation areas.

Disaster Prevention System
Earthquake Preparedness Committee

Following the Great East Japan Earthquake, we established theEarthquake Preparedness Committee, under which threesubcommittees—the Human Safety, Facility Safety, and Production Recovery Subcommittees—were set up to enhance ourearthquake preparedness. We are also working to improve ourBCM (Business Continuity Management) plans. In fiscal 2013,
following measures were taken by each subcommittee.

Human Safety
Specify actions to
Subcommittee
protect lives(Human Resources Div.)
Facility Safety
Maintain buildings
and facilities to
Subcommittee(Facility Engineering Div.) protect lives
Production Recovery
Ensure environment/
arrangement to allow for
Subcommittee(Production Control Div.) early production recovery

Secretariat General Affairs Div.

We carefully handle and strictly control any information heldby the Company or by any Group company, and any information obtained from our customers, suppliers or employees,
etc., in accordance with our internal rules.

Information security promotion system
Management system and roles of each department
Overall control

Administrative General Affairs Div. and IT Management Div.
Creates and revises measures related to thedepartments
management of confidential information
Audits and provides guidance according to theconfidentiality management status across theentire company

In each department

Facility Safety Subcommittee

1) Removing and shortening funnels with primary concern given to earthquake resistance.
2) Enhancing the strengths of in-plant piping racks.

Production Recovery Subcommittee
With the goal of ensuring early delivery of our products toour customers, measures were taken including:

1) Strengthening the facilities to prevent fatalities due to earthquake andliquefaction and making sure alternative facilities and equipment areavailable.
2) Identifying weaknesses in the entire supply chain.
3) Considering extensive cooperation in securing production including
use of alternative facilities within the Group and those owned bysuppliers and competitors.
4) Developing elemental technologies and key personnel to allow operation of
essential production with a minimum number of employees.

17

Role
Assumes all responsibility for confidential
information within the division
Designates people in charge of confidentiality
management
Has the final say in confidentiality classification
Designates employees authorized to create
top-secret documents
Implements voluntary auditing of confidentiality
management status
Establishes rules for the division

Person in charge ofconfidentiality management(Manager or supervisor
named by the division
manager = Key person
in laws/regulations

Acts under the authority of the confidentiality
management supervisor(Designates confidentiality classification and sets theoperating rules within the division)Works to promote and fully establish confidentiality
management in the division

Representative
managers, etc.

Follows laws, regulations, and company rules
related to confidentiality management
Gives approval, instructions, and guidance related toconfidential information used in their location

Department
employees

Cases detected: 15

Education on information security
The management was updated on the current information
security management of our Group as well as issues andefforts that are underway.
We also reported on information leakage incidents and risks ofusing social media to raise their awareness of information
security.
"Information security incidents" were introduced as part of thelegal news distributed to the entire Group to raise employees'
awareness for preventing similar incidents.

Introducing information security incidents
Malicious conduct

Manages systems (both technical and human aspects)

Confidentiality
management supervisor(General managers ofindividual divisions)With the goal of preventing injury due to the shaking ofbuildings during tremors and other structures, measures
were taken including:

Director in charge of General Affairs Div.
Person responsible for confidentiality
management

Information audit results

ExternalfactorUnauthorized access (hacking)Computer virus infection
Theft
Spying
Corrupt practiceInternalfactorIllegal acquisition
Information trading

Violation of rule

Negligence
Negligence byclients to which
information has
been disclosed

Home PC virus infection
Theft during business trip
Loss andmisplacement
Erroneoustransmission

Follows laws, regulations and company rules
related to confidentiality management
Reports accidents, damage, illegal acts andwrongdoing to his/her superior

Evacuation guidance sign pole

AICHI STEEL REPORT

18

Human Rights and Working Practices

Human Rights andWorking Practices

Efforts for diversity
Promoting opportunities for women to play more active roles in the workplace

We respect the rights of each oneof our employees so that diverse
ranges of people can maximize theircapabilities in their work, regardlessof their nationality, age and sex.

With the goal of improving working environments for women,
Aichi Steel has been working to improve its work environments
into those that are friendlier to female workers, including
increasing the number of female workers assigned to professional positions, so they will find it more comfortable andfulfilling to work in an environment normally consisting mainly ofmen.

Usage of the Nice Family System

Respecting human rights

Fiscal year

2009

2010

2011

2012

2013

Child care leave(male) (persons)

11

4(1)

5

9

10

Shorter work hours(male) (persons)

6

10(1)

5

4

5

Basic policy

Respecting human rights/
Prohibition of discrimination

Aichi Steel is working to promote measures designed to raise

The Aichi Steel Group announced in the "Aichi Steel Group

employees' motivation and morale to encourage the creation of

Action Guidelines" and the "Guidebook of Corporate Action

a workplace environment that enables employees to get

Guidelines" that it will comply with laws and regulations both infulfillment from their work and bring out their individual abilities

letter and spirit, and that it will respect human rights. The

to the utmost through the planning, development and imple-

diversity, personality, and character of employees must be

mentation of various measures aimed to secure and develop

respected, and discriminatory words and actions, harassment,

human resources who can contribute to the global management

and slander are strictly prohibited. A "Hotto (hot)" line is in place,of our company and ensure they are allocated in the right

ready for use by employees for consultation concerning humanpositions and utilized effectively.

rights.

Employment guidelines

Efforts to reduce total working hours

Basic matters concerning employment are set out in the

Dialogue and cooperation have been promoted between labor

Company's Rules of Employment, as well as in laws and regula-and management to create a working environment that is friend-

tions or a collective agreement, to establish fair labor condi-

lier to workers and helps enrich their lives. In labor-management

Fiscal year

2009

2010

2011

2012

2013

tions, to promote and maintain order in the workplace, and tonegotiations conducted in fiscal 2013, it was agreed to work toenhance the productivity of the Company. We clarify and imple-

increase the usage rate of paid holidays among employees.

Nice Seniors(persons)

55

51

49

47

101

Number of persons who started using the system per year

Post-retirement reemployment system
We have in place a Nice Senior System, an employment system thatallows our employees who are willing to work after retirement tocontinue working at Aichi Steel until they start receiving their pensions.
As of the end of March 2013, a total of 101 reemployed staff are workingat Aichi Steel contributing their skills in various sections while working toment our recruitment standards in conformity with the Equal
Employment Opportunity Law, the Corporate Code of Conduct

pass on their skills to and help improve younger employees.
We will further improve working conditions for reemployed persons andalso encourage our employees to keep healthy throughout their lives.

Registrants for the Nice Senior System

Those who are reemployed between the ages of 60 and 64 (as of theend of each fiscal year)

set forth by the Japan Economic Federation, and the Aichi SteelGroup Action Guidelines.

Promoting the employment of the disabled
Changes in total working hours(hours worked per person per year)

Labor composition (fiscal year)
Fiscal year

2009

2010

2011

2012

2013

Total workers (persons)

2,330

2,360

2,367

2,369

2,383

Managers (persons)

263

269

268

286

279

Male (persons)

2,221

2,244

2,243

2,236

2,239

Female (persons)

109

116

124

133

144

Foreign workers (female) (persons)

9(3)

9(3)

10(3)

10(3)

10(3)

Average age (years)

39.5

39.7

39.9

39.8

39.7

Average service (years)

20.0

20.1

20.3

20.1

19.7

Turnover rate (%)

0.3

0.3

0.8

0.4

0.8

Voluntary resignation for personal reasons (persons)

10

8

10

12

20

New graduates employed (female) (persons)

78(5)

53(3)

61(5)

66(5)

66(10)

Fiscal year

2008

2009

2010

2011

We have employees with disabilities working in various
positions in the manufacturing and administrative divisions. To

2012

2013

ensure they are assigned to the right workplaces that suit theirindividual capabilities, we encourage more workplaces to be

Hours

2,190

1,973

1,948

2,124

2,145

2,180

open to employing disabled persons and welcome them to visit
prospective workplaces.
Starting this year, we invite graduates of special needs schools

Usage of annual paid vacations

who are joining Aichi Steel to attend our welcoming ceremony

Fiscal year

2008

2009

2010

2011

2012

2013

Usage rate
(%)

69.0

54.0

46.0

48.5

48.8

47.0

so that both sides have increased awareness about working
together as members of Aichi Steel.

Usage rate against the standard 20 days granted

Employment of persons with disabilities
Fiscal year

2009

2010

2011

2012

2013

Employees withdisabilities (persons)

34

35

40

50

44

Employment rate (%)

1.8

1.6*

1.8

2.1

2.3

Achievement statusof the statutory
employment rate (%)

100

92.1

100

100

100

* The employment rate decreased in fiscal 2010 following thelowering of the exclusion rate by 10%.

We have achieved the statutory employment rate for thedisabled of 2.0% in fiscal 2013 and will continue our efforts todevelop a system capable of hiring more disabled persons.

19

AICHI STEEL REPORT

20

Human Rights and Working Practices

Human Rights and Working Practices

Employee health & safety

Aichi Steel focuses on the development of human resources
capable of playing active roles globally as well as developmentof local staff overseas where Aichi Steel operates. We encourage mainly young employees to improve their language skills,
through such initiatives as dispatching 2-3 young employees toour overseas subsidiaries as part of our Overseas Trainee (OT)
program. In fiscal 2013, we offered three types of OT courses

with different durations—6 months, 3 months and 2 weeks—through which a total of 2 of them are overseas subsidiaries
others are language schools. We will continue to seek moreparticipants from wider job areas for the overseas program foryoung employees.

VOICE

Voice from OT participant (who had training at AFC)

Basic policy
Basic labor safety/ health concept

We are taking actions toenhance our workplace

1. Strengthening of "heart, mind, and body"
Heart: Strong belief in and awareness of
pursuing safety

2. Clarification

Consistently focusing on comprehensive safety
and health management, aiming to achieve"zero accidents in all workplaces throughout Aichi."Health-promoting efforts
With a slogan "strengthening of heart, mind and body," Aichi

To help our employees understand necessary abilities to play

Since Fiscal 2012, Aichi Steel Group has been holding Aichi

active roles overseas, we hold Global Seminar sessions, in which

Global Meetings with an aim to promote our relationship withsome of the executives/employees who have experienced

domestic and overseas companies in our Group and help themworking overseas give lectures. By communicating what they

become more self-sustaining. The meeting is designed to bringshould keep in mind and learn in order to become a global

presidents of domestic and overseas companies in the Aichi

player, the Global Seminar aims to encourage each employee to

Steel Group and their local employees together to exchange

voluntarily improve his/her abilities to address global issues.

their opinions to achieve further globalization of our group interms of both our system and personnel. In Fiscal 2013, participants gained deeper understanding of each other by updating
themselves on self-sustaining efforts at our overseas sites andtime

improvingthe"safety

top-level safety managers.

Frequency of accidents and work time loss
Following two serious accidents that occurred in our plants in March andApril, all-out special safety efforts are underway. Managers are required to
implement KY (short for "kikenyochi," or risk prediction) (plus instructions) at the beginning and end of work to protect the lives of staff.
We will continue our company-wide efforts to improve the humanresource development environments of our subsidiaries and raise theawareness of and knowledge about safety of workers to eradicate"unacceptable accidents."

At AFC factory (Fujisawa, second from the left in the back row)

Global meetingwork

declaration" activities by

Basis of activities

Global seminar (April, October, January)inBody: Powerful actions, dedicated efforts

Clarifying standards, changes, or other status

Kazuya Fujisawa

resulting

Mind: Careful observation and thoroughinvestigation of true causes

Clarifying good points (improvement cases, knowledge,
experiences)

Production Engineering Div. No.2

accidents and accidents
losses, by reviewing andClarifying problems (negative issues, poor conditions)
During my training in the Philippines, I had the opportunity toexperience the culture, not only
through daily work, but also by
taking part in their company trip
and sports events. My English
skills have improved and it has
made me confident about
working overseas.

safety, to eliminate serious

Steel Group is focused on maintaining and promoting the healthof the entire Group workforce with concerted efforts byindustrial physicians, public health nurses, nurses and healthmanagement staff. In Fiscal 2013, we promoted systematicefforts with priority on mental health, lifestyle-related disease
prevention and health management support for employees
dispatched overseas.

Mental health activities(Promotion of communication skill
improvement measures)

Frequency of accidents and work time loss
(Cases)

(%)

1.00

5
4

0.68

3

1

0.75
0.50

0.36

2

0

0.66

0.20

0.16

0.25

2013

(Fiscal year)

0.00
2008

2009

2010

2011

Number of accidents resulting
in work time loss

2012

Work time loss frequency rate

Efforts for global human resources development

Follow-up meetings by top-levelsafety managers

Number of accidents resulting
in work time loss

Human resources development

0.00

Work time loss frequency rate

Creation of safe worksites
We have been promoting efforts to create safe worksites, with higher
priority given to work areas with higher levels of danger. For example,
equipment with the potential risk of trapping or catching parts of an
employee's body is ranked on a scale of A to D. In this way we manage

Mental health risk is growing as our work becomes more andour manufacturing processes with extreme care to prevent any accident.

more sophisticated and detailed. To deal with such a situation,

We will continue to improve our facilities to realize an ideal working

We hope such occasions will be opportunities to boost the

Aichi Steel Group has been providing various educational

environment. To prevent electric shocks, exposed charging equipment issolidarity of our Group and further promote the development

programs as well as mental health care, to individual employees

removed from the facility under three time frames of I to III. For theand exchange of global human resources, resulting in enhance-

based on the results of their stress check to maintain their"separation of people and vehicles," danger zones are indicated in threement of our consolidated management.

mental health and prevent them from developing mental issues.

levels. We have developed a three-year plan for these major safety

In Fiscal 2013, a communication skill improvement training was

improvement areas and are steadily implementing the plan.

having discussions on quality assurance.

provided by inviting an external trainer to help improve our
employees' listening and assertion skills, along with trainings for
all individual job ladders. We also cooperate with mental healthconsultants to offer on-site consultations at various sites of Aichi
Steel in a continuous basis to ensure early detection and care of
employees with mental issues. We will continue working withmental health managers to promote the creation of open andcandid workplace environments and ensure prevention ofmental health issues and early detection and care.

Development of safety-conscious humanresources through hands-on training
As part of our efforts to enhance employees' awareness of labor
safety, we have created a facility for simulating danger, in which
employees can get some firsthand experience on the potential
risks in day-to-day operations. We continuously take improvement actions to create safer worksites and prevent accidents inall workplaces by enhancing employee's awareness and understanding of labor safety.

21

AICHI STEEL REPORT

22

Quality Improvement

Quality Improvement
Aiming to be an integrated forging andsteelmaking company that provides theworld's best quality, Aichi Steel works
closely with its business partners to
pursue high quality and gain our clients'
trust in our products globally.

Quality month activities

Aichi Steel purchasing policy

November in Japan has been designated Quality Month. To

Sound corporate activities

deliver outstanding quality to customers at the next process,we have established a Quality Rally (to share quality cases
among departments), events and exhibitions. We also have a
QC Circle Convention to nurture quality consciousness.

Global quality assurance activities
Auditors specializing in quality assurance are sent to fiveoverseas subsidiaries to strengthen the quality assurance
system in overseas locations. The auditors provide support for
the establishment of assurance systems in new facilities, 2S

Selection of suppliers basedon an open-door policy*
Co-existence and co-prosperity
based on mutual trust
Creation of environmentallyfriendly products through thepromotion of "Green Purchasing"*Fair and just attitude in the selection of suppliers

activities for product storage, the self-check system for special
process equipment, and share the quality improvement system

Quality management system (QMS)

employed by group companies in Japan.

AFI (Indonesia) received Best Supplier Award
Basic stance

Certification by third-party organizations<Basic Policy>

In addition to ISO 9001 certification, we have obtained various

In accordance with our policy of "Quality First," we will strive tothird-party labeling certifications for production quality based on

maintain a business structure based on ISO 9001 that gains

our QMS. We are assessed on an annual or three-year basis forcustomer trust and enables us to deliver attractive products that

renewal of these certifications.

company-wide effort to maintain a quality assurance system thatkeeps us in the lead over other companies in quality competition.

Long-term Quality Vision 2016

Being an integrated forging andsteelmaking company that provides theworld's best quality customer trust on a
global scale
1) Further reform and drive for quality assurance2) Global quality assurance system
3) Facilitating TQM (Total Quality Management)
to strengthen personnel with awarenessof quality
Quality Assurance System
Board of Directors, Management Committee(Quality Technology Committee, etc.)

Quality Assurance Div.

23

(ISO Review Committee)

Quality Control Department
for each plant

Plant
Departments

Development and Production
Engineering Department
Other related departments(Sales, Purchasing, Human Resouces etc.)

Overseas Support Department

Indonesia) received the Best Supplier Award in the Forging
Division in the first IGP* (Inti Ganda Perdana supplier award thatcommenced in Fiscal 2013). The Best Supplier Award is given to
the supplier exhibiting the highest performance in quality anddelivery to IGP. The result was achieved due to improved AFI

meet expectations and needs.
Under our long-term Quality Vision 2016, we will strive for a united

AFI (Aichi Forging Indonesia: Aichi Steel's local subsidiary in

New JIS mark (by JICQA)
Marks issued by shipping classification societies:
NK, LR, GL, DNV, KR, CCS, CR
Marks issued by TÜV(Technical Inspection Association in Germany)

management through the combined efforts of our global quality
assurance activities and the training program provided to local
staff. We intend to upgrade our management level on the global
level through continued steady and simple support activities
from the head office.
*IGP: Automobile-related company in Indonesia

Fair transactions
We have not conducted direct transactions with many suppliers
from developing countries. We usually purchase products fromabroad via trading companies and resources/raw material
suppliers.
To promote fair and proper transactions and ensure stablesupply, we will strive to proactively make improvements using
internal and external audit systems. We purchase mineral
resources after investigating whether they are target conflictminerals, and confirm that our purchases do not include conflictminerals.

Green purchasing
We actively pursue green purchasing by employing our own
Green Purchasing Guidelines to purchase environmentallyfriendly products and services from suppliers who pay attention

ISO quality certification acquisition

to global environmental protection. We have recently promoted

1. The 6th renewal of steel materials and forgings (June)green purchasing with a special emphasis on the 3Rs (reduce,

2. Renewal of ISO 9001 certification for electromagnetic products (February)

reuse and recycle) of resources and the reduction of CO2

ISO certification acquisition

IGP Supplier Award (Our company staff is second from the left)

Kariya Plant

ISO9001

April 1993

Chita Plant

ISO9001

December 1995

Forging Plant

ISO9001

November 1997

Electromagnetic products

ISO9001

March 1998

Dental materials

ISO13485

Dental materials
Analysis & Testing Dept.

Gathering voice of customers

emissions.

Supply chain CSR
We have been promoting CSR activities with our suppliers, using

We have kept and managed a database in which product defects reports or

the "supplier diagnosis sheet" program launched in Fiscal 2009.

requests from customers, investigation status and feedback to related

Our suppliers conduct self-diagnosis concerning the items

July 1999

customers are stored.

below.

EC Directive

July 1999

Since 2012, we have been elucidating real cause of each arising complains

ISO17025

September 2007

(defined as trouble arising from products which meet customers' specifica-

Training problem for sales staffs

Consolidated subsidiaries

tions) and addressing prevention of recurrence to meet customer demands.

Omi Mining

ISO9001

May 2002

Aiko

ISO9001

April 2005

Asdex

ISO9001

June 2008

Aichi Techno Metal Fukaumi

ISO9001

March 2013

staffs. Moreover, we have invited external lecturers to improveAFC

ISO9001

April 2003

negotiation skills and process management skills in sales activities.

SAFC

ISO/TS16949

August 2006

Through

AIT

ISO/TS16949

March 2008

AFI

ISO9001

November 2008

AFU

ISO/TS16949

September 2009

In order to enhance the sales skills for customers, we have enrichedthe contents of introductory education program for newly assigned

thetraining,

each

staffs

1. Compliance (legal compliance, confidentiality, personal
information protection, etc.)
2. Safety/quality (provision of product information, productsafety, quality assurance, etc.)
3. Human rights of workers (affirmative action, respect for humanrights, prohibition of the use of forced labor/child labor, etc.)
4. Environmental protection (establishment/operation of EMS[Environmental Management System], greenhouse gas reduction, etc.)
5. Social action (contribution to the local community)
6. Information disclosure (provision of information/dialogue)
7. Risk management (establishment/operation of a risk
management system, BCP, etc.)

acquired fundamental knowledge more
efficiently, and it also improved their

Based on the diagnosis results, we will continue to identify

operational efficiency and quality ofissues to be tackled by each supplier and promote information

work.

exchange to enhance supplier CSR activities.

AICHI STEEL REPORT

24

With Community and SocietyWith Community
and Society

Green
Planting flowers in front of Meitetsu Shurakuen Station

Being conscious of our role as a "goodcorporate citizen," we will positively
participate in social contribution activities
and continue to place increasing emphasis
on interacting with local communities.

promote community-oriented social activities. For this purpose,
we have set the four keywords of “Clean,” “Green,” “Creative,”and “Volunteer” as our focuses for social contribution.

Promotion system
The Volunteer Center, placed in the General Affairs Division,
provides information and promotes educational activities, withthe aim of encouraging corporate/individual volunteer activities.

In 2010, we launched a project to visit local schools to give aTechnical Training Institute plant flowers in front of Meitetsu“lesson about iron” to children, marking the 70th anniversary of

Shurakuen

theour founding. In Fiscal 2013, the lesson was provided to all theourelementary schools (37 classes of 12 schools) in the city of

Station,stationtooffices. In addition to ourTokai, Aichi Prefecture. (Sep./Jan.)voluntary clean-up activities

The “lesson about iron” given to fifth

carried out in the neighbor-graders provided local children withhoods

worksites,

an opportunity to learn about theseasonal flowers help local

local industry of Tokai, a city of iron,people feel refreshed andand to find pleasure in “monozu-

relaxed.

kuri” (manufacturing) through our

of

our

lessons.

Volunteer
Volunteer work to assist victims of the Great East Japan Earthquake
Number of participants in volunteer activities(Num)
Number of participantsin volunteer activities

Aiming to pursue harmonious coexistence and co-prosperity, we

3,500

2,964

2,972

3,000

3,146

2,500
2,000
1,500

Since Fiscal 2011, at the request of Kyohokai, an association

In response to calls by employees who are interested in volunteer activities

consisting of suppliers of the Toyota Group and Toyota Groupbut have no time or chance to join them, we introduced a “one-coin”

companies, we have been collecting articles that could be easily

donation program, which enables employees to participate in activities thatconverted into cash as a volunteer activity to assist victims of thebenefit society voluntarily and continuously.

1,843

1,637

disused cellular phones and spoiled postcards, will be converted

Participants in the “one-coin” donation program can contribute one or more

into money to be donated to disaster areas.

shares (¥100 a share), which are collected from the payroll, to the Aichi Steel

1,000
0

Volunteer Fund, from which donations are made to organizations that we
2009

2010

2011

2012

2013
(Fiscal year)*In Fiscal 2010, single-year charity events were held.

From the Aichi Steel Group, 60
cellular

A total of 460 directors and employees who supported the program’sphones, 10,149 spoiled postcards,

purpose have participated in this donation program (as of March 31, 2014).

collected
postage157
stampsdisusedworth¥3,229,prepaid phone cards worth ¥63,000,

Clean Aichi Day

The “Nearby roads clean-up campaign,” a social contribution

In line with the annual Aichi Steel Group CSR Enhancement

activity to clean neighborhoods, is held every two months. In

Month in October, we conducted the “Clean Aichi Day” program,fiscal 2013, the campaign was conducted six times. A total ofin which a total of 800 people, including employees from our402 people from every worksite and in-plant business operators

subsidiaries in Japan and abroad, cleaned the neighborhoods ofparticipated in the cleaning.

their operation bases.

Activities of the Aichi Steel Volunteer Fund

Community meetings
Community meetings are held

1993, donated charity gifts worth about 2.15 million yen,

every year in the cities of Tokai

including those contributed through our Matching Gifts

and Kariya (in April and Septem-

Program, under which we donate an amount equal to theber, respectively), to promote

amount already collected for the Volunteer Fund.

exchange with residents of theOrganization

Charity gifts"Akatsuki Gakuen" Children's
Foster Home (the city of Tokai)

3 washing machines, 1 dryer,
1 thermos bottle, 1 vacuum cleaner

Chita Social Welfare Organization (Chita City)
Nagomien Welfare Activity Center
Yamamomo No. 1, 2 (2 times in fiscal 2009,)

1 freezer, 1 silk ice extractor
1 set of uniforms for the bakery,1 weight scale for wheelchairs

Satsuki Social Welfare Organization (Tokai City)

Equipment for paper pressing

Kusunoki Workshop for theHandicapped (Higashiura-cho)

1 tractor

Japan Blind Tennis Federation (Nagoya City)

Tennis balls for blind tennis

Oumei Yonza (Tokai City)

20 costumes for choir performances

The Aichi Steel Group donated 1 million yen to support restoration from the extensive damage experienced during the earthquake that

Tokai Social Welfare Council

Electric fans and heaters as emergency
equipment for use during disasters

hit Sichuan on April 20, 2013. The Group also donated 3 million yen for restoration after extensive damage from Typhoon No. 30 that hit

NPO Daikon-no-Hana (Chita City)

Dryer machine, food warmer box

the central Philippines on November 8th the same year.

Kamaishi Social Welfare Council

1 tentAssistance for restoration in China and the Philippines

Interaction with the community

In Fiscal 2013, the Aichi Steel Volunteer Fund established in

Charity Gifts and Donation Organizations (Fiscal 2013)

Disaster Support

support.

employees worked together andand Bellmarks worth 616 points.

25“One-coin” donation

Great East Japan Earthquake. The collected articles, including

Clean
Nearby roads clean-up campaign“Lesson about Iron”

In June and November every year, students of the Aichi SteelclosestSocial contribution policy
Basic policy

Creative

local communities and proactively participate in local volunteer activities.
Monthly

EventsJanuary

New Year Festival: participate in the annual event tocelebrate the New Year at local shrine at a local residents

April

Opinion exchange session with new officers ofneighborhood associations

May

Participate and interact in the neighborhood association workshops

July

Participate in the local Bon festival dance andinteract with local residents

SeptemberParticipate in the local Autumn Festival

October

Participate in the local Autumn Festival

November

Cooperate in the execution of local events

DecemberJoin the year-end party with neighborhood association
officers for opinion exchange and interaction

AICHI STEEL REPORT

26

Environment

Environment

Environmental management promotion organizations (FY2013)

Environmental Action Plan 2015

Environmental Conservation
Subcommittee

As a resource-recycling corporationthat effectively uses limited resources,
our entire company participates inenvironmental activities to make themost efficient use of limited resources.

The Environmental Action Plan 2015, our plan highlighting our environmenResource Recycling

mental burdens,” “promotion of a low-carbon society,” and “improvement of

To this end, placing “environmental management” as the basis of all environ-directions, including production, technology development, coordination

President)
mental(Chair:
activities,
we promote continuoussocial contributions
Prevention
committee and enhance

Omi Mining
with society, and logistics.

Reduction ofenvironmental
burdens

Environment Act and other environment-related regulations; 3)Plan) was established in June 1993, and we continuously andadvance assessments of the environmental impacts of products,

actively aim to achieve our goals.

raw materials, secondary materials and equipment; and 4)
support and cooperation for environmental protection in society
and communities.

audit of the environment management system were as follows.
There were no major non-conformance issues.

Results of internal audits
Classification

With this, all target subsidiaries have now been certified.

Major non-conformance(incidents)
Minor non-conformance(incidents/department)

2009

2010

2011

2012

2013

0

0

0

0

0

0.7

0.63

0.47

0.38

0.28

Educating internal environment
auditors

Results of audits by external auditors

Fiscal year 2013 saw the certification of 17 new internal environ-Classification

ment auditors who support the efficient operation of thealso conduct internal environmental auditor education for
employees scheduled for overseas dispatch on an as-neededbasis.

AIT

November 2006

Accumulate and execute energy
1,000 t-CO2/year CO2 emissions Good
conservation improvement activities
797
Promote improvement in the
SAFC800
December
2009
681 678700
643
departments using large amounts
600 616 607
600
of energy

Electronic Components Site

500

AFI 400
300

Gifu site

May 2010

200
100

AFC 0

Other relevant sites
7% reduction of
Additional measures to reduce
6. Seeking better transportation
Site environmental
meeting traffic lines
emission volume
efficiency in logistics(Chair: Headof each site) Elimination of midway depots
per transportation
Activity aiming for modal shift
unit in 2013 fromthe 2006 level

90

05

07

10

January
2012
11
12
13

kg-CO2/t Unit CO2 emissions in logistics Good

AMC10.0

Under consideration

9.5

Target: 8.9

9.0(Unit: Million yen)

8.5

Classification

The results of the FY 2013 internal audit and the surveillance

The Philippine AFC acquired the certification in January 2012.

environmental management system, making a total of 210. We

May 2007
Promote environment-related themesAsdex
in
Follow-up on theme progressthe medium-term plan for engineering
departments.

Environmental conservation costs

2010

2011

2012

2013

Minor non-conformance(incidents)

1

0

1

1

0

Opportunities for improvement
and incident classifications(incidents/department)

31

14

23

32

24

(0.8)

(1.04)(0.58) (1.10)

06

07

08

09

10

11

12

Cost
13

8. Promotion of projects that benefit

Develop technologies to recover10
resource-recycling
corporations
valuable metals
Costs necessary
for controlling
environmental0(dust, acid sludge cleaning)0
burdens arising upstream or downstream of our
07
08
09
10
11
12
13
Simplified packaging (reducing packing materials andoperational areas in connection with production
Abnormalities/reducing
Implement
strict management
to achieve
packing
time)“Environment Close Call” was adopted.
9. Promotion of activities for “zeroor service activities(Upstream/downstream
abnormalities/complaints”
complaints:
80% or below of regulation values set by
Zero abnormalities/complaints
0/yearenvironment-related laws.
costs)

0

Promote preventive activities (enhance GK).

2009

(0.8)

8.6

Major efforts and their effects
8.0

Landfill volume in
Zero forlandfillvolumecollectors/repair
in correspondence
7. Reduction of by-products during
1,000costs
t/year Landfill
Power
dust
for volume
dustin correspondence
correspondencewith fluorine-containing slag
Environmental
conservation
costs necessary
production
and further effectivewith fluorine-containing slag regulations
withfluorinecollectors,
wastewater
treatment costs,
investment
regulations Good50
utilizationofresourcesin2013
for controlling environmental burdenscontaining
arisingslag
new user to commission
and Find
maintenanceof energy-saving facilities,
costs of
3,671
regulations orin 2013: Zero40
within our operational areas from production
disposal of hard-to-sort bricks, etc.
Internal goaldisposal
andrecyclingofindustrial waste
and general
Promoterecyclingofacid
sludge.
30
service activities (Operational area costs)(Based on direct andwaste discharged from business operations
indirect landfill)
20
Improvement of
resource recycling

subsidiaries with manufacturing sites.

2. Development of technologies toreduce substances of
Eco Life Subcommittee
environmental concern(Chair: Director in
charge of Safety &Environmental Div.)

10. Enhancement of consolidated
Environmentalenvironmental
conservation
costs arising frommanagement

our administrative activities (Administrative
11. Promotion of global CO2
costs)
management

12. Promotion of biodiversity

Environmental conservation costs arising fromand promotion of
our R&D activities(R&D costs)
13. Enhancement
Social contribution

We aim for 100% ISO 14001 certification for consolidated

Audit results

Environmental management

preservation

Results

Promote and adopt proposals for
3R + CO2 reduction activities were thoroughly
1. Promotion of environmental
Aichi Steel Logistics
March
activities in coordination with
implemented intensively. (Reuse,
lifetime2005
Process Energy Reforming Subcommitteegreen purchasing.
business partners
improvement, and logistic improvement)(Promotion and adoption of CO2
8 proposals/month
Logistics Energy Conservation Subcommitteereduction/3R proposals)

Overseaslines on Environmental Issues (current Environmental Action

environmental

January 2005
Results

Products

mental management; 2) compliance/management of the Basicall

Aiko Service

Major efforts

Energy-Saving Production Subcommittee

emissions by our customers

Promotion of a low-carbon society

provide for matters concerning; 1) systems to promote environ-

sincere approach in environmental efforts. The Behavior Guide-

promotes

Safety and Environmental Division)
Target(s)Environmental ISO
Forging
Site
Based oninternal
5. Thorough implementation ofReview Committee
energy conservation practices ingoals in fiscal(Meets twice/year)
production activities
2013 Site
Seki

Three Pillars

has set up the "Environmental Management Rules." These Rules

Environmental Charter was developed in June 1996 to clarify ourstrongly

Action item

October 2004

Administrative officeof the Techno Metal
In renewalof the procurement
system,3. Enhanced control of
Aichi Steel Group EnvironmentalAt the time of renewal Aichi
FukaumiDecember
2010
Safety &procurement system, add a checking
a function was added for the safety/
environmental burdens forCommittee
Environmental each
Div. productfunction when purchasing.
environment check of substances ofEnvironmental
environmental concern. (Operation start
Chita Site
Management Dept.
AFUscheduled in autumn 2013)April 2003
Individual sites
Promotion of eco-friendly related
Follow-up on theme progress
4. Development of eco-friendly
Kariya Site
products that reduce CO2themes in the medium-term planspriority issues in corporate management. The Aichi Steelactivities in an organized and systematic manner.

Japan

Directorin charge of Items and Results
Environmental Action Plan (Chair:
2015– Action

To promote its environmental management activities, Aichi Steel

Group

Aiko
January
2004
resource recycling,” and ouractivities will be conductedfrom manydifferent

Awareness and Publicity
Subcommittee(Meets twice/year)

We view environmental preservation activities as one of the top

Aichi Steel Environmental Charter. The Environmental Working

March 2003

and theEnvironmental
global community” through manufacturing.

Global Warming

Environmental guidelines

to carry out environmental preservation activities based on the

Aichi Ceratec

Specifically, the three pillars of implementation will be “reduction of environ-

Working Group(Meets twice/year)

Basic approach

Our environmental management structure has been developed

January 1997

basic philosophy “to contribute to the sustainableof society
Productdevelopment
and Environment
Subcommittee

Environment Management

Aichi Steelmanagement from a global viewpoint involving consolidated subsidiaries.

tal efforts from FY2011 to 2015, was established Subcommittee
in March 2011, with the

ThemeEnvironment management
promotion organization

ISO certification statusenvironmental education
activities

14. Active disclosure ofEnvironmentalenvironmental
conservation
costsandarising frominformation
enhancedactivities
communication
our social-relation(Social-relation
activities
costs)
15. Revitalization of regional
contribution activities

throughbrainstorming
C o sPromotet s foon-siter emonitoringm p l oyeeBrush-Up
e nvSeminars.
i ro n m eRegularize
ntal edu c at i o n , sessions withEnvironment audit of domestic affiliates by safety/
manufacturers in Japan
a n denvironmentc o s t s manager
n e c e s s a r y t o a c q u i reandm
i n t a i n audits
Continue with aenvironment
302

ISO Requirecertificationlabor costs andMeasurement
related costsof
all group subsidiaries toincomplete at someenvironmental
actionorganizations
report their energy
consumption
volume.
overseas offices
Participate in NPO-led forest preservation
activities and the city of Tokai forestation project.
Promote the "Forestation to Create a Forest for Beetles"

Participate in forest preservation activities (June, February)
Tree-planting ceremony for the "Forestation toCreate a Forest for Beetles" (November)

Enhance education programs.
Increase environmental consciousness
through environmental news, etc.

Classified education continued andinternal auditors increased.
Environmental seminars were held.(2 times)

Research costs for environmental conservation*

28

Demonstrate environmental contributions
Exhibiting at the "Automotive Engineering Exposition" (May)
English version of Aichi Steel Report:
through participation in Messe Nagoya,issued inactivities
Nov.
Festival,
Site Industrial
greening
andetc.
industrial road cleaning
26
Make the Aichi Steel Report available on the Web.
(Disclosed publicly in PDF (on the web))
Hold media meetings, head Office area
Round-table conferences with the press (4 times)
Head office (May) Kariya (December)meetings, and Kariya regional meetings.
Increase participants in Clean Aichi Day.
Demonstrate environmental activities throughin-house publications and News a la carte.

Participants in Expanded Clean Aichi Day: 800
Environment-related information was provided
Total 4,027
through in-house publications and News a la carte.

* Some overseas offices could not measure their electricity consumption. We will consider other countermeasures.

27

AICHI STEEL REPORT

28

Environment

Environment

Environmental Action Plan 2015
The Environmental Action Plan 2015, our plan highlighting our environmen-

Environment

Environment

management from a global viewpoint involving consolidated subsidiaries.

Prevention of Global Warming

tal efforts from FY2011 to 2015, was established in March 2011, with thebasic philosophy “to contribute to the sustainable development of society

Specifically, the three pillars of implementation will be “reduction of environ-and the global community” through manufacturing.

mental burdens,” “promotion of a low-carbon society,” and “improvement of
resource recycling,” and our activities will be conducted from many different

To this end, placing “environmental management” as the basis of all environ-directions, including production, technology development, coordination

mental activities, we promote continuous social contributions and enhancewith society, and logistics.

Products

Reduction ofenvironmental
burdens

Action item

Target(s)Promotion of a low-carbon society

Three Pillars

Major efforts

Results

Results

Promote and adopt proposals forgreen purchasing.
(Promotion and adoption of CO2
reduction/3R proposals)

3R + CO2 reduction activities were thoroughly
implemented intensively. (Reuse, lifetime
improvement, and logistic improvement)
8 proposals/month

2. Development of technologies toreduce substances ofenvironmental concern

Promote environment-related themes in
the medium-term plan for engineering
departments.

Follow-up on theme progress

3. Enhanced control ofenvironmental burdens foreach productAt the time of renewal of the
procurement system, add a checking
function when purchasing.

In renewal of the procurement system,a function was added for the safety/
environment check of substances ofenvironmental concern. (Operation startscheduled in autumn 2013)

5. Thorough implementation ofenergy conservation practices in
production activities

Based on internalgoals in fiscal
2013

Follow-up on theme progress

Improvement of
resource recycling

Item

FY 2013 target (internal)

ResultCO2 emissions

655,000 t-CO2/year

643,000 t-CO2/year

Accumulate and execute energy
conservation improvement activities
Promote improvement in thedepartments using large amountsof energy

1,000 t-CO2/year CO2 emissions
800

We have promoted energy conservation activities in our offices
since 2008. In fiscal 2013, the following activities were conducted.

1. Summer/winter measures to reduce electricity consumption

Replacing lighting with LEDs in the offices on the 2nd floor

Good

797
681 678

700
600

1000
800

797

600

514

08

09

600

616

607

10

11

12

643

200

90

13

(Fiscal year)

CO2 emissions from administrative divisions
t-CO2/year

4,000*Measured since FY2007

3,500

3,456
3,084 2,976

3,000

and 3rd floor of the main office643
600 616 607

544

400

0

Promoting Warm Biz activities (Temperature set to 19°C)

2,613 2,412 2,419

2,500

500
400

2,124

2,000

300
200
100
0

6. Seeking better transportation
efficiency in logistics

7% reduction ofemission volume
per transportation
unit in 2013 fromthe 2006 level

Additional measures to reduce
traffic lines
Elimination of midway depots
Activity aiming for modal shift

90

05

07

10

11

12

7. Reduction of by-products during
production and further effective
utilization of resources

Landfill volume incorrespondencewith fluorinecontaining slag
regulations in 2013: Zero
Internal goal
(Based on direct andindirect landfill)

8. Promotion of projects that benefit
resource-recycling corporations

9. Promotion of activities for “zeroabnormalities/complaints”
Zero abnormalities/complaints

Zero landfill volume in correspondencewith fluorine-containing slag regulationsin 2013
Find new user to commission
disposal of hard-to-sort bricks, etc.
Promote recycling of acid sludge.
Develop technologies to recovervaluable metals(dust, acid sludge cleaning)halved and 3.6 tons of CO2
reduction per year is expected.

Target: 8.9

Introducing a system that displays electricity use in real timein the main office

8.6
06

07

08

09

10

11

12

Joint energy-conservation patrol by all members of the eco-life

Working with customers to improvelogistics and distribution process

10

0
07

08

09

10

11

12

13

10. Enhancement of consolidated
environmental management

Promote on-site monitoring through Brush-Up Seminars.
Environment audit of domestic affiliates by safety/
environment manager

Regularize brainstorming sessions with
manufacturers in Japan
Continue with environment audits

11. Promotion of global CO2
management

Require all group subsidiaries toreport their energy consumption volume.

Measurement incomplete at someoverseas offices

12. Promotion of biodiversity

Participate in NPO-led forest preservation
activities and the city of Tokai forestation project.
Promote the "Forestation to Create a Forest for Beetles"

Participate in forest preservation activities (June, February)
Tree-planting ceremony for the "Forestation toCreate a Forest for Beetles" (November)

13. Enhancement and promotion ofenvironmental education
activities

Enhance education programs.
Increase environmental consciousness
through environmental news, etc.

Classified education continued andinternal auditors increased.
Environmental seminars were held.(2 times)

14. Active disclosure ofenvironmental information andenhanced communication
activities

Demonstrate environmental contributions
through participation in Messe Nagoya,Industrial Festival, etc.
Make the Aichi Steel Report available on the Web.
Hold media meetings, head Office area
meetings, and Kariya regional meetings.

Exhibiting at the "Automotive Engineering Exposition" (May)
English version of Aichi Steel Report:
issued in Nov.
(Disclosed publicly in PDF (on the web))Round-table conferences with the press (4 times)
Head office (May) Kariya (December)

Increase participants in Clean Aichi Day.
Demonstrate environmental activities throughin-house publications and News a la carte.

Participants in Expanded Clean Aichi Day: 800
Environment-related information was provided
through in-house publications and News a la carte.

1

In accordance with the Energy Saving Act revised in April 2006 , we havebeen working on environmental improvement activities through the structuring of an efficient environmentally-friendly logistics system after understanding the flow of distribution and reviewing issues. Aichi Steel has established
an internal goal of a 15% reduction in specific CO2 emissions during logistics
*

10

11

12

13

Other

Oxygen 1.7%

0.6%

Heavy oil class A
Coke 5.9%

from 2006 to 2015.
In "M3 Shipping Cost Activity2," the flow of products after shipment isvisualized to achieve the goal by promoting logistics reform from the perspective of "reverse flow," "double storage" and "two-dimensional distribution."
In fiscal 2013, we achieved a 2% reduction in specific CO2 emissions fromthe previous year.
1. Revised Energy Saving Act: Shippers are obligated to establish plans fora 1% reduction in specific CO2 emissions and the reporting of specificoutput level on a regular basis
2. M3 shipping cost activity: Visualization of product shipping routes andcosts to reduce distribution cost

CO2 emissions
Total

City gas643,000 t-CO2

27.7%

Conservation Month (February)

20

09

Breakdown of energy used in FY2013 (CO2 emissions)In-house publications for Environment Month (June) and Energy

30

08(Fiscal year)

promotion committee (July, February)

40

07

1.9%

3. Other13

1,000 t/year Landfill volume in correspondencewith fluorine-containing slag
regulations Good
50

0

0

2. Making electricity use visible

9.5“Environment Close Call” was adopted.

* Some overseas offices could not measure their electricity consumption. We will consider other countermeasures.

Electricity consumption has

10.0

Implement strict management to achieve
80% or below of regulation values set byenvironment-related laws.
Promote preventive activities (enhance GK).

15. Revitalization of regional
contribution activities

Abnormalities/
complaints:
0/year13

kg-CO2/t Unit CO2 emissions in logistics Good

8.0

Social contribution

volume from the previous year.

Promoting Cool Biz activities (Temperature set to 28°C)

8.5

Environmental management

reduction compared to 1990 levels until fiscal 2012, a figure

Energy conservation in offices

Promotion of eco-friendly related
themes in the medium-term plans

9.0

29

Based on Environmental Action Plan 2015, we pursued a 10%

internal goal was set at 1% reduced emission per production

1. Promotion of environmental
activities in coordination withbusiness partners

4. Development of eco-friendly
products that reduce CO2
emissions by our customers

Total CO2 emissions
1,000t-CO2/year

higher than the Kyoto Protocol target. From Fiscal 2013, theEnvironmental Action Plan 2015 – Action Items and Results
Theme

FY2013 targets and results

Electricity

62.2%

CO2 Balance
FY2012 emissions

607,000 t-CO2/year

FY2013 emissions

643,000 t-CO2/year

Breakdown
Increase due to more production
Improvements (A) – Aggravations (B)Total(-) 42,000 t-CO2/year
6,000 t-CO2/year(-) 36,000 t-CO2/year

Improvements (A)1. Improved energy efficiency of electric furnaces

3,000 t-CO2/year

2. Energy conservation of hot rolling furnaces

3,000 t-CO2/year

3. Energy conservation in forging process

3,000 t-CO2/year

Total

9,000 t-CO2/year

Aggravations (B)
1. Increase in air-conditioning energy use due to heat waves(-) 1,000 t-CO2/year

2. Change in steelmaking processes(-) 2,000 t-CO2/year

Total(-) 3,000 t-CO2/year

AICHI STEEL REPORT

30

Environment

Environment

Biodiversity

3R (Resource Recycling)
Volume of recycled nickel (t/FY)

Basic approach
As a law-abiding member of society, the Company actively

Basic policy

150

promotes 3R activities (reduce, reuse, recycle) for efficient use of

134

123

resources with the aim of achieving "zero emissions," or reducing
the waste generated from the Company to as close to zero as

100

106

94

possible.

80

FY2013 targets and results

Environment

Environment

We think that preservation of biodiversity, along with the preven-publiction of global warming, is an important environmental issue thatnext-generation individuals capable of working to preserve theandprivatesectorcooperation,andfosteringneeds to be addressed to realize a sustainable society.

earth's environment. We have been working on forestation and

We understand the concept of COP10 (10th Conference ofvolunteer employee activities, and will continue with projects to

Parties of United Nations Conventions, Convention on Biologicalprotect the ecosystem.

Diversity) and participate in activities to preserve biodiversity bypromoting the structuring of an ecosystem network through50

In fiscal 2013, we complied with Aichi Prefecture guidelines forthe appropriate use of recyclable resources; however, despite
efforts to reduce waste and increase recycling, we were not able
to reach the goal due to an increase in production from fiscal

Forestation to create a forest for beetles

5
0

2000

2009

2010

2011

2012

2013

2012 and a decrease in recycling volume due to recycling

goal to create an environment in which beetles and othercompany circumstances.
We intend to pursue this endeavor by further sorting andseparating by-products at the point of generation, moving

creatures can live in a natural cycle by forming a deciduous

Volume of direct landfilled waste (1,000 t/FY)

forward with the development of recycling technology and

Item

FY2013 target

Results

Direct landfill

3,893t or less/year

5,338t or less/year

Indirect landfill

2,397t or less/year

5,002t or less/year

High-strength abrasives from internal by-products:
Construction of an AS Shot production facility

50

44.3

Group employees and their families, gathered to plant 1,200

47.3

young trees.

40
30

26.1

20

14.8

13.2

10
0

to conventional products, it generates less dust and it can be used

7.8
1990

1995

2000

2009

2010

2011

2012

5.3
2013

repeatedly. As a high value added product made from slag, it isused in the foundation process for coating, removal of rust and die
washing, and it has received a positive response.

Volume of indirect landfilled waste (1,000t/FY)

In fiscal 2013, the use of this abrasive will be extended to areasthat require large amounts of abrasives such as bridge construc-30

tion, coating, electrical work, automobile production and25.5

shipbuilding; and in order to move forward with the technology formass production, an AS Shot production facility was established.
We will aim to expand sales as a result of our recycling technol-

to Create a Forest for Beetles" project since 2012.
planted acorn seedlings. Approximately 200 people, Aichi Steel

52.0

AS Shot is an environmentally-friendly abrasive made from electric
furnace slag, a by-product generated by the company. Compared

broadleaf forest, and have been continuing with this "Forestation
In fiscal 2013, we held a tree-planting ceremony in which we

60

continuing to make effective use of resources.

As an activity for sustainable biodiversity, we have established a20

Forest of Toyota
development volunteers

Forest-developing volunteers(Kiso Village, Nagano Prefecture)

The “Forest of Toyota Development Volunteers,” an event for

Our company uses a large volume of water in the production offorestation experience hosted by the All-Toyota Social Contribu-

steel and supports the NPO "Green Challenger," which works totion Activities Liaison Committee, was held in Toyota City (Aichi).

develop forests in Kiso Village in Nagano, where the headwater

19 members of the Aichi Steel Group participated in the event

for Aichi water originates. Volunteers have been recruitedand experienced forest thinning (May). Through efforts toamong employees to work side-by-side with local residents inimprove the environment and preserve the biodiversity of forests

cutting and thinning work for forest cultivation twice per year

and satoyama (managed woodlands near human settlements),

since 2006.

we will continue to help improve our nearby forests andcultivate employees’ eco-conscious minds.

ogy.
10

0

31

2000

2.4

2.4

2.4

2009

2010

2011

3.4
2012

5.3

2013

AICHI STEEL REPORT

32

Environment

Environment

Material Flow

PRTR Data
Results for Fiscal 2013

Utilities

Scrap iron for internal recycling:
270,000 tons
Byproducts 268,000 tons

Industrial water: 4,615,000
Nitrogen: 9,906,000 N
Argon: 1,614,000 N

Melting
Refining

Rolling

Waste
186,000 tons

Rolling
Pickling and heat treatment

Heating

Scale, etc.

Slag/dust
Headrace sludge

CastingHeating

Forging

Scrap iron

371,000
tons

AICHI STEEL manufacturing process
Steelmaking

Electricity: 1,071 GWh
Fuels: 283,000 kl2
Oxygen: 46,599,000 N
City gas: 84,868,000 N

112,000
tons

Purchased slab and steel

Reuse outside
the Company(Free assignment
or disposal cost)
165,000 tons

Reuse outside
the Company(Sale to outsidebusiness operators)
67,000 tons

Recycled by outside companies
Landfill: 20,000 tons
Directlandfill

Slag, sludge

IndirectlandfillInternal treatment:
waste acid and dust
Contractor treatment:
waste acid and waste plastic

ForgingIndustrial waste water
Waste water: 2,736,000

Products

1,130,000 tons
Steel Products: 842,000 tons
Forgings: 288,000 tons

Chita and Forging Plants

Iron alloy, etc.: 45,000 tons
Slag flux: 43,000 tons
Reducing agents: 24,000 tons

1,153,000
tons

EnergyGovt.
ordinanceNo

Raw materials

Kariya Plant

Scrap iron: 827,000 tons
Internally recycled scrap: 270,000 tons
Primary and secondary materials: 15,000 tons
RP1: 41,000 tons

Seki Plant

Recycled materials

Water-soluble zinc compound

1.8

31

Antimony and its compounds

80

Xylene87

Chromium and trivalent chromium compounds

132

Cobalt and cobalt compounds

243

Dioxins300

Scrap materials(Scrap iron)
827,000 tons

Discharged
Atmosphere

Transferred
Outside of premises(as waste, etc)

Water

-

0.190

0.480

10.0

-

0.002

0.690

3.1

0.410

-

-

27,000.0

0.110

0.001

2500.000

180.0

-

0.003

3.200

17.0

17.000--Toluene

5.1

1.300

-

-

304

Lead

98.0

-

-

-

305

Lead compounds

310.0

0.240

0.004

240.000

308

Nickel5700.0

-

-

-

309

Nickel compounds

820.0

0.023

0.050

42.000374

Hydrogen fluoride and its water-soluble salts

7.2

0.001

7.000

0.210

384

1-bromopropane

405

Boron and boron compounds

412

7.4

5.300

-

2.100

110.0

-

0.076

21.000Manganese and manganese compounds

20,000.0

0.420

0.440

5600.000

453

Molybdenum and molybdenum compounds

8500.0

0.005

0.550

0.400

87

Chromium and trivalent chromium compounds

860

-

0.016

66.000309

Nickel compounds

420

-

0.014

36.000374

Hydrogen fluoride and its water-soluble salts

100

0.036

1.200

58.000453

Molybdenum and molybdenum compounds

15

-

0.270

2.300

392

Normal hexane

2.5

2.500

-

-

A hyphen (-) indicates a quantity of 0 (zero). The volumes were calculated according to the PRTR system.
Unit is tons/year (however, unit for Dioxins is mg-TEQ/year).

Material balance of PRTR substances in theentire organization of the Company
11 tons

Atmospheric output
CO2: 643,000 tons-CO2
SOx: 6.20 tons3
NOx: 70 tons4

AmounthandledSubstance name1

Atmospheric emissions

54,602
tons

63,952
tons
Chemicals in raw
materials andsecondary materials

Market(Unit: tons)

10 tons

8,568 tons

761 tons

Steel andother products(consumed)

Discharge
Waste
Decomposition /to waters (transferred) neutralization(elimination)

Breakdown of discharged PRTR substances
Xylene 2%
Molybdenum andmolybdenum
compounds 4%
Manganese andmanganesecompounds 4%

Other 4%
Hydrogen fluoride
and its water-soluble
salts

41%

Toluene7%

Normalhexane12%1-bromopropane

26%

PCB control
Based on the Act on Special Measures concerning Promotion of

1. RP: Recycled plastics
2. Heavy oil equivalent
3. Emissions from January to December 2013
4. Emissions from April 2012 to March 2013

33

Proper Treatment of PCB Wastes, we keep a ledger of alltransformers, condensers, waste oil, etc., that contain PCBs, andimplement strict storage and control measures.

AICHI STEEL REPORT

34

Finance

Environment

Atmospheric Quality Data
Chita and Forging Plants (Air Pollution Control Act/ local regulations)
Substance

Facility

BoilerNOx
Heating
furnace

BoilerHeatingSoot

furnace

Water Quality Data
Chita and Forging Plants(Water Quality Pollution Control Act /local regulations)

Limit

Actual level (max)

Item

Limit

Max.

Min.

Average

130

86.0

pH

5-9

7.6

6.6

7.0

150

20.5

COD

25(20)

8.2

3.4

5.5

180

72.4

SS

40(30)

4.0

0.3

1.0

130

73.5

Nitrogen120(60)

4.0

1.0

2.3

150

61.8

Phosphorus

16(8)

0.1

Less than 0.1

0.10

170

60.6

180

70.5

200

32.2

Item

Limit

Max.

Min.

Average

0.15

0.002

pH

5.8-8.6

7.2

6.6

6.7

0.08

0.003

BOD

25(20)

5.7

Less than 0.5

2.2

0.10

0.003

SS

40(30)

15.0

0.5

5.1

0.20

0.003

Nitrogen120(60)

9.6

0.9

4.0

0.25

0.003

Phosphorus

16(8)

0.3

Less than 0.1

0.10

0.30

0.005

0.05

0.001

0.08

0.001

0.10

0.001

34.35

3.57

Kariya Plant (Water Quality Pollution Control Act /local regulations)

Higashiura Plant (Water Quality Pollution Control Act /local regulations)
Item

Limit

Max.

Min.

AveragepH

5.8-8.6

7.2

6.7

6.9

BOD

25(20)

6.4

4.2

5.3

SS

30(20)

4.0

Less than 0.5

1.8

Kariya Plant (Air Pollution Control Act/ local regulations)

Nitrogen120(60)

4.2

1.3

2.3

Substance

Phosphorus

16(8)

0.4

0.1

0.30

Electric
furnace
SOx

NOx(Total limit)

Facility

Limit

Actual level (max)

130

82.8

Heating150

91.5

furnace

170

98.2

200
SOx

(Total limit)

11.62247.2
2.620

Higashiura Plant (Air Pollution Control Act/ local regulations): No regulated facility

Gifu Plant (Water Quality Pollution Control Act /local regulations)
Item

Limit

Max.

Min.

AveragepH

5.8-8.6

7.5

6.7

7.0

BOD

30(20)

3.2

2.4

2.8

SS

60(50)

8.5

Less than 0.5

1.2

Nitrogen120(60)

10.9

0.8

4.6

Phosphorus

16(8)

0.7

Less than 0.1

0.25

Management’s Discussion, Analysis of Financial
Conditions, and Results of Operations
Summary
During the consolidated fiscal year under review, theJapanese economy was faced with persistent uncertainty,
primarily because of soaring resource and energy prices
as a result of the sustained weakness in the yen, as wellas the slowdown in the global economy , including the
economies of emerging countries, while corporate
earnings picked up due to the improvement in the export
environment. Aichi Steel Group’s production and sales
volumes of forgings and specialty steel, which are ourmainstay products, increased from the previous fiscal
year. This was supported by the healthy demand forautomobiles, as well as the pickup in specialty steel
demand from sources other than autos from the fourth
quarter of the previous fiscal year.

Facility

Limit

Actual level (max)NOx

Boiler150

88.0

Seki Plant (Air Pollution Control Act/local regulations): No regulated facility
The actual levels of NOx and soot indicate the maximum values actually
measured for each regulated facility.
Units used are as follows. NOx: ppm, soot: g/m3N, SOx: m3N/h (total
volume control as stipulated by the Air Pollution Control Act)

Unit: mg/liter (except for pH)
Levels of other regulated substances not shown in these tables were all
below the regulation limits or below the minimum measurable amounts (ornot detected at all).
Figures in parentheses ( ) are daily averages.
pH: Hydrogen-ion density
COD: Chemical oxygen demand
BOD: Biochemical oxygen demand
SS: Suspended solids in water

Sales volume (Non-consolidated basis)

1,000

248

1,119
253

1,043
282

1,130
288

Specialty
steel

822

866

761

842

15,0005,000

50,0000Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)

8,459

13.4

14

15,205100,000

44.4

8

4,247

4,899

5,503

Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)

6

0

49.4

49.9

53.0

144,965

%
70
60

53.9

50
40
30

6.4

4
2

123,671 126,112 132,436
112,377

10

10,000Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)

150,000

12

15,000

9,627

4,314

Millions of yen%

20,0000

7,332

Net assets, capital adequacy ratio

ROE

Millions of yen

6,625

14,073150,000

Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)Net income

0215,454
174,279

20,000100,000614

0

200,000

227,478 217,279

237,421

10,000226500Millions of yen

250,000

Forgings 1,070

840

Operating income

Net sales
Millions of yen

thousand tons
1,500

5,000

35

A decline in sales prices in the second half year of the
fiscal 2013 and further weakening in yen had a negative
impact on our sales activities. However, due to the effectsof cost reductions and an increase in sales volume, as
well as a rise in profits of our subsidiary companies, theAichi Steel Group posted operating income of 9,627
million yen, a 31.3% increase from the previous fiscal year
(7,332 million yen). Ordinary income was 9,810 million
yen, a 23.7% increase from the previous fiscal year (7,929
million yen.) Net income was 5,503 million yen, a 12.3%
increase from the previous fiscal year (4,899 million yen).

Under these circumstances, the Group engaged incompany-wide efforts to improve profitability, by working
on corporate-wide cost reduction, as well as promoting ashift to a new business model in the electromagnetic
components business, leveraging on the characteristics
of each area of business. These initiatives are centeredGifu Plant (Air Pollution Control Act/ local regulations)
Substancearound the “ZZ100” activities, which aim at strengthening
corporate profitability to be able to generate 10 billion
yen in annual profits by the end of fiscal 2014. These
efforts resulted in consolidated net sales of 237,421
million yen, a 9.3% increase from the previous fiscal year
(217,279 million yen).

3.5

4.0

4.2

Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)50,00020
10

0

0Mar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 (FY)AICHI STEEL REPORT

36

Finance

Operating Income and Net Income

Financial Position

Net sales for the consolidated fiscal year under review
saw a 9.3% increase from the previous fiscal year to237,421 million yen. The cost of sales was 207,243
million yen and cost-to-sales ratio was 87.3% (87.3% for
the previous fiscal year), which remained flat over theprevious fiscal year. Selling, general and administrative
expenses totaled 20,551 million yen, accounting for 8.7%
(9.3% for the previous fiscal year) of net sales.

The Aichi Steel Group’s financial position as of March 31,
2014 was as follows:
Total assets were 255,259 million yen, an increase of 17,094
million yen from the end of the previous fiscal year.

As a result, operating income for the fiscal year underreview was 9,627 million yen. Net income was 5,503
million yen, and return on equity (ROE) was 4.2%.

Sales by Business Segment
Net Sales (Consolidated)
Electromagnetic
components
12,645

Other businesses
3,966

237,421

Specialty
steel
114,670

Forgings
106,141(Millions of yen)
Specialty steel
Specialty steel is the mainstay product of the Aichi SteelGroup. Due to the increased sales volume, net sales inthis segment saw a 10.0% increase to 114,670 million yen
for this consolidated fiscal year (104,224 million yen forthe previous year).
Forgings
Closed-die forgings for automobiles account for a majorpart of this segment. Due to the increased sales volume,
net sales in this segment saw an 8.3% increase to106,141 million yen for this consolidated fiscal year
(98,031 million yen for the previous year).
Electromagnetic components
Aiming to turn this segment into the Company’s corebusiness in the future, Aichi Steel has been nurturing andpromoting new industrial fields including sensors andmagnetic products. Due to an increase in the sales
volume of MAGFINE magnets and electronic components, net sales in this segment saw a 12.5% increase to
12,645 million yen for this consolidated fiscal year
(11,242 million yen for the previous year).
Other businesses
Aichi Steel’s subsidiary companies are involved in such activities asproviding various services, engage in software development, etc. Net
sales in this segment saw a 4.8% increase to 3,966 million yen for thisconsolidated fiscal year (3,783 million yen for the previous year).

37

Current assets increased by 6,252 million yen from theprevious fiscal year to 125,913 million yen.
Property, The value of property, plants and equipment
increased by 2,223 million yen from the previous fiscal year.
Investments in plants and equipment for this fiscal year
totaled 12,930 million yen. Depreciation and amortization
amounted to 12,355 million yen.
Current liabilities increased by 10,319 million yen from theprevious fiscal year. This is mainly due to an increase of
10,571 million yen in the current portion of long-term debt.
Non-current liabilities decreased by 5,754 million yen fromthe previous fiscal year, mainly due to a decrease of 9,568
million yen in long-term debt.
Net assets as of March 31, 2014 totaled 144,965 million yen,
an increase of 12,529 million yen from the end of theprevious fiscal year. Net assets per share were 699.58 yen(643.05 yen in the previous fiscal year), and capital
adequacy ratio was 53.9% (53.0% in the previous fiscal year).

Consolidated Cash FlowsNet cash provided by operating activities decreased by
12,766 million yen from the previous year to 14,992 million
yen. This resulted from a 10,314 million yen increase in cash
outflow due to an increase in notes and accounts receivable
and a 4,127 million yen increase in cash outflow due to anincrease in inventory, despite a 2,010 million yen increase inincome before income taxes and minority interests.
Net cash used in investment activities increased by 126
million yen from the previous year to 11,993 million yen. Thisis mainly due to an increase of 2,690 million yen in property,
plant and equipment purchases despite a decrease of 2,782
million yen in acquisition of investment securities.

Five –year Summary (Consolidated & Non-Consolidated)
Five-year Summary (Consolidated)
Millions of Yen

Thousands of U.S. Dollars

Mar. 2014

Mar. 2013

Mar. 2012

Mar. 2011

Mar. 2010

Mar. 2014¥237,421¥217,279¥227,478¥215,454¥174,279$2,374,209

Operating income

9,627

7,332

8,459

14,073

4,314

96,274

Income before income taxes and minority interests

9,779

7,769

7,885

11,9493,730

97,791

Net income

5,503

4,899

4,247

15,205

6,625

55,031

Property, plant and equipment

85,841

83,61885,52889,761

82,906

858,414

Total assets

255,259

238,165

241,952

240,218

242,350

2,552,593

Net assets

144,965

132,436

126,112

123,671

112,377

1,449,652

Net income:Basic¥27.99¥24.94¥21.62¥77.49¥33.77$0.3

Net income:Diluted

27.98

-

21.61

77.45

30.54

0.3

Number of employees (Persons)

4,613

4,504

4,406

4,351

4,282

Net sales(yen)

Per share data

U.S. Dollars

Notes:
1. Net sales are presented exclusive of consumption taxes.
2. Scope of Consolidation:
All subsidiaries are consolidated. The 19 subsidiaries are :Aiko Corporation, Aichi Ceratec Corporation, Omi Mining Co., Ltd., Aichi Techno Metal Fukaumi Company, Aichi Steel Logistics Co., Ltd., Aichi Information System Company,
Aiko Service Co., Ltd., Aichi Micro Intelligent Corporation, Asdex Corporation, Aichi Forging Company of Asia, Inc., Aichi Forge USA, Inc., Aichi Europe GmbH,
Aichi International (Thailand) Co., LTD., Shanghai Aichi Forging Co., Ltd., PT. Aichi Forging Indonesia, Aichi Magfine Czech s.r.o., AMIT, Inc. ,Aichi Korea Corporation and Aichi Magfine Technology(Pinghu)Co., Ltd.
3. Net income per share is computed by dividing income available to shareholders of common stock by the weighted-average number of shares of common stock
outstanding during the respective years.
4. Diluted net income per share for 2013 is not written because no dilutive shares exist.
5. Each fiscal year end date is March 31.
6. The U.S. dollar amounts above represent translations of yen, for convenience only, at the rate of ¥100=U.S.$1.

Five-year Summary (Non-Consolidated)
Millions of Yen

Thousands of U.S. Dollars

Mar. 2014

Mar. 2013

Mar. 2012

Mar. 2011

Mar. 2010 Mar. 2014

¥185,764¥173,208¥190,096¥179,183¥141,093$1,857,643

Operating income

6,171

4,600

5,481

11,441

3,153

61,715Net sales

Income before income taxes

6,915

4,810

5,117

10,0482,351

69,153

Net cash used in financing activities was 1,911 million yen,
an 8,287 million yen decrease from the previous year. Thiswas mainly due to a decrease of 13,947 million yen in cash
outflow for the repayment of long-term debt despite adecrease of 5,417 million yen from the previous year inproceeds from long-term debt. Consequently, cash and cash
equivalents as of March 31, 2014 amounted to 36,035
million yen, an increase of 2,215 million yen from the end of
March 2013 (33,820 million yen).

Net income

4,738

3,841

2,714

13,181

5,967

47,375

Available-for-sale securities
Of the total securities owned by the Company and its
consolidated subsidiaries, the historical cost of thosereported on the consolidated balance sheet at fair market
value amounted to 2,612 million yen and the fair market
value of these securities reported on the consolidatedbalance sheet was 12,974 million yen.

Property, plant and equipment

65,462

67,983

72,68578,20069,809654,616

Total assets

213,245

210,113217,473

218,974

222,210

2,132,448

Net assets

121,414117,248

114,371

113,097

102,593

1,214,145(yen)

Per share data

U.S. Dollars

Net income:Basic¥24.10¥19.55¥13.82¥67.17¥30.41$0.2

Net income:Diluted

24.09

-

13.81

67.14

27.51

-

Net income:Cash dividends

10.00

10.00

10.00

10.00

8.50

0.1

Number of employees (Persons)

2,383

2,369

2,367

2,360

2,330

Notes:
1. Net sales are presented exclusive of consumption taxes.
2. Net income per share is computed by dividing income available to shareholders of common stock by the weighted-average number of shares of common stock
outstanding during the respective years.
3. Diluted net income per share for 2013 is not written because no dilutive shares exist.
4. Each fiscal year end date is March 31.
5. The U.S. dollar amounts above represent translations of yen, for convenience only, at the rate of ¥100=U.S.$1.

AICHI STEEL REPORT

38

Finance

Consolidated Balance Sheets

Consolidated Balance Sheets

As of March 31, 2014 and 2013

As of March 31, 2014 and 2013
Thousands of U.S. Dollars

Millions of Yen
Mar. 2014

Mar. 2013

Mar. 2014

Mar. 2013

Mar. 2014

Liabilities

Current assets:
Cash and deposit¥36,194¥33,909$361,940

Notes and accounts receivable

48,08046,605

480,799

Current liabilities:
Notes and accounts payable

155

185

1,548

Short-term borrowings

Finished goods

7,048

6,755

70,475Current portion of long-term debt

Work in process

19,682

18,341

196,821

Lease obligations¥25,852¥27,323$258,518

1,522

1,723

15,217

11,551

980

115,513

68

60

680

2,339

1,388

23,391

175

177

1,750

Raw materials and supplies

8,875

8,328

88,746

Income taxes payable

Deferred tax assets

3,735

3,849

37,353

Accrued bonuses for directors and corporate auditors

Other assets

2,305

1,806

23,055

Other liabilities

13,023

12,560130,236

Total current liabilities

54,53044,211

545,305

38,97348,541

389,734

151

140

1,508

2,389

25

23,887-

10,987-

12,733-

127,328Retirement benefit obligation for directors and corporate auditors

805

1,106

8,053

Asset retirement obligations

648

653

6,484

Less: allowance for doubtful receivables
Total current assets

(161)

(117)

(1,610)125,913

119,661

1,259,127

Fixed Assets:
Building and structures

64,85962,482648,584

Less: accumulated depreciation(44,901)(43,029)(449,011)

Machinery, equipment and vehicles

273,244

264,4112,732,442(230,227)(221,239)(2,302,267)

Equipment

12,82912,676

128,292

Less: accumulated depreciation(11,383)(11,249)(113,827)

14,12014,261

141,194

374

324

3,743

Less: accumulated depreciation

(167)

(134)

(1,667)

Construction in progress

7,093

5,115

70,93185,841

83,618858,414

Less: accumulated depreciation

Land
Lease assets

Net property, plant and equipment

Long-term liabilities:
Long-term debt
Lease obligations

Property, plant and equipment:

Intangible fixed assets:

Deferred tax liabilities
Employees’ retirement benefit liabilities
Net defined benefit liability

Other liabilities
Total long-term liabilities
Total liabilities

Authorized: 476,000,000 shares;

12

123
2,503

Total intangible fixed assets

262

234

2,626

20,46718,286204,673

536

702

5,360

-

14,335-Net unrealized gains on available-for-sale securities, net of tax

21,149-211,486

Foreign currency translation adjustments

Deferred tax assets

366

658

3,656

Other assets

786

760

7,862

Less: allowance for doubtful receivables

(61)

(89)

(611)

Prepaid pension cost
Net defined benefit asset

105,729

1,102,941

25,01725,017250,168

Capital surplus

27,89927,899278,988

Retained earnings

74,49470,987

744,943

treasury stock(1,321)(1,462)(13,212)

126,089

122,441

1,260,887

6,881

5,501

68,813

1,149(1,619)11,489Remeasurements of defined benefit plans

3,473

-

34,731

Total valuation and translation adjustments

11,503

3,882

115,033

77

169

766

2,189,898 shares in 2014 and 2,423,114 shares in 2013

Total investments and other assets

43,24334,652432,426

Total fixed assets

129,346

118,504

1,293,466¥255,259¥238,165$2,552,593

Total Assets

110,294

Issued:198,866,751 shares in 2014 and 2013

222

Long-term loans

642
557,636

Common stock, no par value

12

Investment securities

66
61,518

Shareholders’ equity:

250

Investments and other assets:

65
55,764

Net Assets

Other assets

Telephone rights

39

Mar. 2014
Liabilities and Net Assets

AssetsShort-term investments

Thousands of U.S. Dollars

Millions of Yen

Total shareholders’ equity
Valuation and translation adjustments

Subscription rights to shares
Minority interests in subsidiaries
Total Net assets
Total Liabilities and Net assets

7,296

5,944

72,966

144,965

132,436

1,449,652¥255,259¥238,165$2,552,593

AICHI STEEL REPORT

40

Finance

Consolidated Statements of Income andConsolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets

For the Years Ended March 31, 2014 and 2013(Consolidated Statements of Income)For the Years Ended March 31, 2014 and 2013

Mar. 2014¥237,421
207,243
30,178Mar. 2013¥217,279
189,735
27,544

Thousands of U.S. Dollars
Mar. 2014$2,374,209
2,072,427
301,782

2,605
1,323
7,432
478
178
103
42
436
2,914
5,040
20,551
9,627

2,911
834
6,978
518
177
292
5
508
3,598
4,391
20,212
7,332

26,054
13,23474,316
4,777
1,784
1,035
422
4,356
29,13950,391
205,508
96,274

112
363
105
358
507
1,445

104
293
256
803
360
1,816

1,116
3,633
1,048
3,577
5,074
14,448

684
323
61
194
1,262
9,810

618
271
116
214
1,219
7,929

6,842
3,225
612
1,940
12,61998,103

Millions of Yen
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freight expenses
Sales commission
Salaries and allowances and welfare expenses
Retirement benefit expenses
Provision of allowance for directors’ bonuses
Provision of allowance for directors’ retirement benefits
Provision of allowance for doubtful receivables
Depreciation
Research and development expenses
OthersTotal selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividend income
Gain on sales of goods
Foreign exchange gain
OthersTotal non-operating income
Non-operating expenses:
Interest expenses
Loss on disposal of property, plant and equipment, net
Loss on valuation of derivatives
OthersTotal non-operating expenses
Ordinary income
Extraordinary expenses:
Impairment loss on fixed assets
Total extraordinary expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred
Total income taxes
Minority interests in net income of subsidiaries
Net income

31
31
9,779

160
160
7,769

312
312
97,791

3,400
217
3,617
659
5,503

2,469
(79)
2,390
480
4,899

34,0042,165
36,1696,591
55,031
U.S. Dollars
2014

(yen)
Per share
Net income
Basic
DilutedCash dividends

2014

2013

¥27.9927.98
10.00¥24.94
10.00

$0.3
0.1

For the Years Ended March 31, 2014 and 2013(Consolidated Statements of Comprehensive Income)Mar. 2014¥6,162Mar. 2013¥5,379Thousands of U.S. Dollars
Mar. 2014$61,622

1,383
3,520
4,903
11,065

1,020
1,966
2,986
8,365

13,82535,19849,023
110,645

9,651
1,414

7,502
863

96,512
14,133

Millions of Yen
Net income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total of other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

41

Thousands of U.S. Dollars

Millions of Yen
Mar. 2014

Mar. 2013

Mar. 2014

Balance at the beginning of year

¥25,017¥25,017$250,168

Balance at the end of year

25,01725,017250,168

Shareholders’ equity
Common stock

Capital surplus
Balance at the beginning of year

27,89927,899278,988

Balance at the end of year

27,89927,899278,988

70,98768,053709,875

Cash dividends(1,965)(1,965)(19,654)

Net income for the year

5,503

4,899

55,031

(31)

-

(309)

3,507

2,934

35,06874,49470,987

744,943(1,462)(1,462)(14,621)

Purchase of treasury stock and fractional shares

(1)

(0)

(9)

Disposal of treasury stock due to exercise of stock options

142

-

1,418

Total changes of items during the period

141

(0)

1,409

(1,321)(1,462)(13,212)

122,441

119,507

1,224,410

Cash dividends(1,965)(1,965)(19,654)

Net income for the year

Retained earnings
Balance at the beginning of year
Change of items during the period

Disposal of treasury stock due to exercise of stock options
Total changes of items during the period
Balance at the end of year
Treasury stock
Balance at the beginning of year
Change of items during the period

Balance at the end of year
Total shareholders’ equity
Balance at the beginning of year
Change of items during the period

5,503

4,899

55,031

Purchase of treasury stock and fractional shares

(1)

(0)

(9)

Disposal of treasury stock due to exercise of stock options

111

-

1,109

3,648

2,934

36,477¥126,089¥122,441$1,260,887

Total changes of items during the period
Balance at the end of year

AICHI STEEL REPORT

42

Finance

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

For the Years Ended March 31, 2014 and 2013

For the Years Ended March 31, 2014 and 2013
Thousands of U.S. Dollars

Millions of Yen
Mar. 2014

Mar. 2013

Mar. 2014

Net unrealized gains on available-for-sale securities, net of tax¥5,501¥4,485$55,014

Net changes of items other than shareholders’ equity

1,380

1,016

13,799Total changes of items during the period

1,380

1,016

13,799Balance at the end of year

6,881

5,501

68,813Foreign currency translation adjustments(1,619)(3,206)(16,194)

Net changes of items other than shareholders’ equity

2,768

1,587

27,683

Total changes of items during the period

2,768

1,587

27,683

1,149(1,619)11,489---Net changes of items other than shareholders’ equity

3,473

-

34,371

Total changes of items during the period

3,473

-

34,371

3,473-

34,371

Change of items during the period

Balance at the end of year
Remeasurements of defined benefit plans
Balance at the beginning of year
Change of items during the period

Balance at the end of year
Total accumulated other comprehensive income
Balance at the beginning of year

3,882

1,279

38,820Change of items during the period¥7,769$97,791

12,355

12,840123,550

31

160

312

Decrease (increase) of prepaid pension cost

-

(26)

-

Increase of employees’ retirement benefit obligation

-

407

-

Increase (decrease) of allowance for doubtful receivables

10

(7)

98
(2,082)

Decrease (increase) in net defined benefit asset

(208)

-

Increase (decrease) in net defined benefit liability

444

-

4,444

Interest and dividend income

(475)

(397)

(4,749)Interest expense

684

618

6,842

Foreign exchange (gain) loss

(265)

(519)

(2,653)

Loss (gain) on sale of property, plant and equipment, net

(25)

(68)

(245)

Loss (gain) on disposal of property, plant and equipment

298

143

2,975

(368)

9,946

(3,679)Inventories(1,060)

3,067(10,600)

Notes and accounts payable(23,551)

Notes and accounts receivable(2,355)(1,813)

Other, net

(948)

(906)

(9,479)Subtotal

17,897

31,214

178,974

475

397

4,752

(684)

(689)

(6,845)

Income taxes paid

(2,696)(3,164)(26,957)

Net cash provided by operating activities

14,992

27,758

149,924

Interest and dividend received
Interest paid

2,603

76,213

Total changes of items during the period

7,621

2,603

76,213Net decrease (increase) in time deposits

11,503

3,882

115,033

Payments for purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

169

177

1,686

Payments for purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment securities

Subscription rights to shares
Change of items during the period
Net changes of items other than shareholders’ equity

(92)

(8)

(920)

Total changes of items during the period

(92)

(8)

(920)

77

169

766

5,944

5,149

59,446

Net changes of items other than shareholders’ equity

1,352

795

13,520Total changes of items during the period

1,352

795

13,520

7,296

5,944

72,966

Balance at the end of year
Minority interests in subsidiaries
Balance at the beginning of year
Change of items during the period

Balance at the end of year
Total net assets
Balance at the beginning of year

132,436

126,112

1,324,362

Change of items during the period
Cash dividends
Net income for the year
Purchase of treasury stock and fractional shares(1,965)(1,965)(19,654)

5,503

4,899

55,031

(1)

(0)

(9)

Cash flows from investing activities:
(36)

(20)

(363)

(12,209)(9,519)(122,090)

311

290

3,108

(75)

(2,857)

(745)

-

14

-

-

100

-

(4)

(6)

(41)

Collections of loans

170

122

1,703

Other, net

(150)

9

(1,506)(11,993)(11,867)(119,934)(3,861)

Payments for loans receivable

Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings

(386)

(54)

Proceeds from long-term debt

1,583

7,000

15,830

Repayments of long-term debt

(1,112)(15,060)(11,124)

(65)

(64)

(647)

Proceeds from minority shareholders of subsidiary

74

-

744

Proceeds from exercise of stock options

89

-

887

(1,966)(1,964)(19,662)

(122)

(52)

(1,220)

(6)

(5)

(61)

(1,911)(10,199)(19,114)
11,273

Payments for refund of lease obligations

Cash dividends paid
Cash dividends paid to minority shareholders
OthersNet cash used in financing activities

Disposal of treasury stock due to exercise of stock options

111

-

1,109

Effect of exchange rate changes on cash and cash equivalents

1,127

950

Net changes of items other than shareholders’ equity

8,881

3,390

88,813Net decrease in cash and cash equivalents

2,215

6,642

22,149Total changes of items during the period

12,5296,324

125,290

Cash and cash equivalents at beginning of year

33,82027,178338,201¥144,965¥132,436$1,449,652

Cash and cash equivalents at end of year

¥36,035¥33,820$360,350

Balance at the end of year43

¥9,7797,621

Balance at the beginning of year

Mar. 2014

Income before income taxes and minority interests

Net changes of items other than shareholders’ equity
Balance at the end of year

Mar. 2013

Adjustments for depreciation
Adjustments for impairment loss on fixed assets

Change of items during the period

Balance at the beginning of year

Mar. 2014
Cash flows from operating activities:

Accumulated other comprehensive income
Balance at the beginning of year

Thousands of U.S. Dollars

Millions of Yen

AICHI STEEL REPORT

44Third-Party View

The report for this fiscal year emphasizes the Company's stanceof once again asking itself what the value of its existence is under
Vision 2020. As stated in the TOP Interview, "For a company togrow sustainably, it needs to be willing to solve social challenges
through active communication with society," the report is writtenwith strong consciousness for the company's social value.
Clear management policy based on Vision 2020 (pp. 3-6)
Aichi Steel's vision is to become a "Company of Choice Globally," and clearly
express its corporate value, a value that sees Aichi Steel Group delivering

Mr. Satoshi Chikami

Professor, Faculty ofInternational Welfare Development
Nihon Fukushi University

conditions for women and senior employees, as well as promoting theemployment of the disabled, can be evaluated highly.

reassurance to the world. Under the policy for its "integrated forging andEnvironmental Action Plan 2015 (p. 29)

steelmaking system," from development to production, the company delivers

Of items targeted in the Environmental Action Plan 2015 with "contribution

products to ASEAN and global markets. The mission also emphasizes Aichi

to the sustainable progress of society and the Earth" as its basic concept, theSteel's effort for global collaboration and cooperation, including personnel

biggest achievement seen is reduction of landfill volume brought about by

training, to strengthen the value of its existence in society.

regulations in 2013 that placed restrictions on fluorine-containing slag, apollutant which has shown a significant increase over the past years, to zero

Furthermore, 1S Culture is positioned as a value to be shared among all employees

for the first time since 2007. Continuing from the previous year, CO2

and its further promotion is an important principle theme for CSR management.

emissions per export volume were below the target level, which indicatesthat the overall plan is moving along well. Social contribution is considered

Social responsibility as an environment circulating industry (pp. 7-8)
From the perspective of consumers, products delivered by Aichi Steel are notseen as being directly connected to their lives. Special content pages show
how products are used and how they are a part of life in the city.
Clarifying social responsibility while creating value for its products andvisualizing the multiplexing and multitier involvement of the company ina part of environmental management, and the company's active measuresfor environmental communication can be evaluated highly.
On the other hand, green procurement, environmental load control byproduct and global CO2 management through a tie-up with business
partners still require improvement. Particularly in the area of global CO2
management, the difficulty is understandable due to different laws insociety can be assessed as important activities.

different countries, but it is disappointing that the 2013 report approach is

Evaluation of the Medium-Term CSR Plan (p. 14)

although the issue related to electricity use at overseas offices had already

Similar to the previous fiscal year, activities undertaken, methods employed,targets, results, and evaluation based on CSR Vision 2015 are well-organizedand presented in an explicit manner. Targets have been reached for mostitems; however, some items show lower performance compared to fiscal
2012. I expect that these will be analyzed and improvements planned so"Continue review including substitute measures for actual measurements,"
been pointed out in the 2012 Report. Aichi Steel's efforts to achieve target
levels for all items should continue.

Conclusion
Next year marks the 75th anniversary of the establishment of Aichi Steel.

that these challenges can be overcome in the next financial term.

Recently, CSV (Creating Shared Value) is being seen as an important activity,

Content with consciousness of diversity(pp. 19-22)

problems through their products and services, which will strengthen their"Human Rights and Working Practices" are issues that have come increasingly
into focus. Here, respecting human rights corresponding to global management and personnel development are clearly noted. Efforts for diversity havethe idea that corporations should contribute to solutions for local and global
business foundation and fulfill social responsibility. From this perspective, I
hope to see relevant active corporate activities into the next generation
through the continuous reevaluation of its business activities and its employees participation in volunteer activities.

been strengthened, particularly through our support for improved working*This Third-Party View is based on interviews with relevant parties.

Response to the Third-Party View
I would like to express my appreciation to Professor Chikami of
Nihon Fukushi University for providing us with valuable comments
since fiscal 2010. His comments and suggestions regarding thepromotion of strategic CSR management, our involvement withsociety, measures for diversity and environmental management
are considered valuable in moving forward with CSR activity.
Ichiro Murakami
Executive Officer andGeneral Manager,
General Affairs Div.

45

In regard to his evaluation of "Vision 2020," "Social responsibility as
an environment circulating industry," "Diversity measures," and"Environmental Action Plan 2015," we will continue to improve ourmeasures and activities. His comments on "Green procurement,""Environmental load control," and "Global CO2 management" will
be shared among all departments, and measures that can betaken company-wide will be considered. The entire Aichi SteelGroup will move toward the goal of becoming a "Company of
Choice Globally" and the entire company will move forward with
CSR activities, strengthening CSV (Creating Shared Value) with theaim of becoming a global company as we continue to improvestakeholder trust.