INTEGRATED REPORT 2021

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

will strive to make positive contributions to society by providing
Our Vision We
appealing products from global perspectives and based on our vibrantand trustworthy corporate qualities.

1

2 and the pursuit of excellence.

We will pull together culture based on trust, reliability

3

About the Cover

We will strive to make a positive contribution to society
with safe, appealing, and useful technology and products.

We will be a good corporate citizen, ever mindfulof our environmental responsibilities.

This report uses colors representing theelements of ESG while expressing thesteady progress of activities for each anddemonstrating a management approachthat focuses on steady growth to achieve
the Aichi Steel Vision 2030.

CONTENTS
23

Vision for Aichi SteelPhilosophy System

Our
経営
Vision
理念
MissionA great society comes fromgreat materials.

Vision 2030

01

Our Vision/Editorial Policy

03

Message of Commitment
from the President

Hagane Company

27

Stainless Steel Company

Growth Strategies

29

Kitaeru Company

09

Business Environment Changes

31

Smart Company

11

Initiatives to Realize
Vision 2030
(Medium-term Management
Plan and Aichi Steel Priority
Issues)33

S Priority Issue 4

13

Aichi Steel Group Action Guidelines

Suppliers

Declaration on Labor-Management Cooperation

Customers

Employees

Create a prosperous society
through business reform andprovide extremely competitive
products

25

Company of Choice Globally

Shareholders
andInvestors

Strengthen Relationships
with Local Communities,
and Actively Contributeto Society

35

Aichi Steel GroupFY2021–23 Medium-term Management Plan

15

17

Strengthen Corporate Sustainability

Financial/
Non-financial Data

E Priority Issue 1
Contribute to a sustainableglobal environment

Brand Slogan
In March 2020, we created our brand slogan. This is our declaration tosociety that we intend to become a company that expands thepossibilities of manufacturing by adding value to materials, as thestarting point, to evolve them into products and systems.
The orange dots in the logo symbolize our commitment to using materials
to support the future.

21

G Priority Issue 5
Increase Compliance Awareness Globally, andMessage from the Finance Director

Initiatives and Systems as
the Foundation for Growth

The EarthandSociety

S Priority Issue 3

43

Key Financial Data

45

Financial/Non-financial Highlights

Value Creation

S Priority Issue 2
Encourage the creation of workplaces that aresafe and comfortable to improve employee
happiness

47

DNA of Aichi Steel

49

Aichi Steel Today

51

Value Creation Model

Brand website (Japanese only)

Reporting Media

Readers

Information Available on Our Website

The Aichi Steel Integrated Report 2021 follows an integrated
reporting format that combines financial and non-financial
information, and presents fiscal 2020 initiatives along with specificexamples, to increase understanding of the Aichi Steel Group among
our stakeholders.
The report primarily aims to inform, in an easy-to-understandmanner, our initiatives toward creating medium- to long-term
corporate value as we implement ESG*1 management and contributeto the SDGs*2 in the middle of a rapidly changing businessenvironment.
Use of color, volume of text, text size and other factors were taken
into consideration to create a more easily readable report.

Our reporting via print and the web takes advantages of thecharacteristics of each medium. The print version narrows down
the content to those items of significant importance and those of
greatest interest to the public, presented in an easy-to-read andeasy-to-understand format. The web version offers a more
complete overview of our ESG initiatives.

This Report is mainly intended for our shareholders andinvestors, customers, suppliers, other business partners,
affiliated companies and our employees.

Website01

Completeoverview*1 ESG: Environmental, social and governance*2 SDGs: Sustainable Development Goals

Selected
topics

Editorial Policy

Aichi Steel Integrated Report(this report)

WebsiteImportance to Aichi Steel Group and stakeholders

Report Period and Scope
The Report covers activities conducted by the Aichi SteelGroup during fiscal 2020 (April 2020 to March 2021).
However, some activities conducted before or after fiscal
2020 are also explained where necessary.
Reference Guidelines• GRI Standards• International Integrated Reporting Framework(published by IIRC)• ISO 26000 (Guidance on social responsibility)

For topics with the “Web” mark, please refer to our website
for further details including figures.

https://www.aichi-steel.co.jp/ENGLISH/csr/csr_report/index.html
Please use the web survey to provide feedback (opinions andrequests) on this Integrated Report (Japanese only).
https://forms.office.com/r/JD78kfS35V
QR code link to form:[Important note about forecasts]
The financial results forecasts in this report are based on judgments andassumptions from currently available information. Actual business results may
differ greatly from targets, in light of their inherent uncertainty and the potentialof revision due to future business operation or changes to information inside oroutside the company.

AICHI STEEL INTEGRATED REPORT 2021

02

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

For an Earth, Society
and Company
that Continue toSurvive and Prosper
Message of Commitment
from the President

President

Takahiro Fujioka■ Looking Back at FY2020
Aichi Steel celebrated its 80th anniversary in 2020. In the

COVID-19 headquarters and support center, and expand

words of Kiichiro Toyoda, who started a business that led

the use of teleworking, we were able to create an

to establishment of our company, “Great cars are madeenvironment for business continuity without loss ofwith great steel.” Based on this belief, while still in the

productivity while maintaining safety. We have organized

early years of the automotive industry, we set out on the

our lessons from the pandemic into five themes to create auncharted path of manufacturing specialty steels for“new business style” that we are incorporating into our new

automobiles.

Medium-term Management Plan and workstyle reform.

What we have inherited from 80 years ago is the DNA of“a sense of purpose for the future” and “willingness toDuring fiscal 2020, COVID-19 created an extremely

pioneer new frontiers.” Over the 11 years since I became

difficult business environment, resulting in dramaticpresident, the whole of society, as well as the steel andreductions in sales volumes and increased prices forautomotive industries, have faced a time of tremendous

scrap metal, our main raw material. Production fell bychange. We have experienced a series of ordeals, including

30% and operating profits were 2.7 billion yen in the red

the explosion at our Chita Plant on January 8, 2016, which

during the first half of the year. However, with a recovery

we must never forget, but have still managed to transformof demand and the strengthening of Genryou Management

the strength of individuals into a strong organization while(managing with limited order quantity) in the second half,achieving steady growth*1 over this time. Thanks to thewe were in the black again after absorbing our first half

January 8 accident, we were able to apply the knowledge

losses and rapid rises in the cost of raw materials togained and systems developed in our response toachieve full-year net sales of 204.9 billion yen, operating

COVID-19 in fiscal 2020.

profits of 3.5 billion yen, and profit attributable to owners

With prompt management decisions to establish a03of the parent company of 3.0 billion yen.

AICHI STEEL INTEGRATED REPORT 2021

04

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Message of Commitment from the President

With the pervasive sense of despair surrounding theexpenses, and consolidating our equipment*2, each of ourpandemic, I felt that we needed to commit to a positive

companies committed themselves to their implementation.

financial result in order to maintain and improve employee

It is important to maintain these practices as they provide

morale. While we were unable to control the external

fertile soil for maximizing profits when sales volumes finallyenvironment, including demand and the price of raw

recover. This time, we have seen positive results and I alsomaterials, we were determined to implement Genryou

feel that these efforts have had a positive impact onManagement, which was something we could do as aemployee motivation as well. For Aichi Steel, as the price ofcompany. Genryou Management means building structures

raw materials has a significant impact on profits, we willthat are profitable even with small production volumes bycontinue to focus on implementing Genryou Management

lowering costs and break-even points, and maintaining

to become a company that remains profitable throughthose levels. Although our activities were only modest, suchproduction systems that are resilient to change.

■ Confronting a Dramatically
Changing Business Environment
In establishing a range of frameworks and clarifying the core philosophy andframework of Aichi Steel, we now understand where we need to be headed
as an organization. This means using CASE technologies, carbon neutrality,and digital transformation (DX) to strengthen the company’s foundations andaccelerate implementation of more essential initiatives.

CASE (connected, autonomous, shared & services, and electric)

as determining and carefully managing fixed and variable

To survive the once-in-a-century transition that the automotive industry is*1 Steady growth: Growth that is ongoing, even little by little, like the rings of a tree that continue to be formed regardless of environmental change*2 Consolidating equipment: Aggregation of multiple production lines and equipment, and effective use of excess equipment, line space and labor,

undergoing, we have to offer products that contribute toward the A(autonomous driving) and E (electric) elements of CASE technologies. Goingforward, we will continue to accelerate our existing initiatives while driving

to improve utilization rates

GMPS autonomous driving support systemfurther reinforcement and implementation.

Carbon neutrality
The Japanese government’s Carbon Neutral by 2050 initiative will have a■ Formulating Vision 2030 for the Aichi Steel Groupsignificant impact on companies like Aichi Steel that are heavy users ofelectric energy. However, because this is a core mission for us, we believe that

On top of the pandemic, society is currently undergoing a

2018 as a set of universal values and codes for everyone inparadigm shift based on ideas such as sustainability andthe Aichi Steel Group to follow, and our brand slogan and

SDGs. For us to continue achieving steady growth in thisDeclaration on Labor-Management Cooperation, reinforcing

environment, we have to respond to social changes from aunity between workers and managers, that we establishedlong-term perspective. To achieve this goal, it is essential

in 2020. While facing an uncertain future, we have alsothat Aichi Steel has a core philosophy and framework.

established

Vision

2030

in

line

with

our

renewedFor this reason, we have formulated wide-ranging

understanding of the need to work backward from an ideal

frameworks that include the in-house company system that

future and incorporate ESG management into our business

we introduced in 2017, the Aichi Way that we formulated ininitiatives.

it also offers opportunities for our company, despite the difficulties it brings,
such as considerable increases in energy and development costs. Whilecollaborating with the government, other industries and competitor
companies, we have established a task force, which I am leading, that aims
to reduce CO2 emissions by 35% by 2030 (compared to 2013 levels) andwork toward carbon neutrality by 2050.
To achieve these targets, we will develop innovative technologies for reducing
CO2 emissions while maintaining focus on full implementation of initiatives wehave been conducting in the past and initiatives we can conduct now. If eachorganization determines how to reduce energy consumption in each and every
process of their production activities, and how to develop energy-saving
technologies, and then establishes targets that they put into practice, then it will

Vision 2030: Company of Choice Globally
Basic Policy
Management
Guidelines

Enhance earnings capacity by reforming business and manufacturing
capabilities while putting ESG management into practice(1) Contribution to a sustainable global environment(2) Creation of a prosperous society through business reform(3) Employee happiness and corporate development

demonstrate the likelihood of success and encourage employees to move
forward. I am confident that the unique Kaizen capabilities developed over theyears by the Toyota Group can be applied to decarbonization as well. By
expanding our capabilities, used in the past to overcome many ordeals, with asense of urgency, we will work on achieving carbon neutrality going forward.

Digital transformation (DX)Electric furnace exhaust heat recovery
system completed in 2020

Digital transformation has the power to improve the quality of information andincrease the speed of management. It will help our businesses reform andsupport the “creation of a prosperous society through business reform,” which
is a management guideline in Vision 2030. In April 2021, we established a

Smart factories

cross-company organization with leaders assigned to each of the five themes
to clarify directions and deadlines. Initiatives have been launched to create a
Clarifying directions for the company will change thecollaborated on activities to promote greater understanding

resilient framework for manufacturing and developing talent. The reason thatperspective of employees and lead to forward-looking

and penetration of the vision among all group employees. In

we chose the cross-company format was to maintain a bird’s eye view of thedecisions about business and investment options rather

just over a year since it was formulated, there has been a

initiatives. Tasks that concern the company as a whole are connected because

than being short-sighted. With Vision 2030 launching invisible change in employee awareness, and we are starting

departments and organizations cannot complete them on their own. They

fiscal 2020, each in-house company and headquarters has

to see the results in their thinking, words, and decisions.

have to understand the whole picture, including how the different things they
have to do are connected, and what they ultimately want to achieve.
Under this organization, we will work to digitize data on tasks that
previously relied on skills, intuition and tacit knowledge, and streamline
partially optimized data from each process to create explicit knowledge. This

05

Manufacturing reformE.g., Creating explicit
knowledge from tacitknowledge

Digital solutions

E.g., Consistency of data

Five DX
ThemesE.g., Dramatically increased
speed of R&D

Workstyle reformE.g., Development of IT talentGroup IT governanceE.g., Improved IT literacy amonggroup companies

AICHI STEEL INTEGRATED REPORT 2021

06

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Message of Commitment from the President

will not only lead to faster management decisions but willwhether the methods we are using to get there areon roles instead of titles, while bringing all management

also improve intellectual productivity as well to improve

appropriate. I believe the proper course of action in a

into one structure that we have simplified by reducing ranks

employee motivation.

changing environment is to start afresh and proceed fromand numbers. Under this new structure, I want to focus on

there, so Vision 2030 will not remain unchanged. This is

the above four key points to help realize the new plan.

In the middle of a business environment that continues torapidly change, I realize that I must take command by

because it is important at this time to move quickly butwith an eye on the future.

demonstrating directions for the company and thenRefer to pp. 9-10 for details.

determining whether we are going in the right direction or■ Positioning and Key Points

Measures under the new Medium-term Management Plan will

About the New Medium-term Management Plan

Under the “contribution

Medium-term(defect-free process completion) approach, which are two
ongoing initiatives for creating underlying strengths for theplan under Vision 2030, as a concrete demonstration of thecompany. In terms of Genryou Management, we willpriority issues and roadmap for the first three years ofcontinue to maintain profitability with resilience to upward

initiatives to realize Vision 2030. With detailed informationand downward movements in response to change, and toon what each of us should be doing in our daily jobs, theachieve this we will ensure implementation of companywide

plan enables all employees to share the same directions andefforts toward building a stronger company.

April

2021,

we

launchedanewmove forward to bring Vision 2030 to fruition.

“Jikotei Kanketsu” is an overall approach to good work

It is clear that a vision cannot be realized if only supported

practices, rather than a localized approach, that clarifies theby management, and it is more important for 100 people towork that each of us should be doing. Through thistake one step forward, than for one person to take 100

approach, employees review and continually improve theirsteps, so that we all advance as one. The idea of the newown work to enable downstream employees to smoothly

Medium-term Management Plan is that every employee

complete their tasks without defects. In other words, themust be able to feel themselves moving slowly but surely

basic approach is to have confidence and pride in your own

forward over the three years of the plan. For this reason, I am

work no matter what that work may be, whether attaking the lead myself to disseminate information throughHeadquarters or elsewhere, not just at production facilities.

channels such as the internal newsletter, where I can speak

Since 2018, we have been conducting “Jikotei Kanketsu”

my mind, in order to promote further understanding andtraining for employees promoted to team leader positions,penetration of the plan within the company.

and we have been developing environments that enable

There are four key points to the new plan that I want to

instruction and practice of this approach in the workplace.

focus on. The first is putting “ambidextrous management”

We also continue to develop educational curricula, such as

into practice. It is only a matter of time before our steel andproblem solving and the Toyota Production System (TPS),

forging businesses start to decline if we do nothing, which isand through such efforts to develop our employees, we will

why we have to create products that add value and maintainimprove the strength of our organization by improving the

profitability. On the other hand, in the areas of stainless steel

individual capabilities of each of our employees.

and smart technologies, there are opportunities to create

The fourth key point is incorporating a new business style

new businesses. This is why, under the new plan, we will put

into our new Medium-term Management Plan with the aim

ambidextrous management into practice to both maintainof using the lessons of COVID-19 to achieve growth for theand expand profitability.

company. The new business style comprises (1) safe and

The second key point is establishing specific three-year07

embody the three management guidelines of Vision 2030.

Management Plan to run for three years. This is an action

In■ Overview of the New
Medium-termManagement Plan

reassuring work environments, (2) contribution to alltargets for carbon neutrality, CASE technologies and digitalstakeholders,transformation, and ensuring steady implementation ofdevelopment of autonomous human resources, and (5)systems to promote them. We will create a solid foundation

promotion of cost reductions in line with the TPS. I want toover this time to support initiatives for realizing our vision forrespond properly to the many different social and attitudinalfiscal 2024 and beyond. Designated in April 2021 as a Digitalchanges that the pandemic has brought.

(3)

enhanced

work

life

balance(4)

Transformation Certified Company by Japan’s Ministry of

As one of the ways that we will achieve these goals, we

Economy, Trade and Industry, we will continue to enhance

have completely reformed our executive management

these initiatives going forward.

structure. To achieve faster decision-making and speedier

The third key point is putting Genryou Management intobusiness execution that can meet drastic changes in thepractice and thoroughly implementing our “Jikotei Kanketsu”

business environment, we have revised the format to focus

toasustainableglobalenvironment” guideline, we will develop and improve
innovative technologies toward carbon neutrality from the 4R
perspective of reduce, reuse, recycle, and renewable. I am
leading the Task Force for Promoting Carbon Neutrality where
we are implementing companywide initiatives under the threebusinesses, and accelerate development in next-generation

pillars of eco-management, eco-energy, and eco-production.

areas such as CASE technologies. Finally, we will pursue

The task force comprises six subcommittees in the areas ofthese efforts through the “employee happiness andplanning, technology innovation, energy conservation, process

corporate development” guideline as we continue buildingreforming, environmental conservation, and eco-products.

environments where diverse human resources can play

Under the “creation of a prosperous society throughbusiness reform” guideline, we will accelerate the creationofvalue-added

products

byreforming

ouractive roles and where our employees can work with vigor
and enthusiasm.

existing

Refer to pp. 13-14 and pp. 25-32 for details.

■ The Challenge for Survival in the Futuretheraise “Survival” as my thesis (an assertion of intent). By

determination to produce steel from scratch. This highformulating, sharing, and continually implementing a clear

aspiration, and innovation and creativity, are our DNA andframework, we have been able to learn from our many past

our strengths, which have been passed down to us asdifficulties, including the January 8 accident. I feel that we

assets. In the Aichi Way, we have embodied them in thehave acquired considerable experience and knowledge,

form of action guidelines. As the only materials company

and as a result have dramatically improved our ability towithin the Toyota Group, we have an obligation to supply

survive. But this ability to survive is really “the power ofhigh quality, low cost products to contribute to the growth

people.” Going forward, I will continue focusing onof the group. As such, we have applied this awareness anddeveloping human resources and, as per part of ourpractice to create specialty steel technologies that produce

company vision, create a corporate culture where every

high quality products. Contributing to the businesses of all

employee has a sense of “making a positive contribution to

our customers, these technologies are appreciated not only

society”

by the Toyota Group but by other companies as well.

responding to any change in the business environment with

Aichi

Steel

is

a

companythatstartedfromWithin the steel industry of Japan, specialty steels are

a

while

creating

forward-looking,ancan-dounderlying

attitude.

strength

Changes

in

for
our

also considered to be the final stronghold against overseas

surrounding environment are intensifying, but we have tooffensives due to the outstanding quality and superior

work together to survive these difficult times. I aim to

productivity they provide, and their excellent technicalcontinue leading the way and taking the initiative so thatcapabilities and competitiveness based on proprietary

every employee can share the collective consciousness,know-how. From the social dimension, the steel industry is

and take on the challenges, of “Survival.”situated in an extremely difficult situation. However, Aichi
Steel is determined to tackle carbon neutrality and otherI have been given the responsibility of ensuring that Aichi

difficult challenges, and to raise its corporate value, as the

Steel continues to survive and develop as a company fordeveloper of specialty steels in Japan and as a company

decades to come, and that it remains a company of happy,

that underpins the growth of the Toyota Group.

smiling employees into the future, and I promise to do my

Because of these difficult times we live in, I would like tobest to achieve this goal.

AICHI STEEL INTEGRATED REPORT 2021

08

Vision for
Aichi Steel

Growth Strategies

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Interview

Business Environment Changes

Carbon Neutrality through Perseverance and Innovation

As the social environment continues to change at a dramatic pace, Aichi Steel needs to address a series of newchallenges, including CASE technologies and carbon neutrality. In addition to analyzing risks and opportunities
throughout society, we turn the spotlight onto carbon neutrality in this report as a particularly fast-changing topic
and introduce related initiatives and long-term strategies of our company.

Aichi Steel is a resource-recycling company, using steel scrap

Environmental
Analysis

Category

Changes in
the global
environment

Risks and Opportunities

Measures (Current)●Aichi Environmental Action Plan (renewed every five years)●Development and adoption of technologies to reduce CO2 emissions• Development and in-plant trials of heat storage system able to recoverexhaust heat from plants (2019)• Exhaust heat recovery system able to convert exhaust heat fromelectric furnaces into steam energy and use it (2020)●Response to carbon neutrality• Increasing burden of energy costs• Increasing burden associated with developing
innovative technologies and utilizing renewable energy• Increasing trust in companies working to achievecarbon neutrality• Increasing demand for eco-products• Improving competitiveness of technologies throughdevelopment of innovative technologies●Global warming●Biodiversity●Environmental preservation activities• Local and social contributions, including development of Nakashinden
green spaces and maintenance of biodiversity (from 2013)● Development of materials and products that can help
with updating of social infrastructure● Improved competitiveness of integrated forging
with steel making processes

Changes inexisting market
environments● Social infrastructure
lifespan● Iron and steel demand
trends● Rebuilding of social infrastructure● Growth of overseas manufacturers and structuralreform of iron and steel companies

Arrival of
the smartsociety● CASE (automobile
structural changes,
autonomous driving)● Digital transformation● Expansion of the EV market (expansion of demand formaterials and components for BEVs)● Reduction in use of specialty steels due to electrificationof vehicles● Expansion of markets for new technologies and materials● Development of materials and components for BEVs and FCEVs● Expansion of business into new fields● Improvement of productivity through digital transformation● Dwindling workforce due to declining birthrates● Driving workstyle reform● Impacts of pandemic on business● Enhancement of diversity● Improvement of work environments● Health promotion activities● Building of flexible production systems and promotion of diverse
workstyles

Changesin socialenvironment● Aging and diversity● Safety and health● Spread of new infectious
diseases

and addressing environmental issues in local communities. In

After establishing the Task Force for Promoting Carbon

addition to adopting new technologies for improving heat

Neutrality, led by the president with myself as general leader,

efficiency and recovering exhaust heat, we have continued

we commenced operations from June. Each subcommittee has aactivities to achieve harmony with nature under the plan,

leader and support officer assigned to promote specific topics inincluding installation of LED lighting and other efforts toa timely manner through speedy and reliable business decisions.

raw material in manufacturing. The Aichi Environmental Action

conserve energy, and creation of biotopes from Nakashinden

The CN Planning Subcommittee has an important role ingreen spaces. One important guideline for promoting ESG

determining overall directions with an added focus on the

management under Vision 2030 is “contribution to abusiness environment. With dramatic changes alreadysustainable global environment,” and I am proud of the way

occurring in the short time since the government launched

our company has surely and steadily implemented such

this initiative, it is important that we gather accurate andinitiatives over many years.

up-to-date information to set up the most appropriate

Last year, the government launched its Carbon Neutral by

response quickly. With the necessity of also moving ahead

2050 initiative, which represents a huge challenge for us

with a shared understanding of the targets, this subcommittee

because our existing initiatives and pace of implementation

is gathering information from a wide range of sources, not justalone will not be enough. To reach this target, we need asteel companies. In addition to individual efforts, use of

massive change of policy that does not just concern us but

renewable energy is essential, so it is also developing

includes the establishment of significant guidelines andcollaborative structures with energy companies.

Working to Achieve Carbon Neutrality

measures by the government, the cooperation of energy,

Through this task force, we will start by working to reducetransport and all other industries, and the development of

CO2 emissions by 35% by 2030 (compared to 2013 levels)

The Japanese government’s Carbon Neutral by 2050 initiative*, launched in 2021, will have an enormously significant operationalinnovative technologies. We perceive this situation as offering

while also investigating how to achieve carbon neutrality

new business opportunities rather than risks. We feel that it iseven earlier than 2050.

impact on manufacturers using electric furnaces like Aichi Steel, a heavy user of electric energy. This includes increases in thecost of energy and expenses associated with developing completely new technologies. Rather than wavering between whether
or not to adopt this initiative, we accepted carbon neutrality as a necessary challenge and focused on what we needed to do
to reach the target. We are now working hard to achieve carbon neutrality.
* The Japanese government first launched the Carbon Neutral by 2050 initiative in 2020, and revised its CO2 reduction target for 2030 upward to 46% in 2021.

New initiatives in progress: Establishment and operation of the Task Forcefor Promoting Carbon Neutrality
Within the Environmental Working Group, chaired by President Fujioka, we have been working on initiatives such as building a
low-carbon society, building a resource-recycling society, and preventing environment abnormalities. To enhance these activities, wehave reorganized and have commenced activities under three pillars. We have also designated two of our seven plants in Japan as“carbon neutral model plants” where we are taking the lead and implementing two initiatives: (1) Utilization of solar power to achieve
in-house power generation at Seki Plant, and (2) Promotion of CO2 reduction through use of renewable energy at Kariya Plant.

Organizational structure and roles
Top Management Meeting

Promotion office: Safety & Environmental Div.

3 pillars

Eco-management

6 subcommittees

CN Planning Subcommittee

Roles

Overall management ofever-changing datacollection andformulation of carbon
neutrality (CN) strategies

improvement activities in developing innovative technologies
and new products that anticipate future global needs.

This initiative will not produce results immediately. Rather, itOver the years since joining Aichi Steel, I have acquired

will be a long battle that we will persevere with in order tomost of my experience in the hot rolling mill at Chita Plant andrealize carbon neutrality by 2050 at the latest. This is why wein Production Engineering. I have worked as Plant Manager ofhave recruited many young people in their 20s and 30s as

Chita Plant, General Manager of Production Engineering

members of the task force, while building experience in ways

Headquarters, and Hagane Company President. As an

to drive these initiatives and developing talented people who

operator of electric furnaces and other heating furnaces thatwill ensure efforts continue until we reach carbon neutrality.

use large amounts of electric power and fuels, Aichi Steel is a

I understand that my role is to create the roadmap andheavy user of energy. Therefore, in working toward carbon

foundations to reach that goal, and then pass the reins to theneutrality, the increase in energy costs will be an unavoidable

younger generation as future leaders. I will strive to ensure

challenge for us. In the past, we faced many changes in the

Aichi Steel survives well into the future.

crisis and the current COVID-19 pandemic. At each of these

Safety & Environmental Div. Director Naohiro Yasunaga

times, we have worked together to confront the issue, grown

Corporate Planning Div. Executive Officer

stronger as a company, and overcome the difficulties. Going

Aichi Steel Group Environmental Committee

Eco-energy

Important long-term perspectives

shocks and appreciation of the yen to the global financial

Environmental ISO Review Committee (Heads of Each Site)

Corporate Planning Headquarters General Manager

important to utilize the know-how built up over many years ofsocial environment that were out of our control, from oil

Environmental Working Group(Chairman: Aichi Steel President)(Aichi Steel President, Executive Vice President,
General Managers, Company Presidents)

09

Plan sets out plans and targets for reducing CO2 emissions

Driving appropriate, timely and efficient
initiatives through the Task Force for
Promoting Carbon Neutrality

from automobile and infrastructure dismantling as our main

Eco-production

CN Technology
Innovation Subcommittee

CN Energy Conservation
Subcommittee

CN Process Reform
Subcommittee

Environmental Conservation
Subcommittee

Eco-products
Subcommittee

Development oftechnologies forrecovery and use of CO2(methanation, etc.)
and renewable energies

Plant-driven
improvement activities,
including energy
conservation, production
efficiency, and adoptionof the latest devices
and tools

Production
Engineering-driven
activities for reforming
Aichi Steel proprietary
technologies andlogistics operations,reforming and shortening
processes, and achieving
100% recycling of BEVs
and other automobiles

Social contribution
activities in collaboration
with local communities,
including fulfilling
environmental
responsibilities andutilizing Nakashinden
green spaces

Contribution toautomobile
lightweighting,development ornecessary materials for
BEVs and FCEVs,
management ofchemical substances in
products, etc.

forward,we

will

continueturningdifficulties

into

opportunities by developing innovative technologies that
demonstrate our leadership in the steel industry, developing
eco-products for the automotive industry, using solar power
and other renewable energies, reusing CO2 (methanation,etc.), and using hydrogen and ammonia. By driving these
innovative initiatives, we will contribute toward realizing agreen society.

Naohiro Yasunaga
Safety & Environmental Officer
Director and Managing Executive Officer
AICHI STEEL INTEGRATED REPORT 2021

10

Vision for
Aichi Steel

Growth Strategies

Initiatives to Realize Vision 2030
(Medium-term Management Planand Aichi Steel Priority Issues)

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Aichi Steel Priority Issues

Vision 2030 clarifies what we want to achieve by 2030, and it presents a basic policy to enhance earnings capacity by reforming
business and manufacturing while putting ESG management into practice. As a concrete plan and targets to realize this vision
in respect to the FY2021–23 Medium-term Management Plan formulated in May 2021 and the five priority issues of ESG
Management that we have been continually working on, we will strengthen the foundations of our company through digitaltransformation (DX) and accelerate initiatives, and use this to achieve steady growth.

E

Environmental

Priority issues

Components

Key performance indicator (KPIs)

1

Environmental responsibility

Volume of direct and indirect landfill waste

CO2 emission reductions

Breakdown of energy use (CO2 emissions)Contribute to asustainable global
environment

Applicable section

p. 46(Volume of direct andindirect landfill waste)

p. 19, p. 46(Total CO2 emissions)Harmony with nature

Status of efforts to preserve biodiversity(number of Nakashinden indicator species,
number of volunteer activities, etc.)

p. 20(Harmony with nature)Three Management Guidelines to Realize Vision 2030
Contribution to a sustainableglobal environment

2

1 Fulfill environmental responsibilities

Encourage thecreation of
workplaces that aresafe and comfortable
to improve employee
happiness

2 Contribute to a low-carbon society
3 Harmony with nature

Employee happinessand corporate development

Safe and reassuring work environments

Work-life balance enhancement

Autonomous human resources production

Existing business reform

environments

2 Enhance work life
human resources

Creation of a prosperous society
through business reform

Assistance and programs for supporting diverse
work styles, and their status of use

Status of efforts to improve employee productivity

p. 22(Frequency rate
and number of losttime accidents)

p. 21(Initiatives toward diversity)p. 22(Human resources development)

1 Safe and reassuring work

3 Produce autonomous

Status of facilities improvements based onsafety evaluations, status of safety measuresand efforts to strengthen safety awareness,and frequency of lost time accidents

S
Social

1 Reform existing business

3

Create a prosperous
society throughbusiness reform andprovide extremelycompetitive products

pp. 25-32

Initiative status and growth strategies
of each Company

Development of business in new fields
Shift from manufacturing to building
value-added service systems
Status of quality improvement efforts(number of recognitions received and description)

Quality-improvement initiatives

Sales staff training, quality improvement activities(number of times held, number of participants, etc.)
Collection of customer evaluations(number collected and percentage of improvements,
resolutions, etc.)

2 Develop business in new(smart) fields

p. 24(Awards for Group companies)

Website(Training programs for sales staff)

Website(Collection of customer evaluations)3 Shift from manufacturing

to building value-added service systems

4

Driving DX to Accelerate Solutions for Priority Issues (examples)Strengthen
relationships withlocal communities,
and actively
contribute to society• Digitization of data on tasks that previously relied on skills, intuition and tacit knowledge• Creation of explicit knowledge from streamlined data
• Improvement of intellectual productivity to increase employees’ motivation

Presence in the local community

Local communities

Status of social contribution activities selectedunder in-house criteria (number of participants)

Status of local community development programs(plans and achievements against those plans)p. 33, p. 46(Annual number of volunteers)

p. 34(Interaction withthe local community)

Positioning of Vision 2030 and the New Medium-term Management Plan
FY2021–23
Medium-termManagement Plan

FY2024–26

FY2027–30

Vision2030

G
Governance5

Increase complianceawareness globally,and strengthen
corporate
sustainability

WebsiteCompliance (environment)

Results of environmental management system audit

Compliance (society)

Status of various efforts to strengthen compliance(number of lectures and internal audits; held asa percentage of those planned)

p. 37

Certification and review by a third-party organization

WebsiteCompliance (product responsibility)(Environmental
audit results)(Compliance promotion
activities)(Third-party certifications)

Governance system

11

AICHI STEEL INTEGRATED REPORT 2021

12

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Growth Strategies

Aichi Steel GroupFY2021–23 Medium-term Management Plan
Vision 2030: Medium-term Management Plans of each department thatare closely associated with the three management guidelines
The Medium-term Management Plans for each department and company

Financial/
Non-financial Data

Base for
Value Creation

Environment
Aims
Eco-program for a happy, smiling and prosperous future
Priority Issues Contribute toward a sustainable global environment
by implementing three pillars of the basic environmental policy

Contribution
to a sustainableglobalenvironment

Three pillars of the basic environmental policy(1) Eco-energy:
Contribute toward a low-carbon society by reducing CO2 emissions(2) Eco-production:
Contribute toward a resource-recycling society by recycling automobiles(3) Eco-management:
Fulfill environmental responsibilities and grow together with local communities

function are closely tied to the three management guidelines in Vision
2030. They are also an important step toward realizing that vision. The
whole company will work together on activities to ensure steady
implementation of the Medium-term Management Plans as we movetoward the overarching goal of realizing Vision 2030.

SafetyQuality

Aims

Transform into a company recognized by society
as having a safety culture
Priority Issues Strengthen foundations through reform of management,
human resources and workplaces

Aims
Master manufacturing with a focus on quality
Priority Issues Strengthen the foundations of Jikotei Kanketsu for officeand plant workers by promoting the three pillars of quality

Three pillars of quality

Priority Safety Measures(1) Quality management: Reforming QMS based on IATF 16949(2) Development of quality-conscious human resources:
Developing and utilizing talent able to put Jikotei Kanketsu into
practice(3) Fundamentally high quality design:• Strengthening quality assurance for existing products• Building a quality assurance system for new products(1) Safety management: Culture of safety with mutual awareness(2) Development of safety-conscious human resources:
Teaching company traditions and developing autonomous
human resources(3) Fundamentally safe design: Improving disaster mitigation efforts(4) Health management: Creating workplaces with an open culture
where employees can work with vitality

Production Management

Corporate Planning Headquarters

Aims

Drive manufacturing innovation:
Strengthen the foundations of TPS to help with
Creation
Genryou Managementof a prosperous
Priority Issues • Drive business process reform:
Consistency and digital transformationsociety through• Genryou Management and optimized overall direct control:
business
Personnel management and assignments, etc.
reform• Develop TPS-conscious human resources:
Driving force behind manufacturing innovation

Marketing & Sales
Headquarters

Aims
Maintain volume while improving profitability
Priority Issues Fulfill sales responsibilities
1. Secure order volumes up to the limits of production capacity
2. Improve profitability by refilling orders

Employeehappiness andcorporate
development

Aims
Individual self transformation, with all Headquarters uniting to quickly
and boldly work toward employee happiness and corporate development
Priority Issues• Manage progress of Vision 2030, medium-term andannual management plans, and effectively invest resources• Quickly and strongly implement ESG- and stakeholder-oriented measures• Develop strategies for subsidiaries to help improve corporate value
for the Aichi Steel Group

Profit Targets

Key Management Targets
FY2023 (Forecast)

FY2020 (Actual)

Research and Development
Headquarters
Manufacturing Innovation
Headquarters

Companies

Aims
Dramatically increase the speed of R&D to become an innovation creator
Priority Issues Drive innovation through manufacturing that creates a sustainable
and smart society

2017

New businesses
2020

Manufacturing with the best quality, delivery and cost to achieve steady growth
Create workplaces that can utilize individuality andan overall optimized perspective
Priority Issues Realize Vision 2030 and Genryou Management
Details of the Medium-term Management Planfor Hagane, Stainless Steel, Kitaeru, and Smart companies:

15

Consolidated
operating profits(Billion yen)

1.3

3.5 billion yen
0.6

2.4
1.9
2.3 (deficit)
FY2020

2030

2023

Aims

Refer to Priority Issue 3 on pp. 25–32
13

Existing
businesses

Smart

5.1
3.9
FY2023

Increase
Maintain

Stainless
Steel
Kitaeru
HaganeFY2030

Stainless
Steel

ROE
Smart

▶ Increase

profitability

HaganeKitaeru▶ Maintainprofitability

204.9 billion yen ▶ 250.8 billion yen

Operating profit margin
Payout ratio

20+ billion yen

billion yen

3.6

2040

Net sales

1.7％ ▶

29.1％ ▶
1.9％ ▶

Capital expenditures* 12.8 billion yen
Interest bearing debt* 75.7 billion yen
Depreciation expenses* 14.4 billion yen

6.0％
30.0％
5.5％

▶ 51.2 billion yen▶ 62.7 billion yen▶ 16.9 billion yen* Non-consolidated

AICHI STEEL INTEGRATED REPORT 2021

14

Vision for
Aichi Steel

Growth Strategies

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Message from the Finance Director

Tackling Manufacturing Head-on as We Continue
to Build on Our Collective Strengths
I would like to start by thanking everyone for their

For example, with this new challenge of carbon

As a member of the Toyota Group, we are always

neutrality, the whole company is working hard together.

directly involved in the latest and greatest social

To ensure all our stakeholders, including shareholders,

We are sharing the challenge and doing everything wechallenges and have to tackle these difficult targets

continue to feel good about their support for our company,

can to deliver solutions. During the process, we struggle,

head-on. This gives us the opportunity to apply ourselvesin addition to the assurance and stability we always

we think, we maintain our resolve, and we push throughtirelessly to these challenges, and by remaining resoluteprovide, we aim to be ready for any change in the businessto the end. By doing so, team members grow and canin our efforts, we can hone our capabilities and improve

environment. I am confident that we already have enoughrespond at a higher level. We will spiral up by continuing

our competitiveness.

base and assets that will enable us to do that.

such a cycle. By clarifying directions through thecontinued support of Aichi Steel.

Company Vision and Medium-term Management Plans,Ever since our company was founded, we have worked

everyone at the company is able to learn about the TPS,

hard for the betterment of society using our traditional

TQM, and problem-solving skills, and provide honest

manufacturing capabilities. President Fujioka’s management

input

style focuses on being thorough, and working to evolve

improvement has the overwhelming ability to strengthen

In the 167 QC Circle teams, knowledge is shared to solve problems

and improve Aichi Steel, while protecting the DNA of the

our individuals and organizations while always producing[Image: administrative department]

company and valuing the basics of manufacturing.

the right answers. One concrete example of this istoimprove

them.

This

systemofongoing

Genryou Management (managing with limited order

We have also managed to maintain a rating of “A” forquantity), which enabled us to show good profitability in

our financial rating. In discussions with shareholders andour full-year results by adjusting the production system ininvestors, I sense a feeling of trust in our ability toline with volumes when production took a massive

maintain strong financial health. The share market has

downturn, followed by a massive upturn, as the pandemic

evaluated positively as well, with Aichi Steel judged as

spread. By strengthening the capabilities of our individuals

meeting the criteria for listing on the TSE Prime Market

and organizations, we are ensuring improvements to theIndex in the new market segments from April 2022.

Participation in the National Skills Competition from 2019 to create

underlying strengths of manufacturing.
I also think that being part of the Toyota Group willa culture that values technical skills

become more and more significant for us going forward.
Obviously, it means that we have a stable customer base,
have

Going forward, we will use these comprehensive

responsibilities and missions to fulfill as part of theassets—traditional manufacturing capabilities, ability to

Toyota Group, one of the world’s leading groups ofcontinue strengthening our individuals and organizations,companies.

stable financial base, and Toyota Group strengths—to

but

more

importantly,

it

means

that

we

respond flexibly to changes in the environment while
increasing the pace of “kaizen” and reform. We will also
not hesitate to invest in reviews of our portfolio as well as
the new technologies and facilities required to survive
difficult business environments. We understand that it willtake time to achieve our targets, such as return on assets,
but we will monitor our progress as appropriate. Above

President Fujioka providing guidance directly to managers

all, you can trust in our collective strengths.

in a problem solving lecture

At Aichi Steel, every day is spent building on ourcollective strengths so that we can become the Company

Naoki Ishii

of Choice Globally.

General Manager,
Corporate Planning Headquarters
Managing Executive Officer
Active companywide participation in TPS self-study meetings
to promote use of the TPS[Image: Joint workshop held at Aichi Steel in 2019]15

AICHI STEEL INTEGRATED REPORT 2021

16

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 1

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Aichi Environmental Action Plan

E

Priority Issue

Environmental

1

Contribute to a sustainableglobal environment

The Aichi Steel Group has established medium- to long-term targets aroundthree environmental issues—“building a low-carbon society,” “building a
resource-recycling society” and “achieving harmony with nature”—and is
working to achieve those targets. Through these efforts, we are achieving
efficient use of energy and resources and, through harmony between the
global environment and manufacturing and by providing products andservices with low environmental impact, we are contributing to a sustainableglobal environment.

As a statement of policies and plans for environmental actions
from fiscal 2016 to fiscal 2020, the Aichi 2020 Environmental
Action Plan adopts three core themes for the direction of ourenvironmental action based on environmental management:“building a low-carbon society,” “building a resource-recycling
society” and “achieving harmony with nature.” By reinforcing
management from a global perspective that extends toconsolidated subsidiaries, we have been contributing, as asustainable company, to society and the global environment,
and have achieved a number of successes.
One of the management guidelines included in Vision
2030 for the Aichi Steel Group, which we formulated lastyear, is “Contribution to a sustainable global environment,”
which comprises three elements: “Fulfill environmental
responsibilities,” “Contribute to a low-carbon society,” andSDGs
relevance

Environmental management
Environmental activity promotion systemorder to promote these revisions, we have established a neworganizational system. The Environmental Working Groupnow oversees four subcommittees, the Global Warming
Prevention Committee, the Aichi Steel Group Environmental
Committee, and promotes a variety of activities aimed atenvironmental conservation. In addition, we are currently
working to ensure that all consolidated subsidiaries that
operate production sites are ISO 14001-certified.

(Chair: President)

Awareness and Publicity
Subcommittee
Global Warming
Prevention Committee(Meets twice/year)(Chair: Director in charge of Safety &Environmental Div.)

Environmental ISO Review
Committee(Meets twice/year)(Chair: Director in charge of
Safety & Environmental Div.)

Chita Site
Kariya Site

Seki Site
Electronic Components Site

Process Energy Reforming
Subcommittee

Gifu Site

Logistics Energy Conservation
Subcommittee

Other relevant sites

Aichi Steel Group
Environmental Committee

Site environmental meeting(Chair: Head of each site)

Building a low-carbon society

Compliancewith Japan Iron
and SteelFederation’s
Low-carbon
Society Plan
(Phase 1)▲Three pillars of the Aichi 2025
Environmental Action Plan

• Development of products that reduce
the environmental impact• Planning and implementing CO2 reduction
activities at each plant• Promoting energy savings in production
On-site inspections to improve energy
efficiency through joint patrols
between each site and EMS*1
top management

Results• Achieved compliance with Low-carbon Society Plan (Phase 1)
kg-CO2/t
470
460

449.6

447.9

450

442.6

440

442.2

420

4. Seek better transportation efficiency
in logistics

13% reductionof emission volume
per transportation
unit fromthe 2006 level• Streamlining routes• Modal shift*2• Improve loading rates
Consolidation and shipment of cargo
by destination vehicle
Review of the number of scheduledroutes to suite cargo volume

5. Reduce by-products during
production and continue to utilize
resources effectively

220 kg/t or lessemission volume
per crude
steel unit

• Internal reuse of dust from electric furnaces• Internal recycling of electric furnace refractories• External recycling of waste acid and sludge• External recycling of cleaned sludge

16

7. Reduce and effectively use packaging
materials in logistics operations
8. Reduce water use in production activities
9. Promote activities for preservationof nature and biodiversity

11. Enhance consolidated
environmental management

—

—
—

—

12. Reduce emissions to contributeto improvement of urban air quality
in each country and region—

13. Promote environmental activities
in coordination
with business partners—

14. Further reinforce global employee
environmental education
and awareness activities—

15. Ensure active disclosureof environmental informationand enhanced communication activities

—

19

20

9.0

Target: 8.3

8.5

06

8.0

8.0

16

17

7.9

7.9

18

19

kg/crude steel t

190

20

228

230
220

8.2

212

Target: 220
204

212

× (Note 1)

187

180
170

16

17

18

19

20

• Monitor for new packaging• None found• Continue managing water use• Managed specific consumption at Forging Plant and Gifu Plant• Promotion of “connected” initiatives• Expanding network of groups making efforts
to achieve harmony with nature• Maintained biodiversity-model green spaces• Enhanced PR of activities to achieve harmony
with nature—
Abnormalities/
complaints:
0/year

18

9.5

200

• AS Shot®*3 technology PR and promotion• Creation of topics for technologies
for 100% recycling of automobiles

Target: 440.8

438.6

17

× (Note 1)

kg-CO2/t
10.0

210

6. Promote projects that benefit
resource-recycling corporations

Evaluation• Next-generation energies and technologies
that reduce environmental burdens• Identified ongoing topics for development
and followed progress430

10. Promote activities for zeroabnormalities and complaints

Forging Site

Energy-Saving Production
Subcommittee

Eco Life Subcommittee

17

・ Safety & Environmental Div.
Environmental Management
Group・ Individual sites

Environment Management

Environmental Working
Group(Meets twice/year)

Administrative office—Pursue the potential of materials and create new value

Major efforts

7.5

Building a resource-recycling
society

Resource Recycling
Subcommittee

3. Thorough implementationof energy saving activities
in production

Target8.0

Harmony
with nature

Environmental Conservation
Subcommittee

2. Reduce CO2 emissions
through innovative improvements
in energy efficiency

Three Core Themes

ordinances, agreements, etc.) such as the Basic Environment
Law; 3) Items related to the advance evaluation of theenvironmental impact of our products, raw materials,
sub-materials, and facilities and; 4) Items related tosupporting and cooperating with societal and local
environmental conservation activities.

■ Environment management promotion organization (as of March 31, 2020)

Product and Environment
Subcommittee

Action item
1. Undertake developmentof eco-products and technologies

Environmental guidelines
In order to promote environmental management activities,
we have drawn up a set of Environmental Management
Regulations. Its content can be broadly divided into thefollowing four parts: 1) Items related to promoting
environmental management; 2) Items related to compliancewith and management of environmental regulations (laws,(Refer to the company website
for details on the Aichi 2025
Environmental Action Plan.)■ FY2020 Action Items and Results (Aichi 2020 Environmental Action Plan)
Theme

We formulated the “Environmental Action Plan” in June 1993,
and the “Aichi Steel Environmental Charter” in June 1996. Inorder to achieve our goals, we are actively rolling out new
initiatives. In light of the increasing global trend to ban,restrict, and control certain chemical substances containedin products, we revised the “Aichi Steel Environmental
Charter” and management system in February 2017 tostrengthen our management of chemical substances. In“Harmony with nature.” As our five-year action plan forthese important tasks, and as our commitment to society,we also established the Aichi 2025 Environmental Action
Plan in March 2021. Under the slogan “Eco-program for a
happy,
smiling
and Eco-program for a happy, smiling and prosperous future
prosperous future,” we
EcoEcoEcowill
also
actively
management
energyproduction• Develop• Fulfill environmental
promoteeco-energy,
environmentally friendly
responsibilities• Pursue energy efficiency products and technologies • Conserve nature andeco-production,and • Reform manufacturing• Contribute tobiodiversity
processes
next-generation• Communicate andinfrastructure
disclose
eco-management as the • Adopt clean energy• Explore resource
environmental
circulation
information
three pillars of our basic
environmental policy.

• Implement strict management to achieve 80% or below
of regulation values set by environment-related laws
• Promote prevention activities• Ongoing measures to prevent environmental
near misses• Conducted inspections by Chief EMS Officer• On-site inspections of domestic subsidiaries
at “Aichi Steel Group Environmental Study Group”• Environmental audits of domestic subsidiaries
by the General Manager of the Safety & Environmental Division• Enhance chemical substance management system• Ongoing “Aichi Steel Group Environmental Study Group”
with domestic subsidiaries• Ongoing environmental audits• Established regulations for managing chemical
substances in products• Monitor the adoption of low-emission vehicles• Continue monitoring activities• Obtain information
on product chemical substances• Obtain information on product chemical substancesfrom contract processors• Trial environmental risk prediction training tools• Expanded use of environmental risk prediction
training tools• Continuous publication of environmental reports
and enhancement of content• Enhancing environmental communication activities• Enhanced information disclosure surrounding ESG and SDGs
• Permanent product displays at administrationbuilding Visitor Center× (Note 2)

Note 1. Energy loss will be improved and stabilized as the new equipment comes into full effect.
Note 2. Events could not be held due to the COVID-19 pandemic.
*1 Environment Management System *2 Changing truck transport to rail and sea transport with low-environmental impacts*3 Recycled abrasives made from by-products of the steel making process

AICHI STEEL INTEGRATED REPORT 2021

18

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 1

Initiatives for building a low-carbon society
Fiscal 2020 targets and results
Based on the “Aichi 2020 Environmental
Action Plan,” we pursued reductions in CO2 toachieve the targets of the Japan Iron and SteelFederation’s “Commitment to a Low Carbon
Society” (Phase 1). We reduced total CO2
emissions through a combination of reduced
production and improved operations.

Total CO2 emissions

556,000

Website■ Breakdown of energy used infiscal 2020 (CO2 emissions)Improvement factors

Oxygen 1.9%
Heavy oilclass A 0.9%
Coke

■ Factors behind changes
since last fiscal year
1. Reduced energy consumption due toreduced production
59,500 t-CO2/year
2. Reduced energy consumption due toimproved operations through optimizationof steel making materials

Other

0.5%

7.1%

9,900 t-CO2/year

Total

Total
CO2 emissions
556,000 t-CO2

Hindrance factors

City gas

28.6%

Electricity

t-CO2/year

69,400 t-CO2/year

61.0%

1. Increased energy consumption due to reduced
production and the resulting drop in steel
making efficiency, etc.
7,500 t-CO2/year
2. Increased energy consumption due to reduced
production and the resulting drop in rolling
operation efficiency
1,600 t-CO2/year

Total(-76,000 tons year-over-year)

9,100 t-CO2/year

Energy saving through logistics optimization
In accordance with the Energy Saving Act revised in April 2006,
we have been working on efficient environmentally-friendly
logistics optimization activities after understanding the flow of
distribution and reviewing issues.
More specifically, we are visualizing off-premise logistics
routes and volumes, and promoting logistics improvementsfrom the perspective of streamlining routes, modal shifts (fromland transport to sea transport), and improving loading rates.
From fiscal 2006 to 2020, we achieved a 14% reduction in
CO2 emissions per unit from logistics.
* Modal shift: Changing truck transport to rail and sea transportwith low-environmental impacts

Measures to develop a resource recycling-based society* Photo courtesy of Toyota Metal Co., Ltd.

19

Base for
Value Creation

WebsiteParticipation in “All-Toyota Green Wave Project” activities
Aichi Steel is participating in the “All-Toyota Green Wave
Project” activities being implemented by the Toyota
Group and other affiliated companies as part of efforts
to coexist with nature. This project includes a range ofactivities to “connect communities toward harmony withnature.” We are undertaking activities that contribute torestoration of ecosystems by connecting people withother people and activities and linking habitats.
▶Participation in All-Toyota activities(maintenance of Izu-numa, a wetland area registered under
the Ramsar Convention)

Forestation to create a forest for beetles
Since fiscal 2012, we have been creating a forest for beetles.
We have been planting a broadleaf forest in about 20,000 m2
of Nakashinden green spaces around our plant and creating
an environment in which beetles and other creatures canlive their natural life cycles. We have been working with the
Chita Peninsula Ecosystem Network Council and members of
the Student Action Committee NPO to grow the trees. In fall
every year, we also hold a large harmony-with-nature event
called “Mori Mori event” where employees and their families
participate in various activities, including programs held in
collaboration with other organizations and companies, tree
cultivation activities, release of rare medaka (Japanese ricefish), and planting of wheat.
We have also started new initiatives in addition to the
Nakashinden green spaces. We are currently developing

an ecosystem network across the entire Chita Peninsula,cultivating trees using bamboo charcoal from bamboo groves
we are maintaining at the town of Mihama, and an initiativein collaboration with the Higashiura Natural Environment
Learning Forest to jointly research the beetles and foxes thatare attracted to, and symbolic of, Nakashinden green spaces.
Although we were unable to hold events in the Nakashinden
green spaces during fiscal 2020 because of the pandemic,
we started a new initiative using goats as a method of
weed eradication and were able to establish an efficientmanagement and maintenance system that is friendly topeople and nature. We also conducted other limited activities
as much as possible, including maintaining bamboo groves atthe Higashiura Natural Environment Learning Forest and study
tours of Toyota Motor Corporation’s Forest of Toyota.

Number ofNakashinden
indicator species
recycling, and we are recycling automobile shredder residue(ASR)* by melting “dallied solids” and “solids balers” in theelectric furnace as raw material.

22▲Study tour of Forest of Toyota▲Weed eradication using goats at Nakashinden green space

Forest-developing volunteers* Automobile shredder residue (ASR):
All remaining waste after crushing end-of-life vehicles in an industrial shredder and removing ferrous and non-ferrous metals.

Dallied solids
Material
comprising a mix
of steel scrap(chips) fromautomobile plants
and ASR (re-sorted
and treated) thathas been melted,
solidified andformed.

Measures to promote harmony with nature

Financial/
Non-financial Data

WebsiteContributions to end-of-life car recycling
In line with the End-of-Life Vehicle Recycling Law, which cameinto force in 2005, the Toyota Group is working to achievecomplete recycling.
Aichi Steel is working with Toyota Metal Co., Ltd. to improve

Initiatives and Systems
as the Foundation
for Growth

Solid balers
Compressed
mixture ofautomotive plant
steel scrap (scrap
material) andmolten solidified
material.

As we use large amounts of water in our steel production, we have carried out twice-yearly forest cultivation activities in Nagano
Prefecture since 2006, which is the source of Aichi Prefecture’s service water. We recruit volunteer employees to take partin improvement cutting and thinning activities aimed at creating healthy forests, and in the process deepen our interactions
with local residents. In 2019, we signed
an Adopt-A-Forest Promotion Programagreement with Otaki Village in Nagano
Prefecture to develop a broad area of
about 12 hectares of forest into the
FOREST of AICHI STEEL GROUP.
During fiscal 2020, we conducted forest
thinning activities with a limited number ofvolunteers in consideration of the pandemic▲Limited number of people participating in activities▲Forest thinning workand to help stop the spread of infection.
in Otaki Village, Nagano Prefecture

AICHI STEEL INTEGRATED REPORT 2021

20

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 2

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Human resources development

The Aichi Steel Group is working to create a strong organization by
maximizing the potential of individuals through the creation ofenvironments in which diverse human resources can play an active role.
This includes not only consideration of a wide variety of anti-discrimination
human rights involving nationality, language, culture, age and gender, butalso encompasses women, seniors, people with disabilities, and thosecombining work with child-raising or care-giving.

Report(can be anonymous)

Feedback ofoutcomeContact point
Internal

External

AuditorLegal
representatives

Collaboration

Investigation team

(Investigation/interviews)
ReportPresident/Committees

WebsitePromotion of more active roles
for women in the workplace

Promotion of employment
for people with disabilities

Aichi Steel considers the promotion of diversity to be an
important part of its management strategy, and as part ofthat is strengthening measures to promote more active roles
for women. We continue to proactively hire more female
employees, setting goals for the percentage of female hires
among regular university hires. We have also developed
working from home and career design training for female
employees to consider their careers. In this way, we areadvancing initiatives to support women in developing theirskills. As part of our culture and awareness reform, we areproviding education to our managers on the prevention ofharassment, while operating our Harassment Consulting
Center, to help create an environment where employees canbalance work with family-life and child-raising duties.

We have employees with disabilities working in a range of
workplaces, from our manufacturing sites to administrative
divisions. To enable them to remain at work, it is important to
not only provide the appropriate work support but to provide
them with work that suits their individual abilities, so at thetime of recruitment, we follow a program of practical training
and interviews to decide where to assign them.
With the majority of people with disabilities working at Aichi
Steel being those with intellectual impairments, we holdseminars aimed at developing their capabilities and workshops
aimed at helping them acquire internal qualifications as part ofcontinued support to provide them with rewarding careers.
We are also systematically training and allocating VocationalLife Consultants for Persons with Disabilities and Job Coaches
to provide work-related coaching to develop workplaces where
all employees can enjoy working together.

Since August 2016, we have been providing
specialized technical training for all skilledworkers in forging plants to provide systematictraining on the knowledge and skills needed atthose plants. To raise understanding of the
purpose and necessity of each task, and lead to“Kaizen ,” the roles of skilled workers, from thefundamentals of manufacturing to the essentialsof the facilities that create products and measuresfor dealing with abnormalities, are divided into
three ranks and the training is organized so thatworkers learn in steps. (The ranks are Rank C for
up to five years after joining the company, Rank B
for up to 10 years after joining the company, andRank A for first-level supervisors.)

Plan (steps)
Do (at every important

point, check, confidently
D call“Done!” and proceed)(reflect on work
C Check
process and look for

Act (pass on yourknowledge to the next
person)Number oftimes held (total)

61

Number ofparticipants (total)

321

WebsiteEfforts to eliminate lost time accidents

Health promotion efforts

Although we have seen fewer accidents over recent years
compared to 10 years ago, one regret that remains an issue is thatthe number of accidents resulting in lost work time is not changing.
For this reason, under the slogan “Transform into a company
recognized by society as having a culture of safety” in Vision 2030,
we are conducting activities based on three pillars of safety withthe aim of achieving zero accidents for three years in a row.

We prioritize mental health and lifestyle-related disease
prevention, and systematically implement relevant initiatives.
As a result, we were recognized for the fourth consecutive
year as a Health and Productivity Management Outstanding
Organization, in a program adopted by METI and Nippon
Kenko Kaigi. We continue to maintain and promote the healthof our employees, which is a priority
issue for the company.
Specifically,
weareactively
implementing health promotion activities
with all employees to reach our KPIs
for rates of lost worktime, obesity andsmokers.

■ FY2021 policy looking ahead to 2030
(activities based on three pillars of safety)(1) Safety management: Conducting disaster mitigation
efforts by sharing information on near misses andpromoting mutually beneficial communication(2) Development of safety-conscious human resource:
Training to improve awareness through an “anzen dojo
training” program, and teaching traditions of safe workthrough competitions(3) Fundamentally safe designs: Conducting risk reduction
activities by promoting fundamentally safe designs

Mental health activities

To help stop the spread of COVID-19, respond to increasingly
strict rules and regulations around industrial safety and health,and prevent fires, we are also improving communication with
operators in the factory, listening to problems related to work
issues, and implementing “Kaizen ” improvements through asafety support system of scheduled improvements.

(Cases)

0.68

5

(%)
0.75

Number of lost time accidents

0.66

Lost time frequency rate

4

0.45

0.45

0.45

0.46

0.50

3
2

0.16

0.16

0.15

0.15

2013

2014

2015

2016

1
0

2011

2012

0.25

2017

2018

2019

2020

0.00
(FY)

Lost time frequency rate

■ Number of lost time accidents and lost time frequency rate

▲Workshops for employees with intellectual impairments are held fourtimes per year. Study sessions and leisure activities not only enable
these employees to acquire the knowledge required to work, but also
provide them with the opportunity to network with fellow employees.

A

The hands-on training combines knowledge
learning and practical skills acquisition. Trainee
proficiency is confirmed through written tests,
and determinations of whether trainees havereached a level that can be used in practical work
are confirmed through presentations on
examplesofimprovements
andon-sitemonitoring. Trainees who pass receive ranked
certification. With Rank C training starting in fiscal
2016, Rank B in fiscal 2017, and Rank A in fiscal
2020, we are continuing to expand training
activities. By having all skilled workers undergo
this training, a culture of asking “why?” will becreated and the handing down of technology andskills to successors will be encouraged.

Employee health and safety

Number of lost time
accidents

We have in place a Manager Reemployment System and a
Nice Senior System, which in principle allow all employees
who wish to work after retirement to continue working until
they begin receiving their pensions. To make work moreenjoyable for our older employees, we are also creating
workplaces that are easier to work in and we are reassessing
employee benefits.

21

WebsiteSuppliers

Initiatives toward diversity

Post-retirement reemployment system

P

Specialized technical training

Aichi Steel employees

General Affairs Div.

redos. Through training, we are able to teach theappropriate approach and concrete steps. We
have also developed an e-learning program on thebasics of “Jikotei Kanketsu” that all employees canaccess anytime. We will continue efforts to teachthe “Jikotei Kanketsu” approach going forward.

problems)■ Aichi Steel Compliance Hotline flowchart

The Aichi Steel Group states in the Aichi Steel Group Action Guidelinesthat it will comply with domestic and foreign laws and regulations bothin letter and in spirit, and that it will respect human rights, and sets out
behavioral standards for this.
Through level-based training and other educational opportunities,
we cultivate a corporate culture in which the diversity of each employee
is respected. In addition to the prevention of workplace harassment
and implementation of appropriate measures by our Harassment
Prevention Committee, we also hold workplace study sessions. The
Aichi Steel Compliance Hotline is also in place for use by employeeswith issues regarding human rights. This system enables employees to
consult directly with advising legal representatives.

Procedure

To improve employee productivity, as part of ourefforts to maximize potential and performance,
we hold “Jikotei Kanketsu” training for teamleaders. “Jikotei Kanketsu” is a work approach thatemphasizes high-quality work with an efficientarrangement of steps to prevent errors and avoid

SDGs
relevance

Respect for human rights and creation of comfortable workplaces
Initiatives toward respect for human rights

Website“Jikotei Kanketsu” training

Person/division concerned

Social2

Encourage the creation of workplaces that are safe
and comfortable to improve employee happinessCorrection/management

S

Priority Issue

Base for
Value Creation

The Aichi Steel Group is working to maintain the mental
health of its employees and prevent the development of
mental issues, through various educational programs andindividualized mental health care based on the resultsof stress check tests. We have also provided advice toworkplaces that were determined to be at high risk formental health based on analysis of these results.
In addition, we are enhancing management of risks
associated with mental illness in the workplace throughregular workplace inspections by mental health staff andregular meetings to share information with labor management
staff from the Human Resources Division.
Going forward, we will continue working with supervisors
to promote the creation of open workplaces that enable free
discussion, to prevent the development of mental issues, andenable early detection of issues and early provision of care.

AICHI STEEL INTEGRATED REPORT 2021

22

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 3

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Initiatives for improving quality (TQM)

S
SocialPriority Issue

3

Create a prosperous society through businessreform and provide extremely competitive products

Products provided by the Aichi Steel Group are important parts directly related toautomobile running, turning and stopping. To offer customers greater peace of mind inusing our products, it is essential that we provide a stable supply of high quality products.
To ensure our products gain the trust of our customers around the world, we are aiming tobecome an integrated forging with steel making process company that provides the world’s
finest quality, and we are working as one to build a globally competitive, leading quality
assurance system.

SDGs
relevance

Quality Management System (QMS)

WebsiteNovember has been designated Quality Month.
With a focus on the concepts of “Customer First”
and “Quality First,” we are working to raiseawareness of quality among our employees byholding site inspections by the president, quality
exhibitions displaying quality mottos and posters,
and implementing other initiatives.
We have also worked to improve awareness ofquality among our employees, regardless of thepandemic, by holding improvement case study
meetings online so that employees could
participate from the office or home, and byholding a groupwide TQM conference with
Shinichi Sasaki, as an authority on “Jikotei
Kanketsu,” as special guest.

expectations and needs. In line with our Medium-term
Quality Vision 2030, we are working as one to build aglobally competitive, leading quality assurance system.

Medium-term Quality Vision 2030

Quality assurance system

We have formulated a Quality Control Basic Policy as part ofour efforts to promote quality assurance initiatives.

Quality Control Basic Policy
We will establish a reliable corporate structure, based on
the concept of “quality first,” to provide products thatmeet the requirements and needs of customers.

Third-party certifications andcompliance with international standards
In addition to ISO 9001 certification, we have also obtained
other third-party certifications and public institution
accreditations based on our QMS. We are also audited every
one to five years for review and renewal of thesecertifications and accreditations.

Quality Assurance Div.

(QMS Review Committee)

Quality Control Dept.
for each plant

Plant sections

Development andProduction Engineering Dept.

Other related departments(Sales, Purchasing, Human Resources, etc.)

Overseas Support Dept.

▶Guest lecture by Shinichi Sasaki,
Former Executive Vice President
at Toyota Motor Corp.

Aichi Steel Group initiatives to improve quality are being recognizedby customers.
In March 2020, our Electronic Components Plant received an ExcellenceAward for supplier contributions to quality improvement, for the eighthyear in a row, from the Hirose Plant of Toyota Motor Corporation.
Shanghai Aichi Forging Co., Ltd. (SAFC) also received a Special
Contribution Award from Kubota Engine (Wuxi) Co., Ltd. in December
2020, and the Forging Plant received a Quality Excellence Award from
Daihatsu Motor Co., Ltd. in April 2021.

Promotion of CSR procurement
Green procurement efforts

We strive to provide all of our suppliers, at home and abroad,with procurement information and the opportunity for open,
fair transactions.
Actual transactions are determined based on acomprehensive review of quality, technology, cost anddelivery times, as well as soundness of management,
approach to and structures for ongoing improvement, andother factors.

Since formulating the Aichi Steel Environmental Charter in
1996, we consider environmental conservation in all phasesof our business activities, and work to achieve continuous
improvements.
In August 2020, we announced Vision 2030 for the Aichi
Steel Group. Then in March 2021, we created the Aichi 2025
Environmental Action Plan as a five-year action plan for
implementing ESG management under the vision. To drive
eco-energy, eco-production, and eco-management, which
are the three pillars of our basic environmental policy thatform the basis of this plan, we revised our Green
Procurement Guidelines in April 2021. Our aim was toprioritize purchases from suppliers engaged in efforts to
reduce environmental burdens, such as reducing CO2
emissions, recycling resources, reducing environmentallyhazardous substances, and conserving biodiversity.
In line with customer demands and regulations for
managing chemical substances in products, we classify
controlled substances as banned substances, conditionallybanned substances, or restricted substances, and we advise
our suppliers of the classifications.
When entering a new transaction, making changes tocompositions or manufacturing methods, or adding relevant
environmentally hazardous substances, we also request that
suppliers submit a Report on Presence of Environmentally
Hazardous Substances, we confirm they are not included anduse alternative substances when necessary, and ensure they
are not used.

1. Steel products and forged products

Our relationships with our suppliers based on building andmaintaining
relationshipsoftrust
throughclose
communication, and a basic approach that calls for us togrow together with our business partners and share the fruitsof our mutual efforts.

2. Electro-magnetic products

Legal compliance

3. Laboratory accreditation

We comply with all relevant laws and regulations related toour purchasing activities, and also carefully control theconfidential information of our suppliers in accordance withour company rules.

Acquisition status of quality ISO certification

Passed renewal audit for ISO 9001 (October 2020)
Passed surveillance audit for ISO 9001 (December 2020)
Passed surveillance audit for ISO 13485 (January 2021)

WebsiteGlobal, open and fair transactions

Mutual growth based on mutual trust

Passed renewal audit for ISO/IEC 17025 (December 2020)23◀Special Contribution
Award received by
SAFC from
Kubota Engine(Wuxi) Co., Ltd.

Quality Function Board(Quality &Technology Committee)

Quality Control Basic Policy▲Site inspection by the president(Forging Plant)

Customer recognition of quality

In accordance with our policy of “Quality First,” we will strive
to maintain a business structure, based on ISO 9001, ISO
13485 and other standards, that gains customer trust andenables us to deliver attractive products that meet

Mastermanufacturing witha focus on quality!

WebsiteQuality awareness activities

Activity promotion system

1. Quality
management
2. Development ofquality-conscious
human resources
3. Fundamentally highquality design

Base for
Value Creation

AICHI STEEL INTEGRATED REPORT 2021

24

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 3

Hagane Company
TakashiIshigamiManaging Executive
Officer andHagane Company
President

Business
Overview

Becoming the leading manufacturerof specialty steels to contributeto the development of a mobility society
Changes in the structure of vehicles is creating new opportunities for the Hagane Company
to tackle and contribute to electrification components and overseas markets. Leveraging
our technical strengths, and integrated forging with steel making processes, we will adapt

ProfileAfter working as Smart Company President,
Takashi Ishigami took on the role of Hagane
Company President in April 2019.

•
•
•
•

FY2020 Initiatives: Results (Achievements)
Due to COVID-19, we had a massive downturn in production
during the first half, followed by an upturn in production due
to a recovery of demand during the second half. With such majorchanges in the status of production, we have expanded ourongoing efforts to further deepen Genryou Management andhave produced strong results in each phase as a result.
During the first half downturn, we applied a “volume-matchedcosts” approach that enabled us to produce the necessary
volumes at appropriate manufacturing costs, and we focusedon lowering our break-even points. During the second half
recovery, we were able to ramp up production throughforward-looking operations based on frequent data collection
while maintaining break-even points and not reversing our effortsof the first half. This enabled us to reap the benefits of Genryou
Management in the form of earnings.
Also, because of the pandemic, we have only managed
to provide limited remote technical support from Japanese staff
to India’s Vardhman Special Steels Limited, a company withwhich we entered a business capital tie-up in 2019. Despite this,we have continued improving quality through online guidance
and other channels, and have proceeded according to plan,
including completion of steel production for evaluation to get•

Accelerated shift toward
electric vehicles
Expansion of global
automobile production••

Strengths

Risks & Opportunities

to these changes and evolve in order to create new value.

Intensified competition
through aggregation andreorganizationof competitor bases
Moves toward carbon
neutrality by 2050

Development capabilities throughintegrated forging with steel making
processes that can contribute toelectrification components
High quality of choice globally
Shortened manufacturing processes thatleverage integrated forging with steel
making processes, and energy-saving
technologies such as exhaust heatrecovery

TO P I C SContributing toward a carbon neutral, sustainableglobal environment by reducing CO2 emissions
through conversion and use of steam energy
from exhaust heat of electric furnaces (Japan-first)
Aichi Steel has adopted a system for passing exhaust heat from electric furnaces,

suit, and these furnaces are an important element of that solution. Using thisnew system, we are able to reduce CO2 emissions by the equivalent of about
4,200 tons per year. In addition to reducing CO2 emissions from the steel
making process, those emissions can be utilized to power other facilities,
which enables us to save energy across the entire plant.
As this initiative is a first for the electric furnace industry, we plan to fully
implement the system to become the leading company inthe industry for CO2 reductions.

We will start with the first stage of steel making process reform, which
consists of three steps. In this stage, we aim to secure upward elasticity
in the steel making process and develop and implement business
continuity planning (BCP). We will implement the following initiatives.
(1) We will drive the development of basic technologies for efficient
production by shortening the manufacturing process, including
the use of a one heat process for shortening the steel billet rollingline.
(2) We will expand the supply chain, and drive development oftechnologies for making steel from scrap of different qualities, tostrengthen our capacity for collecting cheap scrap.
From the perspectives of quality improvement and preventive
maintenance, we will use AI and IoT to improve the visibility of optimal
manufacturing conditions and develop infrastructure as the base for
digital transformation.

Exhaust heatrecovery system

4%
reduction
FY2018 H2Electric
furnace

Cooling
tower

96

Combustion
tower

100

95

25

One heat process shortens the casting processenvironment,” which is one of the management guidelines

Cost index (excluding material costs)

0

AICHI CERATEC CORPORATION, OMI MINING CO., LTD.,
Aichi Steel Logistics co., ltd.

Priority Issue 2 Manufacturing strategies

neutrality by 2050, we also have to do everything within our means to follow

Existing exhaustgas cooler◆Subsidiaries

ongoing technical support to India’s Vardhman Special
Steels Limited

Electric furnaces used in the process of steel making are unavoidably large

in Vision 2030.

Specialty Steel Business Management Div.,
Hagane Production Engineering Div., Chita Plant

With increasing social momentum within Japan toward carbon neutrality, the demand for electric vehicles is expected to
grow. At the Hagane Company, we will leverage the product development capabilities of our integrated forging with steel
making processes to develop steel products with a focus on in-house processing. We will also promote commercializationof high value-added parts for electric vehicles.
Overseas, we will continue efforts to gain market share in the India and ASEAN regions where the engine-powered vehicle
market continues to grow. Firstly, we will continue to provide technicalguidance to India’s Vardhman Special Steels Limited to lift the quality of theirproducts to a level that allows stable use in automotive parts. We expect
quality and cost competitiveness to be sufficiently high in fiscal 2022 forthem to take over our steel product supply to our ASEAN forging
subsidiaries, so we are pushing ahead with the development of a global
supply system.
This will enable us to redirect our ASEAN supply volumes to Japan to give
us resilience to upward movements. Using this supply system as a steppingstone, we will not only be able to capture demand from Japanesemanufacturers in India, but also expand our capabilities with a view to futureorders for parts in collaboration with Indian forging and processing
companies.
Using online tools and other methods to provide

consumers of energy. With the Japanese government’s commitment to carbon

We will continue to meet the challenges of carbon

Base for
Value Creation

Priority Issue 1 Product and sales strategies

steam energy for effective utilization in other steel making facilities.

neutrality and of “contributing to a sustainable global

Financial/
Non-financial Data

Strategies for the Medium-term Management Plan

which was previously cooled down as waste, through a boiler and collecting it ascustomer approvals.

100

Manufacture of steel
products and developmentof related production
technologies

Initiatives and Systems
as the Foundation
for Growth

Priority Issue 3 Subsidiary strategies
Steam drum

FY2020 H2

Exhaust gas flow
Steam flow

Steam boilerNewsteam tank

Steam used for vacuum
evacuation in vacuum
degassing equipment

Feedwater tank

Steam used within the plant
instead of using a boiler

The three subsidiaries of the Hagane Company (AICHI CERATEC CORPORATION, OMI MINING CO., LTD., Aichi Steel Logistics co.,ltd.) each have their own unique business strengths. We will continue to provide them with appropriate support to draw onthese strengths through close cooperation, as we target even greater consolidated profitability.

AICHI STEEL INTEGRATED REPORT 2021

26

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 3

Stainless Steel Company
KazuyaFukatsu
Stainless SteelCompany President

Contributing to creating a sustainable
society through stainless steelsand engineering
To further improve the presence of Aichi Steel in the domestic markets for hot rolled flatbars and steel shapes, the Stainless Steel Company is driving market creation activities
through Value Analysis proposals, that help shorten the processes for customers,

Kazuya Fukatsu took on the role of StainlessSteel Company President in April 2020.

•
•
•
•

FY2020 Initiatives: Results (Achievements)
1. Developed systems and changed mindsets within the Company
We created workplaces where everyone can contribute, and wechanged mindsets to one of fostering a sense of unityand growth as a United Stainless Steel Team.

2. Strengthened manufacturing capabilities
We worked on Genryou Management, including minimizing
quality-related loss and consolidating heat treatment equipment,
to build production systems for lower production volumes.

3. Strengthened production capabilities ahead of 2030
We invested in pickling equipment to increase production aheadof 2030. We also made the decision to roughly double
investment in line with the capital investment plan outlinedin the FY2021–23 Medium-term Management Plan.

4. Enhanced activities to develop new markets
Hydrogen: We developed AUS305-H2, a resource-saving,high-strength stainless steel for high-pressurehydrogen applications, that does not use
molybdenum, an expensive rare metal.
Deformed bars: We reached a cumulative shipped total of 5,000
tons of deformed bars as a result of proactive
market development activities that increased
their use in multiple projects.

••

Concerns about an influx offoreign materials into Japan
Deteriorationof production facilities for
hot rolled flat bars andsteel shapes
Increasing need to realize ahydrogen-based society

Strengths

ProfileRisks & Opportunities

by rebuilding production facilities and expanding its engineering business.

Momentum surrounding
rebuilding of domestic
infrastructure••

Range of developed steels forcontributing to a hydrogen-based society
Lineup of hot rolled flat bars
and steel shapes(domestic share of over 70%)
Capital investment for further expanding
production capabilities for hot rolled
flat bars and steel shapes
Integrated engineering business, fromdesign cooperation
through to installation

Manufacture of stainless steel
shapes, round bars
and deformed bars,
and engineering

TO P I C S
Vertical Greening Cylinders (Vertical Forest®) Using
Stainless Steel from Aichi Steel Receives Best
Development Award (Bronze Award)
at 25th International Stainless Steel Forum (ISSF)
Aichi Steel entered a design cooperation with Takenaka Corporation todevelop vertical greening cylinders and engaged in factory manufacture

Financial/
Non-financial Data

Base for
Value Creation

Stainless Steel Business Management Div., Stainless Steel Production
Engineering Div. Kariya Plant◆Subsidiaries

AIKO CORPORATION, Aichi Techno Metal Fukaumi CO. LTD.

Strategies for the Medium-term Management Plan
Stainless steel production capacity plan

Enhanced production capacity(1,000 tons)

By the end of fiscal 2023, we will improve andre-engineer our existing production facilities toenhance production capacity to 73,000 tons (15%higher than fiscal 2019), which is our planned sales
volume for fiscal 2026.

50%
increase

90
FY2021–23
Medium-termManagement Planproduction capacity

80

15%increase

70
60

Approach to markets

50

We will further expand use of our hot rolled flat bars
and steel shapes through design cooperation withgeneral contractors and others.

0

FY2019FY2021 FY2022 FY2023

FY2028

Priority Issue 1 Strengthening our business foundation(achieving healthy growth with safe, growing, and vibrant workplaces)[Safety] Maintain accident-free workplaces
We are committed to creating workplaces that prioritize
safety. We will also develop a consolidated safetysystem through mutual learning mainly with Kariya Plant,
and including subsidiaries.

[Environment] Create energy-efficient plants
to reduce CO2 emissions
We will steadily improve the energy efficiency of Kariya
Plant and contribute toward a low carbon society throughefforts including switching to future new energies.

[Quality] Aim for zero customer complaints[Maintenance] Enhance preventive maintenanceWe aim to reduce customer complaints to zero byeliminating the causes of quality defects through the
Jikotei Kanketsu approach by establishing andimplementing conditions that ensure product quality.

We will ensure fulfillment of our responsibility to supply
customers by completing scheduled repairs and upgradesof deteriorating facilities.

and on-site construction as the stainless steel building structure engineer.
We will continue to deliver high value-added products throughintegrated solutions capabilities, from design cooperation through tofactory manufacture and on-site construction, while helping to become

Priority Issue 2 Growth strategies (increasing profits through six projects)
Project 1

an environmentally friendly society.
Details
1. Location:
2. Specifications:

3. Steel products:

4. Design and on-site
construction:

Restructuring product strategies

Reviewing large variety and small quantity productionof over 4,000 products of different shapes and types.
Project 2

Aichi International Convention & Exhibition Center
Hang 45 vertical greening cylinders (Vertical Forest®) with alength of 9 m from the large approach eaves with a length of 200
m and a height of 11.5 m, constituting the main gate
Stainless steel (about 70 tons)
SUS316A stainless steel pipe (for mandrel)
SUS316 steel shapes (for ring that supports the greening panels)
Takenaka Corporation

Aichi Steel stainless steel used in a variety of applications

Planning alliances

Investigating external ties rather than being closed to them
Project 3

Expanding stainless steel parts, structuresand constructure businesses

Utilizing engineering functions and obtaining early project
information to make Value Analysis proposals to customers
Project 4

Enhancing ties with consolidated subsidiaries
Optimizing consolidated management capabilities
by expanding collaborations with Aiko Corporation
and Aichi Techno Metal Fukaumi Co., Ltd.

Project 5

Visualizing manufacturing processes
and improving workmanshipPhoto credit: Toho Gas Co., Ltd.
Internal stairs inside LNG tank(low ductility in low temperatures)

Replacement of prestressed concrete slabs
on Chuo Expressway (corrosion resistance)

Testing apparatus used to test high-pressure hydrogen environments

Planning and implementing plant layouts that enable
Genryou Management, and enhanced production
capabilities in line with the Medium-term Management Plan
Project 6

5. Expanded engineering businessWe expanded and developed our workforce, and through designcooperation, factory manufacture, and onsite installation, we
accomplished 37 engineering projects in medicine, foods andother plants.
Main entrance

Creating new markets(contributing to the hydrogen society
and rebuilding of infrastructure)
Hydrogen: Delivering an omni-directional response to thehydrogen energy chain and establishing facilities
for testing and evaluating steels
under high-pressure gaseous hydrogen
Deformed bars: Creating domestic markets and establishingproduction systems for stainless deformed bars

SS. Inc.

27

Business
Overview

Initiatives and Systems
as the Foundation
for Growth

Uniaxial load hydraulic servo apparatus for tensileand fatigue tests (installed 2019)

Rotating bending fatigue test apparatus(world’s first, installed 2021)

Vertical greening cylinder

AICHI STEEL INTEGRATED REPORT 2021

28

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 3

Kitaeru Company
TetsuoKondo
Managing Executive
Officer andKitaeru Company
President

Aiming to become a global forging
company leader to contributeto the Toyota GroupAs a global forging company leader for the Toyota Group, the Kitaeru Company needs toevolve further. To achieve this, we will ensure steady implementation of Vision 2030 and theMedium-term Management Plan within Japan, and expand these efforts to global sites, toTetsuo Kondo took on the roleof Kitaeru Company President in April 2021.

•••

FY2020 Initiatives: Results (Achievements)
Although we had a massive downturn in production
during the first half due to the impact of the spread of
COVID-19, we further evolved our efforts with Genryou•

Decline in the useof forged products
as the world shifts to BEVs
Supply concerns andrestructuring of forging
companies dueto the above

Strengths

ProfileRisks & Opportunities

improve the competitiveness of forging across the group as a whole.

Change to high-quality,
low-cost and flexible
manufacturing••

Optimal materials and process designthat merge steel and forged products
through integrated forging with steel
making processes
Optimal product yield process design
throughout forging and machineprocessing
Information gathering from five global
sites and mutually complementary
systems

While increasing local procurement at global sites, there is a need for large
variety and small quantity production because of the differing needs

Specifically, by (1) breaking down our major management KPIs

of environments and customers at each site. Therefore, we decided

into smaller units, and (2) checking the results in short intervals,

to install a global standard production line, which we eventually started

we established more granular targets and checked progress on arunning in May 2020.

capabilities and achieve immediate improvements.
This enabled us to thoroughly share our “volume-matchedcosts” approach that we have been sharing with our
workplaces since fiscal 2019, and our workplaces now feel
more resilient to change.

This forging line produces the toothed GEAR, COUNTER DRIVEN DRIVE
used in automatic transmissions and HEVs. It enables efficient large variety
and small quantity production through faster setups, while improving
precision and reducing production lead times. Incorporating environmental
friendly ideas at every turn, it minimizes CO2 emissions as well.
With this production line and a product range that flexibly meets theneeds of overseas environments and customers, and with our ability
to expand technologies and skills globally as the mother company, we aim
to improve the competitiveness of our overseas subsidiaries and become
the Company of Choice Globally.

Financial/
Non-financial Data

Base for
Value Creation

Kitaeru Business Management Div., Forging Production Engineering Div.,
Forging Plant◆Subsidiaries

Asdex Corporation, AICHI FORGE PHILIPPINES, INC. (AFP),
Aichi Forge USA, INC. (AFU), AICHI FORGE (THAILAND) CO., LTD. (AFT),
Shanghai Aichi Forging Co., Ltd. (SAFC), PT. AICHI FORGING INDONESIA (AFI)

Strategies for the Medium- to Long-term Management Plan
with a Focus on Vision 2030
Priority Issue 1 Evolution into a finished product manufacturer(to become the company of choice through new added value)
To enable our automaker customers to focus on the developmentof advanced technologies in their role as mobility companies, we takebroad responsibility for the manufacturing processes of existing partsand extend our engagement to machining processes as well.
Because of our integrated production systems, handling everythingfrom steel products to forging and machining, we can reduce logistics
costs and shorten manufacturing processes, and deliver highvalue-added finished products to contribute to the successof our customers. We accelerate these efforts with new partsin particular.

Newly ordered parts for BEV electric axles

Priority Issue 2 New product development(to become the company of choice for appealing new products)

Installation of Global Standard Production Line
with a View to Overseas Expansion(Contributing to enhanced competitivenesson the global stage)business environment.

accurately understand the current state of our manufacturing

Manufacture of forgedproducts and developmentof related production
technologies

TO P I C SManagement to improve profitability even within a difficult

daily basis. In this way, we were able to more clearly andBusiness
Overview

Initiatives and Systems
as the Foundation
for Growth

Electric Axle unit

In developing new products for electric vehicles, we leverage thestrengths of our integrated forging with steel making processes to realize
synergies of steel product development, forging techniques and processdevelopment. This enables us to create new products with functionality
and quality that further exceed customer expectations.
In addition to electric axles for BEVs and mounted components for
HEVs, which are both expected to increase in demand going forward, weare looking ahead of that to the next generation and strengthening ourdevelopment efforts with a focus on parts made from new materials.
Through the development of new techniques and processes, we will also
proactively propose cost reductions through such things as eliminatingheat treatment processes and CO2 emission reductions that cancontribute to a low-carbon society.

Priority Issue 3
Building a large variety production system(to become the company for everyone duringindustry restructuring)With the number of suppliers supposed to decrease throughindustry restructuring, we are starting to plan large variety
and small quantity lines that are able to produce manydifferent products even at low volumes, at the same cost andquality as for production of current models, to contribute tostability of supply to customers as the Toyota Group’s leading
forging company. On these lines, we will divide press molding
into the separate processes of pre-forming and finish-forming,with the pre-forming process achieving revolutionary (1) setup
time reductions and (2) material yield improvements.

Pre-forming

Pre-forming
machineFinish-forming

Pre-forming

Pre-forming
machineFinishing

Deburring

Preform feed

Finishforming
machineLoading
Material feed
HeatingHigh-mix production line

(1) Revolutionary setup time reductions (project launch)(2) Revolutionary material yield improvements

Priority Issue 4 Strengthening company connectivity on global sites (to remain the company of choice globally)

Confirming achievement and difficulties of Genryou Management
through on-site inspections
Global standard production line: Integrated line from material heating,to forging, to forging isothermal annealing29

Due to the global pandemic, the whole of the Philippines (where we have a subsidiary) was placed in lockdown, so we
implemented a global back up production. Based on this example, we conducted an exhaustive verification of BAP/BCP
support for our global sites and shared the results with each of our sites.
Going forward, as the mother company, head office will continue conducting activities in close cooperation with our
subsidiaries to enhance connectivity with overseas subsidiaries.

AICHI STEEL INTEGRATED REPORT 2021

30

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 3

Smart Company
Katsunori
KojimaDirector andManaging Executive Officer
and Smart Company President

Business
Overview

Providing safety and security to people
around the world through materials
and technologies
With the enormous advantage of a wide range of solutions, the Smart Company is able toquickly respond to changes around the world as we fulfill our responsibility as a memberof the global community. We are contributing through energy, healthy lifestyles, foodsupplies, and building safe public transport systems as fields for value creation that we have

After working as Kitaeru Company President,
Katsunori Kojima took on the role of Smart
Company President in April 2019.

•
•
•

•

Major structural changes in electricvehicle components and changes
in demand for existing products
Market changes due to such things
as recognition of products for healthinsurance coverage and revisions
to the Road Traffic Act
Further increases in SDG-related needsin the medical and agricultural fields

Strengths

ProfileRisks & Opportunities

identified to help realize Vision 2030 and achieve the SDGs and carbon neutral targets.

••

Wide range of solutions
businesses related
to the SDGs
Unique technical capabilities
originating from steel making
High levels of expertiseand quality among eachof the five businesses

FY2020 Initiatives: Results (Achievements)

TO P I C S

In our daily production operations, we have worked

Next-Generation Fertilizer “PDMA” Developed
to Enable Agriculture in Poor Soil
(Helping to solve global food shortages)

honestly

topromoteGenryouManagement

andstrengthen our business foundation, through which wehave increased sales and profits, and achieved record
profitability, despite the pandemic.
We have also proactively worked on SDG-related topics

Thirty percent of cultivated land globally is alkaline, which tends tobe iron-deficient and makes growing crops difficult. Working incollaboration with Tokushima University to find a solution, we havesuccessfully developed proline deoxymugineic acid (PDMA), which isand have taken on the challenge of creating new value as

an environmentally friendly next-generation fertilizer with modified

a member of the global community.

mugineic acid, a natural substance derived from Gramineae. PDMA is

For example, MAGFINE® Dy-free bonded magnets that

biodegradable* and can be effective on crops other than Gramineae

do not use heavy rare earth materials can potentially be

as well. We are currently working to lower costs with a focus on

used for the electric water pumps used to cool electricvehicles, which would contribute to SDGs 7. Affordable
and Clean Energy, and 12. Responsible Consumption and
Production. To meet increasing demand in a timely
manner, we are gearing up for mass production anddeveloping customer supply channels.

commercialization.
With food production currently unable to keep up with population
growth, and severe food shortages certain to occur, this productis expected to increase food production and contribute to SDGs 2.
Zero Hunger by enabling use of land that is currently unsuitable for
agriculture.
The results of this research were published in the electronic versionof the British scientific journal “Nature Communications” onMarch 10.

Sale and manufacture of electronic
components, magnetic materials
and other functional products
for the next generationand development of related
production technologies

Crop growth confirmed in alkaline soil (four weeks after PDMA application)

31* Biodegradable: Quality of a substance capable of decomposition
by microorganisms or other living organisms

Financial/
Non-financial Data

Base for
Value Creation

Smart Business Management Div., Sensor Business Dept., Magnet Business Dept.,
Electronic Components Business Dept., Smart Production Engineering Div., Higashiura Plant,
Gifu Plant, Seki Plant, Magnetic Material & Parts Plant, Electronic Components Plant◆Subsidiaries Zhejiang Aichi Mechanical & Electrical Co., Ltd. (AME),
Aichi Magfine Czech s.r.o. (AMC),
Aichi Magfine Technology (Pinghu) Co., Ltd. (AMT), Aichi Europe GmbH (Ae)Strategies for the Medium-term Management Plan
Electronic components businessWith demand for electronic components expected to increase as take-up of electric vehicles grows, weare going to need flexible production support to meet that demand. In putting Genryou Management
into practice, we will maximize utilization of existing facilities and improve both productivity and quality
assurance through AI. In this way, we will dramatically expand our earnings capacity while contributing
predominantly to the field of energy. Specifically, we will work together with customers to develop
products with a focus on value-added through such things as technologies that differentiate us fromother companies, and to develop products for the next generation.

Magnets businessOur magnets business is focused on electric water pumps, which are increasingly in demand as coolingcomponents of electric vehicles. We are collaborating with the Frontier Research and Development
Division to develop such things as coating technologies for magnetic powder, and together we arepromoting sales.
As part of our development of electric axles for BEVs, we are merging MAGFINE® Dy-free bonded
magnets with high strength materials developed by leveraging the strengths of our integrated forging withsteel making processes. We have successfully verified high-speed rotation at speeds of up to 34,000
r.p.m., and size and weight reductions of 40% compared to conventional axles. We will continue
development with a view to practical application as we make contributions to the field of energy. We arefocusing on Genryou Management and delivering efficient production support, primarily to our Chinese
subsidiary, which is responsible for producing magnets globally.
In support of carbon neutrality, we will also adopt solar power generation at our Seki Plant, as amodel plant for the company, as we also make contributions to the environment.

Illustration of electric axle

Dental business
In Japan, Ministry of Health, Labor and Welfare has expressed its intention to recognize, by September
2021, dental treatment using precision dental magnetic attachments as a healthcare service covered byhealth insurance. It means that our devices have more opportunities to contribute citizen's health.
Restoration of oral function will improve overall health improved nutrition, which will also contribute tohealthy lifestyles. Going forwards, we will focus on expanding its use from Japan to China and othercountries where populations are aging.

Precision
dentalmagnetic
attachments

Sensor and metallic fiber businessWe will develop markets for sensors and metallic fibers in three main fields: magnetic
marker-based GMPS (Global Magnetic Positioning System), security, and medicine.
With revisions to the Road Traffic Act in 2020, embedding of magnetic markers
gained approval, so we are now actively promoting actual sales of the GMPS. In
the field of security, we aim to actively promote understanding by customers andbuild safe public transport systems to increase use of security gates, based on
ultra-sensitive magnetic MI Sensors, in public areas. In the field of medicine, we willcontinue promoting the use of amorphous wire metallic fiber products, andenhance related sales activities as part of our contribution to healthy lifestyles.

Iron fertilizer business

MAGFINE® Dy-free bonded magnets also help avoid resource risk

Initiatives and Systems
as the Foundation
for Growth

TetsuRiki Agri and TetsuRiki Aqua are existing products that provide ferrous ionscontinuously, necessary for crop growth. We are achieving consistent sales ofthese products through the BtoB channel, and we aim to keep profitability going
forward. In addition, we have confirmed the efficacy of TetsuRiki Aqua forrecovering Fe deficiency in crops affected by citrus greening disease, which is acitrus-specific disease spreading globally. Through a series of field trials andaccumulation of the results, we are developing a global sales network tocontribute to stable food supplies.

100 mm dia.
× 2 mm thick

20 mm▲MI sensor

BeforeMagnetic marker▶

After

Yellowed leaves, affected by citrus greening disease,
have changed into health leaves by applying of TetsuRiki Aqua.

AICHI STEEL INTEGRATED REPORT 2021

32

Vision for
Aichi Steel

Initiatives and Systems as the Foundation for Growth Priority Issue 4

SSocialPriority Issue

4

Green (planting and environmental
conservation)

Strengthen Relationships with Local Communities,
and Actively Contribute to Society

The Aichi Steel Group seeks prosperous coexistence with surrounding
communities, is conscious of its role as a “good corporate citizen,” and isactively involved with the local community. We place importance oncommunication through our social contribution activities and otherefforts, and by gaining the trust of communities and understanding of ourbusiness activities, we strive to be a company that is continually
welcomed in the community.

Twice a year, students of the Aichi Steel TechnicalTraining Institute plant flowers in the roundabout infront of Meitetsu Shurakuen Station, the station
nearest our offices, as one of our activities to clean theneighborhood.

SDGs
relevance

Social contribution activities■ Changes in the number of volunteers insocial contribution activities (cumulative)

In pursuit of harmonious coexistence and co-prosperity, Aichi Steelpromotes community-oriented activities focused around four key
words: “clean,” “green,” “creative” and “volunteerism.”
The Volunteer Center, located in the General Affairs Division,
provides information and promotes educational activities with the aimof supporting employee volunteer activities. It also offers a consultation
service and plans smaller-scale volunteer activities in which employees
and others can easily participate, and it encourages them to experience
volunteering for themselves.
During fiscal 2020, we had to dramatically reduce the number ofactivities that we held for achieving harmony with nature, and volunteer
activities, because of the pandemic. For this reason, there were far
fewer participants than normal even though we were able to holdlimited volunteer activities, such as selling bakery goods from welfare
facilities and offering a cafe with foods that support disaster recovery,and local cleanup activities like Clean Aichi Day.

10,000
Number of volunteers

Activity promotion system

9,175

6,000

7,276

5,277

5,000
4,000
3,000
2,000

2016

Financial/
Non-financial Data

Base for
Value Creation

Creative (education, culture)
Launched in 2010 to mark the 70th anniversary of our
founding, we visit schools to present a “Lesson aboutIron” to students every year. The project, which we haveheld for 10 years, aims to teach elementary school fifth
graders about the local industry of Tokai City, the largest
iron-producing region in central Japan. Through a lesson
called “Making Magnets,” we have been offering a fun
way for local elementary school students to experience
manufacturing, but we were unable to hold the lesson
during fiscal 2020 because of the pandemic. For thisreason, we have considered other options to promotefurther use of virtual
factory tours and otheractivities for people touse regardless of theconditions.
▶
Participating in “Lesson aboutIron” (photo from fiscal 2019)

Volunteer support
Website

8,000
6,629

Initiatives and Systems
as the Foundation
for Growth

9,904

9,000
7,000

▲Aichi Steel Technical Training Institute students planting
greenery on the roundabout in front of Shurakuen Station

GrowthStrategies

2017

Number ofvolunteers in FY2020

2018

2019

2020

(FY)

5,277

Established in 1993, the Aichi Steel Volunteer Fundcontinued to donate to local social welfare organizationsand volunteer groups near our company, and to provide
ongoing support after the Kumamoto Earthquake.
Another voluntary and ongoing program that employees
can participate in is the “one-coin” donation program,■ Aichi Steel Volunteer Fundwhere they donate 100 yen from their pays every month.
During fiscal 2020, although we had to dramaticallyreduce the number of volunteer activities that we held
because of the pandemic, we did hold activities where
possible.

“One-coin” donation

653 volunteers■ Volunteering and Welfare Hands-on Trial(reduction due to COVID-19)

Clean (beautification, safety, security)
In addition to holding the “Nearby roads clean-up
campaign” every two months to help clean ourneighborhoods, we have been holding Clean Aichi Day
every October since 2009, together with employees ofdomestic and overseas subsidiaries, as one of Aichi Steel's

CSR Enhancement Month activities.
We also conduct traffic safety awareness activities as a
responsible manufacturer in the automobile industry. Oneof those activities is “Zero Day” safety patrols that eachsite continues to conduct.

▲Japan Blind Tennis Federation▲OISCA International▲Potato harvesting experience in Nakashinden green space

Interaction with the community
Events and participation

Nearby roads clean-up campaign

Clean Aichi Day

Traffic safety awareness3 events, 69 volunteers 1,307 volunteers 370 volunteers

33

We hold community meetings in the cities of Tokai (February) and Kariya (December), where we promote exchanges withresidents of the local communities and actively participate in a variety of local volunteer activities. We also support activities
involving festivals, sports days and other local events in the communities surrounding our sites, and dispatch employees to assist
with the operation of those events.
We also invite local residents to events held at our headquarters and plants, and work to encourage interaction with our
employees. We had to postpone our community meeting in Tokai City in fiscal 2020 because of the pandemic, but we were finallyable to hold it when the state of emergency was lifted in April 2021. To help prevent the spread of COVID-19, we conducted ourfactory tour with participants remaining on the bus to minimize contact with our employees.
AICHI STEEL INTEGRATED REPORT 2021

34

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 5

GPriority Issue

Governance5

Increase Compliance Awareness Globally,
and Strengthen Corporate Sustainability

Shareholder's Meeting
Appoints/Dismisses

Inquiry

The Aichi Steel Group believes in the importance of realizing asustainable society through business activities in order toachieve sustainable growth and improve medium- tolong-term corporate value. Based on this belief, we work toenhance corporate governance so that we can manage our

Appoints/Dismisses
AuditsAudit & Supervisory
Board

Response

Officer Remuneration and Nomination Committee

SDGs
relevance

Makes decisions/Supervises Appoints/Dismisses
Reports to(Deliberation of critical issues, etc.)

AuditsMakes proposals to/Reports to

Accounting Audit
team

Reports to
Evaluates the appropriatenessof the account audit

Instructs/Supervises

Management Committee

businesses with a high level of fairness, transparency, andefficiency in accordance with our vision, and build strong
relationships with our shareholders, customers, and all otherstakeholders.

AuditsAppoints/Dismisses

Reports to

PresidentInternal Audit Depts.

Basic approach to corporate governanceBase for
Value Creation

Corporate governance system diagram

Board of Directors

The Aichi Steel Group is undertaking measures to further ensure governance andcompliance, enhance awareness of legal compliance, and conduct sound businessactivities worldwide. We are also revising our management structure and conducting
thorough employee training to quickly address risks.

Financial/
Non-financial Data

AuditsInstructs/Supervises

Executive committees
Instructs/Supervises
Makes decisions/Approves

Companies/Headquarters/Departments
Reports toAdvises/Aids

Group Companies

Executive management structure changed to strengthen governanceTo create a governance system that can handle difficultcompetitive environments, we changed our executive
management structure to focus on “roles” that can achieve
faster decision-making and speedier business execution.
We started by eliminating the original Officer and Executive
Officer positions, establishing a new Executive Officer position
that sits above Senior Chief as an employee position, andreducing executive ranks and numbers from 34 to 12 tosimplify the structure. In addition to the roles of General
Manager and Company President, we established a new
Officer position, instead of the previous person in charge of adivision, in order to further accelerate decision-making andbusiness execution.

Roles of each position
Managing Executive Officer

Supports the President from a management perspective while fulfilling the roles ofGeneral Manager and Company President

Executive Officer

Executes business functions on the spot through prompt management decisions, andshares information with the management team

Officer

Oversees and takes responsibility for all operations within a department as the chief
officer in charge of the department

Evolution of corporate governanceOver the years, Aichi Steel’s corporate governance structure has constantly evolved to improve the effectiveness of the directors andstrengthen governance to manage businesses with a high level of fairness, transparency, and efficiency. With the rapidly changing
business environment of recent years, from the once-in-a-century transition of the automotive industry to efforts toward carbon
neutrality, we have implemented further reforms, including simplification of the executive management structure and adoption of a
new Executive system, to accelerate decision-making and business execution. Going forward, we will continue these efforts toaccurately understand the business environment and strengthen governance.

Earlier●Appointmentof outside
Board ofAudit &
Directors andSupervisory
Audit &
Board
Supervisory
Members
Board

Corporate governance structure
Aichi Steel uses an Audit & Supervisory Board. This system
concentrates authority and responsibility for businessexecution to the Board of Directors, as the ultimate body for
management decision making, and assigns the role of audit
and supervision of the Board of Directors to the Audit &Supervisory Board and Audit & Supervisory Board Members,
which are independent of the Board of Directors and businessexecution. We believe this system achieves appropriate
management decisions and execution of duties whileproviding sufficient organizational checks and balances.

35

We employ two independent outside Directors and twooutside Audit and Supervisory Board Members, with extensive
experience and broad insights as managers, who supervise
and audit the execution of duties of the directors, and wedevelop systems that function effectively to ensure objectivity
and neutrality of management oversight.
Internally, we also develop and properly operate systems toensure the appropriateness of our operations in line with theInternal Control System Basic Policy.

Other
Committee
and Executive
Systems

2005

2010

2015

2020

●Tenure of
Directors reduced
to one year
(2006)●Number of
Directors reduced
through
introduction of an
Executive Officer
system (2013)●Appointment of outside
Directors (2015)●Number of outside Directors
increased (2016)●Started evaluating effectivenessof Board of Directors (2016)●Established Director
Remuneration and Personnel
Planning Committee (2018)●Introduced Restricted
Stock Remuneration Plan
(2020)●Established CSR
Committee (2006)●Introduced
Executive Officer
system (2013)●Established Corporate
Planning Committee (2017)●Managing Executive Officer
and Senior Managing
Executive Officer
consolidated into a single
Managing Executive
Officer role (2020)●Disbanded CSR Committee(2018)●Introduced Executive
system to simplify
executive management
structure and acceleratebusiness execution (2021)

AICHI STEEL INTEGRATED REPORT 2021

36

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 5

Compliance

Base for
Value Creation

Risk Management

Compliance promotion system

Compliance promotion system

We aim to be a trusted company through the protection of human rights
and compliance with laws and regulations, and by respecting public
decency. To enhance the overall compliance of our Group, the Corporate
Planning Committee—headed by the Corporate Planning Headquarters
General Manager—sets and reviews compliance policies on a regular basis.
Based on our internal rules and the Aichi Steel Group Action Guidelines,
we strive to improve our compliance with laws and regulations as well as
our social common sense. We enhance employee awareness by
distributing the Aichi Steel Group Action Guidelines, and compliancemanuals.

Whistle-blowing system

Person responsible
for legal
complianceCorporate Planning
Committee

General Affairs
Officer

Chair:
Corporate Planning
Headquarters
General Manager
Members:
Director, Audit &Supervisory Board
Member, Executive
Officer andExecutive
Management

Each division

3 cases

We have established internal rules, such as risk management rules and disaster prevention rules, and have established a risk management
system, so that if we face or predict a serious risk, we can take prompt and appropriate action and ensure sound business operation.

responsible for legal compliance

Persons in charge ofcompliance

Compliance Liaison Meeting
General Legal
Compliance Site

Variousdepartments

General Affairs
Div.

Risk management education
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, andwe include actual cases of crisis at Aichi Steel to heighten
employees' risk awareness and ensure they understand what
to do to prevent crisis occurrence/recurrence and what initial
response to take when a crisis occurs.
As a result of the accident on January 8, 2016, we havedeclared January 8 to be Start Over Day at Aichi Steel to raise

14
12

13

Disaster prevention and risk mitigation measures

10

10

8

8
6

5

3

4
2
2016

2017

2018

2019

We established the Earthquake Preparedness Promotion Committee
through which we are developing disaster prevention measures in theevent of an earthquake in the Nankai Trough. From February 2020, we
have been dealing with the novel coronavirus disease (COVID-19).
The main actions implemented to mitigate risk during fiscal 2020 are
detailed below.

2020 (FY)■ Companywide disaster drills

Compliance promotion activities
To enhance the compliance awareness of employees, we
provide education on compliance to all employees. The
importance of compliance is also covered in the Action
Guidelines workshop held for those promoted to each levelwithin the organization. In addition, other corporate scandalcase studies are reported to the Compliance Liaison Meetingto help prevent the recurrence of similar compliance incidents.
We also hold CSR seminars on preventing harassment, andon-site compliance training and e-learning across the company
for the purpose of preventing crime and harassment.

We plan and conduct companywide disaster drills twice ayear. In fiscal 2020, we conducted the following drills in
November. (The drills in May were canceled due to the
spread of COVID-19.)

Level-based training

299 participants
CSR Seminar

1 timeawareness of our commitment, confirmed by everyone at
Aichi Steel, to preventing such an accident from recurring. We
have also established a permanent Denshinkan Education
Center to teach and pass on to the next generation thelessons learned from the accident and our other failures, andwe provided special safety training to all employees. We also
implement measures to improve awareness, such as theJanuary 8 Remembrance Declaration that we ask all
executives and employees to make each year.

Contact point ■General Affairs Div.
■Audit & Supervisory Board Member ■Lawyer(Cases)0

Risk management system

Departmental person

Changes in whistle-blowing cases

In fiscal 2020, a total of 3 cases were reported to the Aichi Steel
Compliance Hotline, the company's whistle-blowing system. We willcontinue taking corrective measures when necessary and inform thepresident of important matters for confirmation. We will also specify in the
Code of Corporate Ethics how the system is operated and rules on theprotection of whistle-blowers to ensure that whistle-blowers are protected.
We will also continue promoting recognition and awareness of ourwhistle-blowing system among employees to further improve our internalability to govern ourselves.

(Jan)(7 levels)

Compliance Liaison Meeting

4 times(Apr, Jul, Oct, Dec)

On-site compliance training(crime and harassment prevention)
Companywide e-learning

1time

1. Evacuation drills for all employees (assuming a large
tsunami warning after an earthquake)
2. Simulation training by members of the companywide
Emergency Control Headquarters (assuming alarge-scale earthquake and then establishing an
emergency control headquarters, confirming the statusof damage, and formulating a recovery plan, etc.)■ Inspections of disaster preparedness of plants bychairman and president
The president has implemented a program of local disaster
preparedness inspections with the aim of improving disaster
preparedness in each plant. (Forging Plant)

Fair transactions with suppliers
We periodically hold Business Regulations, Procurement Edition seminars to improve compliance with the Subcontracting Act,
which is closely connected to our procurement transactions, and to avoid breaches of the act that is easy to fall foul of.

37

Financial/
Non-financial Data

Earthquake Preparedness Promotion Committee(General Administration Office: General Affairs Div.)

Human Safety
Subcommittee(Office: Human
Resources Div.)
Facility Safety
Subcommittee(Office: Facility
Engineering Div.)

Role
MissionSpecify actions toprotect lives

Role
Mission

Maintain building
and facilities toprotect lives■ Response to novel coronavirus disease (COVID-19)
To respond appropriately to this constantly changing situation,
we launched an Emergency Control Headquarters as soon as
COVID-19 started spreading in Japan. This cross-company
organization continually collected information from inside andoutside the company, reviewed internal operations, adjusted
production, and worked to maintain business continuity.
Having finished establishing the operational system, theorganization was disbanded at the end of fiscal 2020. Goingforward, we will use the knowledge gained through theEmergency Control Headquarters as we implement efforts toestablish a new business style across the company.
We have also established a Support Center to support
employees when they experience difficulties. It is continuing
to implement the following measures and provide support toprevent the spread of the disease among employees. (These
are just some examples.)● Changing workstyles to prevent infection (changing
means of commuting, working from home, reducing
business trips, etc.)● Issuing initial instructions and collecting information in■ Nighttime emergency drills

the event of an infection occurring● Procuring supplies of personal protective equipment(hand sanitizer, masks, protective gowns, etc.)

Evacuation drills have been held assuming the absence ofmany key executives and employees at such times as during
the night. (Forging Plant Office)
AICHI STEEL INTEGRATED REPORT 2021

38

Vision for
Aichi Steel

Initiatives and Systems as the Foundation for Growth Priority Issue 5

Information security
Information security guidelines

Recognizing the importance of information security
management, in order to ensure that information
management is conducted appropriately, we have establishedinternal structures, provided employees with information andeducation on rules and regulations, and conduct inspections
and so on in compliance with the All Toyota Security
Guidelines (ATSG).
The Risk Management Department conducts security
inspections to ensure that there are no issues with external
email, that employees do not carelessly take internal
information outside the office, or that USB memory, cameras,
and other devices are handled properly. Along with enhanced
checking functionality in the system, we are further enhancing
our confidentiality management structure to also provide
advice from experts.
We have applied the ATSGs at all Group companies, andare enhancing information security across the entire Aichi
Steel Group.

We, for security controls and to prevent leakages of personal
information, have established rules regarding the proceduresfor handling documents and data, sending and receipt ofemail, and management standards and procedures forcomputers and peripheral devices.

Information security promotion system
Management system and roles of each department

Administrative Depts.

In each department
Confidentiality
management supervisor(General managers ofindividual divisions)

Confidentiality
management person(Manager, who is the
person in charge ofcompliance, designatedby the general manager)

Representative
managers, etc.

Employees

Financial/
Non-financial Data

Base for
Value Creation

General Affairs Officer•Person responsible for confidentiality management

General Affairs Div. and IT Management Div.
•Creates and revises measures related to the management ofconfidential information•Audits and provides guidance according to the confidentiality
management status across the entire company•Manages systems (both technical and human aspects)

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 self-auditing of confidentiality
management status•Establishes rules for the division•Acts under the authority of the confidentiality
management supervisor(Designates confidentiality classification and sets
the operating rules within the division)•Works to promote and fully establish
confidentiality management in the division•Complies with laws, regulations, and company
rules related to confidentiality management•Gives approval, instructions, and guidance related
to confidential information used in their location•Complies with laws, regulations, and company
rules related to confidentiality management•Reports accidents, damage, illegal acts andwrongdoing to his/her superior

Supporting transformationto achieve further progress

Koichi Yasui

Examples of rules:• Document control rules• Information security control rules• Information disclosure rules• Private information protection rules, etc.

Outside Director

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

Definition of Confidential Information
All information, products, and facilities, regardless of form, thatwould disadvantage the Company if disclosed or leaked, orthat would benefit a third party, and that have been
designated as subject to restrictions on disclosure by theconfidentiality management supervisor specified under the
information security system. Confidential information
regarding other companies obtained through proper means is
also included.

Yuko Arai
Outside Director

Q1. What do you think of your own role as an outside Director?
Also, how would you rate the Aichi Steel Board of Directors?
Yasui: As a member of management in the past, I always try to
personally visit the front lines of gas supply and sales to see andconfirm situations with my own eyes. Even as an outside
Director, I think it is important to visit those sites as much as
possible to get direct access to the ideas and thoughts of thepeople working there (although it was mostly not possible thispast year because of the pandemic).
Arai: I also try to consider lessons and approaches from my own
industry when making recommendations. Vision 2030 sets out
many of the same ESG management and action guidelines
followed by the aviation industry, so I can introduce or propose
any initiatives that might be helpful while actively questioning
things from the perspective of another industry.

Yasui: I believe my role is to apply my past experiences andexpertise to continually question the Board of Directors, todiscuss any concerns I might have, and to provide support at allother times. I feel that the Aichi Steel Board of Directors lets me
perform my role and exchange opinions freely across theboundaries of the company.
Arai: In terms of a free exchange of opinions, the Board of
Directors sets aside some time before meetings to explain any
technical subject that will be discussed, which makes thediscussions more meaningful. I am also impressed with the way
they make improvements or otherwise address any of our
proposals with a sense of urgency.

Q2. How would you rate Aichi Steel’s response to significant changes in the social environment?

Information security awarenessand education
Through our CSR meetings, management receives updates oncurrent Group information security management levels, aswell as issues and ongoing efforts, ensuring a common
awareness of information security as a management issue. For
employees, a check is conducted using an “information
security checklist” for every employee using a personal
computer in their day-to-day work, regarding handling of
information devices and various related rules. Based on thoseresults, staff responsible for education in each department,along with department heads, provide individual instruction.
We also present public incidents of information leaks in anews format, and issue company-wide alerts when acomputer virus or another malicious program is discovered in
the Company, in order to raise awareness of security controls.

Number of times security
training held

39

Initiatives and Systems
as the Foundation
for Growth

Messages from Outside Directors

Information security promotion system

Overall control

GrowthStrategies

10

Yasui: The entire industry is being severely impacted by the
pandemic, so I thought it was quite impressive that the company
quickly moved to establish a new business style and showed thatthey were applying their lessons and discoveries to the future.
Arai: Speaking of rapid response, the company also did well to
respond quickly to the CASE trend, including developing the
GMPS (Global Magnetic Positioning System), and materials andparts for electric vehicles. The company has a strong awarenessof its role in contributing to the SDGs. It is actively applying its
technical capabilities, that other companies cannot match,toward the expansion of businesses in new fields like security,
medicine, and agriculture.
Yasui: Recently, the hot topic of carbon neutrality has surfaced,
representing a major change in the business environment that is
an inevitable management risk for Aichi Steel, but they haveexpressed their determination to tackle this topic throughtechnology development and new market creation. The
company has a well-established culture of taking on challenges,
so I look forward very much to seeing everyone work together
to conquer this new challenge.

Q3. What issues and other important points do you see with Aichi Steel’s medium- tolong-term growth strategies?
Yasui: With increasing complexity of initiatives andmulti-directional expansion of business fields, I really think Aichi
Steel needs to focus on depth and breadth when developing its
human resources, including both specialized personnel andpersonnel with a wider perspective who can provide oversightof the entire company. Because it has a culture of taking onchallenges, I expect to see the company overflowing with talent
who can achieve self-growth as the company grows within anenvironment that allows them to continue taking on challenges.

Arai: It is important that the management team and employees
share the same vision of what the company should be, andwhat they want it to be, in the future. I strongly commend Aichi
Steel for formulating Vision 2030 and announcing it through apresident’s press release. By doing so, they shared the details
and the company’s determination among employees, not justoutside the company, which has created a stronger unifying
force for realizing the vision. I look forward to further efforts by
the company to create safe and secure workplaces, and achieve
workstyle reform, that enables all its employees to work happily
and with vitality, and to growth together with the company.
AICHI STEEL INTEGRATED REPORT 2021

40

Vision for
Aichi Steel

GrowthStrategies

Initiatives and Systems as the Foundation for Growth Priority Issue 5

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

Directors and Audit & Supervisory Board Members

7

6

1 Takahiro Fujioka

3

2 Motoshi Nakamura

President

Executive Vice President

Attendance at Board of Directors meetings

Attendance at Board of Directors meetings

14 of 14 (100%)

14 of 14 (100%)

3 Naohiro Yasunaga

41

5

4 Katsunori Kojima

Director and Managing Executive Officer
General Manager, Manufacturing Innovation
Headquarters
Safety and Environmental Officer

Director and Managing Executive Officer
Smart Company President

Attendance at Board of Directors meetings

Attendance at Board of Directors meetings

14 of 14 (100%)

11 of 11 (100%)

5 Koichi Yasui

6 Yuko Arai

Outside Director

Outside Director

Attendance at Board of Directors meetings

Attendance at Board of Directors meetings

13 of 14 (93%)

13 of 14 (93%)

1

2

4

9

7 Hiroaki Chino

8108 Hirofumi Yokota
Audit & Supervisory Board Member

Audit & Supervisory Board Member
Attendance at Board of Directors meetings

14 of 14 (100%)

New

9 Koichi Ito

10 Katsuyuki Ogura

Outside Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Attendance at Board of Directors meetings

Attendance at Board of Directors meetings

14 of 14 (100%)

14 of 14 (100%)

Number of Directors

6Percentage of outside
Directors (number offemale directors)

33% (1)

Number of meetings of theBoard of Director
Attendance rate at Boardof Directors meetings

14
97.6%

AICHI STEEL INTEGRATED REPORT 2021

42

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Financial/Non-financial Data

Financial/
Non-financial Data

Key Financial Data (11-year summary)Base for
Value Creation(Million yen)

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020215,453

227,478

217,279

237,420

240,647

214,120

212,837

236,237

257,315

242,262

204,908

96,225110,974

130,180

121,899

68,216

Profit and loss
Net sales
Segment:

Hagane Company

32,757

Stainless Steel Company
Kitaeru Company

99,599107,352

109,217

102,018

86,012

Smart Company

13,82014,786

14,627

14,865

15,476

Other businesses

3,191

3,123

3,290

3,477

2,444

7,218

11,813

11,11913,901

3,563

5,653

8,006

9,245

8,970

–2,294

14,072

Operating profit
Segment:

8,458

7,332

9,627

10,616

5,883

Hagane Company

2,467

Stainless Steel Company
Kitaeru Company

845

2,747

1,057

3,329

1,909

Smart Company

237

348

–39

606

673

482

710

856

993

807

6.53

3.72

3.37

4.05

4.41

2.75

3.39

5.00

4.32

5.74

1.74

Ordinary profit

12,873

7,925

7,929

9,810

11,141

5,835

6,863

11,774

11,324

13,776

4,248

Profit before income taxes

11,948

7,884

7,768

9,779

10,693

1,409

8,045

12,371

10,455

13,158

4,717

Profit attributable to owners of parent

15,205

4,246

4,898

5,503

6,023

20

5,084

8,182

6,503

8,543

3,049

7.06

1.87

2.25

2.32

2.50

0.01

2.39

3.46

2.53

3.53

1.49

Capital expenditures

20,528

10,64910,272

12,93012,752

15,40820,831

19,02020,91420,06814,194

Depreciation expenses

12,475

14,447

12,84012,355

11,833

12,692

12,353

13,81814,423

15,884

16,963R&D expenses

2,776

3,337

3,597

3,471

3,538

3,282

3,304

3,777

3,992

3,758

4,054

Return on equity (ROE) (%)

13.45

3.55

3.96

4.17

4.14

0.01

3.60

5.55

4.27

5.56

1.88

Return on assets (ROA) (%)

6.30

1.76

2.04

2.23

2.33

0.01

1.95

2.99

2.30

2.99

1.03

Total assets

240,217

241,951

238,165

255,259

264,694

251,078

271,763

275,315290,294

280,380

314,040

Net assets

123,671

126,111

132,436

144,965

161,669

147,534

151,273

160,806

161,889

163,691

179,716

Capital adequacy

Other businesses
Operating profit margin (%)

Profit margin attributable to owners of parent (%)
Capital expenditures and R&D expenses

Profitability

Assets, liabilities and capital

118,682

120,786

126,323

137,592

153,316

139,344

143,024

151,891

152,638

154,647

169,811

Capital adequacy ratio (%)

49.41

49.92

53.04

53.90

57.92

55.50

52.63

55.17

52.58

55.16

54.07

Interest bearing debt

57,77358,98351,24352,04644,91537,44754,59847,31759,61859,44575,878

0.49

0.49

0.41

0.38

0.29

0.27

0.38

0.31

0.39

0.38

0.45

Cash flows from operating activities

19,787

11,16427,757

14,992

19,33625,193

13,35013,164

13,58036,308

14,793

Cash flows from investing activities–17,445–14,067–11,867–11,993–13,565–12,122–19,677–20,954–19,765–24,517–13,834

Cash flows from financing activities–22,848–741–10,198–1,911–10,158–9,466

15,231–9,5099,035–3,29014,168Net profit per share (Yen)774.89216.21

249.37279.94306.251.02

258.34415.71330.38434.05154.82

Net assets per share (Yen)6,044.28

6,148.61

6,430.50

6,995.84

7,794.08

7,080.24

7,266.42

7,716.77

7,754.80

7,857.00

8,619.39

Dividends per share (Yen)

100

100

100

100

100

100

100

120

120

130

45

Payout ratio (%)

12.9

46.3

40.1

35.7

32.7

―

38.7

28.9

36.3

30.0

29.1

4,351

4,406

4,504

4,613

4,617

4,654

4,773

4,847

4,957

4,912

4,826

Debt-equity ratio (Ratio)
Cash flows

Investment indicators

Non-financial information
Employees (Persons)

1 Every 10 shares in the Company were consolidated into one share effective of October 1, 2016. Net profit per share, net assets per share, and dividends per share
were calculated in anticipation of this share consolidation at the beginning of fiscal 2009.

43

2 The ASBJ Statement No. 28, Partial Amendments to Accounting Standard for Tax Effect Accounting (February 16, 2018) came into force at the beginning of fiscal 2018.
The key management indicators for FY2014, FY2015, FY2016 and FY2017 represent retrospective application of this accounting standard.
Indicators and other information for FY2009, FY2010, FY2011, FY2012 and FY2013 remain as they were prior to application of this accounting standard.
AICHI STEEL INTEGRATED REPORT 2021

44

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Financial/Non-financial Data

Financial Highlights

Total CO2 emissions

Operating profit and operating profit margin(Thousand t-CO2/year)(Billion yen)

Operating profit
Operating profit margin(Billion yen)

20

300

212.8

236.2

15

204.9

3.39

11.8

4.32
11.1

13.9

1.74
3.5

50

2

2017

2018

2019

2020

(FY)

Net assets and ROE

300

(%)

6

5.56

5.55

3.60
151.2

161.8

163.6

600

179.7

4

400

1.88

2017

2018

2019

2020

2018

2019

2020

2

0

(FY)

275.3

3

2.99

290.2

2

280.3

2017

S

2019

2020

(Billion yen)

100
80

0.45
0.39

0.38
0.31

60

59.6

75.8

59.4

(Ratio)(Billion yen)

0.5

15

5.1

0.3

20

0.1

2018

2019

2020

Percentage ofISO 14001-certified
subsidiaries

2000
Base year

2016

2017

10

1.6

2018

2019

0

2020

(FY)

2000
Base year

3.3

3.2

2016

2017

1.3

1.0

0.7

2018

2019

2020

8.1

1

Changes in number of employees

Changes in childcare leave■■ Male ■■ Female■■ Employees started

Percentage of female employees(Persons)

3,000

2,000

0

(FY)

(Persons)

(%)

2,663

2,687

2,733

8.0

8.2

8.2

2,466

2,451

212

20

0.0

(FY)

5

500

8.5
250

154.82
3.0

0

2016

2017

2018

■■Persons employed(%)(Persons)

100

60

0

0

2018

Employment rate
（％）

59

2.75

2.67Statutory

6

4

2.6

50

7

(FY)

employment rate

20

2020

2019

1%)

59

40

10

5

5

55

17

10

225
2020

100

100

15

2,508

221
2019

2018

10

100

(Proportion of all managers

0

2

0

2018

(FY)

2019

0

2020

(FY)

Social contribution

Changes in employee annual working hours

Changes in days of paid leave taken■■ Annual working hours■■ Days taken(Hours)(Days)

3,000

15

2,050

1,988

Social contribution expenditureand number of volunteers

Usage rate■■ Social contribution expenditure
（％）

10

13.3

13.6

66.5

68.0

1,000

5

0

0

Number of volunteers(Million yen)

100

180

(Persons)

12,000160.63
9,904

9.5
90

9,175

124.7677.58 8,000

47.5

5,277
4,000

6.5

258.34
5.0

3Changes in employment of persons
with disabilities

Employees returnedWorkstyles(Yen)

434.05330.38％(FY)

Women inmanagement positions

2018

2019

2020

2018

(FY)

2020

2019

Governance

10

91

5.3

4.7

5

1,000

0.4

47.3

2017

25.5

50

Net profit
Net profit per share

415.71

0.2

2016

％

Net profit and net profit per share

40

0

45

54.5

0.38

99.1

20

0

2018

Waste recycling rate

(FY)

Waste sent indirectly to landfill
30

2,139

Interest bearing debt
Debt-equity ratio

2020

2019

(Thousand tons)

2,000Interest bearing debt and debt-equity ratio

2018

13.2

Social

314.0

1.03

2016

2017

(FY)

(%)

200

0

2016

1.5

0

1,000
0

2005
Base year10

Website

1,200

Diversity

2.30

1.95
271.7

100

2016

2017

Total assets
2.99
ROA

(Billion yen)

4.27
160.8

2016

633.0

Environmental Waste sent directly to landfill

Total assets and ROA

Net assets
ROE(Billion yen)

0

1,400

1,195

556.7

0

0

2016

1,347

681.1

669.2
636.0

600

15

5

0

E

680.3

(Thousand tons)

7.2

100

200

4

700

1,600

1,502

1,447

1,366

650

10

150

0

6

5.74

5.00

242.2

200

(%)

(Thousand tons)

1,520

750

■■ Total CO2 emissions
Production volume

250

Base for
Value Creation

Non-financial Highlights

Net sales

257.3

Financial/
Non-financial Data

2019

2020

0

(FY)

G

Governance

Number of
Directors

6

Number of meetingsof the Boardof Director

14

0

0

(FY)

2018

Security
Number ofoutside Directors

2(incl. 1 woman)

Attendance rate at meetingsof the Boardof Directors

95.7

％

Number of
Audit &
Supervisory
Board
Members

4(of which, 2 outside
Audit & Supervisory
Board Members)

2019

2020

0
(FY)

Compliance

Number of times
security
training held

Number of compliancetraining classes

Number of serious
information
security incidents

Number of reportingand consultation
incidents

10
0

15
3

AICHI STEEL INTEGRATED REPORT 2021

46

Vision for
Aichi Steel

Value Creation

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

DNA of Aichi Steel
Aichi Steel Corporation was originally established in 1934 as the steel

2017

making division of Toyoda Automatic Loom Works (currently Toyota

Started autonomous driving trials
with autonomous driving support
system using GMPS (Global
Magnetic Positioning System)

Industries Corporation). It split off to become an independent entity

2002

in 1940, operating as Toyota Steel Works. The history of Aichi SteelSuccessfully developed andproduced MI highly

shows our efforts to contribute to society by carrying forward thespirit of our founder Kiichiro Toyoda and his belief that “Great cars are

sensitive magnetic
sensor elements

made with great steel.”

2014
Used stainless steel inMar 2021
Successfully developed

Electric Axle for
BEVs* Further downsizing (50%)
currently possible due to highperformance magnetic powder

Net sales(Billion yen)

2003

250

2018

Developed TetsuRiki Agrito promote photosynthesis invegetation

1934
Established as thesteel making
division of Toyoda

2010

Automatic Loom Works

1958
Brought stainlesssteel rolled
angle bars to150

market1935

Jan 2021
Developed 34,000 rpm,
40%* downsized

History of the Business200

next-generation PDMA
fertilizer for poor soils

2020
Completed construction ofelectric furnace exhaust

heat recovery system

the high-pressurehydrogen system of
MIRAI FCEVs

1995
Established Aichi Forge
Philippines as first overseas
forging base

2016
Built integrated production
system from raw materials
to sensors Started
production amorphous

Base for
Value Creation

Completed construction of
new production line at Gifu
Plant for power card
lead frames for electricvehicles2020

May 2021
Developed rotating

bending fatigue test
apparatus for high-pressure

Resource-saving,high-strength stainlesssteel for high-pressurehydrogen applications used
for new MIRAI FCEVs

hydrogen environments
Operatingprofit(Billion
yen)

20

wire

Developed Dy-free
MAGFINE® magnetic
powder containing no heavyrare earth metals

15

First prototype, A1 passenger
vehicle completed

100

10

1982
Developed world's
first composite steel
making process

1940
50

Split off as Toyota
Steel Works, an
independent entity

5

1945

Net sales

Changed name toOperating profit

Aichi Steel

0

0

1934〜

1960

1970

1980

Philosophy Evolution

47

1990

2000

2010

2020 2030* Consolidated since 1995
* The standards for posting sales were changed in 1998 (the portion of sales from steel making basematerial are excluded from sales of steel products)

1940

1985

1998

2018

2020

Five Main
Principles of
ToyodaOur Vision

ActionGuidelines

Aichi Way

Brand slogan

establishedcreatedestablishedestablished as
management philosophy

established

Looking forward to our 90th, 100thand other future anniversaries
AICHI STEEL INTEGRATED REPORT 2021

48

Vision for
Aichi Steel

Initiatives and Systems
as the Foundation
for Growth

GrowthStrategies

Value Creation

204.9
billion yen

Manufacturing at Aichi Steel had its beginnings in specialty steel production. While carrying on this founding DNA, it has
evolved into a wide range of businesses.

Employees: 4,826 (Consolidated)
2,733 (Non-consolidated) (as of March 31, 2021)
Business Description: Production and sale of specialty steel
products, forgings and electromagnetic products
Head Office: Tokai City, Aichi Pref., Japan%%

Sales Offices: Tokyo / Osaka / Fukuoka
Overseas Offices: Shanghai / Silicon Valley
Plants: Chita / Kariya / Forging / Higashiura / Gifu / Seki /Electronic Components

Stainless Steel Company

16.0

%

Kitaeru Company

42.0

%

Hagane Company

Stainless Steel Company

Kitaeru Company

Smart Company

Based on our experience and technical capabilities inmanufacturing specialty steels for over half a century, theAichi Steel Group continues to evolve in pursuit of being
number one in quality.

As the leading manufacturer of stainless steel shapes in Japan,
the Aichi Steel Group meets the various needs of thecustomers through large variety and small quantity productionof over 4,000 products of different shapes and types.

Leveraging the strengths of integrated forging with steel
making process, which enables in-house production of
everything from steel material to forged products, the Aichi
Steel Group is producing high value-added componentsthat contribute to lighter, higher-performance automobiles.

The Aichi Steel Group is creating new businesses across five
fields, from electronic components, magnets, dentistry andsensors, to iron fertilizers developed through knowledge of
specialty steel manufacturing.

68.2

32.7

86.0

15.4

Market presence
Hot-rolled steel bars
(alloys for structural use)
Share of Japanese
production

Market presence

No.

1

(26%)

Stainless steel shapes
and flat steel
Share of Japanese
production● Ability to offer solutions using high quality productsthat leverage the strengths of integrated forging withsteel making processes● World-class forging technologies that create highly
functional, highly accurate products

Market presence

No.

1

(70%)

Production
volume in Japanas a single
forging plant

No.

Main
products

Hot-cold-forged products and machined products (engine,
chassis and drivetrain components, etc.)

billion yen

Net sales (FY2020)

Electronic materials and components, anisotropic Nd-Fe-B
bonded magnets (MAGFINE®), dental magnetic attachments,
ultra-compact ultra-sensitive magnetic sensors (MI Sensors),
iron fertilizers, etc.

Developed
technologies● Hot-rolling technologies of various shapes anddimensions accumulated over the years since producing
Japan’s first hot-rolled stainless steel angle bar in 1958
● Stainless steel building structure engineering
technologies, including design cooperation, factory
manufacture, and on-site construction

billion yen

Mainproducts

Stainless steel shapes, round bars, deformed bars andtitanium bars, and engineering of stainless steel construction

Net sales (FY2020)

Developed
technologies● Capabilities that have evolved with the accumulationof years of experience since foundation● High quality that contributes to automobile safety,
refined through the belief that “Great cars are madewith great steel.”billion yen

Mainproducts

Carbon steels and alloys for machine structural use, steel withguaranteed hardenability for structural use, microalloyedsteel, boron steel, spring steel, high carbon chrome bearing
steel, etc.

Net sales (FY2020)

Developed
technologies

Main
productsbillion yen

Developed
technologies

Net sales (FY2020)

49

7.5

33.3

Company Profile
Establishment: March 8, 1940
Capital: 25,016 million yen (as of March 31,
2021)
Representative: Takahiro Fujioka, President

Smart Company

Hagane Company

Taking advantage of the technical capabilities we have cultivated, we are creating the products of choice for our customers.

Base for
Value Creation

Net sales (FY2020)

Sales
composition

Aichi Steel Today

Financial/
Non-financial Data

● Practical ability to expand the possibilities of a smart
society through new products that leverage steel
making technologies● Unique technical capabilities able to contribute to adiverse range of customers

Market presence

1(No. 3 globally)

Anisotropic Nd-Fe-B
bonded magnets
Share of global
production

(40%)

No.

1

Lead frames forelectric vehicles
Share ofJapanese
production

No.

1

AICHI STEEL INTEGRATED REPORT 2021

50

Vision for
Aichi Steel

Value Creation

GrowthStrategies

Initiatives and Systems
as the Foundation
for Growth

Financial/
Non-financial Data

Base for
Value Creation

About the Sustainable Development Goals

Value Creation Model

The Sustainable Development Goals (SDGs) wereadopted at a United Nations summit in September 2015as a number of goals for creating a sustainable world.
The global community is working together to achieve thegoals. Aichi Steel is also committed to the achievementof the SDGs through its businesses.

Even as our environment undergoes drastic changes, we will address social challenges through our businessactivities and achieve steady growth, supported by the spirit of our founder and his belief that “Great cars are
made with great steel.” Aichi Steel employees, who all share the Aichi Way mindset, will continue to provide
value to society with the belief that “A great society comes from great materials.” by leveraging the strengthsof materials developed since foundation in each of our business domains.

IdentityStrengths

Roots/DNA of Aichi Steel

Systems and people■ Established to manufacture thespecialty steels required forautomobiles■ Toyota Group’s only materials
manufacturer, supporting thebasic performance ofautomobiles■ Business organization comprising
Companies and a Corporate office■ HR diversity and HR development
systems to support sustainable growth

MissionAt foundation:“Great cars are made withgreat steel.”Now:“A great society comesfrom great materials.”

Business
Existing businesses
HaganeCompany

Development andmanufacturing capabilities■ Material development capabilities
handed down since foundation■ Magnet and sensor technologies derived
from steel manufacturing■ High quality, stable manufacturing
capabilities developed by the Toyota
Group

Networks and cooperation■ Global warming and air pollution■ Urbanization and aging
populations■ Information technologies andintelligent technologies■ Changes in automobiles■ Automation and driverlesstechnologies

51

Stainless SteelCompany

Specialty
Steel

Kitaeru
Company

Stainless Steel /Titanium

Smart
Company

Forgedproducts

Electro-magnetic
products

Expanded value through creativity andfurther leveraging of existing strengths

Electronic
functional
components

Batterymaterials

Motors andmagnets■ Global production and sales sites■ Robust supply chains■ Future-focused business and technicalcollaborations

GMPS (Global
Magnetic
Positioning
System)Ultra highsensitive
sensors

Autonomous
driving

Sensing andmedicalEnvironment
and energy
materials■ CO2 reductions through high strength, highperformance materials for lightweighting
vehicles■ CO2 reductions through waste heatrecovery and heat storage units■ Soil improvement and greening throughiron fertilizers■ Safer and more secure healthcare provision
through medical equipment using sensing
technologies■ Food safety through detection of foreign
matter in food
■ Safe and secure workplaces and richer
work lives

Iron
fertilizers

Supporting safe, secure andconvenient mobility

Heat storage material
developed by Aichi Steel

BEVs

BEVs

Heat storage
systems

Agriculture andbiotechnology

Financial foundation■ Healthy and robust financial foundation■ Varied financing channels■ Cash flows with highly efficient capital

Maintaining human andglobal healthLaying the foundation
for new businesses

HEVs, BEVs, FCEVs

Changes in society and theenvironment

Value for Society

New value
on social changes
and needs
社会の変化
・ focused
ニーズを睨みながら、新たな価値提供へ

Business foundation that
supports steady growth● ESG management (Environmental, Social andGovernance)● Risk management and compliance● Prioritization (safety, quality, production, costs)● Employee contentedness and growth■ Accident reductions and help formobility-impaired people throughautonomous driving support■ High strength, high performance materials
to support vehicle running, turning andstopping■ Highly functional components
for electric vehicles(BEVs and FCEVs)

Creating an exciting future■ Creating clean and safe cities throughsuperior design and maintenance-freestainless steel■ Developing materials that make our
dreams come true
(Aerospace, oceanic andunderground development
etc.)
AICHI STEEL INTEGRATED REPORT 2021

52

Primary contact: Public Relations Dept., Corporate Planning Headquarters

Released: December 2021

1, Wanowari, Arao-machi, Tokai-shi, Aichi 476-8666, Japan
Tel: +81-52-603-9216
Fax: +81-52-603-1835
https://www.aichi-steel.co.jp/ENGLISH/index.html