Corporate Strategy 2010

Corporate Strategy
2010
Corporate Profile
Tsugami continues to provide world-leading
high precision, high speed, high rigidity
machine tools at all times.
As a result of the Company's relentless pursuit of
ultra-precision machining technology ever since
it was first established in 1937, Tsugami provides
machine tools that offer high precision, high speed
and high rigidity.
As a comprehensive manufacturer of compact
ultra-precision machinery, Tsugami boasts a wide
range of products, including automatic lathes,
grinding machines, machining centers and thread
rolling machines, all of which combine to create
total production system solutions.
Special - purpose machines and
other businesses
3.3%
Machine tool business
96.7%
Sales by sector (FY2009)
We will continue to focus all of our energies
on developing compact, high speed, high
precision machine tools capable of quickly catering to demand within the
manufacturing industry in the future, including demand for vehicular components
with environmental, energy saving and safety capabilities, demand for compact
terminals and handsets in the increasingly precision-oriented telecommunications
sector and demand for ultra-precision machined items in the medical sector.
CONTENTS
Corporate Profile
P. 1
Our Products
P. 2
Core Markets
P. 3
Topics
P. 4
Medium and Long-Term Management Strategies / Interview with the CEO
P. 5
Global Network
P. 7
Company Directors / Corporate Governance
P. 8
Company Overview
P. 9
PRECISION TSUGAMI 2010
1
Our Products
Machine Tool Business
CNC Precision Automatic Lathes
Special-purpose machines and other businesses
3.3%
The special arrangement of tools
minimizes the heat effect and the cast Rolling machines, etc. 11.8%
iron base suppresses vibrations during
high-speed operation. Hence, it enables Machining centers 3.4%
stable and accurate processing for a
Grinding machines 6.4%
Automatic lathes
long time. The model is best suited
75.1%
to high-precision, mass production
of automobile parts, hard disk drive
components, of f ice automation
equipment, medical and dental
equipment, digital cameras, cellular
phones and other small par ts in a
wide range of fields, including optical
communications.
Sales by machine types (FY2009)
CNC Precision Cylindrical Grinding Machines
This machine enables cylindrical grinding processing of small and medium components in
the fields ranging from unhardened material to highly rigid parts made of hardened steel
and ceramics.
The device can handle diverse items, ranging from single components, such as mold pins,
to a fully automatic processing system equipped with an autoloader automatic checker for
processed products such as automobile engines, transmissions and oil hydraulic parts, IT
components, and medical and dental equipment. With these capabilities, the machine can
meet all of our customer's manufacturing needs.
CNC Precision Machining
Centers
W e op e r a t e a r a n g e o f
m a c hinin g c e n t e r s t ha t
are equipped for a diverse
arr ay of pr o c e s sing, on
component s including
small aluminum parts for
IT products such as household electronics and office
automation equipment, and steel parts for automobiles
and industrial machiner y. We propose the optimal
system for all our models both the vertical and horizontal
types which have a space-saving design that makes
plant layout easy.
Precision Thread Rolling
Machines and Other Items
We supply plastic working
machines that transfer the
shape of rolling dies onto
materials, either via hydraulic
pressure between a pair of
rotating rolling dies or by
clamping the material using a
servo motor.
As part of the rolling die manufacturing process,
we also handle items such as screws, knurls, high
precision lead screws, worms and formings.
Special-purpose machines and Other Businesses
We manufacture and sell precision instruments
and tools produced based on superior precision
machining technology and advanced quality
control, including special-purpose machines,
gauge blocks, rolling dies and screw inserts.
PRECISION TSUGAMI 2010
2
Core Markets
Reliable high precision, high speed and high rigidity,
even when operating 24 hours a day
Tsugami’s superior ultra-precision machining technology
is of such a high standard that it even leads the field in the
rapidly evolving IT sector.
Hard disk drives (HDD), as used in computers and other
equipment, are a prime example. Having developed
CNC high precision automatic lathes capable of handling
machining at a microscopic submicron level on a mass
production basis, we are playing a crucial supporting role
in the evolution of HDD and have secured a large share of
the market.
Technology developed by Tsugami in this sector is also
essential for purposes such as processing peripheral
engine components for vehicles so as to meet
environment, energy saving and safety requirements.
Other
Industry
IT Industry
Automotive
Industry
Sales by Industry (FY2009)
In the medical sector too, our technology is also used to
process difficult-to-cut materials for items such as artificial bones and dental implants.
On other fronts, we continue to develop new products capable of quickly catering to demand for compact
terminals and handsets in the increasingly precision-oriented telecommunications sector and a wide range
of other manufacturing needs.
Our strength stems from the fact that, in addition to machine tools, we have a wide range of peripheral
technologies designed to facilitate high-precision machining, including work material, tooling technology
and tools.
Components manufactured by Tsugami
Automotive parts
HDD FDB parts
processing
Digital camera and mobile phone parts
Bone screws and implants
and more
PRECISION TSUGAMI 2010
3
Topics
Increasing production capacity
China: Production base for low price products
Precision Tsugami (China)
Corporation
Established as a 100% subsidiary in Zhejiang
Province in September 2003.
Demand from emerging markets,
especially China, and surrounding areas
have been strong since the end of 2009,
and the monthly production capacity of
the factory increased to 400 units in the
first quarter of FY2010. We plan to further
expand the factory and increase the
capacity to 600 units by the fall of 2010.
Changes in monthly production capacity in China factory
Japan: As bases for developing
and producing key components
and high-end models,the factories
work600
on further advances in ultraprecision
500 machining technology.
700
600
500
400
300
200
100
0
FY2007
FY2008
FY2009
FY2010
Fall
(plan)
Although the factories in Japan suspended operation
400
during the economic downturn, they are in full
production
300for manufacturing high-end models, for
which demand has recovered, and key components
for models
200 are being manufactured in China. In
response to strong demand, we are requesting
100 surrounding Niigata Prefecture to
companies
cooperate in production, helping to increase the
0
operating rate
in the area.
Nagaoka Factory
Shinshu Factory
Takami Factory
Niigata Factory
PRECISION TSUGAMI 2010
4
Medium and Long-Term Management Strategies /
Interview with the CEO
Medium and Long-Term Management Strategies
Tsugami Corporation ("the Company") is pursuing three key
challenges as its medium-term management strategies.
Introduction of new products targeting areas with high growth potential
We are committed to developing new products that fully meet customer needs in areas with high
growth potential, such as automotive components required for ecological and energy-saving
initiatives, IT with greater precision including hard disk drives (HDD) and digital cameras, and
processing of small, high-precision components in the telecommunications and medical fields.
Business strategies focused on growth regions
Over the medium and long term, we will seek to rapidly strengthen our business to further enhance
our production, sales, and after-sales services systems in markets such as China, Southeast Asia,
and India where capital spending is robust.
Additionally, we will actively promote sales in Europe where our products have yet to fully penetrate
the markets, through a subsidiary in Germany and new partnerships with local distributors. The
alliance with Tornos in Switzerland to manufacture and market machine tools has been steadily
producing results.
Higher management efficiency and customer satisfaction
To strengthen the Group, we will unify our sales, production, and administrative systems and
maximize management efficiency at all Group companies.
We will also dedicate ourselves to a management approach that earns the trust of our customers,
constantly aiming to increase customer satisfaction through continuous efforts to provide new
products and enhance services that meet their needs.
Interview with CEO
Review of operations in FY2009
Q: Please describe the results for fiscal
2009?
Although there were certain signs of a recovery
in fiscal 2009 from the economic downturn
triggered by the global financial crisis in fiscal
2008, the Japanese economy continued to face
a challenging situation, compared to the situation
before the economic downturn.
The machine tool industry as a whole recovered
slowly, but did not reach the level before the
downturn. However, demand in China and other
emerging economies in Asia picked up from the
end of 2009, and the IT industry, including the
field of hard disk drivers, started to recover.
In the circumstances, orders received were high
from the fourth quarter of FY2009. The entire
Group reviewed and strove to streamline its
production system as it increased the production
capacity of the China factory to respond to a strong
yen and to bolster its price competitiveness.
As a result of declines in consolidated net sales in
the first quarter through the third quarter, which
were not offset by a recovery in the fourth quarter,
consolidated net sales for the fiscal year under
review came to 15,598 million yen (down 31.2%
year on year). Consolidated operating income was
84 million yen (down 89.5%). The consolidated
ordinary loss and net loss were 117 million yen and
244 million yen, respectively.
PRECISION TSUGAMI 2010
5
Before and after the global
slump
Q: Have there been any changes in Tsugami
after the global slump from the latter half of
FY2008 through FY2009?
The business structure of Tsugami has changed
drastically.
In the depression in the wake of the so-called
Lehman shock, Tsugami strove to reduce fixed
costs by closing two domestic plants and laying
off certain employees. As a result, although the
Company posted a net loss in the fiscal year ended
March 2010, it was able to minimize the loss.
Markets have been recovering across the globe,
especially in China and other emerging economies
in Asia, since the end of last year, but the Japan,
U.S. and European economies have yet to see a full
recovery. That means that the market environment
surrounding Tsugami has changed drastically after
the Lehman shock. We believe it is important to
respond to the change.
local corporations in Asia and has been forming
alliances, including capital alliances, in Europe and
the United States. Through those initiatives, we
aim to make the most of our resources, including
human resources.
Return to shareholders
Q: What is your basic stance on returns to
shareholders?
With respect to dividends, we would like to focus
on boosting returns to shareholders with the aim
of continuing stable dividend payments, while
considering the link with operating results as well
as the purchase of treasury stock.
I ask our shareholders for your continued support
and encouragement in the years to come.
Specifically, we need to consider how to develop
emerging markets in Asia including China. The
most important question is how to enhance our
production and sales system for products that sell
best in Asia.
Overseas operations and
localization
Q: Why are your operations in China
successful?
Tsugami had superiority in sales in China. In
addition, we have introduced local production
successfully, and sales channels have been
developing. Another major reason is that we have
left the management of our operations in China in
the charge of excellent local staff.
Q: What are your views on your overseas
operations?
As overseas sales are accounting for increasing
percentages of overall sales, bolstering and
developing overseas operations is an important
challenge. Tsugami has established several
Takao Nishijima
Chairman and C.E.O.
PRECISION TSUGAMI 2010
6
Global Network
Japan
TSUGAMI Corporation
Head office :
9-10, Horidome-cho 1-chome,
Nihonbashi, Chuo-ku, Tokyo
Plants :
Nagaoka Plant
Shinshu Plant
Takami Plant
Niigata Plant
Sales & After sales Offices :
East Japan Marketing Division (Tokyo)
Nagaoka Marketing Division (Nagaoka)
Suwa Marketing Division (Suwa)
Central Japan Marketing Division (Nagoya)
West Japan Marketing Division (Osaka)
Sendai Office
Takasaki Office
Hitachi Office
Shinshu Office
Hamamatsu Office
Hiroshima Office
Fukuoka Office
Nagaoka City, Niigata Pref.
Saku City, Nagano Pref.
Nagaoka City Niigata Pref.
Niigata City Niigata Pref.
Group Companies :
Tsugami Machinery Co., Ltd.
Tsugami General Service Co., Ltd.
Tsugami Precision Co., Ltd.
U.S.A.
Affiliates REM SALES, LLC
Europe
Tsugami (Germany ) GmbH
Asia
Korea
China
TSUGAMI KOREA Co., Ltd
TSUGAMI Corporation Shanghai Office
Precision Tsugami (China) Corporation
Precision Tsugami (China) Corporation Shanghai Branch
Precision Tsugami (China) Corporation office in Dongguan, Guangdong
Thai
Tsugami (Thai) Co., Ltd.
PRECISION TSUGAMI 2010
7
Company Directors / Corporate Governance
Company Directors
Directors and Auditors :
(as of June 18, 2010)
Representative Director, Chairman and CEO
Takao Nishijima
Representative Director and Senior Executive Officer
Yoshiharu Kikuchi
Representative Director and Senior Executive Officer
Toshiharu Niijima
Director and Managing Executive Officer
Toshio Honma
Director and Managing Executive Officer
Donglei TANG
Outside Director
Takeo Nakagawa
Outside Director
Mitsuhiro Masumi
Standing Statutory Auditor
Ikuo Oomiya
Outside Statutory Auditor
Kunimasa Ohta
Outside Statutory Auditor
Yoshifumi Miyata
Outside Statutory Auditor
Hiroaki Tamai
Corporate Governance
The basis of the management of the Company is to contribute to society by constantly anticipating the needs of the market
and to create new value underpinned by the precision technologies we have been developing since our founding. Under
this basic policy, we seek to strengthen legal compliance and practice sound and transparent management to properly
execute our duties and sustain long-term growth.
Tsugami recognizes that the return of profits to shareholders is one of its most important business tasks. Under the
principle of steady dividend payments and retaining treasury stocks, we will return profits based on improvements in our
consolidated earnings.
1. Corporate Governance Framework
The Company has adopted the corporate auditor system, consisting of the Board of Directors and the Board of Statutory
Auditors. The Board of Directors and the Board of Statutory Auditors are our basic structure of corporate governance.
The Board of Directors of the Company is comprised of seven directors, with two outside directors, as of June 18, 2010. The
term of directors is set at one year to better clarify management responsibility.
The Board of Statutory Auditors is made up of four statutory auditors, including three outside statutory auditors. The statutory
auditors always attend the meetings of the Board of Directors and other major meetings, and audit the execution of duties by
directors as well as company-wide business and financial conditions.
2. Internal Control System and Risk Management Framework
As one of its most important business tasks, the Company is committed to creating a system for ensurnig proper business
operations and credible financial reporting (internal control system).
Specifically, Tsugami has set up an Audit Office, operating under the direct control of the President, to audit situations such
as compliance with laws, regulations, and Articles of Incorporation that are related to the Company and its subsidiaries. In
conjunction with these efforts, the Audit Office is striving to manage the risk of loss and secure proper business operations.
Tsugami has developed a basic policy to meet the requirements of a system to prohibit dealings with antisocial forces.
The Company is making all employees aware of the policy through the Tsugami Group Code of Conduct. To ensure that all
employees execute their duties in compliance with laws, regulations and the Articles of Incorporation, the Company has
established systems such as the Compliance Committee, Information Security Committee, Business Improvement Committee,
and the Whistleblowing System.
Tsugami is creating a Risk Management Committee, aimed at identifying and managing any kind of risks inherent in its business
activities, and is building a system for preventing and preparing for potential risks.
PRECISION TSUGAMI 2010
8
Company Overview
Company Overview
( as of March 31, 2010 )
Company History
Corporte Name : Tsugami Corporation
Established : March 15, 1937
June 1923
Research into gauge blocks started at Honjo Ohira-cho in
Tokyo by founder Taisuke Tsugami
March 1937
Tsugami Mfg. Co. Ltd. established in Nagaoka, Niigata
prefecture, and production of gauge blocks started
June 1939
Production of T-TML500 L-type thread milling machine
started
Head Office : 9-10, Horidome-cho 1-chome,
Nihonbashi, Chuo-ku, Tokyo
Production of T- UG300 hydraulic universal cylindrical
grinding machine started
October 1942
Paid-in Capital : 10,599 million yen
Tsugami Precision Engineering Industry Co. Ltd. established
and factory constructed in Saku, Nagano prefecture
Tsugami Precision Engineering Industry Co. Ltd. absorbed
into Tsugami Mfg. Co. Ltd in February 1945 and renamed
Shinshu Factory
570
Number of Employees : Consolidated
Non-consolidated 517
June 1946
Listed stock exchange : Tokyo (Code: 6101)
Production of grinding machines, thread rolling machines
and sewing machines started (ban on production of machine
tools issued)
May 1949
Stock listed on Tokyo, Osaka and Niigata stock exchanges
November 1957
Production and sale of T7 sliding headstock automatic lathe
started
April 1968
14th Okochi Memorial Production Prize awarded for
outstanding research and development results in the field of
thread rolling technology
November 1970
Company name changed to Tsugami Corporation
October 1972
2nd Okoshi Memorial Prize awarded for outstanding
research and development results in the field of gear
grinding machines
September 1973
VCL gang-tool type automatic lathe equipped with leadturner capabilities completed
June 1978
Mercury series CNC precision automatic lathes developed
and sales launched
March 1982
PAN1 CNC precision automatic lathe awarded 12th
Automation Machinery Prize for small and medium-sized
enterprises
October 1982
Company name rebranded in Japanese
March 1984
MA3 machining center awarded 14th Automation Machinery
Prize for small and medium-sized enterprises
July 1992
S20 series CNC precision automatic lathes awarded 22nd
Machine Design Award
March 1993
S20 series CNC precision automatic lathes awarded 23rd
Automation Machinery Prize for small and medium sized
enterprises
Shares : Authorized sharesres 320,000,000 shares
Issued shares
68,019,379 shares
Treasury shares
1,154,303 shares
Number of shareholders : 13,279
Major shareholders :
Owner ratio
Mizuho Trust & Banking Co., Ltd.
(Employee retirement benefit trust of Tokyo Seimitsu Co.,
Ltd., new trust custodian: Trust &
Custody Service Bank, Ltd.)
6.8%
The Dai-Ichi Mutual Life Insurance Company
(now The Dai-ichi Life Insurance Company,
Limited)
3.1%
Mori Seiki Co., Ltd.
2.9%
Sumitomo Mitsui Banking Corporation
2.2%
The Hokuetsu Bank, Ltd.
2.2%
May 1994
Subsidiary Tsugami Precision Co. Ltd. certified as authorized
proofreader for end standards (gauge blocks) using the
Traceability System measuring method
Japan Trustee Service Bank, Ltd.
(Trust account)
1.9%
January 1999
Shinshu Factory certified under ISO 9001 (Quality Control
Management Systems)
February 1999
Nagaoka Factory certified under ISO 9001 (Quality Control
Management Systems)
October 2000
Automatic lathe assembly plant completed at Nagaoka
Factory
November 2000
Nagaoka Factory certified under ISO 14001 (Environmental
Management Systems)
July 2001
Grinding machine assembly plant completed at Nagaoka
Factory
September 2003
Precision Tsugami (China) Corporation established
April 2004
Consolidated subsidiary Tsugami Machine Tool Trading
Corp. absorbed into Tsugami Corporation
November 2005
New plants completed at Nagaoka Factory and Shinshu
Factory
August 2006
Precision Tsugami (China) Corporation Shanghai Branch
established
April 2007
Tsugami Corporation South Korea Branch established
November 2007
European subsidiary Tsugami GmbH established in Germany
February 2008
Machine tool production and sales alliance concluded with
Swiss company Tornos SA
December 2008
New factory extension completed at Precision Tsugami
(China) Corporation
January 2009
Consolidated subsidiary Tsugami Shimamoto Ltd. absorbed
into Tsugami Corporation
February 2010
Subsidiary TSUGAMI KOREA Co., Ltd. established in Korea
Business year : From April 1 each year to March 31
of the following year
Annual shareholders meeting : June each year
Surplus dividends :
The record date for the year end dividend shall
be March 31 each year.
When paying interim dividends, the record date
shall be September 30 each year.
Shareholder register and securities agent :
Mitsubishi UFJ Trust Banking Corporation
10-11, Higashisuna 7-chome, Koto-ku, Tokyo
137-8081
PRECISION TSUGAMI 2010
9
1-9-10, Horidome-cho, Nihonbashi,
Chuo-ku,Tokyo 103-0012, JAPAN
TEL.03-3808-1172 FAX.03-3808-1175
http://www.tsugami.co.jp/