Dialogue

Watanabe

The Great East Japan Earthquake of March 11 (2011) was a massive disaster centered on the Tohoku region, and companies in the private sector suffered a wide range of damage and other negative effects. How did MHI fare?

Omiya

Before I address this issue, I would like to offer my prayers for the souls of the people who perished in this enormous disaster and also extend my sincere condolences to the people who have suffered as a result of the disaster.
As most of the MHI Group's plants are located in western Japan, our employees and factories were largely unharmed.

Watanabe

The damage from the disaster has been truly heart-wrenching. My deepest sympathies are with the many people who have been so deeply affected by the disaster. Never before had I so intensely realized just how vitally important our social infrastructure-electricity, water and so on-is to us.

Omiya

It's true that companies like ours that create the infrastructure that supports people's lives bear huge responsibility. The disaster has truly brought this home to me, as well.
At MHI, we're now putting all our efforts into restoring damaged infrastructure that incorporates our products. For example, some 10,000 of our employees have been dispatched to thermal power generation plants operated by Tokyo Electric Power and Tohoku Electric Power, and others are working to restore waste incineration facilities in the city of Sendai. We are also responding to a request by Tokyo Electric Power to provide gas turbines for thermal power generation plants and, although the reactors used at the Fukushima No.1 nuclear power plant are of a different type than our own products, we are giving our support to help bring the situation there to a swift conclusion, for example by providing maximum cooperation to prevent radioactive materials from spreading.
In addition to providing support through our business activities, promptly after the earthquake we dispatched a company jet to assist in transporting medical supplies to the people of the stricken region. The MHI Group also donated ¥500 million and our employees collected contributions toward the relief efforts. Going forward, the MHI Group will continue making every effort to rebuild the infrastructure that was destroyed and restore the affected area to normalcy as quickly as possible.

Watanabe

Mr. Omiya, you mentioned that you recognize the magnitude of MHI's corporate social responsibility (CSR) in its role as a company involved with infrastructure. I'd like to ask you, if you would, to speak a bit more about your company's thoughts on CSR.

Omiya

First of all, the MHI Group's foremost corporate social responsibility, I believe, is to provide products worldwide that will contribute to the development of a sustainable global society. The MHI Group supports society by providing many different types of infrastructure: not only power plants, but also railway systems, aircraft, ships, bridges and so on. Accordingly, I believe that our most important corporate social responsibility is to carry out our business operations and the manufacturing of our products with dedicated integrity.
Another important corporate social responsibility for us is to appropriately distribute the profits we earn from providing products to all our stakeholders-including shareholders, business partners (suppliers), local communities and employees.

Watanabe

MHI, as a company undertaking the construction of social infrastructure, is also called upon, not only to generate profits in the short term, but also to create value from the long-term perspective, isn't it?

Omiya

Yes. Naturally, we strive to return profits to our shareholders and other stakeholders as much and as quickly as possible. But as you say, developing social infrastructure is a long-term proposition.
Consider passenger aircraft, for example. Developing this sort of transportation infrastructure, on which many people's lives depend, calls for safety above all else. Ensuring this safety requires a great deal of time and money, and in this respect it's inconsistent with seeking short-term profits.
For the past several years, we've been developing a small, environmentally friendly passenger jet, the MRJ. Not too long ago we received a letter from a shareholder-actually a husband and wife. The letter read: "When my wife and I learned that MHI is developing the MRJ, the kind of product dreams are made of, we decided to become shareholders, even though 1,000 shares, the minimum trading unit, was all we could afford. Please keep working to make this a better world." Reading that letter truly gave me courage, because I could sense that the couple shared our focus on long-term value creation.

Watanabe

I too am looking forward to seeing the MRJ flying through the skies all around the world. But if your business goes global in that sense, won't your concept of CSR have to change, too?

Omiya

Absolutely. Today, the growth of the global economy is being driven less by the industrially advanced countries and more and more by the emerging economies such as China and India. Many of those countries face a variety of difficulties in areas such as securing energy and water, and demand is rising for social infrastructure to resolve these problems.
By way of response, in order to apply our "true comprehensive strengths" toward resolving these worldwide issues, in April 2010 we drew up a five-year medium-term business plan, and we are now implementing organizational reforms to put that plan into practice. In 2008, we set up the Sustainability Energy & Environment Strategic Planning Department to create proposals that combine products previously supplied separately by various departments related to energy and the environment, and this approach has already chalked up successes in many parts of the world. Then just this April, we consolidated the authority and responsibility for product operations at our business headquarters (Head Office) that previously had been divided between the business headquarters and the various works (plants). At the same time, we streamlined the functions and organization of our administrative departments and created a large common platform for forming companywide strategies, supporting improvement activities across the various business segments, and promoting more advanced business processes.

Watanabe

In other words, you strengthened the collaboration among business headquarters to better meet needs from around the world.

Omiya

Yes. Even so, developing business overseas presents difficulties on a number of fronts, so we need to apply the knowhow we've cultivated over the years and respond in line with local needs. When building a power plant, for example, individual countries have different requirements on things like the materials and colors of the internal furnishings of rooms, making detailed changes necessary. We have to take a pragmatic approach to analyzing and understanding our customers' needs.
In this way, we not only have to take into consideration the social climate and culture of each different region, but also their business practices and views on human rights and labor; additionally, we must also always keep to global standards. As a participant in the United Nations Global Compact, we work to adhere to the 10 principles set forth in the four categories of human rights, labor, the environment and anti-corruption.

Watanabe

Please tell me about the progress and major achievements of the Company's CSR activities during your three years as president.

Omiya

First, with regard to the environment, in line with the Kyoto Protocol we've set a target of cutting CO₂ emissions by an average of 6 percent, compared with the fiscal 1990 level, during the five years from fiscal 2008 through fiscal 2012; and to achieve this target we've upgraded production and air-conditioning equipment at all our factories and offices, and installed photovoltaic power generation systems. In fiscal 2010 we brought CO₂ emissions down to 440,000 tons, our target level, and as far as possible we plan to maintain these conditions going forward as we work to meet our 6 percent reduction target. Also, the products we've supplied have cut CO₂ emissions by more than 100 million tons each year (see p.31 for basis of calculation). This constitutes a major contribution to preventing global warming.
In addition, we are in the process of preparing an "MHI Environmental Vision" to clarify our medium- to long-term targets. We look for this vision to serve as our compass in contributing toward the realization of a sustainable society on various fronts-reducing CO₂ in production processes, lowering CO₂ emissions through our products, conserving resources and reducing generation of waste, and so on.

Watanabe

Ensuring "safety and security" is cited as one facet of MHI's medium-term CSR plan. I understand you've made some advances in employee safety training?

Omiya

That's correct. In April 2010, we set up an "Accident Exhibit and Materials Room" at our Technical Training Center in Nagoya. The purpose of this installation is to convey information about past product-related accidents to employees using videos and panel displays. Some 7,000 employees have visited the facility since it opened, and it has made an impression on them. Many comments have been received along the lines of "The graphic depiction of the misery that an accident can cause chilled me to the bone," or "Such accidents must never happen again." We believe that the starting point in addressing the issue of safety is for all employees who are involved in manufacturing to share in the understanding of the importance of safety. In this sense, I consider the effort has been an extremely significant success.

Watanabe

In recent years, much emphasis has also been placed on the importance of CSR in the supply chain.

Omiya

Yes, this is important. In 2009, we started addressing this issue through discussions with employees in the Procurement & Sourcing Department of each of our works. The outcome was our announcement in July 2010 of the "MHI Group Supply Chain CSR Promotion Guidelines" to promote environmental protection, respect for human rights and occupational safety among our business partners (suppliers). Moving forward, we will continue working together with our partners to fulfill our corporate social responsibilities.

Related link

• Energy-saving Activities in Offices

Watanabe

I understand that recently MHI set up an in-house nursery. This must be greatly appreciated by your employees with children.

Omiya

MHI Kira Kids Nursery

We opened the MHI Kira Kids Nursery at the Nagasaki Shipyard & Machinery Works in April 2010. One of the big social problems Japan faces is the decrease in the nation's working population owing to the falling birthrate and its aging citizenry, and we believe that to solve this problem it's necessary to create a work environment that helps employees to raise children. Having an in-house nursery makes it easier for employees to drop off their children in the morning and pick them up in the evening, and it also gives them peace of mind knowing that their children are always nearby. We've even set up a system so that employees can check up on their kids from their PC monitors.
As another initiative, we have set up the Career Return Plan enabling employees who have left their jobs to get married or have a child to return to the workplace. So far, 24 people have taken advantage of this system to return to the workplace.

Watanabe

That initiative really addresses the work-life balance

Omiya

Another is a project we introduced in 2009 called "Forum 35." This is a program targeted at employees in their mid-thirties-the "second-generation baby boomers" who play central roles at all workplaces. Meetings are convened regularly where they can have discussions with their counterparts in other departments. Their discussions are always lively, touching on topics such as interaction between individuals and organizations, families and society at large. I think the program has had a positive impact also in the way it helps people who have diverse working styles to accept each other.
We've also set up a system for rehiring employees who retired at the mandatory age but who still have a lot of vitality. Under this system, contracts can be extended up to age 65. Today employees rehired under the program are enthusiastically offering guidance to younger workers and passing on their technical expertise to the next generation. We also ask people in this program to create manuals to help pass on the skills and know-how they have built up through their long years on the job.

Watanabe

All the things I have heard here today have convinced me that MHI is a company that accepts diverse working styles. I also get a strong impression that MHI is a company where work is very rewarding.

Omiya

Thank you very much. As I commented at the beginning of our discussion, MHI is in the business of building social infrastructure, and conducting our business properly has direct implications for contributing to society. From this perspective, I believe that MHI is a rewarding place for employees. Of course, building infrastructure is a business that comes with major social responsibility. This is the very reason why we strive to create an environment where employees can work enthusiastically and make the most of their ambitions and their skills, so that MHI can contribute even more to society and be even more steadfast in fulfilling its corporate social responsibility. As a company that supports efforts to put Japan back on a quick recovery track, we know we bear a heavy burden of responsibility, and we aim to continue responding to the hopes and expectations of society. Be sure to keep watching as the MHI Group addresses these challenges.

At "M's Square" showroom, which reopened in November 2010 following renovation