Introduction

The DAIDO METAL GROUP traces its history back eighty years to 1939, when the company was founded in Nagoya. On 4 November 2019 we will mark the company’s 80th anniversary.
The DAIDO METAL GROUP is the only major company in the world that specializes in producing a full lineup of plain bearings, not only for the automotive industry, which is our largest client sector, but also for ships, construction equipment, general purpose machinery and other industry sectors. The Group is also taking steps to develop core operations in sectors other than plain bearings, with the addition of two new consolidated subsidiaries to the DAIDO METAL GROUP in 2017 ‒ Iino Holding Ltd. and ATA Casting Technology Japan Co., Ltd. Global operations are expanding steadily. The DAIDO METAL GROUP now operates 38 facilities in 15 countries worldwide.
DAIDO METAL is a global leader in the field of tribology ‒ the science and technology of friction, wear resistance and lubrication. The DAIDO METAL GROUP provides a multitude of advanced, top-quality products that have earned the appreciation of customers worldwide and helped the Group establish a strong network of business partners. 2019 marks the current Emperor is planning to abdicate in Japan, so together with these historic milestones DAIDO METAL will be marking its 80th anniversary in November 2019.

Results of the previous Midterm Business Plan
(“Together To The Top”) and start of
the new plan (“Raise Up Daido Spirit”)

The DAIDO GROUP’s last Midterm Business Plan, entitled “Together To The Top”, spanned the six-year period from FY2012 through FY2017. During that period the DAIDO GROUP established solid production and sales networks in five regions worldwide, and made strides into new areas of business with the acquisition of subsidiaries Iino Holding Ltd. and ATA Casting Technology Japan Co., Ltd., in 2017. This allowed the DAIDO GROUP to surpass its sales target for the final year of the plan. However, profits fell short of the goals set out in the plan, due to industry slumps in the shipbuilding and construction machinery sectors, decelerating economic growth in emerging markets, as well as adverse exchange rate trends and rising raw materials costs. In addition, a surge of orders at the production facility in Mexico led to increased personnel costs and shipping expenses, which also weighed on profitability.
After reflecting upon the results of the previous Plan, DAIDO METAL announced its new Midterm Business Plan covering the period from FY2018 through FY2023, entitled “Raise Up Daido Spirit – Ambitious, Innovative, Challenging.” The Plan, which is discussed in greater detail in the Feature section on pages 7- 8, was drawn up with the participation of every individual in the DAIDO METAL GROUP. The new Plan is based on a full consideration of issues we found during the previous Midterm Business Plan period, as well as an effort to address the risks posed by changes in the business environment. It places an emphasis on the following four objectives.

Action line 1
Strengthen current business lines further
– True leader in Tribology

The company aims to capture the top global market share in all categories of plain bearings, and establish a firm business foundation in every sector of this business. In addition to the markets for automotive engine bearings, automotive turbocharger bearings and bearings for large-sized marine engines, where DAIDO METAL already holds the top global share, the company will aim to capture the largest share of markets for bearings used in small and medium-sized ship engines, construction equipment engines, hydroelectric, combustion and wind power generators, and industrial machinery bearings including polymer bearings. This objective is a carry-over from the last Midterm Business Plan, and reflects the Group’s continued progress towards the goal of industry dominance.

Action line 2
Creating / fostering new business lines
– Define new business areas and foster them.

As part of its effort to “develop new core businesses to complement the bearing business,” the DAIDO METAL GROUP added two subsidiaries with exposure to new industry segments ‒ Iino Holding Ltd. and ATA Casting Technology Japan Co., Ltd. For years DAIDO METAL has been building a large network of sales channels and business partners that can help cultivate these new businesses into Group’s core business area. The Group has also been steadily expanding investment in research and development, working in close collaboration with customers and industry-government-academic collaboration.
In this way, the company aims to develop new businesses in markets with good growth potential. These efforts are helping the Group to address the current paradigm shift in the automotive industry (from combustion engines to electric and hybrid motors) while expanding its presence in special bearings for non-automotive use, as well as entirely new industry sectors.

Action line 3
Enhance management /
operational control platforms
– Strengthen various platforms including production,
IT, HR, financial reporting.

Under the Group’s previous Midterm Business Plan it succeeded in establishing a production and sales network in five regions worldwide. However, in order to develop a truly solid global organization and management structure there are still a multitude of challenges to address. It is necessary to conduct a thorough strategic review of all production and sales operations in the Group for optimal global balance, strengthen global research and development activities, and leverage the capabilities of the “Internet of Things” (IoT) to create a new production infrastructure.
To this end, the Group will focus all efforts on addressing these issues under the new Midterm Business Plan with flexibility, to deal with dramatic changes in the business environment.

Action line 4
Energetic organization with
animated communication and motivation
– To develop people and organization which can
adapt to rule changes in the business.

DAIDO METAL is taking steps to promote diversity in its global workforce in order to attract the personnel that can help the Group take business growth to the next level.
In addition to providing education and trainings we are working to develop open and effective communications channels and atmosphere to invigorate the organization and promoting an environment in which all employees can actively discuss the issues that affect our future growth, all personnel enjoy a healthy balance between work and their personal life.

Promote CSR activities
as a central management issue

As stated in the DAIDO METAL GROUP CSR Policies, the Group, as a responsible corporate citizen, continues to serve the society through its business, and strives to be a trustworthy partner with customers, shareholders, employees, business partners and the communities in which we operate, with our high standard of compliance and the contribution to the community.
The Group develops new products and new materials that are energy-efficient and environmentally friendly.
Furthermore, DAIDO METAL is constantly working to improve the product quality globally.
The Group promotes sales of its environment-friendly products through various trade shows and PR activities. We are steadily reducing CO2 emissions, energy consumption and industrial waste in our global production network, and are engaged in ongoing environmental risk management activities.
The Group’s communications with stakeholders include numerous IR events mainly in Kanto and Tokai area. DAIDO METAL takes an active role in community activities in the towns where production facilities are located. For example, we hold a summer festival for residents of Inuyama and co-sponsor the “Fureai Trio Concert,” and hold many factory tours. We will continue seeking opportunities to build ties with the local community.
In the Midterm Business plan that begins in FY2018, the Group placed an importance on ESG (Environment, Society, Governance) management as a key driver to increase corporate value. There is huge potential in the field of Environment. There are many aspects in the field of Society, and we aim to create a working environment and structure where each employee can realize their potentials, promoting diversity in the workplace and better working hour management. In the Governance area, we continue to observe compliance requirements, and review our governance structure in view of new Corporate Governance Code. In this way, we promote and strengthen each element of our CSR activities.

Increasing corporate value over the longer
term with the concerted effort of the Group

In September 2018 the company made a public offering which brought in additional capital from many investors.
To meet the expectations of shareholders and other Group stakeholders, the entire DAIDO METAL GROUP needs to work in concert to increase corporate value over the mid-long term. Naturally, given the rapidly changing business environment in which we operate, it is necessary to redouble efforts to enhance our profitability. It is also essential that we increase disclosure of our nonfinancial accomplishments and the Group’s efforts in the “ESG” arena to provide our stakeholders with a full and accurate picture of our corporate value. We trust that these efforts will earn the confidence and continued support among our stakeholders.

Seigo Hanji
Chairman and Chief Executive Officer
Daido Metal Co., Ltd.