In June 2022, Achilles Corporation celebrated its 75th anniversary, and embarked on the next 25 years of its corporate history. This new beginning has by no means been smooth sailing. With global climate change, frequent natural disasters, and the trend towards smaller families and the aging of the population starting to become a serious issue in Japan, there are a wide variety of factors that are adding uncertainty to people’s lives. At the same time, the global economy is becoming ever more complex due to the effects of globalization, and the social environment within which Achilles operates is being transformed at an ever more rapid pace. Given this background, for our company to achieve sustained development as it heads toward its 100th anniversary, we need to proceed with renewal, including the appointment of a new president, and strive for constant enhancement of corporate value, and to this end we have transitioned to a new system.
Regarding the transition to become a company with an Audit and Supervisory Committee, this will enable members of the Committee to exercise votes at meetings of the Board of Directors, and can be expected to enhance the effectiveness of the oversight and auditing of the directors. Furthermore, strengthening the monitoring of the Board of Directors will take the company’s corporate governance to a higher level and enable the realization of more transparent management, and in this way, we are aiming to put in place a system that responds more precisely to the need of stakeholders, both within and outside Japan.
Achilles Corporation is structured with eight business divisions, and we have a wide range of products—including shoes, housing construction materials, automotive materials, electronics materials, products related to daily life and film products—that are popular with customers across diverse markets. I recognize that this is an important strength for our company, something that was brought home to me through my experience of working in the sales division, where you are closer to the customer, for many years.
I believe that the key to growth for our company is to link these different businesses together to create new value by leveraging the company’s total capability. As an example, in October 2021 we established a new Disaster Response Division, with the aim of strengthening our disaster preparedness, disaster response and infectious disease prevention products by integrating them. Another example is our conductive covering materials, which have been adopted by leading automotive manufacturers, and which were created through integration of our automotive materials and anti-static product businesses. Going forward, we will continue to implement initiatives of this kind that involve coordination between different business divisions.
With regard to the creation of new value, while creating highly original new products and services is very important, an important keyword for our company’s business strategy is “high social utility.” Our disaster response business is one manifestation of this commitment, but there are also various other social issues, such as the emergence of the hyper-aged society, food loss, and Japan’s relatively low self-sufficiency in food. Achilles has product lines that can play a useful role in addressing these issues, including film products for use in the agricultural sector, products related to livestock raising, and insulating materials that can help food to keep longer. By making effective use of the product commercialization technology that we have accumulated over the years, in the future we will aim to continue expanding our business areas based around a commitment to high social utility.
In addition, in regard to our other existing products, we aim to provide products that embody a higher level of processing as well as new services. Rather than just supplying products, we are strengthening our ability to disseminate information to our target markets, and working to provide additional “information value.” I believe that being able to provide highly original products and services that incorporate information value will help to further strengthen the brand value of our company’s products, and hopefully also increase our corporate value.
A further point is that, from the perspective of realizing high social utility, it is very important to provide resource-saving, energy-saving products and services, and we aim to conduct our business activities in a way that minimizes greenhouse gas emissions.
For Japanese manufacturing industry, expanding one’s range of business areas generally makes it necessary to develop business operations overseas. Our new automotive materials factory in China (located in Foshan, Guangdong Province) is scheduled to begin operation this year, and we are launching a medical film project in the USA. We are making effective use of our existing and new overseas production and sales facilities, and taking on the challenge of expanding into new fields.
Crude oil prices have been high since the beginning of last year. Going forward, although it is anticipated that the global economy will return to something closer to normal in the post-COVID era, and although business sentiment is expected to improve, on the other hand, it is likely that the price of natural resources will remain high and that raw material prices will continue to rise, due to factors such as increased demand for crude oil and naphtha, and the possibility that the conflict in Ukraine will continue for an extended period.
There are many factors affecting raw material prices, and it can be assumed that it will continue to be difficult to predict how they will fluctuate. With regard to these cost increases, we will be striving to eliminate waste and absorb as much of the increase as possible, through measures that will include rapid implementation of initiatives to enhance productivity through the use of smart processes and digital technology, with a focus on manufacturing.
Nevertheless, the fact remains that there are areas where we cannot absorb all of the increased costs just through our own internal efforts, and we will need to secure our customers’ understanding for price adjustments that will be needed to maintain profitability. Over the medium to long term, we will be working to establish alternatives to existing raw materials, and to commercialize non-naphtha-derived raw materials.
We continue to set environmental targets every year as part of our internal environmental improvement activities. Regarding the goal of becoming carbon neutral, in FY 2021 we set a medium- to long-term target of reducing total CO2 emissions deriving from energy use by 30% by the end of FY 2030 (compared to the base year FY 2018). Starting last year, we have begun to investigate and consider concrete strategies for achieving this goal, including switching over to using “green” electric power, adopting co-generation systems, adopting solar power for internal use, and various energy-saving measures. In November 2021, we began implementing a gradual transition to green electric power.
Our Environmental Committee, which was established in 1999 to deliberate on all environment-related matters in connection with manufacturing, provides advice on strategies for energy-saving, switching over to alternative energy sources, reducing CFC emissions, reducing waste, and realizing more efficient transportation as a company designated as a Specified Shipper under Japan’s Act on the Rational Use of Energy.
Besides aiming to become carbon neutral in our own production processes, Achilles is also targeting all CO2 emissions, from raw materials procurement through to product use and disposal, and is aiming to respond to the Japanese government’s goal of realizing carbon neutrality by 2050, by scrutinizing key trends and technology evolution both within and outside Japan, and considering all options. More specifically, the whole company is working together as one to actively utilize renewable energy at our production sites, improve productivity through smart processes and digital technology, and eliminate waste, including the generation of physical waste.
In the future, we will also be working to further strengthen our dissemination of information relating to these targets and to the results achieved.
A further point is that the “green” growth strategy announced by the Japanese government along with its commitment to achieving carbon neutrality includes energy-saving goals and initiatives to foster widespread adoption of zero-energy housing. As the high-performance heat insulation that our company manufactures can be used to develop high-performance housing at lower cost, I believe that we can make a positive contribution toward achieving energy-saving goals and bringing about the widespread adoption of zero-energy housing.
It goes without saying that, of the various categories of management resources, human resources are the most important. Our company is proud of the fact that, traditionally, we have cultivated a corporate culture that values every individual employee, but we need to take this a step further. The diversity of our human resources will be important for our future growth, and to this end, we are working to build friendly workplaces characterized by mutual respect and by a serious effort to respect and accept one another.
In addition, in cultivating the human resources needed for global business development and in developing and in expanding the scope of application of the smart processes that we have developed in our manufacturing operations to include the sales division and back-office departments, we are strengthening training, etc. aimed at cultivating the human resources needed to drive digital transformation (DX). Going forward, in order to promote organizational diversity, we will be building working environments in which everyone can fulfill their potential, regardless of their personal identity, and we will be implementing workstyle reforms.
It is also very important for a manufacturing enterprise to strengthen its intellectual property, and particularly in relation to our Technical Center and other product development related units, we have worked to create an environment that encourages people to try new things and to challenge themselves.
First of all, I would like to take the opportunity to thank Professor Doi, who provided these suggestions. As a global enterprise, the Achilles Group needs to commit itself to continue striving to take the needs of all multi-stakeholders into account.
Regarding the three issues that were raised by Professor Doi— Responding to human rights risk in the supply chain; Circularity-related initiatives; and Concrete measures addressing climate change and carbon neutrality—while we are already taking steps to address these issues, going forward, besides working to further enhance the effectiveness of the measures that we take, the comments from Professor Doi have provided a valuable opportunity for us to reinforce our recognition of the need for promoting disclosure of information in a way that meets our stakeholders’ needs.
With regard to human rights risk in the supply chain, in FY 2021 we conducted a questionnaire survey of our main business partners for the first time. A summary of the survey results is presented in this report, but I think that, going forward, we will need to review the survey methods used, particularly in relation to suppliers where there is deemed to be a particularly high level of risk. Regarding our contribution to circularity and the resource-circulating society, from the perspective of reducing risk associated with the destruction of natural capital, which includes measures taken in response to global warming, with regard to changing the raw materials that we use and our medium- to long-term approach to our business model, I believe that we need to consider strategies that will contribute toward enhancing corporate value. As regards concrete measures for achieving carbon neutrality, initially, we will be implementing thorough energy-saving measures, and proceeding with a systematic transition to green electric power. Over the long term, we will be thinking in terms of adopting energy sources that do not generate CO2 emissions, and adopting new technologies, and our fundamental approach will be to respond to these issues in a way that optimizes costs.
Since joining Achilles in 1985, apart from two years spent supervising the company’s manufacturing division, I have been working in the sales division the whole time, including periods spent working in Osaka and Fukuoka.
My responsibility for the future is to address the various issues that I have outlined in detail above, taking the company’s corporate philosophy as a foundation, and leading all Achilles executive officers, and all Achilles Group employees, to further increase the speed at which we tackle these issues and improve the practical results achieved.
Taking as a foundation the technology, knowhow, and business partner network, that Achilles has built up over the past 75 years, I am convinced that, if we combine the capabilities of all Achilles Group employees, we can continue to generate new value. One thing that I am particularly aware of due to having continuously worked in roles that brought me into close contact with customers is that one of Achilles’ strengths is the positive feelings that many customers across a wide range of markets have toward our company. I hope that our customers will provide us with an even higher level of support as we strive to make effective use of this strength by implementing initiatives that involve horizontal integration across not only the disaster response business but also other business areas, and as we work to generate new value.