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Issued on January 6, 2017
Sumitomo Wiring Systems, Ltd.

Summary of New Year speech of 2017 (for employees)

Osamu Inoue, President

The world auto industry, the North American and Chinese auto markets have remained favorable and the European auto market has been on a recovery trend. The Brazilian and Russian auto markets have been experiencing serious shrinkage, in addition, for the Japanese auto market, market expansion cannot be expected due to the declining birth rates and an aging population and the sluggish domestic kei car market, and accordingly, it is experiencing a very difficult situation.
Although it is anticipated that the SWS group will receive orders at a good rate for the time being, the order volume may fluctuate greatly depending on changes in market environments. I ask you to obtain accurate information quickly and share it globally. I also ask you to prepare for any likely environmental changes that may take place, so that we can respond to these flexibly and quickly.
In light of the above, I will make three requests this year.

The first request is to advance ‘Reduction 10’.
Since 2013, we have promoted cost reduction activities under the slogan of Reduction 10. The cost competition has intensified due to the customers’ mega-platform strategy, the expanded emerging markets and diversified needs of customers. In addition, we have to secure money required for the development in order to respond to new technologies for next generation vehicles. In order to develop our wiring harness business in a sustainable manner in the midst of such a tough business environment, we need to implement unprecedented cost-cutting measures. I would like you to continue promoting the Reduction 10 Activity toward an annual cost reduction of 10% by deepening the activity.

The second request is to enhance development/suggestion capabilities and quick conversion into commercial products.
The major trend of automotive technology is the electronization. The electronization will be further accelerated as the electrification and autonomous driving technology are advanced at the same time. It is no exaggeration to say that the electronics technology supports all areas of environment, safety, and convenience, which are market needs. In the future, we cannot survive through severe global competition unless we add higher value to our competitive strengths. I would like you to promote concept-in activities so that customers can increase its advantage in competitions by utilizing highly unique, value-added product development abilities. Moreover, the technological development by customers and competitors has accelerated and the time for late comers to catch up has shortened. Therefore, I would like you to enhance abilities to collect and analyze information to achieve the speeding up of the commercialization of new items.

The third request is the reinforcement of our global marketing power.
In severe competition with our competitors, we should place our focus on the following three matters: cost and profitability, technological strengths and the speed of commercialization, and customer satisfaction. In the trend of customers’ mega-platform strategy, we should strengthen the system to develop products at a low cost in order to meet diversified needs of customers in different countries and regions. In the global market, I would like you to expand the business and increase the profitability by consistently making a customer-based response rather than region-based response and grasping the needs of customers. In addition, competitors and regions and areas of competitions change as a paradigm shift in the auto industry progresses. Therefore, I would also like you to speed up of the transformation by strengthening of our response capabilities in the global business.

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