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By actively working to solve social issues through our businesses, we aim to contribute to the achievement of the SDGs and Daido Steel’s sustained growth.

Coexistence of Society and Environment

“Beyond the Special” was established as a slogan for the Daido Steel Group in 2016 to mark its 100th founding anniversary. The slogan embodies our aspirations to be an enterprise that is passionate about continuously supporting people and society by delivering what we call “Beyond the Special Value.” Moreover, the industrial world now faces a wave of technological innovation, driven by what has been described as a once-in-acentury transformation in the automobile industry and the ongoing march of the Digital Revolution. Additionally, customer needs are changing as part of efforts to address stricter environmental regulations worldwide and solve social issues such as the risk of climate change. Demand has been increasing for materials that will fulfill those needs.

In this environment, we have arrived at the conclusion that Daido Steel should fulfill the role of supporting customers’ technological innovation by supplying high-performance materials, that is, materials that add “Beyond the Special Value” to steel. That is why we have adopted our basic management policy.

Daido Steel manufactures two types of specialty steel. The first type is mass-produced specialty steel with a wide range of applications. The other type is special steel or special materials, as the term “specialty steel” suggests. The latter type offers high-performance features such as high heat resistance, corrosion resistance, and cleanliness. These new materials are developed for use in specific applications based on customer needs, and at times are developed jointly with customers. Among these materials are high-performance magnets for motors installed in hybrid and electric vehicles and super-clean stainless steel needed for semiconductor manufacturing equipment. Accordingly, we take pride in conducting monozukuri (manufacturing) that will support the mobility society of the future and the innovative technologies that will be realized by 5G. “Beyond the Special” expresses what the Daido Steel Group seeks to be: an enterprise that continually supplies materials that contribute to innovation in these sorts of industries through collaborative creation with customers.

The future of mobility, including automobiles, is steadily heading in the direction of electrification and automation. However, we should continue to see manufacturers compete to improve the efficiency of gasoline engines for some time. To achieve highly efficient internal combustion engines, it is essential to have materials with properties such as the heat and corrosion resistance needed to tolerate usage under the demanding conditions of high temperatures and high engine revolution speeds. Meanwhile, the electrification of automobiles cannot be realized without high-performance magnets. Therefore, the High Performance Materials and Magnetic Materials segment, which covers such materials, has been positioned as a growth field. Portfolio reform was also identified as a key priority. The goal of portfolio reform is to shift from structural materials to high-performance materials. Over the past two years (fiscal 2018 to fiscal 2019), Daido Steel has actively made capital investments to strengthen its supply capacity for high-performance materials and has built a framework to meet customer demand. We have identified market changes and customer needs and have increased capacity and made capital investments to ensure a steady supply of materials. Therefore, we will put the finishing touches on the plan in fiscal 2020 by steadily putting these capabilities into action.

Looking at current conditions, the COVID-19 crisis has led to increasing uncertainty. Nonetheless, the demand environment will reemerge as the world overcomes the current situation and the global economy returns to strength. We need to put preparations in place to ensure that we can fully address this demand environment when it does return. For this purpose, and in order to establish business fundamentals that can tolerate even low levels of operation, we will implement measures such as cost reductions, selective capital investments, and curtailment of cash outflows.

The Sustainable Development Goals (SDGs) have become a prominent topic of discussion not just in business circles, but also in the news media, and I believe that public recognition of the SDGs has been growing. Social issues on a global scale cannot be solved through the activities of countries and governments alone. To solve these issues, the active involvement and efforts of companies are still essential. We believe that the best way for Daido Steel to contribute to a sustainable society, as targeted by the SDGs, is to clearly identify what it can do to solve social issues through its businesses.

Based on this belief, we have identified Daido Steel’s material issues (P14–15). Some of the material issues we have identified through extensive discussions overlap with the items we have implemented so far as part of our CSR activities. From the perspective of solving issues, we need to conduct activities that go a little further than our CSR activities. For example, activities to reduce CO2 emissions have been undertaken at Daido Steel until now on a standalone basis. From now on, it will be crucial to make modifications within the supply chain from suppliers to customers to whom our products are supplied. In addition, we would like to build on our strengths by implementing even more in-depth measures than before in the fields of safety and human resources, where we had already devoted efforts in the past. In the current fiscal year, we have completed the process up to the stage of identifying and organizing issues.

Unless we can earn the trust of stakeholders, the meaning of our existence as a company will be lost. Daido Steel’s material issues describe what it must do now in order to be a company that continues to earn the trust of society and preserves the meaning of its existence 30, 50 and 100 years from now. As the SDGs and ESG investment increase the importance of sustainability, we believe that implementing sustainable management while flexibly handling changes to the key issues we must address, brought on by changes in the business environment or social trends, will pave the way for Daido Steel’s sustained growth.

Daido Steel’s founder, Momosuke Fukuzawa, established a set of principles called Gokai Jussoku (The Ten Principles of Conduct) to guide the behavior of employees. In the first four of the ten principles, the founder stressed the primacy of the customer with the word juyouka (customers). We have carried on the message left to us by our founder, an entrepreneur from a century ago, who urged us to always remember the basic principle of business: Take good care of your customers. Our history of embracing this message and handing it down to future generations, always staying close to our customers, and growing together with our customers has shaped what Daido Steel is today. While perfecting Quality, Cost, Delivery (QCD), a pillar of the manufacturing business, we will continue working to implement sustainability initiatives as a comprehensive specialty steel manufacturer that fulfills the trust of its customers and all other stakeholders.