What is your evaluation of UACJ’s corporate governance system?

Asano More than three years has passed since integrating the former companies, and I believe I can safely say that UACJ’s governance system surpassed the standard level of systems found in most Japanese corporations from the beginning. But I’m not suggesting that this was easy to achieve. The two former aluminum manufacturers, Furukawa-Sky Aluminum Corporation and Sumitomo Light Metal Industries Ltd., must have survived through their unique histories and corporate cultures independently and utilizing different business strategies. Accordingly, it probably wasn’t easy to integrate the managements of two organizations into one.

Sone To be honest, when attending the first board meeting after the companies were integrated. I could see a notable difference in the corporate climate, I was a bit worried, and thought to myself, “Is this really going to work?”

Suzuki Yes, things did not move so smoothly in the beginning. But every time an important decision needed to be made, for example, regarding investments for overseas acquisitions, there was rapid progress in communications and sharing of issue awareness among the board members. I could sense that a feeling of unity and teamwork had formed in management. Witnessing this, I could really see how the corporate culture developed.

Sugiyama I only became an outside director in June of last year, so I am not aware of situations before then. But I feel that present-day board meetings function very smoothly. I also attend the Group Business Report Session held monthly in order to deepen my understanding of business operations. There, I can feel the excitement in the remarks of the participants, each of them wanting “everybody to work together to build the company.”

Sone Of course, we are only half way there, but overall in terms of evaluating the adjustments required for the organization and governance, integration is progressing.

How do you follow-up on decisions made on issues such as investing in overseas acquisitions?

Asano Overseas M&A projects are an important aspect that will have a large influence on the future of UACJ. For that reason, As an outside auditor, I confirm whether or not the case in question has been discussed thoroughly by the departments concerned and if an internal consensus has been obtained.

Sugiyama M&A proposals require considerable internal discussion, and the amount of time for board meetings is limited. So it’s very important carefully confirm the review process and make sure everything is prepared correctly beforehand.

Asano That’s why I not only ask the individual in charge about the details of past discussions, but if I feel the response is not sufficient, I go through all of the meeting minutes. For very important projects, I try to attend the meetings for preparing proposals as well.

Is there anything that can be done to raise the level of governance at UACJ?

Sone One thing that can be done is to increase the awareness of corporate governance throughout the Group. By this, I mean explaining what corporate governance is and why it’s important to ensure strict compliance throughout the organization. This must be recognized not only by top management such as the chairman, president and directors, but also by all companies and employees in the Group. Another issue is the need to create a system that enhances the effectiveness governance. For example, processes should not stop after conducting a routine check according to the bylaws and reporting, “There is no problem.” Even if rules have not been violated, there is no company entirely free from underlying problematic issues. The reason for conducting the review in the first place should be clarified and addressed.

Suzuki Yes, in addition to reviewing the actions of management according to the prescribed rules, a system is needed to proactively reveal underlying issues and risks involving corporate management.

Sone Isn’t it important to follow the PDCA cycle based on results in order to continually raise the level of management quality one level higher?

Do you have any suggestions as to what UACJ needs to do to achieve sustainable growth as a major global aluminum supplier?

Sone UACJ accelerated investments in Asia and North America after integrating the former companies. In terms of global management, the Group lacks experience in this area. Japanese common sense cannot simply be applied to all international business scenarios with the expectation of a successful outcome. In the overseas M&A projects, for example, how operations are managed after acquisition is extremely important. Even if the company acquired has performed well in the past, it’s essential to ensure that everything is not left up to local management and to have UACJ personnel capable of hands-on management in place

Suzuki For that purpose, personnel with the expertise and skills need to be actively recruited. At the same time, it’s important to make the present staff up to the mid-management level aware of the way forward planned, and instill in them the motivation to be leaders of international business.

Sugiyama I think “diversity” is a key word describing what the UACJ Group must have to strengthen its global management. The other day, I had the opportunity to talk with a few women working as specialists at the Technical Research Center in Nagoya, and left with the impression that they are highly motivated in their work. In addition to promoting active roles for women in management, how to manage people of various nationalities who are now employed by companies in the Group as a result of M&As, etc. is important as well. UACJ must help each employee understand how maximize to his/her potential. Furthermore, with the increasing global attention being drawn to corporate environmental management responsibility, UACJ should proactively release information regarding its environmental conservation initiatives, such as utilizing recycled aluminum materials in its products and reducing CO₂ emissions, to the international society.

Asano In addition to strengthening global management capabilities, I also believe it’s important to further strengthen engineering prowess from the mid-to long-term perspective. UACJ’s vision is to be recognized as a major aluminum industry leader in a competitive global market, and engineering prowess is one of the keys to having that competitive edge.

Sone To compete in the global market requires simultaneously reducing cost and improving quality through innovative production engineering. To cultivate new markets and new applications as an aluminum manufacturer, it’s necessary to increase basic research on materials and product development.

Asano Currently, UACJ is proactively making large-scale upfront investments, and it's important to ride out this cycle with all companies doing their absolute best in support of it. Once the investment phase is over, I expect it to grow to be one of the world's most outstanding major aluminum suppliers. To sharpen the edge it has over the competition, I think it is necessary to raise the level of comprehensive engineering prowess yet another level.

Suzuki Although outside directors and outside auditors are in a different position from that of employees in the Company, our objectives for UACJ are the same: achieve sustainable growth and increase the corporate value. We should all do our best for the Company, utilizing our knowledge and experience to the fullest to maximize results.