Firstly, my heart goes out to all of those who have lost their lives to the novel coronavirus. I would like to take this opportunity to express my deepest condolences to all of the families who are now grieving as a result of this terrible disease. At the same time, I pray for the swift recovery of each and every person currently afflicted with COVID-19. I would also like to take this opportunity to express my heartfelt gratitude and admiration for all of those who are working tirelessly to care for the sick and prevent the further spread of COVID-19 on the front lines of medicine all over the world. The Sumitomo Rubber Group started out as the very first modern tire factory in Japan, founded in 1909 as the Far East manufacturing base of the British Dunlop Rubber Company. In the years that followed, as Japan rapidly industrialized and then achieved unprecedented economic growth in the post-war era, our group has also vastly expanded in terms of both the scale and scope of our business activities, bringing us to where we are today as a global corporate group. In our over 100 years of history, the Sumitomo Rubber Group has overcome various crises and adapted to respond to numerous changes in the business environment. Through all of this, however, we have never wavered in putting the health, safety and wellbeing of our customers, our business partners and our employees first and foremost in word and deed.
Moving forward, in order to continue to adapt and grow our business in the midst of a constantly changing business environment, we will not only work to continuously reinforce our corporate governance system, but will also strive to cultivate the next generation of talent, who will play an essential role in driving the future development of our business. At the same time, we will continue to make active contributions to local communities around the world so that we may enhance both the economic value and the societal value of our group.
Formulated in 2012, our VISION 2020 set forth a roadmap for expanding our business, with a focus on overseas markets in particular, toward achieving our stated goal of becoming a True Global Player. Our groupwide efforts to accomplish VISION 2020 were primarily driven by three key Growth Engines: “The Challenges of New Markets,” “An Insatiable Drive for Innovation” and “Entering New Business Fields.”
Toward building a global network for manufacturing and sales, the Sumitomo Rubber Group spent the last decade establishing new operational bases all over the world. On the manufacturing side, we built new factories in Hunan (our second factory in China) and Brazil and acquired an existing factory in South Africa. On the sales side, we established new sales companies in India and Australia and acquired the rights to use the DUNLOP trademark throughout all of Africa. The year 2015 marked a major turning point for our group. The dissolution of our Global Alliance with the American Goodyear Tire & Rubber Company resulted in our acquisition of a factory in the United States and gave us much greater freedom to sell our tires in European and North American markets, which in turn led to the rapid acceleration of our global business expansion. Meanwhile, we took full advantage of our new factory in Turkey (which began manufacturing operations in 2015) to increase sales in European markets. In addition, we also acquired a major tire retail chain in the United Kingdom: Micheldever Tyre & Auto Services. As a result of these developments, we have had great success in increasing the market share of our FALKEN brand in Europe.
Over the past decade, the Sumitomo Rubber Group has taken full advantage of proprietary technologies that expand the possibilities of rubber in order to bring to market various new products that better fulfill both economic and societal needs. In 2013, we developed and brought to market “ENASAVE 100,” our groundbreaking 100% fossil resource-free tires made from all-natural renewable resources. In 2016, we followed this up with the release of “ENASAVE NEXT II,” fuel-efficient tires developed using our “ADVANCED 4D NANO DESIGN” New Materials Development Technology. These and other environmentally friendly technologies have won us numerous accolades, including the “Grand Prize for the Global Environment Award” and a “Nikkei Global Environmental Technology Award.” In 2018, we unveiled “SMART TYRE CONCEPT,” putting forward our bold new vision for the future of tires. The very next year, we released “ENASAVE NEXT III,” tires that incorporate Performance Sustaining Technology developed in keeping with our visionary New Technology Development Concept.
With the aim of growing our overall business, we have been actively expanding into new markets and new fields of business. As part of these efforts, we have aggressively expanded our OE supply business to gain market share among overseas automakers, particularly in Europe and North America. As a result, our group’s overall OE tire sales volume increased by 37% between 2012 and 2019. Meanwhile, in our Industrial and Other Products Business, our flagship “MIRAIE” Vibration Control Units for Detached Housing received widespread acclaim for their effectiveness in protecting buildings during earthquakes in Kumamoto and Hokkaido, which led to their subsequent adoption at Kumamoto Castle and Higashi Honganji Temple. Thanks in part to the growing trust placed in them, sales of our vibration control units increased by 192% between 2012 and 2019. In addition, we have also greatly expanded our Rubber Parts for Medical Applications Business in major markets in Europe, acquiring the Swiss medical rubber products manufacturer Lonstroff AG in 2015 and launching a new factory in Slovenia in 2019.
Through the initiatives undertaken as part of VISION 2020, our group has succeeded in building the necessary framework to become a truly global business.
At the same time, however, there are still some issues to work out when it comes to our group’s profitability. In particular, our newly built factories in Brazil and Turkey are still in the process of ramping up production, while our newly acquired factories in the United States and South Africa are still struggling with productivity issues, meaning that these factories have yet to fulfill their full potential. Although we did not achieve the performance targets set forth in VISION 2020, we did succeed in vastly expanding the scope of our business activities and building a global network for manufacturing and sales. Moving forward, we will endeavor to improve our overall business performance by maximizing the returns on our investments to date while moving forward with new initiatives with the aim of adapting to various ongoing changes in our business environment.
Our New Midterm Plan is a comprehensive business plan that aims to further enhance our corporate value between now and 2025 by pushing forward with new initiatives that, while firmly grounded in our efforts up until now, will also look ahead to a brighter future.
Our New Midterm Plan aims to build on our previous efforts by fully harnessing our “Insatiable Drive for Innovation” to advance our SMART TYRE CONCEPT to the next level while maximizing the results that we reap from the global business framework that we have built up through taking on the “Challenges of New Markets” and “Entering New Business Fields.” In addition, in order to ensure the successful implementation of our New Midterm Plan, we have launched a new groupwide project to promote various initiatives that aim to reinforce the framework of our organization and generate greater profits. We call this project the “Be the Change” Project to Reinforce the Foundations of Our Business. Meanwhile, we will continue striving to enhance both our group’s economic value and our value to society through ongoing efforts driven by three key Value Drivers: “Developing & Promoting Sales of Advanced Products,” “Creating New Value” and “Promoting ESG Management.”
In the initial stage, the “Be the Change” Project will focus on initiatives to reinforce our organizational framework as we build up the necessary momentum to break through barriers to further growth. Having thus equipped ourselves with the strength to get things done and see things through, we will then be ready to move on to the next stage of this project: initiatives to generate greater profits. We have already initiated talent management and global personnel development activities as part of our efforts to reinforce the framework of our business, as well as activities to improve cashflow and cost effectiveness as part of our efforts to generate profits.
Even as global economic development brings increases in worldwide demand, it also drives increasingly fierce competition in markets throughout the world. Nevertheless, the Sumitomo Rubber Group will continue working to enhance our corporate value by developing and promoting sales of advanced products that incorporate second-to-none technologies throughout our Tire Business, our Sports Business and our Industrial and Other Products Business. In our Tire Business, we will develop and promote sales of advanced tires with a focus on SUVs while also working to increase our share of OE fitment in the luxury vehicle market. In our Sports Business, we will work to increase sales in the world’s largest market, North America, by bringing top-notch products to market. In our Industrial and Other Products Business, we will expand manufacturing and sales of rubber parts for medical applications in Europe in order to meet growing demand for these products coinciding with the rapid growth of the overall healthcare industry.
As the automotive industry is transformed by new innovations such as CASE and MaaS, the Sumitomo Rubber Group will continue to provide new value by further advancing our SMART TYRE CONCEPT to the next level and beyond in order to continue bringing advanced products and services to market. We believe that the Mobility Society of the Future will have a need for tires that provide new types of value, such as Maintenance-Free Tires, Trouble-Free Tires and Tires with Reduced Environmental Impact. In order to meet the needs of autonomous driving and make ride-sharing even more convenient, we are pushing forward with the development of basic technologies on various fronts, advancing R&D related to rubber properties, tire structures, tire management systems and so forth. At the same time, we are also aiming to create even greater value by strengthening cooperative relationships with our business partners and taking active part in collaboration that brings together industry, government and academia.
In recent years, Sustainable Development Goals (SDGs) have been receiving more and more attention. Meanwhile, our company has long been actively engaged in efforts that aim to find solutions to environmental and societal issues with an eye toward making our society more sustainable. For example, we have long been striving to make our business activities more environmentally friendly by offering a full lineup of fuel-efficient tires, not to mention “ENASAVE 100,” our revolutionary tires made from 100% fossil resource-free, all-natural raw materials. At the same time, we have also been working to contribute to society outside of our business through activities involving tree planting, efforts to preserve biodiversity and other socially conscious volunteer activities.
Of course, all of these activities are fully in line with the Sumitomo Business Philosophy, which has been passed down through generations over the 400-year history of Sumitomo. Moving forward, we will continue striving to create new value by engaging in business activities that emphasize both “Enhancing Our Economic Value” and “Enhancing Our Value to Society.” In tandem with these activities, we will also continue to promote ESG Management while working to contribute to the achievement of SDGs toward realizing a sustainable society – a society where everyone can live and work in safety and with peace of mind.
President and CEO, Representative Director