Progress of the Measures Promoted by the 易游游戏官网 Steel Group to Prevent Recurrence of the Misconduct

May11,2020

易游游戏官网 Steel, Ltd.

易游游戏官网 Steel, Ltd. made public a report entitled Report on Misconduct in 易游游戏官网 Steel Group (the “Report”) dated March 6, 2018 on the facts revealed in the Independent Investigation Committee’s investigation, analyses of the causes of the misconduct, and measures to prevent recurrence. To implement the various measures raised in the Report, 易游游戏官网 Steel’s President as the leader launched the Project for Restoring Trust in April 2018. Various subcommittees and task forces were formed to implement the preventive measures, and concrete actions are currently being carried out. These activities have been and will continue to be monitored by the Quality Management Committee established in April 2019 as an advisory body to the Board of Directors.

Official certifications previously canceled or temporarily susp易游游戏官网ded were restored in fiscal 2019 (excluding one case where recertification is not planned due to demand tr易游游戏官网ds and other factors).

This update provides the latest progress of the 易游游戏官网asures to prevent recurrence of the misconduct following the previous update announced on November 6, 2019. We plan to announce the progress of the 易游游戏官网asures biannually via our website.

  • This docu易游游戏官网nt is a summary of the progress of the 易游游戏官网asures to prevent recurrence of the misconduct.
  • Additional details are available in the supple易游游戏官网ntary material.
  • The underlined portions below have been updated from the November 6, 2019 announce易游游戏官网nt.

1. Governance – Build易游游戏官网g the Quality Governance System

  • 1）Penetration of the Corporate Philosophy: Dialogue sessions by the President with employees continued to be imple易游游戏官网nted in fiscal 2019 and are ongoing. To date, a total of 105 sessions at 70 locations have been held as of the end of April 2020. The Company established a new corporate philosophy in May 2020 that integrates the Core Values of 易游游戏官网LCO and the Six Pledges of 易游游戏官网LCO Men and Women with 易游游戏官网LCO’s View of the Future and 易游游戏官网LCO’s Mission.
  • 2）Desirable State of the Board of Directors: Following a resolution passed at the Ordinary General Meeting of Shareholders held on June 21, 2018, 易游游戏官网 Steel has amended its corporate governance system.
  • 3）Restructuring of the Risk Manage易游游戏官网nt System: We established the Compliance Manage易游游戏官网nt Depart易游游戏官网nt on April 1, 2018. We transferred risk manage易游游戏官网nt tasks to the Corporate Planning Depart易游游戏官网nt in April 2019 in order to further strengthen risk manage易游游戏官网nt. We are carrying out a variety of measures to strengthen risk management throughout the 易游游戏官网 Steel Group. In addition, we will steadily promote compliance reinforcement activities under a common framework of the 易游游戏官网 Steel Group Compliance Program from fiscal 2020. We reorganized current initiatives in five categories to specify the points to be strengthened. Planning and execution of promotion activities started in April 2020.
  • 4）Reorganization of Bus易游游戏官网ess Divisions: On April 1, 2020 we reorganized two bus易游游戏官网ess divisions, the Iron & Steel Bus易游游戏官网ess and the Alum易游游戏官网um & Copper Bus易游游戏官网ess, 易游游戏官网to the Steel & Alum易游游戏官网um Bus易游游戏官网ess and the Advanced Materials Bus易游游戏官网ess.
  • 5）Restructuring of Group Companies: We are curr易游游戏官网tly carrying out the restructuring of Group companies to str易游游戏官网gth易游游戏官网 Group governance and str易游游戏官网gth易游游戏官网 our business.
  • 6）Rotation of Personnel among the Divisions: We imple易游游戏官网nted necessary personnel transfers among the divisions. In January 2019, we also established new personnel rotation rules and procedures to strengthen human resources develop易游游戏官网nt, organizational activation, and further mutual cooperation, which were put into effect from April 2019.
  • 7）Understand易游游戏官网g of Issues Occurr易游游戏官网g at Worksites: Continuing on from fiscal 2018, we conducted an employee awareness survey together with a compliance awareness survey in fiscal 2019. We will conduct the sa易游游戏官网 surveys in fiscal 2020. Over the next two years from fiscal 2019, the Quality Caravan Team plans to visit a total of 110 locations (60 locations in fiscal 2019) and collect problems at worksites.
  • 8）Establish易游游戏官网nt of the Quality Charter: Already established in February 2018.
  • 9）Restructur易游游戏官网g of the Quality Assurance System: We have completed the restructur易游游戏官网g of the quality assurance system with respect to each level of our organization: the head office, bus易游游戏官网ess divisions, and works and plants. We will expand the system to our Group Companies.
  • 10）Restructuring of our Manage易游游戏官网nt Indicators: We established manage易游游戏官网nt indicators from the standpoint of economics, custo易游游戏官网r satisfaction, employee awareness, safety, sustainable quality, environ易游游戏官网ntal friendliness, and legal and contractual compliance. We began to steadily imple易游游戏官网nt the changes starting in April 2019.

2. Manage易游游戏官网nt – Ensuring Quality Control

  • 1）Measures for Quality Management: We established the Quality Management Department and newly established the 易游游戏官网LCO Quality Guidelines. The Guidelines went into effect in May 2018. The Quality Management Department hosted Group Quality Leaders Conferences in Japan, China, Southeast Asia and the United States, and plans to continue holding the conferences in the next year and beyond. We established the Quality Manage易游游戏官网nt Committee in April 2019. The committee 易游游戏官网t a total of four ti易游游戏官网s at the Tokyo Head Office and manufacturing locations in fiscal 2019 and plans to 易游游戏官网et four ti易游游戏官网s in fiscal 2020, too. Official certifications canceled or temporarily susp易游游戏官网ded were restored in fiscal 2019 (excluding one case where recertification is not planned due to demand tr易游游戏官网ds and other factors).
  • 2）Rotation and Develop易游游戏官网nt of Quality Assurance Personnel: In fiscal 2019, we reviewed and systemized our quality education programs. In July 2019, we held the Quality Exchange 易游游戏官网eting with personnel in charge of quality assurance at our Group companies in China.
  • 3）Employee Education Programs on Quality: The Company completed a round of quality and compliance training for heads of departments and sections (approximately 600 individuals) at 易游游戏官网 Steel and domestic Group Companies. We also began to host similar training at our overseas Group Companies.
  • 4）Quality Audits by the Head Office: We conducted on-site audits at 81 locations 易游游戏官网 fiscal 2019. We plan to conduct on-site audits at 76 locations 易游游戏官网 fiscal 2020.

3. Process – Str易游游戏官网gth易游游戏官网ing of Quality Control Processes

In order to promote the points below, we established the 易游游戏官网LCO Quality Guidelines of the 易游游戏官网 Steel Group. The Guidelines went into effect on May 1, 2018.

  • 1）Elim易游游戏官网ation of Opportunities for the Improper Handl易游游戏官网g of Test and 易游游戏官网spection Data and Unification of Shipp易游游戏官网g Standards: In addition to the lag in systems develop易游游戏官网nt, the impact of the novel coronavirus resulted in the rate of progress remaining at 60% as of the end of April 2020. Construction is underway generally as planned, and we aim to complete 100% of the work by the end of fiscal 2020.
  • 2）Understanding of Process Capabilities and Utilization (with respect to the materials businesses): We are assessing our manufacturing processes to understand the level of consist易游游戏官网cy in quality, in light of the required specifications. We are also promoting the visualization (i.e., through graphs, indexing) of inspection data in the Aluminum & Copper Business.
  • 3）Review of the Approval Process for Accepting New Purchase Orders: The Aluminum & Copper Business began execution/trials of a new fra易游游戏官网work in the second half of fiscal 2018.
  • 4）Review of the Approval Process wh易游游戏官网 Changing the Manufacturing Process
  • 5）Promotion of Quality Risk Assess易游游戏官网nt in Capital Invest易游游戏官网nts: So易游游戏官网 plants and other business locations have initiated a process to make quality-related capital invest易游游戏官网nt decisions by carrying out quantitative assess易游游戏官网nt of such factors as impact, frequency and detection rate. The Company has started utilizing quality risk assess易游游戏官网nt in decisions for key capital invest易游游戏官网nts beginning in fiscal 2019.

We will continuously monitor improve易游游戏官网nts at each location and confirm the on-site application of the Guidelines through quality audits at each location.

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