May 2022 Regular Press Conference : President Hayashi's Message

(Introduction)

• In Management Vision 2.0 formulated in last November, the Chubu Electric Power Group set goals to accelerate investments in new growth areas and optimize the balance of revenue as well as achieve over 250 billion yen in consolidated ordinary income in 2030.
• On the other hand, the current business environment is very challenging due to soaring global energy prices impacted by the situation in Ukraine.
• In order to overcome this adversity and continue sustainable growth, it is important to create a lean organization where each and every individual of each group company refines their ability to think and act autonomously and responds quickly and flexibly to the fast-changing business environment.
• “Kaizen activities”, one of the Chubu Electric Power Group’s efforts to improve productivity, are a major driving force in responding to the drastically changing business environment.

(Overview of Kaizen activities)

• The Chubu Electric Power Group launched “Kaizen activities based on the Toyota Production System approach” in 2017 to enforce cost reduction as power demand decreased due to increased awareness of energy conservation after the Great East Japan Earthquake.
• 5 years have passed since its launch, and 13 groups companies are currently implementing “Kaizen activities”. The Kaizen Promotion Office, which was newly established last month, takes the lead in accelerating and establishing such activities.
• Kaizen activities review the way work is done, including not only technical field operations but also clerical desk work, with zero based thinking, aiming to make “pursuit of the essence of work” and “thorough elimination of waste” a habit. So far, the entire group has worked on approx. 2,700 Kaizen cases.

(Achievement of Kaizen activities)

• I believe “Kaizen activities” largely contribute to sustainable growth of the Chubu Electric Power Group from three aspects: “cost reduction”, “creation of new value” and “human resources development”.
• First, I would like to talk about the effect of “cost reduction”.
• “Kaizen activities” so far has achieved an estimated cumulative effect of 13 billion yen, including reduced expenditures due to streamlining maintenance management of transmission and distribution facilities and increased power generation due to improved operation rate of hydro power stations.
• Last month, the Chubu Electric Power Group set a new medium-term management goal to achieve over 180 billion yen in consolidated ordinary income in FY2050 as a milestone to achieve Management Vision 2.0.
• As the first step to achieve this goal, we work to recover profits in the domestic energy business and thoroughly reduce costs by continuing to strengthen “Kaizen activities”.
• Next, I would like to talk about contributions to the “creation of new value”.
• Previous Kaizen efforts have accelerated the streamlining of work by advancing inventory of work and reviewing the necessity and essence of each work process.
• To review the essence of work, it is necessary to think again what values and needs customers desire.
• By making this a habit, I feel that the awareness to provide services which are more attentive to customers and to improve the essence of work is increasing within the entire organization.
• Additionally, work streamlining resulting from Kaizen activities has reduced the workload by approx. 1,600 people’s worth of workload.
• This has enabled shifting approx. 460 people to new growth areas and strengthening and upgrading of conventional work, which has proven to generate “human resources” and “time” to create new values and profits.
• The Chubu Electric Power Group aims to increase the proportion of profits generated by new growth areas and transform our business structure. “Kaizen activities” are expected to largely advance this transformation.
• The third point I would like to talk about is “human resources development”.
• I believe Management Vision 2.0 can only be achieved with the growth and success of each and every individual of each group company.
• “Kaizen activities” need to overcome many hurdles to review the way we have been doing our work with zero based thinking.
• I believe that we can acquire the mental strength to continue challenging new business areas and the ability to think outside the competition even in a severe business environment by working diligently and repeatedly through ingenuity and trial-and-error.
• Additionally, visualizing the results of our efforts lets individuals feel the significance and role of their own efforts, as the objectives, issues, measures and effects of our daily work are clarified.
• In this way, each and every employee can accumulate successful experiences as parties involved in Kaizen activities, which will enhance work satisfaction and autonomy and also improve work-life balance.
• We have gained positive responses from an internal survey, where more than 80% of our employees answered that they felt a change in their awareness of work objectives and how they conduct their work.
• Therefore, I feel that “Kaizen activities” are not merely rationalization efforts but largely contribute to the development of human resources as a training ground for people development.

(Conclusion)

• As I have discussed, “Kaizen activities” of the Chubu Electric Power Group are steadily achieving results.
• There is no end to “Kaizen activities” which aim to improve productivity. In order to make the activities more autonomous, we will develop human resources who become leaders of the activities in each section and further permeate “Kaizen awareness” among employees through workplace discussions.
• I will continue to take the lead in further expanding and deepening these activities so as to establish Kaizen awareness, build a flexible but strong business foundation and realize Management Vision 2.0.
• This ends my presentation.