Greetings

Resources for the futur  Looking ahead to the next 100 years

Introduction

I would first like to reiterate our deep apologies to shareholders and others concerned for the great inconvenience and anxiety we have caused due to the accounting problems that started at our U.S. subsidiary, Suminoe Textile of America Corporation. These accounting problems produced a significant delay in our announcing the financial results for fiscal year ended May 2016 and for the first quarter of fiscal year ending May 2017, and resulted in corrections to the financial statements for the past four fiscal years. These problems have keenly reminded us that it is of the utmost importance for top-level executives to re-learn what corporate governance ought to be, and to promote a sense of moral awareness so as to enable each and every member of our various organizations to always know what is the ethical thing to do.
Striking a balance between profit seeking and contributing to the environment and society is a difficult challenge in managing a business. However, I believe that we must pursue a corporate vision that values harmony as we advance toward the establishment of a sustainable society. We are determined to intensify our efforts to realize high ideals, while maintaining fair and favorable relationships with individual stakeholders. Moreover, we remain well aware of the importance of compliance with laws and regulations as well as social norms and corporate ethics, and will share this sense of values among all executives and employees of the Group companies.



Accelerating Overseas Expansion and Establishing a Mechanism to Cope with Changes in World Affairs

The Suminoe Textile Group has been accelerating its overseas expansion for more than 20 years since 1994, when we branched out into Thailand. The Group has now increased its global presence to include 13 establishments in six countries. Our overseas sales account for roughly 30% of total sales. If limited to the automotive textile business, the ratio of overseas sales has already exceeded 50%, with the number of overseas employees constituting about half the total number of consolidated Group companies. We have globally allocated our management resources, including human resources, in an optimal manner, thereby enabling all Suminoe Textile establishments to constantly work to achieve the highest level in terms of quality, price and supply of products. Meanwhile, to expand our scope of business amid turbulent world affairs, it is absolutely necessary to develop our management capacity to keep pace with various changes. We also need to establish a stronger governance system and ensure full compliance across the Group. We will strive to raise our risk awareness, sort out matters of concern every day, implement measures, formulate rules and conduct follow-up verification without putting off a problem into the future. By establishing such a series of actions as a “mechanism” within our organizations, we will create a system that can respond appropriately to any changes.



Contribution toward the Realization of a Recycling-Oriented Society

Our Company has released ECOS®, recycled carpet tiles produced using horizontal recycling technology, which has achieved a post-consumption recycled material usage rate of 83% as well as a 44% reduction in CO2 emissions (as compared with other products of Suminoe Textile, according to LCA results). These figures are unprecedented in the world. ECOS® is a series of eco-friendly and high-efficiency products that has established a technology for producing new carpet tiles by recycling used carpet tiles. Its technological level is remarkably higher than that of conventional recycling models.
In the future, Suminoe Textile Group will continue to proactively develop environmentally friendly products in line with our fundamental development philosophy of “KKR+A (Kenko [Health], Kankyo [Environment], Recycle and Amenity),” thereby contributing to the creation of a recycling-oriented society.



Growing as a Global Enterprise through Diversification of Human Resources

The employees are the company's most important resources. I understand that human resources are always so important in business management. To nurture human resources who will take the lead in the future, we will cultivate the business operation skills and son-site capabilities of employees by adopting our predecessors' instruction skills and improvement methods while passing on techniques and expertise from one generation to the next. With the recognition that education must always be workplace-oriented, we will create a working environment where individual employees can maximize their own abilities, by incorporating opinions, especially from young and female employees, and deepening mutual understanding. As we step up our overseas expansion efforts, we will continue to respect the characteristics and culture of each region and promote diversification of human resources, thereby enhancing our comprehensive strengths as a global enterprise.



Bequeathing Traditional Techniques to Future Generations and Spurring New Technological Innovations

Suminoe Textile Co., Ltd. owns Tango Textile Co., Ltd., a subsidiary at which experts in hand-weaving techniques are working to produce plush hand-woven curtains and hand-woven carpets. Together with the Kyoto Traditional Art and Craft Factory, which manufactures brocades, Tango Textile is committed to passing on traditional techniques to future generations. It is difficult to preserve hand-weaving techniques in business management, which requires improvements in work efficiency. However, we consider that passing on traditional culture is also one of the social responsibilities that Suminoe Textile Group must fulfill as an interior manufacturer. In recent years, we have undertaken the production of new plush hand-woven curtains by using an electronic jacquard loom in conjunction with a computer, in an attempt to put new life into the tradition. As a pioneering manufacturer in the interior industry, we will redouble our efforts not only to maintain traditional techniques, but also to develop next-generation technologies.



Ichizo Yoshikawa
Chairman and President
Suminoe Textile Co., Ltd.