New Year's Greeting from the President Koji Miyahara
January 4, 2005
I wish you all a Happy New Year!
At the beginning of this new year, I would like to make a new start for this year with all the people who work for the NYK Group in a fresh state of mind.
Last year, the rapid expansion of the Chinese economy and the sustained boom in the U.S. economy contributed a great deal to the world economy. Furthermore, fast-growing Russia, India, and Brazil, the European Union (EU) with its expanded market, and the closer-knit ASEAN economies helped to boost the momentum of world economic growth.
It is generally agreed that a year of the summer Olympic Games and of a U.S. presidential election always brings a prosperous economy. This was borne out by and large last year.
Then, how and where the world will move this year.
According to a forecast by the Organization for Economic Cooperation and Development (OECD), the growth rate of the world economy will slacken somewhat. Moreover, there are a number of disquieting factors for the NYK Group, such as soaring prices for crude oil, fears of the dollar's depreciation and economic slowdown in the U.S. due to that country's deficits, and the problems of cooling the overheated Chinese economy and revaluing the Chinese currency. We cannot afford to turn a blind eye to these developments.
According to United Nations (UN) population statistics, the population of the market economies, which stood at three billion in the 1980s, has now increased to about six billion after the collapse of the Berlin Wall.
What we should note in this context is that the intermediate strata of consumers have shown steep increases of hundreds of millions of people over the past several years. This trend is particularly conspicuous in China. In other areas as well, such as other parts of Asia, Middle and Eastern Europe, and Latin America, the strata of intermediate consumers are expanding steadily.
As a consequence of this trend, cargo movements, including large quantities of consumer goods, resources, raw materials, and food are expanding on a global scale, and this trend is considered likely to continue for some time.
Thus, when viewed from a macroeconomic point of view, I think that a bright future is in store for the NYK Group's goods-transportation business, which has shipping and global logistics at its core. It appears unlikely that the booming shipping market as we see it today will collapse drastically in the immediate future.
Under these circumstances, now is the time to expand business by consolidating our footing. During the current business term, the NYK Group expects to achieve its best-ever business results, thanks to unstinted efforts from you all. Nevertheless, without being carried away by that achievement, we have to keep thinking how best to win even deeper trust among our customers. I would here like to point out four actions that I consider should be taken.
First of all, we must strive to further deepen our customers' trust in the NYK Group.
For the NYK Group, which aims to become a global, unrivaled group of shipping-centered and comprehensive logistics enterprises, it is paramount for us to always remember that there can be no NYK Group without customers, and to never forget the principle of giving top priority to on-site work. These two guidelines should already have permeated all of you so thoroughly that they are now familiar slogans.
Nevertheless, I would like you all to examine afresh whether we are consistently providing services to customers by truly considering their needs and placing ourselves in their positions. There are far more customers beyond our immediate customers. We must provide proper services that go so far as to take even those extended customers into consideration.
Speaking of on-site work, there are various kinds of activities. But our starting point as a comprehensive logistics enterprise is, needless to say, on-site activity involving the transport of goods.
Please pay even more frequent visits to the places of on-site work, such as ports, ships, and warehouses, to say nothing of our customers' factories, in order to explore at all times whether there is room left for "improvement." "Global logistics" starts from "global on-site work."
Furthermore, the administrative divisions of the NYK Group in various regions of the world are now called upon to reorganize themselves into more sinewy structures and reinforce their business-support capabilities. For instance, major tasks facing their financial/accounting departments this year include the globalization and diversification of financial activities, and the earlier settlement of accounts.
Moreover, this is a crucial year of preparations for next year's scheduled inauguration of OSCAR, our common IT system for liner and car-carrier services throughout the world.
I believe that only through these concerted efforts by all our divisions can we give brilliance and strength to the services we provide to our customers.
Second, we need to continue our efforts for cost reduction.
The shipping industry makes tremendous investments and gets returns on these investments over a lengthy period. The shipping business may thus well be termed an equipment-based industry maintaining activities over a long period. By contrast, the shipping market tends to be so erratic that observers cite the proverb, "If a peak is high, the following valley is deep."
Since last year, moreover, ship-charter rates, bunker oil-prices, and expenditures caused in part by congestion in European and U.S. ports have continued to soar.
At a time when shipping companies are doing firm business, these rising costs are apt to be overlooked. Nevertheless, if they are left as they are, a high-cost structure will remain after the current market boom is over. For this reason, we need to maintain our tireless efforts and work more vigorously than ever for cost reduction.
Our cost-reduction campaign, called "Dosukoi Mouittcho!" (Now for It! Let's Make Another Spurt!), is producing tangible results. This year, too, all of you are requested to brace yourselves, strengthen your defenses, and strive, according to goals that you have determined, for cost reduction at your respective places of work.
Third, we need to revitalize our organization in all regions of the world and make active use of Global Human Resources (GHR).
NYK has long been described as an "airy" place where information flows smoothly and people throughout the organization talk to each other familiarly.
Nevertheless, in the present age of globalization, more deliberate efforts and planning are needed if we are to maintain this good NYK tradition and spread it worldwide to make the most of the diversity of the NYK Group's personnel. Please remove any walls between divisions, national boundaries, or job rankings, and thereby revitalize mutual communication, promote information sharing, and endeavor to create a strategy that ensures speedy action.
Moreover, one of the biggest themes for the NYK Group from now on is how best to foster our personnel, which constitutes the most important resource for the global organization. Let us vigorously discuss and promote our GHR program, which seeks to cultivate and utilize human resources in global fields through the concerted effort of the whole NYK Group.
Fourth, we need to tackle the task of increasing our corporate value.
As I said when I assumed the NYK presidency, I consider it my duty to increase the corporate value of the NYK Group as a whole. But, what does corporate value mean?
The usual indicators of corporate value are the "aggregate market value of shares" and the "sum total of profits." But corporate value is not limited to these two factors. Rather, the important measure is how much social contribution the company in question is making through its main line of business, which, in the case of the NYK Group, is our comprehensive global logistics business. Consideration should also be given to how many contacts with society it is striving to maintain and deepen, including social contribution, and how much satisfaction and pride the employees of the group can feel in their daily work. I think that all these factors combined should be taken into account for any true determining of corporate value.
Omi merchants, who had regularly engaged in itinerant trade throughout Japan and even conducted business overseas in the middle of the Edo Period, made it a watchword to be "good on three sides." This meant "good for suppliers, good for customers, and good for society." At the root of commercial ethics for these merchants who did business far away from home was what is known today as Corporate Social Responsibility (CSR).
Therefore, already rooted in these operational principles of 300 years ago is the notion of not lapsing into a "profit first" principle, but always weighing everything from a long-term perspective and fulfilling social responsibilities Ð namely, CSR.
Recently, reports that some companies of a highly public nature inadequately disclosed information caused distrust among investors and shareholders. For our part, we are determined to continue our efforts to win the trust and esteem of all our stakeholders by faithfully observing basic principles, by improving and expanding the transmission of information from our company through sincere investor-relations (IR) and public-relations (PR) activities, and by enhancing the transparency of our management activities.
Our company will mark the 120th anniversary of its founding in October this year. In this long history, NYK has experienced various things. Throughout, however, NYK has devoted its greatest energies to ensuring the safe operation of ships.
Right now, 620 vessels of the NYK Group continue to travel the length and breadth of the world's seven seas. Nevertheless, unless those vessels are firmly assured of safe operation and environmental protection, the NYK Group cannot fulfill its mission as a comprehensive logistics enterprise.
I advise that all employees in the NYK Group, irrespective of nationality, once again meditate deeply on the importance of our "Sail On Safety" policy and bear that policy always in mind, never neglecting it for a second.
Furthermore, our new three-year medium-term management plan starting in fiscal year 2005 will be announced at the end of March this year. As the drafting of this plan has now entered a final stage, I would refrain from discussing its details here. Nonetheless, I would like to take this occasion to say a word about the plan. That is, we are going to determine our plan by looking beyond its three-year period Ð to a horizon as far ahead as around 2010.
The year 2010 may seem distant, but actually, it is close at hand. Let us march ahead together, firmly consolidating our footing and, at the same time, looking toward a series of high peaks that rise ahead!
In closing, let me pray sincerely for the sustained health and greater happiness of you all who work for the NYK Group, and for that of your families, throughout the New Year.