New Year's Greeting
Happy New Year! I hope you enjoyed a refreshing holiday break and that 2017 will be a richly rewarding year for all of you in the Toyota Tsusho family worldwide and for your loved ones. Let me take this opportunity to share some reflections on the past year and to express some hopes of you in the year ahead.
A Look Back on 2016
An especially big event in world affairs last year was the victory by Donald Trump in the US presidential election. The startling outcome of the November election has not yet produced any serious turmoil. And the US economy has actually been doing well since the election. But we need to remain alert to the implications for our business of the inevitable changes ahead in US political and economic policy and to be prepared to respond promptly.
Just as stunning as the US election result was the decision by UK voters to exit the European Union. That decision, too, has not yet resulted in serious economic repercussions. But Europe continues to present issues that command our careful attention, including the refugee crisis, the threat of terrorism, and the burden of unmanageable debt in several nations.
France and Germany will hold national elections this year. Here again, we need to be alert to the implications for our business of the election results. And here again, regardless of outsider’s comments, we need to be prepared to respond promptly.
In China, fiscal stimuli are keeping economic growth more or less in line with the government’s targets. But we expect a prolonged slowdown in the pace of growth in reflection of excessive investment and massive debt.
The economic outlook is brighter in India. That nation posted growth of about seven percent last year. And we expect India’s growth momentum to remain strong this year as the government steps up spending on infrastructure.
Meanwhile, Africa is highlighted in our global strategy. We anticipate long-term economic expansion there, led by an emerging middle class and population growth. To be sure, prices for natural resources remained weak last year and growth slowed in African economies that are dependent on those resources. But other African nations posted strong growth. Those contrasting trends underline the need for us to tailor our strategy to the different circumstances in each nation and to adopt a long-term perspective. This year, we will press ahead vigorously in developing African business while assessing and addressing risk carefully in each nation.
Japan is marking time in regard to economic performance. The Japanese economy remains highly sensitive to political and economic developments in the United States, and elsewhere. So we find ourselves in Japan contending with the results of events beyond our control. We therefore need to approach our work each day and each month and each year in the spirit of new beginnings. We need to maximize our performance in handling the work and procedures that we can control and thereby minimize our exposure to the results of events that we cannot control.
Reversing the huge after-tax deficit that we posted in the fiscal year to March 2016 has necessarily been our top priority. That has meant asserting more autonomy in corporate governance and more self-reliance in marketing at our operations worldwide. I am happy to report that we are on track toward reversing the deficit fully. We have a good chance, in fact, of achieving our highest-ever after-tax earnings in the present fiscal year. That is a tribute to impressive commitment by all of you, and I am profoundly grateful for your effort.
Let us note, however, that we still have a long way to go in fortifying our capacity for generating earnings through sales growth and cost savings. All of us need to redouble our efforts in regard to the three rudiments of profitable business: focusing on business opportunities that offer convincing prospects of good returns, using expenses wisely, and avoiding unnecessary expenditures. Our corporate attainment in achieving record earnings will hinge on our individual everyday attainment in achieving personal bests in quantitative and qualitative performance through creditable business practices.
Requests of You in 2017
That brings me to the subject of my expectations of you in 2017. The key message calls for “moving on to renewed growth.” Tackling that task begins with securing a shared awareness of the need for strengthening our foundation.
Dramatic change is under way in the markets that we serve. That change is especially dramatic in the automotive sector. Witness the progress in reducing vehicle weight by switching from steel to such materials as aluminum, carbon fiber, and plastics. Witness, too, the progress under way in autonomous driving and in electric vehicles. Underlying those and other changes are advances in artificial intelligence and in the Internet of Things. Altogether, the automobile industry is undergoing a once-in-a-century paradigm shift.
These newly emerging technologies (such as AI, robotics, and IoT) are making big shifts in all industries, not only in automotive sector. Those shifts are occasioning an influx of new competitors. And we need to develop new approaches to business to cope with the changing competitive dynamics. We are therefore preparing to undertake a new initiative for fortifying our approach to next-generation technology oriented business.
We will nurture momentum in “moving on to renewed growth” through an initiative for funding entrepreneurial proposals by employees. We will welcome proposals for developing business in leading-edge technologies and leading-edge services not only in automotive but also in any sector. And we will be happy to alter our standard criteria for investment approvals as necessary to fast-track worthy proposals, within specified limits.
All of us need to perceive business opportunities in the change that is transforming the business environment. And we need to recognize the tremendous capabilities that we possess for capitalizing on those opportunities. Those capabilities center on the experience, the insights, the customer relationships, and the resources that we have accumulated as a member of the Toyota Group. We have nurtured those fundamental strengths worldwide and across a vast range of business sectors through our global activities as one of leading trading companies. More than ever, we need to identify ways to combine those strengths innovatively to build new business and to secure new sources of earnings.
We need to strive in every way to, in the words of our slogan, “Be the Right ONE” for customers, and to keep, in the words of our key message in the Management Mission Statement, moving on to renewed growth.
I call on all of you to bring a sense of personal commitment to fulfilling our goals. I call on you to think carefully about the “what” and “why” of your work. And I call on you to run plan-do-check-act cycles to monitor and manage your progress.
I also call on you to devote careful attention to the paramount priorities of health and safety. Let us bear in mind that everything we do needs to begin with ensuring health and safety. Similarly, we need to abide by rigorous standards of corporate ethics. Only as healthy, safe, and ethical individuals can we fulfill the expectations of our customers and of society. That means being fully prepared to respond to potential risks in the behavior of those around you, as well as in your own work.
Our organization is poised for renewed growth. We are preparing to shift to a newly aggressive stance in acting on business opportunities. The outlook for the business environment is, as ever, fraught with uncertainty. But asserting distinctively Toyota Tsusho capabilities will enable us to cope with even unsuspected change and maintain our business momentum. Let this indeed be a year for moving on to renewed growth.