November 30, 2005


"Society Changes. Hitachi Transforms It." (Hitachi, Ltd.)

Keywords: Newsletter 

JFS Newsletter No.39 (November 2005)

Hitachi, Ltd., founded in 1910 as an electric machinery repair shop of the Hitachi Mine of Kuhara Mining Co., developed the first five horsepower induction motor made in Japan. Currently the Hitachi Group consists of seven business units: information and telecommunication systems, electronic devices, power and industrial systems, digital media and consumer products, high functional materials and components, logistic services and others, and financial services. It is a business group engaged in creating a wide range of infrastructure and systems for society, from high functional materials to power plants.

The Hitachi Group is a corporate group consisting of a total of 1,152 companies, including 623 subsidiaries and group companies in Japan, and 529 overseas. The total number of employees is about 340,000 worldwide. The revenue of the group was around 9 trillion yen (about US$79.65 billion) in fiscal 2004. Overseas revenues accounted for 36 percent of the total.

Since its foundation, Hitachi has embraced the philosophy of "contributing to society through the development of superior, original technology and products" as part of its Fundamental Credo, and operated in and outside of Japan. Its corporate message, "Society Changes, Hitachi Transforms It," expresses its commitment to being a change agent for a better society, as a sound corporate citizen, by developing new business with its knowledge and technology. Here are several examples of Hitachi's initiatives around the world.

The government of Egypt has planned many state projects aiming to expand the vegetation cover in the country. One of them is the construction of the Mubarak Pumping Station. Launched in 1998, about 2,250 square kilometers of desert are to be greened through the project by daily supplying water taken from Naser Lake, which was created by the construction of the Aswan High Dam. Twenty-one of Hitachi's large pumps are installed at the site.

This was an unprecedented project in which the design and construction of the pumping equipment were done simultaneously with the main structure, under severe conditions. Hitachi completed the construction within five years by organizing an international consortium with companies from the U.K. and Egypt. To secure quality and to reduce costs, Hitachi cooperated with local factories in Egypt to process and weld steel, with the careful guidance of Hitachi's engineers staying on site. This approach contributed to the creation of local employment and to technology transfers to local people.

The city of Chongquing in China plans to start operating straddle-type monorail systems in December 2005, aiming to mitigate traffic congestion and air pollution caused by the rapid growth in automobile use. Hitachi first developed this type of monorail system 40 years ago, and has accumulated experience and technology since then. Hitachi provides technological support in Chongquing.

The advantages of a monorail system are less construction cost and time than those of a subway system, punctuality and carrying capacity that outperform a bus system, and route flexibility with minimum restrictions of existing buildings and geographical configuration. Hitachi focuses on the development of monorails that are considered to be promising environmentally friendly urban transportation systems as a business contributing to establishing a sustainable society.

As a globally active corporation, Hitachi believes it is a vital challenge to facilitate the reduction of environmental impacts on the entire Hitachi Group of over 1,000 group companies and subsidiaries worldwide. The success of this initiative is expected to become the strength of Hitachi.

In 2004, Hitachi defined its "environmentally sound Monozukuri" (designing, manufacturing or repairing of products) as a group-wide norm. In order to implement the norm, Hitachi established "Environmental CSR-Compliant Monozukuri (PLM and Total SCM) Standards" (PLM for product lifecycle management, and SCM for supply chain management) in the same year and is now developing an operating system.

Hitachi already has a system to track its progress of energy and recycling management by aggregating and using accumulated data. On the other hand, it did not have adequate information on chemical substances contained in products, although it already had a good idea of amounts of chemical substances released from factories during manufacturing processes. Aware of the growing need for more stringent chemical substances management and information disclosure, Hitachi is giving top priority to creating its Integrated Management System for Chemical Substances Contained in Products.

Based on this system, Hitachi will choose parts that are free of toxic chemical substances prohibited by Hitachi from its suppliers at the design stage of a product. Suppliers are required to input the data of chemical substances contained in the parts to Hitachi's database and submit a declaration stating that none of the substances subject to control are contained.

The management system links serial or lot numbers of the products using these parts with data on chemical substances contained in each part. After verifying that the total chemical substances content of products meets the criteria, the products will be shipped and the delivery data will also be recorded in the system database. Thus, chemical substances contained in each part will be traceable throughout the manufacturing stages from procurement to delivery.

Hitachi employs up to 1.5 million different types of parts annually, sourced from more than 7,000 suppliers. Hitachi, in turn, supplies various materials and products to many companies. It is no easy task to create a single system that can store and manage all relevant information on a database.

Once a system is built, it will allow integrated management of information on chemical usage that was previously kept independently by each group company. This will enable Hitachi to engage in proper group-wide management of chemical substances. Since the system can indicate the types of parts used in a given plant, in case inadequacies are found in chemicals contained in parts after shipment of the product, all products of the Hitachi Group can immediately be checked against the use of the parts in question. The system can be further utilized as a way to ascertain chemical use, and then to replace chemicals with those that have less environmental impact, or to work towards reducing the actual usage of a certain chemical by setting concrete numerical targets.

In building the system, cooperation from supplying manufacturers is vital. Most of them are small and medium-sized manufacturers. In order to facilitate the preparation of analytical data of chemicals by the suppliers, Hitachi matched the data input requirements to the 25 chemical groups that are standardized by a trade association, the Japan Green Procurement Survey Standardization Initiative.

In addition, Hitachi asks all suppliers to fully adopt environmental conservation activities. Thus, one of the objectives of the group by the end of fiscal 2006 is to have all of its major suppliers be "Green Suppliers," meaning that they not only understand and cooperate with Hitachi's green procurement standards, but have also acquired external environmental certification such as ISO 14001. To cater to the needs of small and medium-sized manufacturers, Hitachi established an environmental management certification system that can be acquired at less cost but at the same time embraces the particular viewpoints put forth by Hitachi. Consultation is also provided to promote environmental management by suppliers. To date, about 70 percent of the suppliers have qualified as Green Suppliers.

The Integrated Management System for Chemical Substances Contained in Hitachi Products was deployed as a model in three group companies from June 2005, and now is being extended to the entire group. By the time of the implementation of the European Union's Restriction of Hazardous Substances (RoHS) Directive in June 2006, this system will be working in all of Hitachi's nearly 700 group companies that are subject to the RoHS Directive.

Hitachi believes that its attitude to promote environmental impact reduction in its group companies as well as suppliers in the supply chain will underpin its global activities that work towards building a sustainable society, and that it can be an enormous power to transform society.

(Staff writer Eriko Saijo)