MABUCHI MOTOR : Integrated Report 2022 （9,589KB）

Mabuchi Motor Integrated Report

2022

Fiscal year ended

December 2022

Mabuchi Motor contributes to the protection of the global environment and people's happiness by offering compact, lightweight, and high-efficiency motors at reasonable prices.

Our motors help provide safe and eco-friendly motive power all around the world.

C O N T E N T S

01	Contents	33	Financial and Capital Management
02	Management Principle	37	Mid-Term Sustainability Targets
03	Our Identity	3 9	Initiatives towards Climate Change
05	Business Portfolio Evolution	41	Environmental Initiatives
07	Message from Our CEO	44	Initiatives towards Society
09	Interview with Our COO	47	Corporate Governance
13	Value Creation Process for Realizing	55	Risk Management
	the Management Principle	57	Directors and Executive Officers
15	Initiatives towards Key Sustainability Issues	60	Messages from New Outside Directors
17	Our Strengths	61	Financial Data, 10-year Period
21	Our Business	63	ESG Data
23	Business Overview	65	Corporate Outline

27 The Management Base that Supports Our Strengths

In editing the Mabuchi Motor Integrated Report 2022

The Mabuchi Group contributes to the development of a sustainable society by working to address social issues through its business and corporate activities. In this report, we explain our approach and actions towards fulfilling our responsibilities as a corporate steward of society, which are shaped in a collaborative dialogue with our stakeholders. We refer herein to the value co-creation guidance provided by the Ministry of Economy, Trade and Industry.

Covered Period

The figures in this report are as of the end of December 2022 unless otherwise stated.

Cautionary Note on Forecasts

Statements concerning the business forecast recorded in these slides are based on information available at the time of preparation. Actual results may differ from the forecast due to various factors.

Factors that may affect the operating results include, but are not limited to:

• Fluctuations in exchange rates
• Changes in economic conditions, demand trends, and other factors surrounding our businesses
• Rapid technical innovations such as new technologies and new products
• Change in Environmental Regulations
• Fluctuations in market prices of copper, steel, rare earths, and other materials

1

Management Principle

Contributing to International Society and Continuously Increasing Our Contribution.

The "Management principle" of Mabuchi Motor encompasses the following beliefs:

1. Elevate our level of contribution to society and to persevere, as a prominent entity the world cannot do without.
2. All members of the Mabuchi Group shall participate in acts of philanthropy through their work.
3. Achieve growth as an individual, and a richness of the heart that is derived not solely through material wealth, but through the experience of caring for fellow human beings, Mother Nature, and all elements that sustain our lives.

Mabuchi's Management Vision

Permanent vision that remains unchanged

Vision that would not be changed over a short period of time

Management

Principle

Management

Markers

Management

Guidelines

Our

Missions

Vision that changes according to the current of the times

Management Markers

A statement of how the "contribution" stated in the management principle is to be understood and embodied, and a statement of the major mission to be fulfilled through business activities.

１．By offering superior products that are reasonably

priced, we contribute to the well-being, comfort, and convenience of people all around the world.

２．By fostering career opportunities and technological development, we address social and economic disparities around the world.

３．By placing highest value on our people, we empower and encourage them to realize their potential and contribute to society.

４．Through our corporate activities we protect our planet's ecosystem and the health of its inhabitants.

Management

Scheme

Management Guidelines

A guideline for corporate activities that will serve as a starting point for creating value that contributes to society and achieving sound growth.

１．Develop products that offer flexibility of application and optimize production conditions.

２．Improve product development based on thorough value analysis and standardization of parts and materials.

３．Realize cost reduction by using advanced processing technologies and by minimizing waste.

４．Pioneer new markets and secure sufficient market share in alignment with the company's values and strategy.

５．Cultivate the talent of our people by continuously matching the right person with the right opportunity.

６．Conduct business in a way that has the smallest possible environmental impact and that abides strictly by health and safety standards.

７．Enhance the company's sustainability through management policies and strategies that take a long-term view.

Our Missions

A set of values to be shared in order to "achieve further growth" by overcoming various difficulties and conflicts that arise in the course of performing one's duties.。

Management Scheme

We are pursuing our business activities with the concept of "continuously demonstrating Mabuchi's unique characteristics, which cannot be easily imitated, by mobilizing our organizational strength based on selection and concentration."

MABUCHI MOTOR 2022 2

The F-typemotor, which uses a ferrite magnet

3

Tokyo Science Industrial Co., Ltd.

The high-performance horseshoe-shapedmagnetic motor

Our Identity

Diversifying Applications while Specializing in Small DC Motors

Sources of our High Profitability as Seen in the History of our Founding and Business Development

A Pioneer in Small DC Motors

The story of Mabuchi Motor begins in 1946, well before the company's founding. In that year Kenichi MABUCHI, later to become the company's first president, created a motor for use in teaching science to school children in Takamatsu, Japan. In 1947, he succeeded in developing the world's first high-performancehorseshoe-shaped magnetic motor. In those days, the magnetic field in a DC motor conventionally was created using an electromagnetic coil. But Kenichi was an out-of-the-box thinker, and came up with the idea of using a permanent magnet that would allow for smaller motors and lower power consumption. He proceeded to make this idea a reality. Working with his younger brother Takaichi who would later become the company's second president, Kenichi produced and sold high-performancehorseshoe-shaped magnet motors for use in models. This motor was able to rotate continuously for one to two hours using only one battery, which was astounding at the time.

While building the foundation of the small DC motor business on these products for models, the Mabuchi brothers began to enter the toy parts market, which was larger than the model market. Back then toys were powered mainly by either springs or friction, power sources that dwindle quickly. Therefore, Kenichi and Takaichi developed a motor for toys. In 1953, they approached Nomura Toy, a toy wholesaler in Tokyo, to sell their new motor to the company. When Nomura Toy showed a motorized toy sample to a toy buyer from the United States, the buyer's eyes widened in surprise. This was the origin of Mabuchi Motor sales to Nomura Toy. Production and sales surged, and Kenichi and Takaichi moved their business to Tokyo, the hub of Japan's toy industry. They rented the second floor of Nomura Toy's warehouse and set up a factory there. Then on January 18, 1954, they established Tokyo Science Industrial Co., Ltd. - the date we regard as the founding date of Mabuchi Motor.

In the earlier days of the company, motors produced by Mabuchi Motor were used mostly in toy cars made for export, and they were too expensive for ordinary Japanese people to buy at that time. The company decided to create a small and powerful motor that could make toy cars affordable for children in Japan. Doing so was required reducing the cost of the motor from 120 yen to 20 yen, which was the cost of a spring. The main component of motors at that time was an expensive material called alnico magnet, therefore, we set out to develop a motor using a less expensive ferrite magnet. Using the new ferrite magnet, the company created the F-type motor, whose performance matched that of an alnico magnet motor - at half the weight and a cost below 20 yen. Production of the F-type motor began in 1958. It was an innovation that synced perfectly with the plastic model fad at the time - and "Mabuchi" became a household name.

Thoughts Put into Our Motors

Mabuchi Motor started from a dream of a boy who loved models. Kenichi MABUCHI, the first president who loved manufacturing since he was a child, created model airplanes and ships and devised various ways to move them. When he was in sixth grade, he used gasoline as fuel to move a model of a steamship with alcohol lamps faster, which ignited and caused severe burns. At that time, he thought he wanted to create a safe power for

children in the world. This experience led to the later development of our motors.

In 1946, Kenichi created a motor for school teaching materials with the idea that "science education must be flourishing for the future development of Japan." That is the school motor. In this way, our educational support has been handed down from before our founding.

MABUCHI MOTOR 2022

Technological Innovation and Diversification of Applications

In 1960, we focused our attention on the trend in tape recorders toward more compact, lighter weight, and cordless designs and began to develop a motor for tape recorders. For this application, we needed to achieve silent, smooth rotation while reducing current consumption to 10% of its existing level, and extending service life 50 to 100 times. We did so through a threefold innovation that improved shaft precision, used a new oil-less bearing, and refined the motor technologies, including to enable contact between a commutator and brush - all of which reduced production costs. As a result, we succeeded in developing the FM- 250 series of motors, which later gained an overwhelmingly large share of the tape recorder motor market. This is one example of our innovation pattern. Mabuchi Motor has realized diversification of expanded applications for our small DC motors through innovating in technologies and reasonable

price.

We have specialized in small DC motors and have worked to diversify the market for their applications because we believe it is essential to concentrate

our business resources on small DC motors in order to create products that outperform our competitors, even though we are a modest company scale.

We have achieved business growth by developing our business activities with the aim of selling them not only in Japan but also to markets and customers around the world. As a result of these proactive sales activities to markets and customers around the world, the overseas sales ratio of motors has reached 90%.

Standardization to Achieve High Profitability

In 1969, as the scale of motor production and sales grew rapidly, we experienced significant production shortage of parts and our assembly capacity proved insufficient. In the toy industry of the time, that products were custom-made was taken for granted, and Mabuchi Motor was producing a wide variety of motors whose specifications differed slightly depending on the customer. The production failure hit during the summer, which was the peak production period ahead of the Christmas holiday shopping season. In addition, we received a number of our customer complaints.

To rectify this situation - and just as importantly, to avoid its recurrence - Mabuchi Motor made the decision to standardize its products. We started explaining to our customers how to

achieve high profitability through standardization, and the first to agree with us was one of the largest toy manufacturers in the United States. As a global industry leader, the company was keenly aware of the tough competitive environment and recognized that standardization offered a smart and reasonable way forward. After that first agreement, our standardization project clicked into gear. This unique strategy has enabled Mabuchi Motor to build, maintain, and expand its sustainable competitive advantage and achieve high profitability.

*Please refer to page 17 for more information on our standardization strategy.

Origin Story: Our Management Principle

Takaichi MABUCHI resolved to articulate a basic philosophy for the company that would express "why Mabuchi Motor exists, and what we sweat over and work for." From its beginnings as a small factory, Mabuchi Motor had grown into a medium-sized company with more than 1,000 employees.

Takaichi believed that, for the Company to keep growing and developing, it needed a strong management team, and to this end, we have formulated a management philosophy that our employees can truly identify with. He looked back at the path the brothers had taken. They had dedicated themselves to developing a low-cost motor for toys, and achieved production at a low price, equivalent to that of a spring. The dream of many children to play with electric toys came true. He also felt a sense of purpose in life, realizing that through his business he was contributing to the lives of people around the world and to the economic and social prosperity of the world. This idea became the core of our management principle that Takaichi MABUCHI formulated for

Mabuchi Motor: "Contributing to International Society and Continuously Increasing Our Contribution." This principle has been our constitution, guiding Mabuchi Group companies around the world, transcending limitations of time and location.

Under our Management Principle, profit is not the company's ultimate objective. However, we attach great importance to profit. We believe that profit is a company's reward for contributing to society or to customers, as well as an indicator of the level of its contribution. Profit is also a source of energy for powering more and increasing social contributions. We believe that a company can remain in a virtuous cycle of increasing social contribution, which increases its profits, which then through more and better activities again increases its social contribution, and so on. And we believe that such a company will gain the support of people and communities local and global. It will find that its purpose has become

timeless.4