TIDMMEL
RNS Number : 5518N
Mitsubishi Electric Corporation
01 June 2022
FOR IMMEDIATE RELEASE No. 3526
Media Inquiries
Public Relations Division
Mitsubishi Electric Corporation
prd.gnews@nk.MitsubishiElectric.co.jp
www.MitsubishiElectric.com/news/
Update on Investigation into Improper Quality Control Practices
and Implementation of Reform Roadmap (Third Report)
TOKYO, May 25, 2022 - Mitsubishi Electric Corporation (TOKYO:
6503) announced today it has received the third report of its
Investigative Committee (Chaired by Hiroshi Kimeda, Partner
(Attorney-at-law), Nishimura & Asahi, announced on July 2,
2021) regarding improper quality control practices that were
carried out by the company. The company also issued today an update
on reforms being carried out in three key areas-quality assurance,
organizational culture, and governance-including measures designed
to prevent any recurrence of the improper quality control
practices, as first announced on October 1.
So far, the Investigative Committee has completed its
investigations into 1,933 out of 2,303 reports extracted from those
on quality related issues which were applied, or around 80% of the
total. The Investigative Committee expressed the view that the root
causes identified in its first and second reports are equally
applicable to the improper quality control practices newly revealed
in the third report. The Investigative Committee will continue its
investigation on the remaining 14 sites, and the company will
continue to cooperate fully with the Investigative Committee in an
effort to bring the investigations at all works sites to completion
as early as possible.
The committee also confirmed that the three areas of reforms,
including measures to prevent recurrence, the company has been
carrying out since October 2021 appear to be based on the
committee's recommendations, and that the company's directions
toward the reforms and initiatives to them have been positively
noted. The committee also provided new recommendations to increase
the effectiveness of the measures, including a recommendation to be
mindful of any excessive burdens that the preventive measures may
pose at the workplace level. As it carries out the three reforms,
the company will continue to refine and enhance its efforts based
on these recommendations.
Based on the committee's final investigation results, the
Governance Review Committee (Chaired by Toshiaki Yamaguchi
(Attorney-at-law), Yamaguchi Toshiaki Law Office, established on
October 20, 2021) intends to tender its report on the
accountability of the company's Executive Officers and Board of
Directors and its assessment and recommendations on the company's
internal control and governance systems. The company will issue an
announcement as soon as this report is available.
Mitsubishi Electric also takes this opportunity to reiterate its
sincere apologies to all customers, valued stakeholders, and
broader society for the impact of these incidents, including the
delay in completing the investigation.
http://www.rns-pdf.londonstockexchange.com/rns/5518N_1-2022-6-1.pdf
1. Status of Investigative Committee's investigation
The Investigative Committee, established on July 2, 2021 and
chaired by an outside attorney, conducted a survey of all employees
in Japan. The committee has used objective data and other
information to verify the consistency of the responses it received,
and it has conducted forensic investigations into Executive
Officers and other relevant parties as well as carried out
interviews and inquiries with relevant parties at the affected
sites.
As of the third report received today, the Investigative
Committee had identified a total of 2,303 matters requiring
investigation, of which it had completed its investigation into
1,933. The committee will continue to investigate the remaining
matters.
The findings in the third report issued today describe
occurrences that have come to light since the second report was
received and disclosed on December 23, 2021. Tables 1 and 2 provide
overviews. Table 3 summarizes the company's latest responses to
improper quality control practices covered in the second
report.
Table 1: Status of company-wide investigation (as of May 25,
2022)
Progress level Manufacturing site
1) Completed investigations 8 works sites
Nagasaki Works, Power Distribution Systems
Center, Kamakura Works, Fukuyama Works,
Air-Conditioning & Refrigeration Systems
Works, Kyoto Works, Shizuoka Works, Industrial
Mechatronics Systems Works,
(including the LCD Div.)
-----------------------------------------------------
2) Ongoing investigations 14 works sites
Kobe Works, Itami Works, Energy Systems
Center, Communication Networks Center, Transmission
& Distribution Systems Center, Inazawa Works,
Communication Systems Center, Nakatsugawa
Works, Gunma Works, Nagoya Works, Himeji
Works, Sanda Works, Power Device Works,
High Frequency & Optical Device Works
-----------------------------------------------------
- Temporary suspensions of ISO9001 certifications: 3 sites
(Fukuyama Works, Kamakura Works, Transmission & Distribution
Systems Center)
- Partial withdrawal of ISO9001 certifications: 2 sites
(Nagasaki Works, Power Distribution Systems Center)
Table 2: Overview of newly reported incidents of improper
quality control practices (as of May 25, 2022)
Site Improper quality control practice
Public Utility 1 Kobe Works: 9 cases
Systems Group Some sequence tests not carried out on controllers
or auxiliary electric relays.
Some improper entries made in record of processing
time measurements on monitoring control device.
Some improper entries made in film thickness
measurement inspection reports on operation panels.
Some continuous energization tests not conducted
on power supply units.
Some improper entries made in record of environment
used to test control panels.
Some film thickness measurement inspections
not conducted on on-site operation panels.
plus 3 other cases
2 Itami Works: 19 cases
Some vibration tests on railcar equipment not
carried out.
Some protection tests on auxiliary power supplies
not carried out.
Some improper entries made in vibration test
reports on propulsion control devices.
Some improper entries made in test record of
serial numbers for vehicle motors.
Some aging tests on gate control units not carried
out.
plus 14 other cases
3 Nagasaki Works: 1 case
Some improper entries made in cooling capacity
deterioration diagnosis of vehicle HVAC systems.
4 Communication Networks Center: 4 cases
Some inspections of radio equipment, etc., carried
out improperly.
plus 3 other cases
------------------- -----------------------------------------------------------
Energy & 1. Energy Systems Center: 2 cases
Industrial Some analog input/output confirmation tests
Systems Group on instrumentation control devices not carried
out.
Some sudden three-phase tests on turbine generators
carried out improperly.
2. Transmission & Distribution Systems Center:
4 cases
Some improper practices in shipping tests on
shell-type transformers.
Designs that fall partially short of internal
design standards for shell-type transformers.
Some improper practices in shipping tests on
core-type transformers.
Designs that fall partially short of internal
design standards for core-type transformers.
3. Power Distribution Systems Center: 4 cases
------------------- -----------------------------------------------------------
Building 1. Inazawa Works: 10 cases
Systems Group Some withstand voltage tests on elevators parts
for the US market not carried out.
Discrepancies in location where task of attaching
certification label is performed on elevators
for the US market.
Discrepancies in elevator parts specifications
required in Singapore market.
plus 7 other cases
------------------- -----------------------------------------------------------
Living Environment 1. Nakatsugawa Works: 1 case
& Digital Some improper entries made in test reports on
Media Equipment commercial Lossnay products.
Group 2. Air-Conditioning & Refrigeration Systems Works:
2 cases
------------------- -----------------------------------------------------------
Factory Automation 1. Nagoya Works: 7 cases
Systems Group Improper entries in motor defect reports.
plus 6 other cases
2. Fukuyama Works: 1 case
Improper practices in UL periodic factory audits
of low-voltage circuit breakers.
------------------- -----------------------------------------------------------
Automotive 1. Himeji Works: 4 cases
Equipment Some manufacturing processes not carried out
Group on inverters.
Discrepancies in IMDS entries on rotor bobbin
materials.
Some periodic sampling inspections of sensors
not carried out.
Improper practices in motor generator development
tests.
2. Sanda Works: 32 cases
Some periodic sampling inspections of EGR valves
not carried out.
Some ICS development tests not carried out.
Some vibration tests on car navigation and other
products not carried out.
Some display audio manufacturing carried out
in different locations.
Some improper reports of decision on approval
for transition to mass production in display
products.
Some display audio evaluation tests not carried
out.
Improper practices in EGR valve manufacturing
line customer audits.
Some work on car navigation products not carried
out.
plus 24 other cases
------------------- -----------------------------------------------------------
Semiconductor 1. Power Device Works: 1 case
& Device
Group
------------------- -----------------------------------------------------------
In cases where the improper quality control practices listed
above constitute breaches of applicable laws/standards, this
information has already been provided to the related organization
units and corrections implemented. As for the company is working
proactively with customers to arrive at a solution for cases in
which misconduct impacted contractual requirements. Measures to
prevent any recurrence are being implemented in all cases.
Table 3: Status of responses to previously reported cases (as of
May 25, 2022)
Site and details Current status
Nagasaki Works 1) Rectifying situation with
1. Improper inspection practices emergency power supply equipment
for HVAC systems for railcars. Stopgap measures :99.6% (1,092/1,096
2. Delayed reporting to customers units) complete
and public on emergency power Permanent fixes :74.0% (811/1,096
supply equipment. units) complete
2) To foster quality awareness
that makes quality a top priority,
set out implementation rules
for quality self-inspections
and quality declarations performed
by employees (April 2022).
3) Revised product development
management rules to strengthen
mechanisms for complying with
customer specifications (December
2021).
4) Created a guidance document
designed to encourage active
communication between managers
and their reports (March 2022).
----------------------------------- -------------------------------------------
Air-Conditioning & Refrigeration 1) Progress of commercial product
Systems Works inspections
1. Some inspections not carried Survey of product installation
out owing to inadequacies destinations:
with commercial air-conditioning 97.9% (2,375/2,427 units) complete
& refrigeration system inspection Inspections:
equipment. 68.2% (1,656/2,427 units) complete
Surveys/briefings, explanations
and inspections are ongoing
with a view to early completion.
2) Established development/operating
rules for testing machines and
inspection equipment; inspection
details are discussed and inspection
scopes reviewed on a regular
basis (October 2021).
3) Recurrence prevention report
provided to Ministry of Economy,
Trade and Industry (December
2021).
----------------------------------- -------------------------------------------
Power Distribution Systems 1) Third-party departments attend
Center C-GIS shipping inspections (provisional
1. Some tests not conducted measures ongoing).
on 72/84kV CGIS (cubicle-type 2) Revised frameworks, including
gas-insulated switchgear) for better checking of requirements
units. imposed by law/regulations and
external standards, and reviews
of departmental education/training
details (April 2022).
3) Digitize manual test data,
create test results database,
promote automated evaluations.
(targeting September 2022)
----------------------------------- -------------------------------------------
Fukuyama Works 1) Testing sections within manufacturing
1. Improper quality control departments transferred to Quality
practice discovered with respect Assurance Department (January
to UL489-listed low-voltage 2022).
circuit breakers when conducting 2) Continuous improvement of
regular factory inspections. UL periodic factory inspections,
2. Did not make sufficient including measures to prevent
applications under the Radio improper use of test equipment
Act for CO(2) laser marker and thus prevent improper testing
equipment. practices (January 2022).
3) Completed additional applications
under the Radio Act to rectify
missing/insufficient applications;
recurrence prevention report
provided to Ministry of Internal
Affairs and Communications (May
2022).
----------------------------------- -------------------------------------------
Kamakura Works 1) Finished product inspections
1. Improper quality control performed by the quality assurance
practices for ETC equipment section within the IT systems
department handling ETC transferred
to the Quality Assurance Department
(April 2022).
2) Revised development management
rules to strengthen management
of specifications, prescribed
procedures, etc. (March 2022).
----------------------------------- -------------------------------------------
2. Summary
As of the third report, the Investigative Committee has
completed its investigations on 8 sites out of Mitsubishi
Electric's 22 sites in total. As described in the report,
investigations on the remaining 14 sites are progressing, and the
company will continue to cooperate fully with the Investigative
Committee's ongoing investigations.
The table below shows the number of cases of improper quality
control practices now identified, including cases identified in the
investigative reports of October 1 and December 23, 2021.
Table 4: Number of improper quality control practices identified
by the Investigative Committee
Announced Announced Announced Total
in October in December in most
recent
report
Sites investigated 2 5 22 22
------------ ------------- ---------- ------
Number of improper practices 2 5 15 16
------------ ------------- ---------- ------
Number of improper quality
control practices 18 29 101 148
In the recent investigations, no improper practices were
confirmed at the Communication Systems Center, Shizuoka Works,
Gunma Works, Kyoto Works, Industrial Mechatronics Systems Works, or
High Frequency & Optical Device Works. But given that several
best practices issues related to quality of operations were
identified at these sites as well, Mitsubishi Electric recognizes
the need for efforts to improve quality levels across the entire
company, and will proceed with the following initiatives.
(1) The Investigative Committee's third report provides specific
examples of issues at a number of sites relevant to what the
committee's first report identified as the four direct causes of
improper quality control practices ( Lack of emphasis on realizing
quality assurance through adherence of protocols, Vulnerability of
the Quality Division, Exhaustion of middle management, Distance
between head office and the front line) and the three
characteristics of organizational culture that led to these
practices ( Closed organizational system due to independence of
individual sites, Highly independent Business Unit System, The
resolve of management).
The report also gives some recognition to the direction and
steps taken so far by the company on its reforms in three key
areas-quality assurance, organizational culture, and
governance.
In addition, the Investigative Committee provided seven specific
recommendations for enhancing the effectiveness of these reforms.
Mitsubishi Electric takes these recommendations seriously and will
continue to carry out its reforms, adding new measures to these
three areas if and as necessary.
(See Table 5, Table 6, and Table 7 for progress on the three
reform areas, and Table 8 for the specific recommendations and the
company's responses to them.)
(2) As to the three items identified by the Investigation
Committee as problems with organizational culture that led directly
to the improper practices, Mitsubishi Electric will work to resolve
these problems through its April 2022 management reforms as well.
Further, the company will rethink its management policies to make
them more socially conscious, instill an understanding of this in
all managers, and work to raise awareness of the social
responsibilities the company bears as a whole.
(See Section 4 for information on the management reforms and
revision of management policies.)
(3) Going forward, the company will also do a deep dive into its
measures to prevent a recurrence, including its three areas of
reform, through a detailed analysis that includes identifying the
characteristics and systematically categorizing the details of
improper practices that occurred at each of its business divisions,
works sites, and other organizational units, and, on that basis,
institute strategies tailored to each individual workplace.
3. Progress in carrying out three reforms, including measures to
prevent any recurrence
Below is an update on the company's progress in reforming its
quality assurance, organizational culture, and governance reform in
accordance with the Investigative Committee's recommendations.
(1) Quality assurance reforms
The Corporate Quality Assurance Reengineering Group, which was
established on October 1 and reports to the CEO, is executing the
company-wide measures shown in Table 5. Its aims are to strengthen
new company-wide functions for quality assurance led by the head
office, and to share knowledge and to provide flexible support
across business divisions.
It has become clear that many of the quality matters discovered
during the Investigative Committee's investigations to this point
have been test deficiencies and problems due to test results not
meeting required values, and these are issues that should be
resolved between the initial stages of product development and the
point at which preparations to produce the product have been
completed. The company believes that this points to a problem in
the way quality control is carried out, in the sense that quality,
and communications with customers as well, are built into products
upstream (in the design and production technology phases) and
visualized on that basis.
The quality assurance reform measures titled "Greater
independence and separation of chain of command" and "Strengthen
quality assurance functions" imply that the Corporate Quality
Assurance Reengineering Group should coordinate with the Corporate
Total Productivity Management & Environmental Programs Group
and Corporate Research and Development Group to confirm whether
designs are correct and production preparations are ready in all
phases of manufacturing, and make improvements through the
Plan-Do-Check-Act (PDCA) cycle. The company believes this will be
an effective means of addressing the currently identified quality
matters.
The company also reaffirms that enhancing quality through IT and
digitalization will be crucial to running the PDCA cycle
efficiently. To implement detailed responses tailored to its
diverse products, differing customer specifications, and the rules
and requirements in different countries, and accelerate its efforts
to resolve the present problems, the company will pursue digital
transformation (DX) initiatives across its quality processes and
work to eliminate human error and enhance and streamline quality
control.
The company also sees the need to clarify issues (close calls,
potential incidents) that tend to be overshadowed by the presently
pressing quality issues, and to take steps to prevent them.
To address this, the company will assess the health and
soundness of each of its sites and production lines, quickly find
problems, and implement efforts whereby all relevant employees
provide support.
As a company, Mitsubishi Electric aims to achieve integrity
through the PDCA cycle, using the clarification of problems to keep
its activities in check and mobilizing its entire workforce to
provide support in implementing solutions.
Table 5: Progress of quality assurance reforms
Task Progress as of May 2022
Creating a new company-wide
structure for quality assurance * In April 2022, a Chief Quality Officer (CQO) was
(led by head office) appointed from outside the company to oversee the
Corporate Quality Assurance Reengineering Group.
* The Corporate Compliance Committee's quality
governance subcommittee has assessed the Corporate
Quality Assurance Reengineering Group's activity
every two months (December 6, 2021; February 28,
2022; April 27, 2022).
* The company has identified the infrastructure it
needs to ensure compliance with law, standards, and
customer specifications and strengthen the quality
assurance process, and has decided to invest 5
billion yen in FY2022 and plans to invest 30 billion
yen or more over two years.
---------------------------------------------------------------
Company-wide measures for quality assurance reforms
-1. Restructure the 1) Greater independence and separation
control functions of chain of command.
In April 2022, Corporate Quality Assurance
Reengineering Groups and Quality Assurance
& Management Departments were established
at all work sites, provided shipping
authority, and began operating.
2) Strengthening of quality assurance
functions
In FY2022, quality audits were conducted
at five sites with an emphasis on
ensuring products conform to laws,
standards, and customer specifications.
From April 2022, the auditing process
will be improved to help identify
issues at sites and facilitate improvements;
these improved audits are planned
for 28 work sites.
--------------------------------- ---------------------------------------------------------------
-2. Addressing technical 1) Strengthen and ensure compliance
capabilities and resources with laws, regulations and public
issues standards.
Different from conventional management
of information on laws and regulations
relevant to each site, in March 2022
the company finished drafting the
outline of a system via which the
Corporate Quality Assurance Reengineering
Group will centrally collect and manage
information on laws and regulations
common to all sites.
Using an external organization, from
June 2022 the company plans to start
viewings of information on the revision/abolition
of legal standards and standards documents.
2) Enhance quality through IT and
digitalization
* In April 2022, the company decided on basic
specifications clearly defining what points should be
checked when assessing consistency between customer
specifications and shipped products.
* The company is selecting and evaluating specific
tools for the digital management of customer
specifications and inspection data. Details of the
tools' characteristics, etc., have been shared
company-wide (March 2022); they are scheduled to be
introduced in October 2022.
3) Strengthen head office support
for manufacturing sites
The quality support team is gathering
information on problems experienced
in three specific workplaces. This
will be used to provide support going
forward. A contact center has also
been set up to handle inquiries on
technical issues from manufacturing
sites.
4) Training of quality-control personnel
* A survey of the skills possessed by manufacturing
sites' quality assurance and quality control
departments was completed in April 2022. Internal
training courses tailored to skill levels were rolled
out company-wide in February 2022. The survey results
will be used to visualize skills strengths and
weaknesses and an enhancement plan will be formulated
(June 2022).
* A quality assurance and quality control department
leadership training course is scheduled to start in
June 2022.
--------------------------------- ---------------------------------------------------------------
-3 Enhance an awareness 1) Revitalize personnel rotation
of quality compliance Candidates for quality assurance department
personnel rotations have been selected
from across manufacturing sites. A
plan is to be formulated by June 2022.
2) Instill awareness of quality compliance
among senior managers
A compliance seminar for executives
was held in February 2022.
3) Quality Compliance Awareness Training
* Improper Conduct Prevention meetings using the Kani
Factory as a case study were held in all workplaces
(November 15 - December 29, 2021).
* July 2 is designated Company-wide Quality Day; the
CEO and business division heads are slated to issue
messages to employees.
--------------------------------- ---------------------------------------------------------------
(2) Organizational culture reforms
In March 2022, the "Team Sousei (Creation)" company-wide
transformation project, comprised of employees selected through
internal recruitment, set out its Robust Policies for reforming
corporate culture with the aim of creating a new Mitsubishi
Electric. The team came up with the slogan "Changes for the Better
start with ME", with "ME" signifying that everyone in the
Mitsubishi Electric Group will act as driving forces for change. In
other words, it signifies that both individuals and the Mitsubishi
Electric Group as a whole must act to effect change.
This overarching plan was put into action from April 2022, with
a total of 148 employees company-wide involved in a range of reform
projects within each business division. Briefing and discussion
sessions for emplpyees on the Robust Policies by Executive
Officers, Business Group President and members of "Team Sousei
(Creation)" have been implemented since the middle of April, with a
total of 59 sessions having been completed. These activities will
be continuously carried out in all the work sites and offices
within the company.
With respect to initiatives that will be deployed on a
company-wide basis such as personnel systems, the relevant
divisions have already begun putting together appropriate measures
and reviewing existing systems. FY2023 marks the company's first
step toward change, with these efforts to continue toward the goal
of establishing a new culture and building a connected,
self-powered organization, which the company envisions achieving by
around FY2026.
The company will steadily carry out its efforts to renew its
human resources management system to meet the objectives of the
overarching plan described in Table 6. Specifically, the company
seeks to overcome its inward-looking organizational culture, and to
drive change in the behavior of senior management and foster
diversity to facilitate open communication. The company will also
take steps to reform its organizational culture and ensure its new
culture takes hold. These will include running training rotations
designed to foster independent growth and cooperation across
organizational boundaries, striving to improve the working
environment of middle management by ensuring that managerial scope
is appropriate and building systems for decentralized authority,
and ensuring that senior management provides appropriate support.
It will also entail fostering mindfulness of the fundamental role
of managers and fleshing out the managerial education and training
programs that enable managers to fulfill their role. The company
will continuously monitor the progress of these measures in an
effort to gauge and enhance their effectiveness.
Table 6: Progress of organizational culture reforms
Task Progress as of May 2022
"Team Sousei (Creation)" 1) Formulation of Robust Policies
company-wide transformation Timeline
project Step 1: Identify key issues and underlying
causes (Oct - Dec 2021).
Step 2: Work out how to address them (Dec
2021 - Feb 2022).
Step 3: In March 2022, the Robust Policies
were created (released on April 8, 2022).
Outline
* The Robust Policies set out six objectives with the
aim of taking Mitsubishi Electric "from minus to zero,
and from zero to an even better tomorrow."
easures to improve the company's outmoded
culture:
promote positive, interactive communication
prioritize productivity
share information transparently.
easures to build a new culture:
facilitate self-initiative among individuals
and units through clarification and delegation,
collaborate across divisions to maximize
Group strength, and
increase opportunities to learn from each
other and grow spontaneously.
* The plan sets out the slogan: "Changes for the better
start with 'ME' and the Mitsubishi Electric Group, so
let's do what we can, step by step, as individuals
and as collective members of the Mitsubishi Electric
Group!"
2) Progress and future plans
* In addition to the company-wide transformation
project established in October 2021, departmental
transformation projects will be set up in each
business division to help the company achieve the
Robust Policies and also look at issues specific to
each organizational unit (a total of 148 people are
engaged in reform projects across the business
divisions).
* The Robust Policies are being widely explained and
discussed, from the level of executives through to
employees at each of the company's sites (a total of
59 sessions held as of May 2022).
--------------------------------------------------------------------
Renewal of the 1) Measures to improve the outmoded culture
personnel system -Creating a culture that enables open communication-
Change in behavior of senior management
aimed at creating an open culture
(a) Executive officer coaching aimed at effecting
behavioral change from the top
* Coaching is being carried out for all Executive
Officers since November 2021.
* Coaching also slated for Executive Officers and
Executive Officers (Associate) newly appointed in
FY2023.
(b) Reform of Executive Officer compensation
system
* Implemented reforms including those with a view to
reflecting employee engagement in compensation
(announced May 25, 2022).
Promoting diversity to overcome the inward-looking
organizational culture
(a) Promote women's participation and recruit
experienced people with an emphasis on different
types of experience
(b) Promote interaction/exchanges with overseas
employees.
* Formulate guidelines premised on receiving employees
seconded from overseas locations and trialing remote
working schemes (scheduled for September 2022).
2) Measures to build a new culture
* Creating a culture of independent growth and
cooperation across departments-
Consider a new development programs aimed
at expanding the careers of younger employees
* Currently looking at facilitating experience in other
workplaces according to the individual's wishes,
strengthening career consulting functions, etc.
(trial introduction from October 2022).
Personnel rotations designed to break down
inter-departmental barriers
* Guidelines for the cross-department rotation of
employees at all levels, including management, rolled
out company-wide (March 2022).
Supporting middle management and optimizing
the organization
(a) Create/deploy requirements for appointing
managers with more emphasis on human resources
management (trial introduction from October
2022).
(b) Formulate standards for distributing
authority and rightsizing managerial scope
of control to reduce the burden on middle
management (scheduled for October 2022).
(c) Enhance training programs to foster consciousness
of managerial roles/functions.
* Started management enhancement training for newly
appointed managers (from October 2021)
* Video content to be provided to incumbents (scheduled
for first half of 2022).
--------------------------------------------------------------------
Encouraging mindset
and behavioral change * Continue to convey the CEO's thoughts on reforms and
continuously arrange opportunities for dialogue
between the CEO and personnel at company sites to
facilitate the two-way exchange of views. Sessions
held at all 42 sites in FY2022. To facilitate deeper
discussion in FY 2023, the sessions will be held in a
town-hall format-small-scale meetings for the
different employee levels (total of 42 sessions
planned, nine held so far).
* Holding Executive Officer workshops to deepen mutual
understanding and facilitate shared recognition of
issues and plans (from November 2021;3 sessions have
been held).
--------------------------------------------------------------------
(3) Governance reform
To strengthen the company's management oversight functions and
realize sustainable medium- to long-term growth in its corporate
value, Mitsubishi Electric has initiated a reform of its Board of
Directors. On October 20, 2021, it established the Governance
Review Committee comprising third-party lawyers to begin assessing
the company's internal-control and governance systems in order to
identify problems and provide recommendations for improvement.
Going forward, the company plans to devise and implement further
improvements to its internal-control and governance systems, with
reference to the committee's recommendations.
On the issue of governance reform, the Board of Directors,
including the three statutory committees, is working toward an
appropriate vision of governance and oversight in a way that builds
on the fundamental separation of execution and oversight by
structuring the "Company with a Nomination Committee, etc." while
also taking note of trends in governance across the world at
large.
To institute the oversight functionality required of a Company
with a Nomination Committee, etc., the company will work to create
and enhance the environment necessary to facilitate proper
oversight (Board of Directors function and composition, support for
outside directors) while also enacting specific individual measures
for strengthening oversight functions based on the Governance
Review Committee's recommendations.
In addition, to strengthen risk management, in January 2022 the
company set up a specialist panel reporting directly to the CEO and
appointed a new Chief Risk Officer (CRO). The panel will monitor
the company's internal risk management activities from a high
level, examine the company's multilayered internal control
measures, and assess whether management systems are effective and
whether any procedures have become obsolete/unnecessary. It will
thus work to catalog and improve the company's various internal
control measures.
Table 7: Progress of governance reforms
Task Progress as of May 2022
Strengthen management 1) Strengthen the functions of the Board
supervisory functions of Directors
(Board of Directors The Board of Directors' agenda was reviewed,
reforms) and the Board decided on key issues to
discuss, including what the company should
be like and organizational reform measures
(March 31, 2022, board meeting). To be
applied from July 2022 (after directors
have been appointed).
2) Review of the composition of the Board
of Directors
* Appointed an independent outside director as chairman
of the Board of Directors (October 2021).
* Decided on director candidates to be submitted to
this year's general meeting of shareholders
(announced on May 25, 2022). Planning to invite
managers with manufacturing industry experience to
serve, and to have a majority of independent outside
directors.
3) Strengthen the functions of the Board
of Directors Secretariat
* Strengthened cooperation between corporate-related
divisions and the Board of Directors Secretariat by
having selected personnel serve on the Secretariat
and corporate departments concurrently (November
2021).
* Corporate Strategic Planning Division also to
participate in the Board of Directors Secretariat to
ensure the Board of Directors handles important
agenda items (October 2022).
* One experienced person appointed to strengthen the
functions of the Secretariat (May 2022).
4) Strengthen the functions of the three
statutory committees
* Nomination Committee: Review of positioning and role
(Nomination Committee rules revised; November 25,
2021 Board meeting).
* Compensation Committee: Introducing new executive
officer
compensation system (announced May 25,
2022).
* Audit Committee: To be reviewed as necessary based on
the results of the Governance Review Committee's
assessment.
5) Other
* Planning to consider/implement additional
improvements based on the Governance Review
Committee's assessment.
--------------------------------------------------------------
Assessment of internal Established Governance Review Committee
control system (Governance (October 20, 2021)
Review Committee) * Chair: Toshiaki Yamaguchi, Managing Partner
(Attorney-at-Law, Certified Fraud Examiner),
Yamaguchi Toshiaki Law Office.
- Members:
Junya Naito, Partner (Attorney-at-Law),
Momo-o, Matsuo & Namba
Takashi Kiuchi, Partner (Attorney-at-Law,
Certified Public Accountant), Miura & Partners.
* The company received the committee's report on
Executive Officer and Director accountability, and
the Board of Directors decided and disclosed
disciplinary action for those involved on December
23, 2021.
* The committee will continue to assess the company's
internal control and governance systems and will
submit its conclusions and recommendations, with
reference to the results of the Investigative
Committee's investigation as well. The committee also
plans to assess Exexutive Officer and Director
accountability for the improper quality control
practices identified in the Investigative Committee's
second report (December 2021) and thereafter.
--------------------------------------------------------------
Strengthen risk-management To respond swiftly and strengthen cross-divisional
systems responses in times of crisis and address
various risks that could affect the execution
of group business, the company has set
up a specialist panel and appointed a new
Chief Risk Officer (CRO) in January 2022.
--------------------------------------------------------------
(4) Investigative Committee's specific recommendations and the
company's responses
The committee's third report contains the following seven new
specific recommendations. The company takes these recommendations
and will implement tangible responses, as described below, as part
of its three key areas of reform.
Table 8: Investigative Committee's specific recommendations and
the company's responses
Investigative Committee's specific Company's responses
recommendations
Take steps to prevent excessive
countermeasures from posing undue * The head office's Quality Assurance & Management
burden at the workplace level. Department maintains a presence at all sites, via
which it ascertains conditions at those sites and
coordinates with head office. Requests company-wide
support as needed.
(Table 5 -1)
* The quality governance subcommittee periodically
checks that measures are effective and that the
necessary resources are deployed, and provides
company-wide support as necessary. (Table 5 )
-------------------------------------------------------------
Deloy individual workplace initiatives
horizontally. * Through quality audits and trouble consultations,
initiatives of each site are to be drawn up and
deployed horizontally. (Table 5 -1, -2 )
* The company will work to optimize section headcounts
and establish intermediate positions (deputy section
chief, team leader, etc.).
(Table 6 )
-------------------------------------------------------------
Collaborate with manufacturing
sites. * As part of the Corporate Quality Assurance
Reengineering Group tours of manufacturing sites,
discussions on quality assurance reform initiatives
are held. (Table 5 -2)
-------------------------------------------------------------
Prioritize initiatives for branch
factories. * Implementing integrated management and operations at
main factories.
* Quality audits by the Corporate Quality Assurance
Reengineering Group are conducted annually at 21
works sites as well as seven branch factories. (Table
5 -1)
-------------------------------------------------------------
Support system to handle, e.g., -- The Corporate Quality Legal
negotiations with foreign certification Departmant
authorities. within the Corporate Quality
Assurance Reengineering Group
handles this, including through
the use of external organizations.
(Table 5 -2)
-------------------------------------------------------------
Use a tangible how-to format
for education and training of * Training for all new section manager company-wide
managers and staff, changing management will incorporate specific instructions, including
mindsets. examples, on how to deal with problems that are
reported to them. (Table 6 )
-------------------------------------------------------------
Rigorous employee education on
quality. * On top of the conventional quality education provided
so far, the company will add content on the improper
practices recently uncovered and roll out newly
organized education programs to employees again.
* Look at whether to revise internal rules and work to
simplify them.
* Develop specific measures in response to the improper
quality control practices discovered.
* In addition to the compliance education already
provided to executives, the company plans to provide
education programs on quality governance conducted by
external lecturers. (Table 5 -3)
-------------------------------------------------------------
4. Management structure Management policy
The company also seeks to resolve the three organizational
culture problems identified by the Investigative Committee as
direct underlying causes of the improper practices ( C losed
organizational system due to independence of individual sites, H
ighly independent business unit system, T he focus of management)
through a reform of management structure and a reform of management
policies/guidelines.
(1) Revision of management structure
As of April this year, the company has classified nine business
groups into four business areas (BAs): Infrastructure, Industry and
Mobility, Life, and Business Platforms. It has also appointed four
BA Owners tasked with implementing initiatives to maximize
corporate value over the medium/long term based on a high-level
overview of the entire company's business with a view to addressing
social issues. They will work to enhance the competitiveness of the
business groups' individual businesses while also helping to reform
the inward-looking organizational culture-i.e., insular at the site
and business group level-through BA-driven efforts to strengthen
cross-organizational functions.
In corporate divisions, the company will expand the chief
officer structure to drive company-wide management from a
high-level perspective, strengthen the entire company's shared
capabilities, develop infrastructure, implement effective risk
management and control, and support flexible business
management.
(2) Revision of management policies
From May 2022, the company's management policies will clearly
state that the tasks of resolving social issues through the
company's business and achieving sustainability are fundamental to
its operations. Through internal newsletters and executive town
hall meetings, this policy will be clearly communicated across the
company to ensure that all executives and employees recognize that
they are part of this effort, fostering an awareness of social
responsibility and norms.
5. Executive accountability and disciplinary action
As disclosed in the October 20, 2021 press release "Mitsubishi
Electric Announces Establishment of Governance Review Committee,"
the company set up a Governance Review Committee comprising
external experts who do not have any business relationship with
Mitsubishi Electric. The committee's objectives include assessing
the company's internal control and governance systems and
clarifying the accountability of Executive Officers and Directors
regarding improper quality control practices.
The committee intends to assess the accountability of Executive
Officers and Directors based on the results of the Investigative
Committee's investigation, and based on the committee's Reports,
the company will also consider what executive disciplinary action
should be taken to address the improper quality control practices
identified in the Investigative Committee's second report which was
released and received on December 23, 2021, and thereafter.
6. Looking ahead
So far, investigations have been completed across 14 of the
total of 22 sites, and the company will continue to provide its
full support to the Investigative Committee with a view to arrive
at a full picture of the improper quality control practices and
root them out as the company's top priority.
The company will conduct detailed analyses of the improper
quality control practices identified to this point, and implement
extensive recurrence prevention measures tailored to each of its
sites.
Under its new management structure, the company will steadily
implement its three key areas of reform, which will include
carrying out its responses to the Investigative Committee's
specific recommendations, as it strives to regain the trust of all
stakeholders, including society at large, its customers, business
partners, and employees.
###
About Mitsubishi Electric Corporation
With more than 100 years of experience in providing reliable,
high-quality products, Mitsubishi Electric Corporation (TOKYO:
6503) is a recognized world leader in the manufacture, marketing
and sales of electrical and electronic equipment used in
information processing and communications, space development and
satellite communications, consumer electronics, industrial
technology, energy, transportation and building equipment.
Mitsubishi Electric enriches society with technology in the spirit
of its "Changes for the Better." The company recorded a revenue of
4,476.7 billion yen (U.S.$ 36.7 billion*) in the fiscal year ended
March 31, 2022. For more information, please visit
www.MitsubishiElectric.com
*U.S. dollar amounts are translated from yen at the rate of
Yen122=U.S.$1, the approximate rate on the Tokyo Foreign Exchange
Market on March 31, 2022
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
STRFZGGVRMRGZZG
(END) Dow Jones Newswires
June 01, 2022 05:01 ET (09:01 GMT)
Mitsubishi Electric (LSE:MEL)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Mitsubishi Electric (LSE:MEL)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
