ISSUES TO BE ADDRESSED
The following are the business and financial issues that the UT Group must address with first priority in order to implement the Long-Term Management Vision and the Fourth Medium-Term Management Plan, and to achieve sustainable improvement of corporate value:
01BUILDING A BUSINESS BASE THAT IS LESS SUSCEPTIBLE
TO ECONOMIC FLUCTUATIONS
The UT Group’s operations are affected by production adjustments that are caused by economic trends, natural disasters and infectious diseases, etc. as the jobs in manufacturing facilities, mainly production sites, represent a large portion of UT’s worker dispatch and outsourcing business. In the past, the semiconductors and electronic components sector represented a large portion, and so we have worked to diversify into different product sectors, such as automotive and so on, in order to reduce the impact of production adjustment driven by the silicon cycle. Although we have become more resistant to production fluctuations in individual product areas, we still recognize that it is difficult to eliminate the cancellation risk due to reductions in production volume in all product areas stemming from an overall economic slowdown. We are therefore expanding our business share of our clients’ plants to subordinate the order of cancellation versus our competitors in the event of a major economic recession, and strengthening our solution business, which captures demand for structural reform mainly from large companies. In addition, we intend to build a business base that is less susceptible to economic fluctuations through different occupations, such as the design and development area of upstream processes and the development of workplaces in various regions using area platforms.
02CONTINUOUSLY SECURING ORDERS TO FILL UP VACANCIES
The UT Group’s business is to employ dispatch workers as its regular associates (a term for employees at UT Group), thereby achieving both a stable employment for those who work and providing flexibility to client companies. In order for this business model to function well, excess personnel in one workplace must be quickly shifted into a different workplace. For this reason, we need to continuously secure order backlogs or vacancies across Japan so that excess workers can be placed in other workplaces. The UT Group secures vacancies by assigning managers to each client company to manage personnel dispatched and make proposals to clients to pursue more jobs for our dispatched workers. In the Group Sales Division, which has been established as a sales management function for the entire Group, staff propose services to major corporate groups across business areas and develop prospective clients with the aim of finding more dispatch jobs for excess workers.
03BUILDING A STABLE RECRUITMENT SYSTEM
In Japan, due to the declining birthrate and aging population, the decline in the working-age population is expected to continue. This trend may potentially affect our business and make it difficult to hire personnel in the mid to long term, although the majority of our technical associates are still young. In such an environment, we have improved recruitment efficiency by utilizing various recruitment media, including job advertising, building our own job site, and standardizing the skills of interviewers across our nationwide bases, in order to ensure stable recruitment of human resources. We are building a system to ensure that personnel can be recruited consistently.
04REDUCING THE TURNOVER RATE OF TECHNICAL ASSOCIATES AND IMPROVING THEIR SKILLS
The turnover rate of dispatched associates in the manufacturing dispatch industry to which the UT Group belongs is said to be higher compared to regular associates. Their high mobility is another industry trait. This is due to the fact that temporary employment is common in the manufacturing dispatch industry, which makes it difficult for these temporary workers to consistently build careers and improve skills. In addition, the increase in the turnover rate of temporary associates in the manufacturing dispatch industry results in higher hiring costs to maintain the number of temporary associates, leading to lower margins. It is also difficult to increase the unit cost of temporary workers as they cannot develop their skills. Based on an awareness of this situation, we employ associates who are dispatched to client companies as associates with open-ended (indefinite) employment, thereby ensuring stable employment. Also, our in-house certified career counselors work with them to consider a career plan that suits each individual, and are working to improve their skills and improve their careers through education and training. By continuing to advance these measures and further strengthening the system, we will strive to reduce the turnover rate of technical associates and continuously improve added value.
05STRENGTHENING SYSTEMS FOR MANAGEMENT AND
The UT Group aims to sustainably achieve high sales and continue to grow profits. It is therefore essential to develop and secure personnel for management and business operations, and to establish an organizational foundation that is appropriate to the size of the business. We are therefore working on flexibly managing the organization and establishing business systems that support it, as priority issues, in addition to developing and securing personnel for this purpose.
06CONTINUOUSLY STRENGTHENING CORPORATE
We recognize that strengthening our corporate governance system is important in order to achieve sustainable growth and increase corporate value. We are striving to establish a system that enables appropriate and prompt decision-making and business execution, and a system for its proper supervision and monitoring. From the viewpoint of ensuring the soundness and transparency of management, we will continue to strengthen the corporate governance system in accordance with the size of business. In addition, we will continue to strengthen group-wide internal controls, which are becoming increasingly important due to the expansion of corporate scale, the increase in group companies, and the development of overseas business operations.
07BUSINESS EXPANSION THROUGH M&A
We are gaining a significant share in our mainstay worker dispatch business for the manufacturing industry, especially for large enterprises, thanks to our industry-leading dispatch of indefinite-term associates, high capacity for HR, and high quality HR development and management systems. There remain areas where we are still unable to exert our competitive advantage, such as workplaces in regional areas, and non-manufacturing functions such as technical and administrative areas. We intend to tap into these areas and consider M&A as an effective means. In the case of M&A, we first take into account the target company’s personnel hiring and development platform and synergies with our existing businesses, evaluate the business, and promote an M&A strategy that contributes to the enhancement of corporate value. After the acquisition, a PMI dedicated team established within the General Affairs Division is engaged in strengthening the acquired company’s governance and establishing a system that will enable early realization of group synergies.
08STREAMLINING BUSINESS PROCESSES AND USING IT TO
BUILD A COMMON BUSINESS FOUNDATION FOR THE GROUP
We recognize that it is possible to improve efficiency through standardization of forms and processes and the introduction of systems for recruiting, sales, and administrative operations at each base of the UT Group. A cross-company project team had been established to identify issues and explore the potential for IT-based efficiency and has implemented those systems in stages. In addition, we carried out a major organizational restructuring within the group such as a consolidation of subsidiaries with common business characteristics. We will build a muscular and strong business foundation over the medium to long term by promoting each strategy of the 4th Medium-Term Business Plan on a clearer path.
09PROMOTING EMPOWERMENT OF NON-JAPANESE WORKERS
In Japan, not only the working population but also the total population are expected to keep declining in the future. Under the revised immigration control law, which came into force in April 2019, a new status of residence has been established, and the law is being developed to accept non-Japanese personnel. We also recognize that we need to expand business not only in Japan but also overseas in order to continue growing. In 2017, we launched the management agency business for non-Japanese workers and have since established a system to ensure compliance, including protection of the rights of non-Japanese personnel when used by companies. In order to create an environment in which non-Japanese personnel can play active roles, we will support non-Japanese workers who have gained skills through skills training and continue to work in Japan based on a specific skills visa. Furthermore, in order to assist them to work by using their skills after returning to their home countries, we will expand our overseas business base by establishing an HR service business through capital and business alliances with leading local companies overseas.