INVESTOR RELATIONS

We are pleased to report that the construction of the NMS VIETNAM CO., LTD. (“NMS VIETNAM”) plant has been completed and a structure to commence production has been established. The construction of this plant was first announced on January 22, 2016 in line with our commitment to disclosing information in a timely fashion.
The NMS VIETNAM plant is the fruition of the Company’s new business model. As we explained at the results presentation meeting, the defining feature of the plant is that it was constructed using the Group’s own resources.

We believe there are many people who consider EMS to be their first candidate for placing orders when they have an overflow at their own plants. On the other hand, it is also possible to establish a plant as the extension of the services offered by the human resources business, just as has been done at this plant. NMS VIETNAM initially began operations with the Company undertaking outsourcing contracts for production by taking the production line of the overseas plants of customers for whom the Company dispatches human resources or undertakes outsourcing contracts (full contracts) at customer plants in Japan and transferring them to the NMS VIETNAM plant.

The increased risks in China have accelerated the pace of change in the production map recently. In light of these developments, one customer made the decision to transfer production to Vietnam. However, the transfer meant that the production level at the customer’s plant in Vietnam would exceed the production capacity of the plant. To deal with this situation, NMS VIETNAM proposed building a plant to support the shortage of the production capacity, and this is exactly what it has done. Because the plant is an NMS VIETNAM plant, the Company is able to identify similar needs that the customer faces without needing to venture out of the plant. As a result, it is now able to manage plants more efficiently than customers manage their own.

The NMS VIETNAM plant handles the production of electric equipment for cars. The plant will initially begin operations with 350 employees, with the number rising to just below 1,000 by the end of the current fiscal year.

We expect the plant to accommodate and support the development of CHINA+1.

As the President of the Company, I attended the ceremony to sign the agreement establishing a business alliance with UNG RIGHY CO., LTD. (“URG”), an institution that dispatches Cambodian workers to Thailand. The ceremony was held on Thursday, July 7 , which is the same day as the Tanabata Star Festival day in Japan. President Oknya Ung Seang Rithy of URG, an alliance partner, is a lady with extraordinary vitality.

Given the fact that the signing ceremony took place on the day of the Tanabata Star Festival day, it was almost as if President Oknya Ung Seang Rithy was playing the part of Orihime (Vega) and I the part of Hikoboshi (Altair), with the Minister of Labour and Vocational Training Ith Sam Heng acting as the intermediary between us. He is a person in the center of the photo clapping and smiling.

This business alliance goes beyond the mere dispatching of Cambodian workers to Thailand. It stands as the first step towards realizing the human resources supply chain management (SCM) that we advocate. The details of this alliance are as follows:

1. Provision of an initial training program in Cambodia

NMS provides the initial training program for workers at the human resources training center managed by URG. Through this program, before they are dispatched workers receive training which for years Japanese manufacturers have provided to trainees after they enter Thailand. This will reduce the burden on the customers, who are Japanese manufacturers.

2. Labor management of Cambodian workers

In the past there have been services in Thailand which have taken advantage of using illegally sourced Cambodian workers.
The Company provides workers through the official channels, so the Cambodians we dispatch are able to work comfortably. In addition, they are paid the same level of wages as Thai workers. These factors help the workers to stay motivated in carrying out their duties, while at the same time keeping the attendance rate high and holding the turnover rate down at its lowest level.
As of now 400 Cambodian workers have been dispatched. We have received a good response to this form of labor management from customers.

3. Luring Japanese companies to Cambodia and providing workers

During the signing ceremony, we also enthusiastically exchanged views with the Minister of Labour and Vocational Training Ith Sam Heng and discussed a joint effort being made to lure Japanese companies to Cambodia. We now must look into the details and consider holding presentation meetings in Thailand and Japan in the future.

We plan to provide human resources who have completed the work period in Thailand (two to four years) to Japanese manufacturers that have been lured to Cambodia.

We also explained the plan during the results presentation meeting held on May 30, 2016. Those interested can watch the video of the results presentation meeting.

Based on the alliance that we have established,
we intend to boost the number of Cambodians dispatched in Thailand to 5,000 by the end of 2017.
Likewise,
we plan to increase the number of dispatched workers in Thailand, including Thai workers, to 10,000.

We are not aiming for short-term dispatching, but rather want workers to stay in their jobs for an extended period. By improving their skills, they will be able to earn pay rises on their own. We want to see workers stay highly motivated and tackle a variety of challenges. When they choose to take on these challenges, we will also provide them with opportunities to work in the Group’s EMS and power supply business. In doing so, we will aim to become the world’s first human resources SCM company that provides a form of labor management that transcends borders.

Moving forward, we will continue to take steps to develop a wide range of opportunities. There is plenty to be excited about.