Pacific Industrial : Sustainability Report 2022 (For Viewing) (8.0MB)

These drawings are posters drawn by Pacific Industrial Group employees' children.

What can we do to protect our precious planet?

The actions each and every one of us take now will change our children's tomorrow.

We hope that you will enjoy and appreciate the heartfelt messages expressed by the children through their drawings.

SUSTAINABILITY REPORT 2022

Pacific Industrial Co., Ltd. Sustainability Report 2022

BRAND SLOGAN

Pacific Industrial develops new businesses, new technologies and new products

that add to safety, environmental performance and comfort.

By doing so, we aspire to achieve sustainable growth as a company with a trusted reputation that meets the expectations of society. An expression of this aspiration is our Brand Slogan.

In preparation for an upcoming mobility society,

we will develop into a manufacturer capable of offering a prosperous,

safe and secure future and help to realize a sustainable society.

Toward this ambition, Pacific Industrial will create the future with passion.

CORPORATE PHILOSOPHY

As a Global Manufacturer of Technology Components,We Will…

1. Endeavor to develop and enhance technologies and to supply high quality products in response to the needs of customers.
2. Value our employees as our essential family members and pledge to provide a place where they enjoy working and creating.
3. Continue to contribute to society, confirming our role in the world as an excellent company as well as an environmentally conscious company.

CONTENTS

Introduction

Introduction of the Pacific Industrial Group

Sustainability Report 2022 Editorial Policy

Pacific Industrial Group has been publishing Sustainability Reports (former CSR Reports) since 2007 to promote and enhance dialogue with more of our stakeholders so as to build a sustainable society.

We are currently promoting sustainability management based on the sustainability-related material topics that we identified in 2020.

Our initiatives for the 15 identified material issues and the progress of KPIs is reported in this Sustainability Report 2022.

We look forward to hearing your candid opinions.

Other media

Websites

Websites provide comprehensive information related to sustainability, and discloses sustainability initiatives, figures, data and other details that could not be included in this Report as well as the latest information as necessary.

Websites

Provide more comprehensive

and timely information

This Report

Provides a summary

of important information

Securities Report

The Securities Report compiles corporate information, business segments, business result, stock information, risk-related information, financial information, and other information available at the end of the accounting period in accordance with the Financial Instruments and Exchange Act, and is disclosure material in which such information is described in full detail in paragraph format.

Period Covered in the Report:

From April 1, 2021 to March 31, 2022

(includes the latest information at the time of publication)

Boundary of the Report:

The Pacific Industrial Group

(In principle, the company and its consolidated subsidiaries.

If disclosed data is different from it, the scope is described individually.)

Publication Date:

September 30, 2022

Publisher:

Pacific Industrial Co., Ltd.

Corporate Planning Department

Phone:+81-584-93-0110

Fax:+81-584-93-0112

Guidelines Used as Reference:

GRI Standards ISO26000

The International Integrated Reporting Framework

Final Report

Recommendations of the Task Force on Climate-related Financial Disclosures

Sustainability Accounting Standards Board

(Reference codes are attached to the relevant sections, including partial disclosures.)

Notes on outlook

This report contains forward-looking statements, including strategies, plans, targets, and other projections made based on currently available information. These forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed in the forward-looking statements. Accordingly, there are no guarantees that the forward-looking statements contained in this report will prove to be accurate.

Steadily Promoting Business in the Midst of Upheaval

As the transition to a mobility society accelerates, including CASE and electrification, the environment surrounding our Group is becoming increasingly severe and uncertain due to the spread of COVID-19, soaring resource prices and restrictions on the supply of parts and materials, as well as the situation in Ukraine.

Under these circumstances, our Group has worked to prevent infections, promoted cost improvements, built a production system to match order fluctuations, and secured personnel and parts. In addition, we have formulated the PACIFIC Environmental Challenge 2050 in light of social issues such as SDGs and carbon neutrality, and we are working to reduce CO2 emissions.

In the stamping business, we promoted development and sales of products for electrified vehicles, such as ultra-high tensile strength steel products using the cold press method that contribute to car body weight reduction, functional parts such as battery cases and those from forging presses, and molding products that contribute to wheel caps and sound and vibration insulation. In response to growing needs for lighter weight products, a new plant for stamping products is under construction adjacent to the Higashi Ogaki Plant in Ogaki City, Gifu Prefecture, with an eye toward carbon neutrality.

In the valve business, together with our Group company Schrader, we are developing tire valves, on which our company was founded, as well as Tire Pressure Monitoring System (TPMS), car air conditioning valves, and industrial valves. We are also focusing on developing control valves for heat-pump-type car air conditioners, which are expected to be increasingly used in electrified vehicles.

Initiatives Dedicated to

Material Topics

In 2020, based on the SDGs (Sustainable Development Goals), we have identified our Group's key issues as material topics, and last year we formulated major initiatives and KPIs based on them.

The elements of the material topics, including human rights, human resources, the environment, and responsible procurement, are incorporated into our Group's "Code of Conduct" and "Supplier Sustainability Guidelines." We are implementing specific initiatives with our suppliers in Japan and overseas, as well as promoting awareness through study sessions, the company newsletter, and e-mail magazine among other means.

As for "solving social and customer issues through products," we are working on cost reduction, weight reduction, and environmental impact reduction through LCA using our product and material development, construction methods, and production technologies. In recognition of these initiatives, we received 20 awards globally from our customers in fiscal 2021. As for new product development using existing technologies, following last year's release of "e-WAVES," a multi-sensing logger for vaccine transportation and other applications, this June we launched "CAPSULE SENSE," a cow body condition monitoring system that contributes to solving the problems of cattle farmers who are suffering serious labor shortages.

With regard to the urgent issue of "mitigation of and adaptation to climate change," in May of last year, we endorsed the TCFD recommendations and worked to refine our analysis of the risks and opportunities that climate change poses to our Group while using scenario analysis techniques. In particular, regarding the introduction of renewable energy, we are actively promoting the installation of solar power generation systems at our domestic and overseas plants using PPA, working to achieve 100% renewable energy in the Kyushu and Tohoku regions, and continuing our initiatives to achieve a 20% renewable energy ratio by 2030.

More Active Roles for

Diverse Human Resources

Regarding "respecting human resources and their active participation," we are proceeding with human rights due diligence in accordance with our human rights policy, which was formulated in February of 2021. In addition, as part of our health initiatives, we were selected under the 2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program

(large enterprise category)." Currently, we are establishing targets for the ratio of female managers and strengthening the recruitment of female employees to enable diverse human resources to play an active role. In the future,

we will accelerate diversity and inclusion management by creating an environment in which everyone can demonstrate their individual characteristics,

not only women, but also foreign nationals and mid-career employees, in a variety of situations. We will also promote education by rank and digital skill training to create

an organization and culture in which diverse human resources can grow and create new value.

We appreciate your continued support.

Shinya Ogawa

President ,Member of the Board

Overview of Pacific Industrial Group

Pursuing "Glocal" Corporate Activities Under a Global Quadrilateral System

Company Profile

Main Products

Stamping and Molding Products

Overview by Business Segment

We operate in three main business segments: stamping and molding product business, valve product business, and other (information service) business.

164.4

billion yen

69.5% (FY2021)30.4%

Tire Valve Products

Overview by Region Regional segments are categorized into Japan,Europe and the U.S., and Asia.

Engine Cover

Oil Pan

Car Air Conditioner Products

Net sales

(billion yen)

Total assets/Net assets

Ordinary income / Net income for the year attributable to owners of the parent

Ordinary income

Net income for the year attributable to owners of the parent

Ratio of operating income to sales

(%)

Capital expenditures/Depreciation expenses

Total assets Net assets

*ROA based on operating income

(%)

ROE ROA

Capital expenditures Depreciation expenses

(billion yen)

Fuel System Products

10.0

7.5

8.1

History of the Pacific Industrial Group

Promoting Innovation and Globalization

In 2020 we celebrated our 90th anniversary. Established in 1930 with the aim of domestically producing automotive valves core, we have grown into a global company by developing the stamping and molding business, developing TPMS, and integrating the Schrader Group.

As we entered 2020 and COVID-19 spread around the world, we took on this challenge with the policy of "solidifying our foundations glocally, with our first priority being preventing infections and maintaining employment and production."

We will create the future with enthusiasm with the aim of realizing a sustainable society while leveraging the spirit and technology of "manufacturing" cultivated over many years.

1930

1950 1940

PACIFIC INDUSTRIAL CO. (unlimited partnership) was founded to manufacture valve cores for automobiles.

1970

Valve cores packaged in boxes at the company's founding

1936/Aug.

Received rights to the utility model of the valve core

1938/Apr.

Reorganized into PACIFIC INDUSTRIAL CO., LTD. and constructed a new plant.

Company.

1954/Jul.

Qualified as a manufacturer of valve core products under the Japan Industrial Standard.

1957/Jul.

Introduced tubeless tire valves into the market.

1960/Nov.

Set up Nishi Ogaki Plant and expanded the stamping business.

1970/Aug.

Listed in the TOKYO and NAGOYA STOCK

EXCHANGES, 1st Sections.

1972/Nov.

Set up Kita Ogaki Plant and expanded the tire valve business.

Kita Ogaki Plant

1977/Sep.

Set up Mino Plant as a plant specializing in

the manufacturing of tire valves and valve cores.

1990

1982/Sep.

Set up Yoro Plant as a plant specializing in the manufacturing of dies and molds.

Yoro Plant

1984/Jun.

Established PACIFIC VALVE (TAIWAN) CO., LTD. in Taiwan.

1987/May

Established PACIFIC VALVE INDUSTRIAL CO., LTD. in South Korea.

PACIFIC VALVE INDUSTRIAL CO., LTD.

1988/Jul.

Established PACIFIC INDUSTRIES USA INC. in the United States.

1989/Mar.

Established PACIFIC INDUSTRIES (THAILAND) CO., LTD. in Thailand.

1990/Nov.

Set up Higashi Ogaki Plant as a plant specializing in the manufacturing of molding products.

Higashi Ogaki Plant

1999/May

All the plants attained ISO 9001 Certification.

2000

1999/Jul.

Established PACIFIC MANUFACTURING OHIO, INC. in the United States.

PACIFIC MANUFACTURING OHIO, INC.

2000/Oct.

All domestic plants attained ISO 14001 Certification.

2000/Dec.

Began the production of TPMS transmitters.

Achieved cumulative global production of 10 billion valve core units and 5 billion tire valve units.

Ceremony to celebrate the achievement of 10 billion valve cores units and 5 billion tire valves units

2004/Sep.

Established PACIFIC AIR CONTROLS CO.,

LTD. in South Korea.

2005/Apr.

Established TIANJIN PACIFIC AUTO PARTS CO., LTD. in China.

TIANJIN PACIFIC AUTO PARTS CO., LTD.

2006/Dec.

Set up Kyushu Plant as a production plant for stamping and molding products.

Kyushu Plant

2010/May

Set up Kurihara Plant as a production plant for stamping and molding products.

2011/Nov.

Established CHANGSHA PACIFIC HANYA AUTO PARTS CO., LTD. in China.

2012/May

Established PACIFIC INDUSTRIES EUROPE NV/SA in Belgium.

2012/Jun.

Established PACIFIC INDUSTRIES CHINA CORPORATION in China.

* Merger with TPA in August 2021

2020

2013/Nov.

Set up Wakayanagi Plant as a production plant for molding products.

2014/Jan.

Achieved cumulative global production of 100 million TPMS transmitters.

Ceremony to celebrate the achievement of total 100 million units of TPMS transmitters

2014/Jul.

Established PACIFIC MANUFACTURING TENNESSEE, Inc. in the United States.

2014/Jul.

Established PACIFIC AUTO PARTS TECHNOLOGY (CHANGSHU) CO., LTD. in China.

2014/Nov.

Established PACIFIC AUTO PARTS (THAILAND) CO., LTD. in Thailand.

* Integrated PIT in November 2020

2018/Aug.

Acquired Schrader valve business in the U.S. and France

2020/Aug.

Celebrated our company's 90th anniversary

2020/Apr.

Moved to the Prime and Premier Market with a restructuring of the Tokyo and Nagoya Stock Exchanges market.

Founded by manufacturing valve cores

The company was founded in 1930 with the challenge of developing automotive valve cores for the first time in Japan, and succeeded in producing valve cores* domestically, which was said to be "more difficult than making precision watches."

※Valve core is a component that maintains air pressure as a core of the valve through which air enters the tire.

7 Pacific Industrial Co.,Ltd. Sustainability Report 2022

Started the stamping business

Our stamping business started in 1949 after we became one of the partner factory for Toyota Motor Corp. in 1946.

We delivered wheel caps for Toyopet, the first passenger car after the World War II.

Production of radiator grilles, oil pans, trunk hinges, etc. started in succession.

Toyopet wheel cap

Production of radiator grilles, etc.

Expanded plants and businesses in Japan

Nishi Ogaki Plant was set up in 1960, with two more factories built in the 1970s to expand valve business.

Established a foundation for future growth by expanding domestic factories and businesses, including the start of control device business in 1970, molding business in 1979, electronics business in 1981, and dies and molds business in 1982.

Nishi Ogaki Plant

Established first overseas base

We established PACIFIC VALVE (TAIWAN) CO., LTD. in Taiwan in 1984 as the first overseas base for our valve business. After that, we promoted globalization by expanding our bases into Korea, the United States, Thailand, China, Belgium and France.

PACIFIC VALVE (TAIWAN) CO., LTD.

Developed next generation valve TPMS

In 1999, we developed a TPMS transmitter as a next-generation valve for the IT age, which is a high value-added product made possible by combining the technologies we have accumulated over many years.

The use of TPMS became required by law in the United States and demand has expanded to grow into one of our core products.

TPMS clean room

TPMS transmitter

Acquired Schrader's valve business

We acquired Schrader valve business in the U.S. and France in August 2018.

Our global quadrilateral system with production and sales bases in Japan, Asia, North America and Europe was established.

Schrader-Bridgeport

International, Inc.

Schrader SAS