Focused on Global Growth in the Iron Castings Business

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1 Special Feature 1 Focused on Global Growth in the Iron Castings Business Responding to growing demand in the global market as the world s largest iron castings manufacturer As part of the growth strategy outlined in our Medium-Term Management Plan, Hitachi Metals welcomed Waupaca Foundry, Inc., an iron castings manufacturer with the world s largest production capacity, to the Group in November The addition of Waupaca s exceptional manufacturing technologies and solid customer base augments Hitachi Metals traditional strengths in materials and product design development capabilities, enabling us to provide new products and service solutions meeting the expectations of customers throughout the world. 9 CSR Communication Report 2015

2 Iron Casting Business Prospects Our Vision: Global No. 1 Iron casting has been Hitachi Metals core business for many years. In particular, we are building a global supply structure for high-grade ductile cast-iron products, including the deployment of production centers in Japan, South Korea and the United States, as well as the addition of a manufacturer in India as a subsidiary in April The addition of Waupaca ensures a competitive position in the global market while expanding our business domain to achieve further growth. With six foundries in the United States, Waupaca serves the North America transportation, agriculture, construction equipment and other industrial segments. Waupaca s strengths, including the world s largest production capacity, exceptional manufacturing technologies and a solid customer base, are the driving force behind the company s stable growth. technologies and expertise. Going forward, we plan to introduce Waupaca s exceptional manufacturing technologies to production centers in Japan, South Korea, the United States and India. We will also realize efficient business activities utilizing Group economies of scale to conduct collaborative technological development and materials procurement. With this new strengthened business structure and the vision to be Global No. 1, we will become the true global leader in the iron casting business, surpassing all others in terms of production capacity, sales, profitability and growth potential. Hitachi Metals Group Iron Casting Market Business domain up to now (High-value-added niche-zone) High-grade DCI market (High-grade) Significant expansion under new structure The addition of Waupaca s competitive mass production capabilities enables us to develop global business responding to various customer needs, bolstering the Hitachi Metals Group existing focus on providing added value. Waupaca s core business (Volume-zone) GI/DCI market (Middle range) To create new value as a unified Group, Hitachi Metals has established project teams to inculcate our corporate philosophy and systems and promote the sharing of DCI: Ductile Casting Iron GI: Gray Iron Waupaca Foundry, Inc. Overview (As of April 1, 2015) Waupaca Foundry, Inc. Core Products Location : Wisconsin, USA Representative : Gary Gigante, CEO Business : Development, manufacture and sales of iron castings for the transportation, agriculture, construction equipment and other industrial segments. Sales : US$1,735 million (September 2013) Established : May 4, 1955 Brake rotor for passenger car Brake caliper for passenger car Differential case for passenger car driveline Motor housing for electric motors CSR Communication Report

3 Special Feature 1 Waupaca s Monozukuri* Quality Management through Unique Manufacturing Technologies Waupaca manufactures a variety of iron casting products for a wide range of industrial segments, from automobiles, agriculture and construction to material handling. Waupaca maintains company-wide certifications including the ISO 9001 and ISO/TS international quality standards. The company also supplies brake components and other parts important for ensuring safety. From melting and casting to finishing, Waupaca possesses the world s largest integrated manufacturing technologies, enabling the stable provision of high quality products the company s strength. Waupaca s products are highly durable and reliable due to its proprietary manufacturing process and technologies, molding equipment and automated finishing system. Furthermore, the high precision of its finishing requires minimal post-process machining, contributing to lower production costs for the customer. Reducing Environmental Impacts in the Manufacturing Process Waupaca has established goals to be achieved by the year 2020 and is executing various policies with the aim to reduce the environmental impact of its business activities. Energy Each Waupaca plant is engaged in energy-saving measures, such as the use of waste heat and energy-saving equipment, which are linked to cost reductions. For example, at Plant 1, waste heat from the cupola iron-melting process is used to provide approximately 70% of the plant s space heating requirements during winter, as well as heat for 100 % of the plant s hot water needs. Pollution Control To prevent air pollution, Waupaca has installed state of the art pollution control devices that trap dust and filter air at all its plants. We have also introduced sophisticated air pollution control monitoring systems. Advanced bag leak detection probes are installed within the emission control systems to monitor this equipment and ensure it is operating properly. Waste One of Waupaca s largest waste streams is spent foundry sand used to make molds for the casting process. To reduce the amount of sand disposed in landfills, the company promotes reductions in the amount of sand used and the efficient reuse of spent foundry sand. Waupaca cooperates with government institutions to reuse foundry sand as a highway sub base fill, geotechnical fill and for other general construction uses. Water To reduce the amount of water used, Waupaca installed closed-loop water cooling systems that recycle water used in the manufacturing process. Introduction of this technology has resulted in a 30-95% reduction in cooling water use at Plant 4, the variation of which is due to seasonal water demands. Waupaca Environmental Activity Goals and 2014 Achievements Category Energy Pollution control Waste Water Goal for 2020 Reduce energy intensity* 25% compared to 2009 levels. Note: Measured in one million Btu s per ton of product shipped. Maintain best available air pollution control systems considered. Reduce spent foundry sand generation 30% compared to Status of progress Reduced energy intensity by more than 14% at all six plants between 2009 and Maintain air pollution control systems considered as best available by the U.S. Environmental Protection Agency and associated state regulatory agencies for all processes. Reusing over 70% of foundry byproducts used in metal casting process. In 2014 a total of 400,000 tons of sand was reused. Reduce amount of water used by 80% compared to Reduced water consumption at all six plants by more than 17% from *The Japanese word monozukuri expresses the art and joy of making things as perfectly and efficiently as possible, while respecting nature in terms of the materials used and the environment. 11 CSR Communication Report 2015

4 Maintaining Positive Relationships with Regional Communities Supporting Various Activities as a Member of the Community Based in Wisconsin, USA, Waupaca engages in various activities that contribute to the local community, including the donation of equipment to local schools, support for community fire prevention and rescue efforts and environmental management. It also sponsors and participates in community activities. Since 2012, Waupaca has participated the construction of the Swan Park Recreation Facility located in Waupaca, Wisconsin. Swan Park is a multipurpose facility for summer and winter recreation featuring a 42-foot (12 meter) high sledding hill providing families a place to play in winter. Waupaca s three local area foundries donated approximately 200,000 cubic yards (150,000 cubic meter) of foundry sand and slag used as an unconfined geotechnical fill, making effective use of production process byproducts and reducing the city s construction material costs. In addition, the company hosts business symposiums for veterans to provide ongoing employment opportunities in the community. Waupaca also collaborated on the 2014 community art event Tell Your Story in the Tiles, where it assisted participants in the creation of iron tiles. Molding machine Automated finishing process Finishing process Closed-loop water cooling system Swan Park aerial view CSR Communication Report

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