Kamiya Masayuki

September 17, 2010

Globalization and Cross-fertilization

in AGC Group

Shrink Grow

Focuson Growth

OptimumPortfolio

at

Hokkaido

University

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AGENDA

１． AGC Group Overview

２． Globalization of AGC Group

３． Globalization and Management Reform

４． Diversity and Cross-fertilization

５． Ongoing Challenges

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AGC Group Business Overview

(Sales 13,000 oku yen, Operating Profit 2,000 oku yen)

-Float flat glass-Figured glass, Polished wired glass

-Heat-absorbing glass-Heat-reflective glass-Fabricated glass for architectural use（Insulating glass units, Security glass, Fire-resistant glass)

-Fabricated glass for industrial use-Glass for solar power system,etc.

-Laminated glass-Tempered glass

Automotive Glass

Flat Glass

-Vinyl chloride monomers

-Caustic soda

-Urethane materials

-Gases

-Solvents, etc.

-Fluorinated resins

-Water and oil repellents

-Battery materials

-Iodine-related materials, etc.

Fluorochemicals & specialty chemicals

Chlor-alkali & urethane

-Optical filters for Displays-Optical membranes-Optoelectronics materials-LCD backlight glass tubes-Synthetic quartz glass-Glass frit and paste-Materials for semiconductor manufacturingequipment etc.

Display

Electronic Materials

-LCD glass substrates-PDP glass substrates-Glass bulbs for cathode-ray tubes,

etc.

Other(2%)

Glass( 46%)

Chemicals(20%)

Electronics & Display( 32%)

( )Forecast of FY2010

Other Glass-Lighting lamp glass products

-Industrial glass productetc.

-Ceramic products,

-Logistics and financial

services, etc.

2-2-

AGC Group Global Operation

Approx. 250 group companies in 27 countries

Sales：１１,４８２ oku yen (2009) , Group Employees： ４７,６００

AsiaSales：4,180 oku yenEmployees：18,000

North AmericaSales： 765 oku yenEmployees：3,700

EuropeSales：2,361 oku yenEmployees：13,200

JapanSales：6,586 oku yenEmployees：12,700

-Flat Glass-Automotive Glass

-Electronic Materials-Chemicals

-Flat Glass-Automotive Glass

-Chemicals

-Flat Glass-Automotive Glass -Display Glass

-Electronic Materials-Chemicals-Ceramics

-Flat Glass-Automotive Glass -Display Glass

-Electronic Materials-Chemicals-Ceramics

3-3-

Global Market Position

No.1 当社 AGC Group

No.1 ｻﾝｺﾞﾊﾞﾝ + ｾﾝﾄﾗﾙ硝子Saint-Gobain + Central Glass

No.1 日本板硝子グループNippon Sheet Glass Group

No.4 ガーディアンGuardian

：

65% 70%

Flat Glass Automotive Glass

Glass Substrate for LCD (TFT) Glass Substrate for Plasma Display

No.1 AGC Group

No.1 Saint-Gobain Group

No.1Nippon Sheet Glass Group

：

No.1 Corning

No.2 AGC Group

No.3 Nippon Electric Glass

：

No.1 AGC Group

No.2 Nippon Electric Glass

＊Exclude

China

No.1 AGC Group

No.1 Saint-Gobain Group

No.1 Nippon Sheet Glass Group

No.4 Guardian

：

4-4-

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Global Flat Glass Operations

36 float glass plants in the world (8 float lines in BRICs)* subsidiary with minority share

[North America]

3 Float

USA 3

Coated Glass,

Processed Glass

Solar Glass

[Europe]

16 +2 Float

Belgium 5, France 2

Netherlands 1, Italy 2,

Spain 1

Czech 2+1, Russia 3+1

Coated Glass, Mirror

Processed Glass

[Japan / Asia]

15 Float plants

Japan 3, Indonesia 4

Thailand 3, Philippines 1

China 2, India 2*

Coated Glass, Mirror

Processed Glass

Solar Glass

AGC Glass Company’s

Headquarter located in Brussels

AGC Soda Solar BU

[Japan/Asia]

11 plants in 8 countries

Japan, Indonesia

Thailand, India, China

Korea, Malaysia

Automotive Glass Operations

[Europe]

9 plants in 6 countries

Belgium, France, Italy

Czech, Russia, Hungary

[North America]

2 plants in 1 country

Automotive production bases spread across three regions,

Japan/Asia, North America, and Europe, in response to global expansion

and centralization of procurement by auto makers

Global Market Share: Approx. 30%

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Display Glass Operations

Note: percentage in ( ) shows AGC’s shareholding

Taiwan : AFT(100%)

Japan (Yonezawa): AGFT (100%)

Flat Panel Display Glass

Korea:AFK (67%)HTG (70%)PGK (100%)

TFT Glass Substrate Manufacturing Base

TFT Glass Substrate Polishing Base

PDP Glass Substrate Manufacturing Base

HEG : Hankuk Electric Glass Co., Ltd.SAE : Shanghai Asahi Electronic Glass Co., Ltd. (to be sold)HNH : Hunan HEG Electric Glass Co., Ltd.SAT : Siam Asahi Technoglass Co., Ltd.ATV : Asahi Techno Vision Pte.,Ltd.

AGFT: Asahi Glass Fine Techno Co., Ltd.

AFT : Asahi Glass Fine Techno Taiwan Co., Ltd.

AFK : Asahi Glass Fine Techno Korea Co., Ltd.

HTG : Hanwook Techno Glass Co., Ltd.

PGK : Asahi PD Glass Korea Co., Ltd.

CRT TV Glass

Korea: HEG (43%)

China: SAE (40%)

Thailand: SAT (63%)

Singapore : ATV (100%)

China: HNH (HEG100%)Japan:

Takasago, Kansai, Keihin, Aichi

PDP Glass Substrate Processing Base

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AGENDA

１． AGC Group Overview

２． Globalization of AGC Group

３． Globalization and Management Reform

４． Diversity and Cross-fertilization

５． Ongoing Challenges

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History of Globalization

1907 Foundation of Asahi Glass Co., Ltd.

1964 Established Thai Asahi Glass, and THASCO Chemical (Thailand)

1972 Established Asahimas Flat Glass (Indonesia)

1981 Acquired Glaverbel (Belgium) andMaas Glass (Netherlands)

--- entry into Europe

1985 Established AP Technoglass (USA)

1992 Established Dalian Float Glass (full-scale entry into China)

1998 Glaverbel acquired PPG’s flat glass operation in Europe

1999 Acquired Hankuk Electric Glass (Korea)

1956 Established The Indo-Asahi Glass (India)

1997 Glaverbel acquired Bor Glassworks (Russia)

2000 Established Asahi Glass Fine Techno (Taiwan) and

Wholly owned the 3 Thai affiliates

1992 Acquired AFG Industries (USA)

1999 Acquired ICI’s PTFE business in the USA and UK

2002 Wholly owned Glaverbel through TOB

Asia

1989 Established Siam-Asahi Technoglass (Thailand)

1996 Established Video Display Glass Indonesia

1979 Established Asahi TV Glass (Singapore)

1985 Established Asahi Techno Vision (Singapore)1987 Established Asahimas Chemical (Indonesia)

Europe &

America

2005 Started Glaverbel Klin (Russia)

2006 Started AGC Flat Glass Suzhou (China)

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AGC Group CEO Message (at Brussels in 2001)

Worldwide deregulation and dramatic progress of

Information Technology has accelerated the consolidation

of its main markets, and intensified the global competition

at the pace faster than we had anticipated.

At the beginning of the 21st Century, faced with the

challenges of globalization, AGC Group wishes to become a

truly global and really multinational enterprise.

So far, the group's management of its businesses was

based on regional organizations, where each regional

member had their own set of values, vision, organization

and cultures.

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AGC Group CEO Message (2)

Aiming to be more global and more reactive, AGC needs to

proceed through a merger of most of its organization

throughout the world, in order to share a clear vision

among units and to consolidate its world leader position.

There are different cultures and variety of multinational

human resources in our group and they are the most

valuable assets of the group.

Different cultures and diversity of people can sometimes

produce friction and conflict, but we must transform the

heat generated by the friction and conflict into the energy to

create the truly global enterprise by sharing the clear vision

among the people.

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AGENDA

１． AGC Group Overview

２． Globalization of AGC Group

３．Globalization and Management Reform

４． Diversity and Cross-fertilization

５． Ongoing challenges

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Globalization and Management Reform

Globalization presented special opportunities and challenges for AGC

group to review its whole aspects in AGC group’s management system:

Creation of Group Vision and redefinition of Business Domain

Reform of Corporate Governance system

Redefinition of Group Corporate function

• Authority, reporting, meetings between Corporate and Company

• Global leaders are nominated for global functions such as strategic

planning, finance, tax, group HR, IR/PR, global audit, etc.

(Global Tax leader is a Belgian)

Review of management structure and legal structure

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Globalization and Management Reform(2)

What should be managed on global, regional and local basis in

each Global In-house Company

- Centralization and de-centralization -

Globalization promoted exchange of resources and cross-

fertilization in all aspects of activities:

- Marketing, R&D, Production, Engineering, Procurement, Finance, IT,

Tax, HR,

Communication is not always easy among the people with

different languages, history, culture but, it is a key for success.

- People are strongly influenced by certain structural characteristics

and patterns of thought to their own language -

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“Our Mission”

Flat glass as used in buildings and automotive windows:- lets bright light into our lives,- enables us to brightly view the world around us.

Display materials and components:- gives us bright images and enhances communications.

The Group’s bright (intelligent and innovative) technologies: - will contribute to the advancement of the information society

and new types of energy in the 21st Century.

The value we bring to the world = “Brightness”

We, the AGC Group,

to make the world a brighter place.

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“Our Shared Values”

Our four Shared Values are to be adopted and followed by all

members of the Group and are of the foremost importance in

accomplishing Our Mission.

These Shared Values will serve as the basis for every judgment we

make and action we take collectively and individually.

Innovation & Operational Excellence

Diversity Environment Integrity

Sources of

the Group’s

Competitive

Advantage

Pillars that Support

the Group as

a Global Enterprise

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Basic Concept of Governance

Capital Market

Board of Directors (“BOD”)

Group Corporate

Imaginary Capital Market

Investment Return

In-house

Company

In-house

Company

In-house

Company

Investment Return

“Oversight”

of

management

“Group

Corporate”

function“Execution”

of

management “Business

Operating”

function

“Group” management, regardless of the frame of legal entity, such as parent/subsidiary (to be applied to the both A and B below)

A. To clearly separate “oversight” and “execution” of management

B. To clearly separate “group corporate” function and “business operating” function

“Group” as a whole

A

B

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How shall we measure the performance?

EBIT

Net Profit

-18-

Succession Plan of Global Top Positions

Flat glass

company

Auto glass

company

Chemical

company

Display

company

CEO

Company

President

Global

Top

Positions

Top

layer

High Potentials

layer

CEO nominates

and decides the

successor of global

top positions

CEO can nominate

the successor of

global top positions

from the high

potentials layer.

CEO can nominate

the successor of

global top positions

from other companies

CEO can decide next

company president

without company’s

agreement.

CEO can appoint

someone by grade-

skipping.

(acceleration of promotion)

Information of both Top and High Potentials

layers must be disclosed in advance to the

group CEO.

Recruiting from outside

(e.g. headhunting)

If there are no adequate successors in the

organization, CEO has the right to recruit next

company president and top of corporate functions

from outside.

Exte

rnal

hu

man

R

eso

urc

eIn

tern

al h

um

an

reso

urc

e

nomination

nomination

nomination

Successor

Successor

Successor

nomination

Successor

Examples of Succession planning variation

Successor

nomination

Global Top Positions in Corporate

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AGENDA

１． AGC Group Overview

２． Globalization of AGC Group

３． Globalization and Management Reform

４． Diversity and Cross-fertilization

５． Ongoing challenges

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Evolution and Cross-fertilization(Dr. Hama, Principal Researcher, R&D）

When a living organism mates with another, their genes are exchanged, allowing them to produce diverse new offspring. This enables them to survive a variety of environmental changes, and at the same time, “evolution” has proceeded at a dramatic speed.

Thus, “preservation of diversity” and “cross-fertilization” is essential for the survival of living things.

Bacteria simply reproduces itself by self-division, so that its DNA does not change and evolution cannot take place. Thus, it can repeat reproducing itself forever.

On the contrary, higher organisms can produce new offspring by sexual reproduction. Their DNA is linear and capable of recombination with another to produce a new offspring. This has led these organisms to go through the evolution to human beings.

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Evolution and Cross-fertilization （2

） After all, living organisms have chosen “diversity,” “adaptation to

environment” and “evolution”. Individual organisms have limited life span,

but the species are maintained through alternation of generation, and it

evolves and changes in a long run.

Without mating with another, evolution would not have been accelerated.

The process of accepting something foreign, producing something new,

overcoming environmental changes and ultimately advancing can be

compared to evolution of living organisms. Living organisms need to retain

genes that look useless in order to maintain diversity. Human beings appear

to have many such genes.

This idea may be applied to a variety of fields, such as research, business

and culture. When we focus on one thing, we should still maintain the

possibilities for diversity rather than excluding all the others. Otherwise, we

may run the risk of extinction when our environment changes drastically.

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AGENDA

１． AGC Group Overview

２． Globalization of AGC Group

３． Globalization and Management Reform

４． Diversity and Cross-fertilization

５． Ongoing Challenges

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Ongoing Challenges

What should be managed on global, regional and local basis by

Company or Corporate?

• Authority, approval rules, reporting, meetings

• Centralization and decentralization

Implementation of redefined Group Corporate function and regional shared services

Global HR management system

Group brand integration

Communication is not always easy among the people with

different languages, history, culture

Adventure continues…

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