I'm an employee shareholder. There are concerns that changes planned for next year to the IC-based employee ID card would significantly increase prices in the employee cafeteria and lower service quality. Your thoughts, please.
President and CEO Yoshinori Yamashita
We will check into this and respond as needed.
I live near the Atsugi Plant. I frequently see a lot of Ricoh employees smoking at nearby convenience stores. How about setting up smoking areas on your premises?
Mr. Yamashita
Our efforts to encourage smoking cessation aim to maintain employee health. Now, around 16% of our workers smoke. We will take steps to ensure that they do not bother others by smoking off-site at places like those you pointed out.
A read a newspaper article about Ricoh launching iPS (induced pluripotent stem) cell-related operations. Are you entering the medical field? Around how large do you expect that business to be? How long would that take?
Mr. Yamashita
The article was about our announcement of a strategic business partnership with Elixirgen Scientific of the United States. That company has iPS cell differentiation technology. We target 20 billion yen in drug discovery support business sales by 2025 from combining cell discharge technology with Ricoh inkjet heads.
I understand that Ricoh's work practice reforms are bearing fruit, but I have heard the efforts have yet to extend across the nation. What progress are you making? How long will it take for your efforts to be nationwide?
Mr. Yamashita
As part of work practice reforms, I get out of my office and work alongside our employees. Other executives are also supposed to work on the same floors and offices as employees. Also, we launched an in-house side business program to make work more worthwhile for our people. I and other executives have spent the 18 months soliciting direct feedback from employees, and we recognize we're only halfway there in progressing outside metropolitan Tokyo. I think that we're 60% to 70% of where we need to be in driving work practice progress. I want people to feel great about working at Ricoh.
Hidetaka Matsuishi, Corporate Executive Vice President and CFO
I also think we're only halfway there nationwide, for two reasons. One is that we haven't done enough outside regular offices, notably at plants and research institutes. The other is that while we have put clerical systems in place, we need to dig deeper to change work practices. We need to create environments that best motivate employees, and I look to consider worker feedback in driving change.
I agree that your proposal in the fourth agenda item aligns Ricoh's interests with those of shareholders. Also, I would like to note that I am very pleased with Ricoh's efforts to provide employment at the Gotemba Plant for people with social disabilities.
Mr. Yamashita
The effort you're referring to at Gotemba is that of the RICOH Eco Business Development Center. We will continue this approach. I greatly appreciate your comment.
I didn't get why you would describe your efforts with core office printing operations as Growth Strategy #0. I understood your growth strategy explanation today, but why #0?
Mr. Yamashita
The technologies we cultivate in core businesses under Growth Strategy #0 have paved the way to Growth Strategy #1 and #2, so there's great significance there. For example, I touched on photovoltaic cells in the business report presentation a little earlier. We developed these cells by drawing on copier photoconductor technology. We greatly appreciate your opinion on the naming.
I would like to ask some questions of outside directors. How do you gather information on management issues, the business climate, and conditions at Ricoh? Also, how do you feel about remaining an outside director?
Masami Iijima, Director
I have served as an outside director for three years. I have a sense of urgency, as the business environment is changing dramatically. Progress with worldwide digital transformation is one example. As an outside director, I will keep contributing to Ricoh's reforms and corporate value improvement efforts from shareholder perspectives.
Makoto Azuma, Director
I've been an outside director for five years. In gathering information, we enjoy support from the president and executive officers. We also get opportunities to speak with many employees, including engineers and sales representatives in their 40s, and with business heads, about the future of Ricoh and its challenges today. We will continue to oversee management and watch out for growth opportunities.
Mr. Yamashita
We also got advice from outside director Kazuhiro Mori on improving manufacturing sites and cutting costs. Mutsuko Hatano, another outside director, has advised us on research and development and provided insights to female leaders.
Japanese companies have begun to repatriate production in Japan. What's Ricoh's manufacturing strategy?
Mr. Yamashita
We won't simply repatriate production that we shifted overseas to achieve low-cost manufacturing. But we are thinking, for example, of automating production of key copier modules in Japan and shipping them to overseas plants. Another move would be expand mass production of vehicular head-up displays at our Tottori Plant. So, we're cultivating manufacturing strategies that leverage our advanced production technologies in Japan.
The operating margin in your office printing business exceeds 10%, yet the figure for office services is only 3% or so. Is that acceptable?
Mr. Yamashita
The revenue of our office printing and services businesses differ. Cost ratios are higher in office services because we often purchase applications needed in digitizing workflow from other companies. While developing killer apps internally, we will drive efforts to cut cost ratios while collaborating more with partners and increasing value.
Seiji Sakata, Director
We are still in the investment phase with our office services business. We will boost profitability by building volume in providing apps. We are driving services efficiencies through robotic process automation and other technologies, and are endeavoring to enhance earnings without harming service quality.
You exceeded your structural reform goals in FY 2017 and 2018 but did not reach your initial targets in FY 2019. We look forward to you accelerating your structural reform efforts in office printing.
Mr. Sakata
In office printing, our new MFPs have dramatically improved service efficiency. We are also automating production. We're striving through these efforts to generate more office printing earnings.
What's happening with growth strategies that harness camera and other technologies? Isn't vehicular camera business a growth area?
Mr. Yamashita
I didn't go into detail in today's presentation, but we are using optics and image processing technologies that we cultivated in our camera and other businesses. We're expanding steadily in vehicular cameras. A good example is stereo cameras in brake assistance and other advanced driving support systems. We look forward to growth in the years ahead.
