hitachi’s value for italy research study · social innovation delivers value to different...

Hitachi’s Value for ItalyResearch Study

This study* was elaborated with the use of:

Property data of Hitachi Group companies and contents within Group companies’ documents, reports, presentations, etc.

Data and information discussed with the Group companies’ management team during individual meetings

Inputs shared and collected from Group companies in collegial meetings

Available data within local, national and international statistical databases, opportunely re-elaborated by The European House – Ambrosetti

Property contents from other research studies and papers elaborated and published by The European House - Ambrosetti

Information gathered from interviews with Hitachi’s key stakeholders and customers

Re-elaboration of data according to the The European House - Ambrosetti’s framework of the 4 Capitals, with the triple perspective: “One Hitachi”, Focus on single Companies’ distinctive features and Social Innovation/Value creation case histories. The adopted perspective aims to capture all the value createdin Italy by Hitachi Group companies.

(*) This study has been conducted by The European House – Ambrosetti working group composed by Valerio De Molli, Emiliano Briante (Project Leader), Rossana Bubbico, Elisa Maria Milani and Massimiliano Sartori.

Contents

CHAPTER ONEHitachi Group and its

presence in Italy 4

CHAPTER TWOHitachi and Social Innovation 14

CHAPTER THREEHitachi’s value(s) for Italy 31

CHAPTER FOURHitachi’s Future perspectives 121

Information and Telecommunication Systems

Construction Machinery

Smart-life andEco-friendly Systems

Social Infrastructure and Industrial Systems

High-functional Materials and Components

Hitachi engages in different, worldwide business, thereby creating both economicand social value in order to contribute to a sustainablesociety

Electronic Systems and Equipment

Automotive Systems

Others

5

Source: The European House - Ambrosetti elaboration on Hitachi data, 2017

North America

Revenues: 9.5 billion euros Number of companies: 97 Number of employees: ~20,000

Europe


Other AreasRevenues: 3.7 billion euros Number of companies: 101 Number of employees: ~14,000

Japan


Asia


6

Hitachi enters the Italian market with two divisions: one dedicated to electronic components and the other to consumer products

Hitachi Electronic Components Division, the Italian Branch of the German company, can be considered as the starting point for Hitachi EuropeHitachi Group develops within different business units:

Industrial Design OfficeElectric Components Global StorageHigh Technology AutomotiveDigital Media Group

In 1989, Hitachi Data Systems was founded in Italy, after the acquisition of National Advanced Systems (NAS) by Hitachi and Electronic Data Systems (EDS)

With the development of the Automotive business, in Italy, Hitachi faced the transition from pure commercial trading to semi-production, having both a warehouse and a production site

Over the years, most of these divisions have been spun off to become stand alone legal entities ormergers

1982

1990

7

Hitachi Europe becomes an Italian legal entity, due to the merger with Hitachi Sales Italiana, a company operating in the consumer field. It is instantaneously characterised as a multi-business reality operating in diverse fields, from the very simple one, like the consumer, to the more complex one, like power plants. In fact, the group’s strategy is to look at new start-ups or local realities of particular interest to expand its business: from incubation to independence from the producer and the creation of a true businessunitHitachi acquires 49% of SCAI spa, a company producing and selling construction machinery

The businesses of the Group companies are:Air Conditioning Digital MediaElectronic ComponentsDisplay Division – production of first plasma division Global StoragePower System Division – Power Plant and Proton Beam Therapy Data SystemsHigh Technology

Hitachi Transport Systems is created, which initially is concentrated on being a service provider for the Air Conditioning division

Hitachi Air Conditioning is conceived, a commercial unit focused on the sale and post-sale of air conditioners for private and industrial use

2002

2006

2003

8

Hitachi Europe, as Hitachi Ltd Regional Headquarters, provides a common corporate functions platform to support the single business units

Hitachi Medical Systems enters the Italian market, taking over and expanding activities previously carried out by a distributor and by the local subsidiary of Aloka, the Japanese company in the ultrasound market integrated in Hitachi world wide

Hitachi Data Systems acquires BlueArc, a company, that produced and sold NAS platformsHitachi Group acquires Drivetec, which becomes Hitachi Drives & Automation, specialised in automation and now also offering services in water and energy efficiency management

Hitachi Group acquires Valcom, an Italian engineering firm with over 25 years of experience in the field of oil and gas plant systems. The company becomes Hitachi Industrial Engineering EMEA, which today develops innovative projects combining information technology with engineering and project management (3D modelling, data validation among multiple database, procurement and constructability engineering services) in a wide range of fields

Hitachi Data Systems completes the acquisition of Avrio, oXya, Pantascene and Pentaho, to enforce its solution portfolio for Social Innovation and Analytics businesses

2010

2011

2013

2014

9

Hitachi Group acquires the majority of the share capital (51%) of Ansaldo STS, a leading company operating in the sector of high technology for railway and urban transport

Hitachi Group acquires AnsaldoBreda, which then becomes Hitachi Rail Italy, a multinational rail transport engineering company based in Italy whose main products are designing and manufacturing of railway and mass transit vehicles

Hitachi Group acquires Cosmic Blue Team (“CBT”), an Italian IT service firm, which becomes Hitachi Systems CBT, the European System Integrator of Hitachi Systems

Hitachi Air Conditioning merges with Johnson Controls Inc, to create a joint-venture named Johnson Controls- Hitachi Air Conditioning Europe. Johnson Controls acquired a 60% stake of the carved-out business and Hitachi Appliances continues as a 40% shareholder of this venture

2015

10

FIAMM Energy Technology was established by carving out FIAMM’s lead acid battery accumulators business for motor vehicles and industrial use to become a member of Hitachi ChemicalGroup

Hitachi Vantara is launched in the Italian market: a new business entity to leverage the broad portfolio of innovation, development and experience from across Hitachi Group companies to deliver data-driven solutions for commercial and industrial enterprises. This new company will unify the operations of Hitachi Data Systems, Hitachi Insight Group, and Pentaho into a single integrated business as Hitachi Vantara to capitalise on Hitachi’s Social Innovation capability in both operational technologies (OT) and information technologies (IT)

2017

11

General ManagementHitachi Europe

Healthcare (Diagnostics)Hitachi Medical Systems

MetalsHitachi Metals

Construction MachinerySCAI

Batteries and Energy storageFIAMM Energy Technology

LogisticsHitachi Transport Systems

AppliancesJohnson Controls - Hitachi Air Conditioning

High-techHitachi High Technology

Rail sectorAnsaldo STS Hitachi Rail Italy

Information TechnologyHitachi Vantara Hitachi Systems CBT

Automation, Water and Energy ManagementHitachi Drives & Automation

InfrastructureHitachi Industrial Engineering EMEA

12

Hitachi Systems CBT

Hitachi Europe Hitachi VantaraHitachi Drives & Automation Hitachi Industrial Engineering Hitachi Medical SystemsJohnson Controls – Hitachi Air ConditioningHitachi Systems CBT Hitachi MetalsHitachi Transport Systems Hitachi High Technology SCAI

Headquarters

Office

Production Plant

Data Centre

Hitachi Transport Systems

FIAMM

FIAMM

FIAMM

Hitachi Systems CBT

Hitachi Systems CBT SCAI

SCAI

SCAI

Milano

Ansaldo STS

Ansaldo STS

SCAI

SCAI

Bari

Avezzano

Massa

Pistoia

SCAI

Ansaldo STS

Hitachi Rail Italy

Hitachi Rail Italy

Hitachi Systems CBTHitachi Systems CBT

Hitachi Vantara

SCAI

Hitachi Rail Italy Hitachi Rail ItalyAnsaldo STS

Roma

Napoli

Messina

Palermo

Potenza

Torino NovaraGenova

Vicenza

Venezia Mestre

Bologna

Reggio Calabria

13

Throughout its over 100 year history, the Hitachi Group and its companies have passed on its Mission and Values to generations of employees and external stakeholders

The Vision has been created on the basis of the Mission and Values, as an expression of what the Hitachi Group aims to become in the future

Source: Hitachi 15

“Process of developing and deploying effective solutions to challenging and often systemic social and environmental issues in support of socialprogress”

The global imperative to innovate and address the local challenges of the fast-moving modern world is effectively what creates the concept of Social Innovation

It includes the aspect of making innovation deliver life-changing outcomes for society and individuals, in addition to bringing technological and human capabilities from various sectors together, with technology convergence and IT as the glue that binds them

The idea has strong links to the concept of creating shared value (CSV), which encompasses many stakeholders, such ascompanies, social enterprises, governments, NGOs, charities, public sector organisations and therefore also plays a majorrole in society

Other interpretations focus more on the business value of innovation to deliver advancements for society by opening untapped markets with profitable business models

Generally, companies operate at the intersection of CSV and business value creation

Source: The European House – Ambrosetti elaboration on Standford Graduate School of Business, 2017 16

Within Social Innovation, a convergence of technologies, industries, products and business models takes place, which is able to bring real positive changes to the lives of individuals and societies, by simultaneously creating sharedvalue

Sectors seen as separated in the past are converging into new products and services to provide innovations that will help providing breakthrough changes for society

Today, five critical global mega trends are creating both challenges and opportunities for Social Innovation, these include:

Urban population to reach 4.3 billion by 2020 and to account for 55.9% of total population

Mega cities to contribute with$21 trillion to GDP by 2020

Urbanisation Futureof Energy

Sustainability and efficiency are key in addressing per capita electricity consumption annual growth of 2.2% by2020

Futureof Mobility

Future of mobility willbe multi-modal

Over $600 bln will be spent on global high speed rail projects cumulatively by 2020

Health,Wellness& Wellbeing

By 2030, global population of>60 year olds to increase by 56% (from901 mln to more than 1.4 bln)

Growing opportunities for innovation and technology

Futureof Mobility

$1.5 Trillion of investmentneeded to make cities smart by 2020

Source: The European House – Ambrosetti elaboration on Standford Graduate School of Business and other sources, 2017 17

Source: The European House – Ambrosetti elaboration on Standford Graduate School of Business and other sources, 2017

Urban development

Manufacturing & construction Energy

Health & wellbeing Water

Transport & logistics

Natural resources

Supply chain sustainability Resource conservation & efficiency Food purity & safetyWaste recovery...

Smart & safe cities Carbon-neutral buildings High speed railPPP business models...

Energy management Energy saving Energy storageRenewable energy Smart grids...

Water networks Intermittent water supply Decision support systemIndustrial water management Desalinisation...

Multi-modal solutions Electric vehicleCar sharing & pooling Insurance analytics...

Medical cities,location based monitoringSelf monitoringGenetically engineered productsFitness apps...

Industry 4.0:Efficiency & sustainabilityNear-sourcingWellness of workers Smart factory...

18

Source: The European House – Ambrosetti elaboration on CSR Europe “The Sustainable Development Goals (SDGs): The Value for Europe”, 2017

Social Innovation delivers value to different stakeholders, in terms of:

positive transformational change to communities

accelerated advancement for governments

enhanced efficiency and sustainability to corporations

significant advances to citizens’ personal quality of life

For social innovators, the key element is profitable and sustainable growth

Profitable and sustainable growth is mainly achieved by partnering with different stakeholders, in order to provide for solutions and innovations around diverse processes, analytics and operations

GovernmentIncreased pressure for sustainable economic

growth

SOCIETY

CommunitiesUsers/citizens with increased

ownership, engagement and interest

CorporationsLooking at long-run corporate

performance metrics

19

“Hitachi delivers innovations that answer society’s challenges. With our talented team and proven experience in global markets, we can inspire the world”

Hitachi is seen as a visionary global player with a thought leading position in the sphere of Social Innovation

The company, in fact, aspires to drive innovations together, in order to make positive contributions to society, working smarter, faster and more creatively towards a better tomorrow

Hitachi focuses on realising a sustainable society by understanding global social and environmental expectations.This is done through communication with stakeholders and integrating those expectations into its management and business value creation with a strong focus on technology deployment and innovation to answer the challenges of society

With a clear focus on sustainability, society and growth, Hitachi’s vision is about promoting a transition into a new phase of growth following recent years where recovery from the 2008 global financial crisis had been a priority

20

Based on a self-stated goal of improving the quality of life for the global community, Hitachi’s Social InnovationBusiness is based on collaboration, blending technology innovation with new business models and driving the development, improvement and enhancement of social infrastructure

Having evolved its Social Innovation strategy and vision over many years, the Hitachi Social Innovation Business today is built on 6 key technology areas:

Sophisticated range of

intelligent water and wastewater

treatment solutions,

including systems and technologies for their control and operation

Technologiesand solutionsto increasethe

efficiency,stability and security of

both conventional and renewable

energy generation

Huge range of technologies,

systems and data management solutions to support a

healthier and safer society

Electronic and electro-mechanical

technologies for next generation vehicles and full

systems integrator across rail, road

and airport management and

control

National, social and industrial infrastructure

based on advanced IT

Solutions forboth physical and cyber security

to maintain the safetyand

security ofpublic facilities,

companies,critical infrastructure

and cities

21

Co-creation for Social Innovation reaches deep into industries and across supply chains as well as between suppliers and regions, creating shared value at every step along the value chain

By bringing stakeholders directly into the innovation process, businesses have found a unique way to develop innovative new products and services in an increasingly complex world

Hitachi therefore strongly focuses on the process of collaborative creation: a crucial element in bringing Social Innovation Business to life

“The process of innovating with partners in order to create new value for business stakeholders, for

customer and for society at large”

EVOLUTION OF DIFFERENT CREATION APPROACHES

22

1st step:Hitachi collaborates with customers toidentify challenges, establish visions,and develop solutions

2nd step:Hitachi creates new solution concepts that provide greater value, and rapidly develops prototypes and performs demonstrations to customers

3rd step:Based on the results of the demonstration, the finalised solution is validated at the customer site and then launched into the market successfully

Co-CreationInnovation

through collaboration

Customer

PartnersHitachi

Business Units

Hitachi R&D

23

It is believed that IoT has the potential to drive companies towards co-creation, thanks to the wealth of data it enables

In fact, IoT is bringing together data, people and machines, making the connected world an opportunity to make more informed decisions and improved outcomes for citizens, industries and institutions

Hitachi is one of the few companies in the world with decades of experience in developing both operational technology and information technology, the core building blocks of IoT

“The Internet of Things (IoT) is a framework in which all “things” in society are connected to the internet and mutually exchange information via networks.Information collected from these “things” is utilised to uncover new value for the betterment of society”

INTERNET OF THINGS

24

In 2015, there were about 15.4 billionconnected devices. This number will grow to30.7 billion in 2020, and 75.4 billion by 2025

In 2016, global spending on the IoT across markets was $737 billion

By 2020, global spending might reach $1.29 trillion, with an annual growth rate of 15.6%

The industries making the largest IoT investments in 2017 are Manufacturing ($183 billion), Transportation ($85 billion),and Utilities ($66 billion)

Smart grid technologies for electricity, gas and water and smart building technologies are also forecast to see significant investments during the year ($56 billion and $40 billion, respectively)

Source: The European House - Ambrosetti elaboration on IHS-Markit, International Data Corporation and Statista data, 2017

Number of connecteddevices(in billions), 2015-2025

+73%

25

Companies with a low and very low digitalisation rate in Italy

(% of the total), 2017)

Investments in digitalisation of economic sectors in Italy

90.4

89.2

87.687.1

North West

North East

Centre South

Source: The European House - Ambrosetti elaboration on Assinform data, 2017

Percentage of companies with medium-high investments from= 0% to =100%

Italy shows a significant delay in the digitalisation process

Banks Insurances TLCMedia

IndustryTransport Services Retail

Energy Utility Healthcare

26

As reported by the “Observatory Internet of Things” of the Politecnico of Milan, the market value of IoTin 2016 was equal to 2.8 billion euros (+40% with respect to the previous year). This increase is mainlyattributable to:

Smart Metering gas, the set of systems allowing the telemetry and remote management of electricity, gas and water meters, resulting in better network management, waste reduction and greater awareness of customer consumption

Smart Cars, a phenomena regarding 7.5 million vehicles in ItalySmart Buildings, beginning with the security applications and systems, followed by Smart Logisticsand Smart Home

Looking at connected objects, today the number greatly exceeds 52 million, considering both cellular and non cellular networks:

36 mln 1.6 mln 650k 200k 1 mln 530k ...

Italy shows a significant delay in the digitalisation process

Source: The European House - Ambrosetti elaboration on Politecnico of Milan data, 2017 27

Source: The European House - Ambrosetti elaboration on Politecnico of Milan, 2017

Smart Cities are seen as a great opportunity for the Italian IoT market. In fact, 51% of medium- large municipalities have reported initial projects in this area, but they mainly are experiments or pilot programs. Smart agriculture, Smart retail and Smart industries (according to the Observatory, 25% of the industries interviewed do not know about the existence of IoT) are further areas in need of additional development

The necessity to develop a shared national vision exists, in order to be able to overcome economic issue encountered by the single municipality at the beginning. The latter can be considered as crucial, being an IoT area in which the projects’ costs are covered by the resulting benefits

Achieving the objective of increasing IoT’s presence in Italy will require certain conditions to be in place, like overcoming technical, organisational, and regulatory limits

Companies using and implementing IoT technology will therefore play an important role in developing the right systems and processes to create and maximise the value for communities

28

Hitachi is unique in combining Operational Technology (OT) and Information Technology (IT) for the creation of value through

Digital Transformation

OT IT

City

Industrial

Business

Consumer

CloudCommunications

IT systems

Artificial Intelligence Big Data

analytics

29

(*) The European House – Ambrosetti proprietary know-how applied to a series of different industries

“4 Capitals Model” to measure, evaluate and highlight Hitachi’s value (values) for Italy, as contribution to growth of the territorial capital (= the sum of economic + social + knowledge + environmentalcapitals)

Contribution to the generation of economic and financialvalue(directly and indirectly) for thelocal territory and the country (GDP),to the development ofbusiness activities, to the attraction of investments, to exports,etc.

Contribution to employment (directly and indirectly) and well-being of employedpeople and their families, to qualityoflife, fairness and social integration, to participation and sharing of collective values, etc.

Contribution to maintaining the integrity of the territory and the ecosystem, to the ability toreduce energy and water consumption and regenerate natural resources, to improve the security and safety system, etc.

Contribution to theeducation, training and research systemof the territory, to the innovation capacity and to the attraction and retain of knowledge and skills,etc.

Hitachi in Italy

Economic Capital

Social Capital

Environmental Capital

Knowledge Capital

Value

Value

Value

Value

32

KPIs measuring the value createdby Hitachi’s activities in ItalySome indicators:

RevenuesEconomic multiplier of revenues (direct + indirect +induced impacts) ExportProductivity EmploymentSocial multiplier of employment (direct + indirect + induced) Number of patentsEnergy and gasconsumption CO2 emissionsWorkplace injuries…

(*) «One Hitachi» aggregates data of all the Hitachi Group Companies operating in Italy

“ One Hitachi* ” Hitachi’s single companies

Focus on companies’ distinctive features/performance contributing to the formation of economic, social, knowledge or environmental capital in ItalySome topics:

Economic performance improvements Relevant CSR activitiesRelevant strategies on human capital formation Collaborations on Research and InnovationDigitalisation of manufacturing processes Energy efficiency investmentsCircular economy approaches…

Hitachi’s innovative products, services and solutions

Case histories on Hitachi’s SocialInnovation responding to society’schallenges in ItalySome topics:

Healthcare and people wellbeing Smart MobilityWater and Energy Efficiency ManagementProductivity and efficiency gains in industrial processesInternet of Things across value chains Reduction of environmental impacts…

Value Creation for Italy

33

Limited use of Open InnovationAgeing population

and increasing healthcare needs

Low productivity levels

Low innovation scoreboard

Delays in digitalisation and Internet of Things

High unemployment rate (especially in the South)

Stagnant energy efficiency improvements

Growing attention towardsenvironmental issues

Low efficiencyof water networks

Significant urban congestion and excessive use of individual transportation

34

Contribution to the generation of economic and financial value (directly and indirectly) for the local territory and the country (GDP), to the development of business activities, to the attraction of investments, to exports, etc.

One Hitachi KPIs:Revenues Economic multiplier of revenuesExport Value added(GDP contribution)Investments Revenuesper employee (productivity)

Economic Capital

Social Capital

Value

Hitachi in Italy

Value


Knowledge Capital

Value Value

35

One Hitachi revenues have grown by 34% between 2015 and 2016, thanks to relevant acquisitions and a general increase in business activities

(1) Ansaldo STS S.p.A revenues considered for Ansaldo STS(2) “Leading Italian Industrial and Services Companies Report”, 2016 edition, Mediobanca, 2017(3) “Financial aggregates (of 2065) Italian companies”, Mediobanca, 2017 Source: The European House - Ambrosetti elaboration on Hitachi data, 2017

Revenues, (a mln),2015—2017

Total growth

Organic growth(excluding acquisitions)

In Italy, the industrial and services companies’ revenues 3 have grown on average by 2% from 2015 to 2016

Concerning FY 2016 revenues, One Hitachi would be at the 60th position (14th amongforeign-owned companies) in Italy 2

36

One Hitachi’s activity in Italy

Purchase of goods and services from Italian suppliers*

Households spending**

* One Hitachi’s First Tier suppliers and suppliers of suppliers (activation of the value chain)

** Consumer spending by families receiving a salary by Hitachi or its suppliers

Direct impact Indirect impact Induced impact

37

For each 1€ of One Hitachi’s revenue in Italy, 0.9€ of additional revenues are activated within the entire economy

Source: The European House - Ambrosetti elaboration on Hitachi data and own calculations and econometric modelling using Input/Output tables of Istat, 2017

One Hitachi generates atotal turnover of approximately4.2 billion euros of which 3.5 bln in the manufacturing sector

Direct revenues

Economic Multiplier: 1.9

2,260

Direct, Indirect and Induced Revenues (a mln), 2016

3271,654

4,236

Indirect revenues

Induced revenues

Total economic impact

38

1,398.9Manufacturing

29.5Utilities

47.3Transportation and Storage

42.4Wholesale and Retail Trade

239.8Financial and Professional Activities

38.5Information and Communication

49.8Construction

21.1Mining and Quarrying

6.0Agriculture, Forestry and Fishing

88.2Rental and Leasing Activities

19.5Other Activities

(*) Data in million eurosSource: The European House - Ambrosetti elaboration on Hitachi data and own calculations and econometric modelling using Input/Output tables of Istat, 2017

Indirect and induced revenues

1,981 mln €

39

(*) “Financial aggregates (of 2065) Italian companies”, Mediobanca, 2017Source: The European House - Ambrosetti elaboration on Hitachi and Mediobanca data, 2017

In Italy, the industrial and servicescompanies’ export* have grown by2% on average in the sameperiod

Total export represents approximately44% of Hitachi’s revenues in 2016. In particular, Ansaldo STS and FIAMM Energy Technology exported respectively 63% and 60%

Export from Italy, (a mln), 2015—2016

One Hitachi increases its export between 2015 and 2016 and positively contributes by approximately 1.1% to Italian manufacturing trade balance

+89%

531

1,001

FY 2015 FY 2016

40


In Italy, the industrial and services companies’ Value Added has grown by 4% on average in the sameperiod*

Value Added, (a mln), 2015—2016

134

187+40%

One Hitachi value added, which ultimately represents the contribution to Italian GDP, has grown by 40% between 2015 and 2016

FY 2015 FY 2016 **

(**) FY2016 does not include the Value Added data of FIAMM Energy Technology

41

Source: The European House - Ambrosetti elaboration on Hitachi and Eurostat data, 2017

Labour Productivity in Italy has decreased by 0.4% in the same period

One Hitachi has increased its revenue per employee by 2.4% in the last year

FY 2015 FY 2016

Revenues per employee, (ka), 2015—2016

432+2.4%

421

42

(1) Gross investment (gross fixed capital formation) divided by gross value added of non-financial corporations

Source: The European House - Ambrosetti elaboration on Hitachi and IMF data, 2017

In Italy private Investments have decreased by 0.1% in the same period

Not considering acquisition, the investments have grown by 58%

One Hitachi investments have doubled between 2015 and 2016. Hitachi’s investment rate1

is higher than Italian industrial and services companies average (24% vs. 18%)

22.5

Investments, (a mln),2015—2016

45.2

FY 2015 FY 2016

+101%

43

Italy is characterised by a substantially flat productivity performance, which continues to lag behind the average of other EUcountries

Data shows a positive relation between productivity and GDP growth

Relation between labour productivity and GDP growth in some European Countries

TEH-A Global Attractiveness Index identifies low productivity as one of the main obstacles to Italy’scompetitiveness

Global Attractiveness Index*, top 10 and Italy over 144 Countries (positioning), 2017

1st 6th

2nd 7th

3rd 8th

4th 9th

5th 10th

16th

(*) Report: Global Attractiveness Index 2017 – The true barometer of a Country’s attractiveness, The European House - Ambrosetti

Source: The European House - Ambrosetti elaboration on Eurostat and IMF data, 2017

USA

GER

CHN

JPN

SGP

CAN

FRA

GBR

KOR

NLD

ITA

44

Source: The European House - Ambrosetti elaboration on Hitachi, Eurostat and IMF data, 2017

A positive relation between investments, especially in innovation, and productivity, is demonstrated with

positive implications also on GDP

If Italian productivity grew as Hitachi’s, Italian GDP would increase by 0.96%

Labour Productivity per person employed in Italy,(2010=100) 2010—2016

Productivity growth (%), 2015-2016

-0.4% +2.4%

Productivity growth (%), 2015-2016

-0.1% Doubled

ITALY

ITALY

45

Across all industries, relevant efforts are driven by the goal of improving the productivity of industrial processes. Improvements can come in a variety of ways, including:

lower capital and operating costs,

increased yields, and

reductions in resource and energyuse

Some energy-efficient innovations may primarily be aimed at reducing direct costs, but generally also include beneficial impacts on other aspects of a production process (i.e. lower maintenance costs, increased production yield, safer working conditions, reduced environmental impacts, etc.)

Today, in light of ongoing increases in the costs of electric power and gas and the special care given to the environment, it is essential to make the knowledge, monitoring and awareness of energy consumption a priority

The accurate identification of the degree of efficiency of energy use, so as to determine which actions would provide the best cost-benefit ratio, should therefore become extremely relevant, especially for Italian private and public companies

46

Italy saw only a 14% reduction in energy intensity* between 2005 and 2015(vs. -28% in the UK and -20% inGermany)

The greatest area for improvement for Italy is to enhance commitment and to increase spending on energy efficiency programs and R&D

Energy efficiency has been defined as the “first fuel”, as it is competitive, cost effective to achieve and widely available in a significant number of countries

Strong energy efficiency policies are therefore vital to achieving the key energy-policy goals of reducing energy bills, addressing climate change and air pollution, improving energy security and increasing energy access

Energy intensity reduction in EU countries, 2005-2015

Source: The European House - Ambrosetti elaboration on Eurostat data and International Energy Agency, 2017

(*) Ratio between the gross inland consumption of energy and the gross domestic product (GDP) for a given calendar year; it measures the energy consumption of an economy and its overall energy efficiency-28%

-20%

-19%

-19%

-16%

-14% ITA

FRA

EU

ESP

GER

GBR

47

Hitachi has a long-lasting real-world experiencein energy components

The company has therefore come to know the importance of finding the causes of wastage and inefficiency in production cycles in order to reduce costs and has created a special division to take on the issue of streamlining energy efficiency, with an industrial approach based on a scientific method:H-VisionH-Vision is a method able of producing not only data, butalso analysing the latter and providing a specific solutionfor every context both in the short- and long-run

Today, H-Vision is a working tool implemented by numerous professionals within the energy sector and by public and private companies and organisations of all areas

Source: The European House - Ambrosetti elaboration on Hitachi data, 2017 48

Energy saving measures can play a significant role for lowering energy consumption and energy costs, as well as for environmental protection

An important parameter for energy saving in the buildings sector is the high efficiency of the energy infrastructures, which requires excellent quality of the relevant equipment installed

One of the main building types with a great potential to apply measures of energy saving are hospitals, due to:

24-hour operation (lighting, heating, air conditioning, electricity consumption)

Big surface of the buildings

Needs for hot water

Need for thermal comfort

Sterilisation supplies

Energy consuming machines and equipment

49


Hitachi Drives & Automation, given the complexity and delicate matter involved in challenging the aspect of energy efficiency within hospitals, applied H-Vision to deal with the measurement of the temperature of a hospital operating room due to the importance of:

Guaranteeing an aseptic ambient

Providing for a refrigeration system

After measuring and analysing the initial situation, the following data were collected:

Output temperature from the 3 refrigeration units: 9ºC

Minimum input temperature inside the operating rooms before the exchange point: 14.5º C

Difference lost: 5.5º C

Electrical Efficiency: 48% (low)

Every 1º C of temperature lost for the entire circuit corresponds to370 kWh/day.Total losses cost the hospital more than 149,000 euros/year

50

The following actions were enforced:

Restructure some principal pipes

Installation of smart radiators with Open Window technology

Change of the polarity of radiator fans

System is now supported by continuous monitoring to prevent problems and to verify that the efficiency level reached is maintained

Electrical consumption of this application has been reduced by about 23%

If applied at national Italian level, more than 330 million euros could be saved through a more efficient energy management in operating rooms

Source: The European House - Ambrosetti elaboration on Eurostat data and International Energy Agency, 2017

Electrical efficiencyincreased by about 6%

Assuming

6,137 Operating Rooms in Italy

2ºC energy efficiency gain (instead of the 5.5ºC obtained by Hitachi Drives & Automation within the analysed case)

Energy cost of 0.22/kWh

51


The project is focused on the optimisation of the gasoline formula, without acting on the refinery technology

In order to achieve this goal, a Big Data Analysis tool is used through Lumada powered by Hitachi Vantara

The project is characterised by three main steps:

Input of Data from the Refinery Control System (Input Data Mining)

Creation of Data Ingestion/Integration/Dashboards and reports through Hitachi’s Lumada platform

Analysis, Evaluation and Support by Engineers to enhance operational optimisation (Decision Support System)

Decision Support System

Analysis Supportand Technical Evaluation by

Engineers

Operational optimisation Technologies Enhancement

Process efficiencies balance Plant Upgrading

Data Ingestion / Integration /

Dashboards and reports

Input Data Mining

Data input from the refinery Control

System (DCS)

52

1st step

Analysis of the gasoline produced in the refinery and comparison to the gasoline required by the standard reference Any deviation above the standard reference will be analysed, looking for recurring patterns in order to find a correction in the production/blending formula and to reduce the “give-away”

With a predictive approach the target is to enhance the formula using less quantity of semi-finished productsUsing linear and non linear regression algorithms the target is to improve the so called “Blending Formula”

After the blending, the gasoline is transferred to a tank close to the port, which will be unloaded in the Oil Tanker (tank often contains a residue from theprevious batch)A temporal correlation between the composition of the new gasoline batch and the residual of the previous gasoline batch

Using the results of the optimisation achieved in step 2, it would be interesting to go backwards to understand how to reduce the consumption of the semi-finished components through the reutilisation of the residues that are already present within the tank

2nd step (A)

2nd step (B)

3rd step


The semi-finished products from the pipelines are put into a blending tank, using a predefined formula*, which is different for all the types of gasoline made in the refinery

All the variables in the formula areanalysed to find a way to minimisethe “give-away”, creating a betterquality (compared to the standard)final gasoline

Products Pipeline

Oil Tanker

In a second stage of theproject, the goal will be to optimise theproductive-chain, in order to minimise the losses in terms ofwaste product, and maximise the revenues for theCustomer

Blending Tank Gasoline Pipeline

(*) For any type of gasoline that will be produced in the refinery, there is a well defined “blending formula”. According to this formula all the semi-finished products will be mixed into the Gasoline Blending Pool


Contribution to employment (directly and indirectly) and wellbeing of employees and their families, to quality of life, fairness and social integration,to participation and sharing of collective values, etc.

One Hitachi KPIs:Number of employeesSocial multiplier of employment

Average age of employees

Type of contractsEmployment distribution across Italy

Economic Capital

Social Capital

Value Value


Knowledge Capital

Value Value

Hitachi in Italy

55

One Hitachi has been increasing its total labour force in Italy, significantly contributing to Italy’s employment


In Italy, the industrial and services companies’ employment* has grown by 1.3% on average in the same period

Hitachi’s number of employees is forecasted to increase in FY2017 too. For example, Hitachi Rail Italy plans to hire around 250 people (+13%)

Employees, (nr.), 2015—2016

Total growth

Organic growth (excluding acquisitions)

4,012

5,237

FY 2015 FY 2016

+31%

+8%

56

For each employee of One Hitachi in Italy, 1.2 additional employees are activated within the entire economy

Source: The European House - Ambrosetti elaboration on Hitachi data and estimation using Input/Output tables of Istat, 2017

One Hitachi generates a total social impact of approximately11,360 employees in the Italian labour market

Direct, Indirect and Induced Employment(number of employees), 2016

Direct employment

Social Multiplier: 2.2

5,237

5,284839 11,360

Indirect employment

Induced employment

Total social impact

57

One Hitachi employees’ average age is slightly lower than the Italian one, but 6 out of 9Hitachi Group companies are well below it

Source: The European House - Ambrosetti elaboration on Hitachi and Istat data, 2017

Max 46.7

43.1

Min 38.0

43.6

58

98% of One Hitachi labour force has a permanent contract, which is 12 p.p. higher than the permanent contract rate of the Italian economy

Source: The European House - Ambrosetti elaboration on Hitachi and Istat data, 2017

Fixed term2%

Permanent98%

Fixed term14%

Permanent86%

ITALY

59

In Italy the employment rate for people aged 20-64 is 61.3%, the worst European data afterGreece

The situation in Southern Italy is even more worrying with an unemployment rate equal to 19.6%: here, since 2006, the rate has been diminishing by 13 percentage points versus a national average of 5 percentage points

Source: The European House - Ambrosetti elaboration on Istat data, 2017

x2.7 x1.9

Italy North Centre South

11.7%

7.6%10.4%

Unemployment rate in Italy (%), 2016

x2.619.6%

17.4% 46.4% 32,964 17,787

Population at risk of poverty or social exclusion (%), 2016

NORTH ITALY SOUTH ITALY

GDP per capita(euros), 2016

NORTH ITALY SOUTH ITALY

60

Source: The European House - Ambrosetti elaboration on Istat data, 2017

36% of «OneHitachi» employees

vs. 52.0% of total employment in Italy



One Hitachi’s contribution to the Italian employment is particularly relevant for the South of Italy, where 43% of the labour force is located



61

Achieving a Fair and Equitable Work Environment

Hitachi has a human resource strategy that emphasises the concept of “decent work”

This concept has taken on increased importance globally as a standard for labour practices, with the International Labour Organisation, for example,positioning the concept as an important objective of its activities

Companies are expected to ensure decent workthrough policies appropriate to their businesses

Implementing a Strategy for Growth with a Global Human Capital

The Hitachi Group is promoting a global human capital management strategy

Fostering human capital through a diverse array of initiatives, such as:

hiring and promoting to management positions non-Japanese personnel

drafting measures to share values and promote mutual understanding

formulating programs to develop human capital capable of meeting the needs of global operations has become a priority

62

Contribute to business through human capital and organisation development

A right person in a right place

High performing people and organisation

Engaged and motivated employees

Workforce Planning Fast-track Leadership Development Program

Career Development

Talent ManagementGlobal Leadership Development Talent ReviewSuccession Planning

Organisation Review

Compensation Development

Global Performance Management

Total Remuneration Survey

Hitachi Insights (Employers survey)

Global Human Resources Management PlatformHuman Resource Information System

Hitachi Global GradeGlobal Human Capital Database

Hitachi Core Values

63

Since 2013, Hitachi Group has been conducting an annual global employee survey, Hitachi Insights, as a way of measuring employee engagement

In September 2015, the survey was administered for the third time. Around 210,000 employees worldwide were sent the survey in one of 13 different languages, and roughly 170,000 responses were received

For the second consecutive year, the results in all 13 categories improved compared to the previous fiscal year’s results

The year-on-year improvements were the outcome of the in-house departments and organisations examining the results and implementing improvements, in line with the PDCA (plan, do, check, act) approach

The survey was composed of 147 questions, within 15 different categories

All questions asked for the employee’s level of agreement with each statement on a 1 (strongly disagree) to 5(strongly agree) scale, also translated to a simpler favourability scale:

Favourable Neutral Unfavourable

Strongly agree Agree Neither agree nor disagree Disagree Strongly

disagree

64

Donations of «working hours» to the populations affected by the

earthquake in central Italy

Organisation of volunteering days at the SOS Villages, where employees

can concretely give a helping hand and spend time with the children

Voluntary Blood Donation Campaigns twice per year and in cooperation with AVIS Milano

Corporate Golden Donor of FAI

Participation at the «Volunteers for a day» promoted by the

Municipality of Milan

Visits of schools at the Hitachi Rail plants, where topics of safety, design and other

stages of product manufacturing arepresented and discussed

Support to the Ronald McDonald Foundation with the goal of helping children and their families in hospitals to overcome disease-related difficulties

Production of institutional and/orproduct videos, with evidence ofsustainability aspects

65

The Healthcare sector is continuously facing social problems caused by, among others, rising costs and an ageing population. The latter is an aspect of particular importance for countries, such as Japan and Italy (% of population >65 is very high)

Poor and inconsistent quality of care, inequality issues and inaccessibility to appropriate healthcare are among the main challenges encountered by both the public and the private healthcare sector worldwide

Hitachi, through its approach in Social Innovation at global level, tries to face these issues at three levels: society, system and patient

“Build a society in which everyone can live in good health, safety and security”

Average population age, 2016

45.1 46.9

42.7 30.1

16.1

Hitachi’s aim is to create an efficient and improved quality of healthcare by focusing its medical innovation around relevant stakeholders, including patients, healthcare providers, insurers and governments

% on total population

Source: The European House - Ambrosetti elaboration on World Bank and Eurostat data, 2017

Individuals over 65 in Italy (million), 2016, 2030 and 2050

20.1

13.4

2016 2030 2050

22% 25% 30%

ITA JPN

EU

66

Hitachi Medical Systems is the market leader in open MRI systems production and commercialisation with over 7000 systems installed worldwide

Oasis is the only HI-Field MRI available in the market worldwide, providing both a high degree of diagnostic confidence and patient comfort

Compared with the doughnut-shaped, closed systems, the benefits of open MRI machines can include:

Higher levels of patient comfort

Reduced claustrophobia and patient-size concernsIncreased patient scan volumeGreater ease when placing critical body partsdirectly under the magnetLower upfront and maintenance costsSpecially tailored also for paediatric patients

Open MRI technology increases the value and quality of life of patients with particular needs, generating a positive social impact thanks to this innovative technology

67

The majority of European citizens live in an urban environment, with over 60% living in urban areas of over 10,000 inhabitants. They live their daily lives in the same space, and for their mobility share the same infrastructure. Urban mobility accounts for 40% of all CO2 emissions of road transport and up to 70% of other pollutants from transport

European cities increasingly face problems caused by transport and traffic. The question of how to enhance mobility while at the same time reducing congestion, accidents and pollution is a common challenge to all major cities in Europe. Congestion in the EU is often located in and around urban areas and costs nearly 100 billion Euros, or 1% of the EU’s GDP, annually

Efficient and effective urban transport can significantly contribute to achieving socio-economic objectives, reducing energy dependency and tackling climate change

Mobility in urban areas is also an important facilitator for growth and employment and forsustainable development in the EU

Cities themselves are usually in the best position to find the right responses to these challenges, taking their specific circumstances into account

Source: The European House - Ambrosetti elaboration on European Commission data, 2017 68

In tomorrow’s megacities, citizens’ selected route will be increasing and their habits regarding transport, as a result of pressure, from both environmental responsibility and congestion in city centres, will change

Nevertheless, currently in Italy, the mobility is mostly an individual phenomenon, with significant impacts on costs, pollution, safety and congestion (for example, in Milan a person loses approximately 35 minutes every day)*

Efficient and effective urban transport, such as the driverless metro system, can significantly contribute to achieving socio-economic and environmental objectives, by contemporarily bringing practical solutions:

short headways (up to 60 seconds for Lille’s metro)high flexibility (adapting the service frequency to real time demand)

high service level (24/7 service, e.g. Copenhagen’s metro) and

higher commercial speed (up to 44km/h in Vancouver)

In addition, driverless metro systems considerably reduce operating costs (by up to 40%) mainly bringing with them human resources flexibility

➞ Public transport prices are significantly reduced and accessible to more of the population

Source: The “future of urban mobility”, The European House - Ambrosetti, 2017 69

Ansaldo STS’ Driverless Unattended metro assures high performances, from a technical to transportation point of view

It is already present in a numerous cities worldwide (Copenhagen, Milan, Brescia, Rome, Thessaloniki, Taipei, Riyadh and Honolulu)

Ansaldo STS has so far developed more than 125 km of driverless unattended metro railway lines, of which51.3 km in Italy alone, with more than 145 stations, 8 control and maintenance centres and 190 trainsDriverless Unattended Metro main advantages versus Conventional Metro include:

Lower O&M expenditure

Improved service flexibilityHigh level of safety, performance, availability, reliability and quality of service

Increased public transport service attractiveness

70

The new M5 metro line in Milan is the first infrastructure of urban transport in Italy realised through project financing; an instrument permitting the financial contribution of private entities (both Ansaldo STS and Hitachi Rail Italy are key contributors)

The project promises an abatement of atmospheric and acoustic pollution: at full capacity it is estimated, that the M5 will lead to 15 million annual user shifts from private car to metro with a consequent significant decrease in pollutants

Overall, an annual saving of 8,470 tons of fuel and 260 less road accidents per year in the city are forecasted

Thanks to the 12.8 kilometres and 19 stations across the entire line, it is possible to transportbetween15 and 18 thousand passengers per hour per direction with peak frequencies of 90 seconds (reaching up to 75 seconds if needed)


The M5 metro line of Milan, equipped with Ansaldo STS’ driverless technology, has been elected as“Transport Deal of the Year 2015” at the Project Finance International Magazine Awards. The projectis in fact known as the first Italian example of Project Financing for urban transport finished intime

71

Safeguard environment

Reduce private circulation

Contain total costs of publictransportation

Improve connections between urban areas

In 1986, the “Azienda Servizi Municipalizzata” (ASM) promoted a feasibility study to create an integrated transport system with the purpose to outline a sustainable development of a transport system compatible with citizens’ needs, transport efficiency and environmental protection

The result led to the introduction of an automated urban metro system, able to meet the transport demand of both the city and the neighbouringmunicipalities

1 3 5 7

Improvelivabilityof historic

centre

2

Improve integration

and useof public

transport4

Increase mobility of

the urban system

672

For each new passenger using the metro, 1.4 additional passengers use other public transport, for a total of 2.4 passengers switching from private to public transportation

Brescia Metro connects the northern districts of the city to those in the south-east, passing through the historic centre

The urban track, which has 13.7 km of line and 17 stations plus a control/storage centre, has been identified in order to maximise connections between different areas of the city

The metro line is equipped with Ansaldo STS’s “Driverless” technology. This system is able to:

Reduce staff costs due to automationEnforce high safety levels (elimination of human error)Regulate the speed with respect to fixed limitsIntensify or dilate the passages of the convoys as needed(more flexibility)Intervene in case of failure, by blocking the entiresystem

Number of passenger using Driverless metro (million), 2013-2016


x2.4

2013

1215

+ 5 million

2014 2015

16

2016

17

+ 12 million

2013 2017

Number of passenger using public transport (million), 2013-2017

5341

73

Hitachi Rail Italy’s new Caravaggio/Rock train, comprising of 5 cars for a total 136m length, will have a total capacity of 656 passengers and 4 motor bogies that will reach a speed of 160 km/h

Thanks to its new architecture, light weight design andhigh efficiency propulsion, the train will enable uniqueperformances, including:

transport capacity per unit length

consumption per passenger/km

guaranteeing different fittings of the interiors according to the customers’ needs

Comparing with current trains, a fleet of 270 active new Caravaggio/Rock trains is able to guarantee a daily time saving of more than 189,000 hours for a serviceof 20 daily train rides

Hypotheses on the introduction of new Regional train fleet (300 trains)

270 active trains

20 daily rides

70% coefficient filling≈420 passengers

5 minutes saved per ride

189,000 daily hours saved


ETR1000 is the train manufactured by Hitachi Rail Italy*, onbehalf of the Italian State Railways designed to reach a topspeed of 360 km/h**

It is designed to travel on the high-speed networks in Europe overcoming differing infrastructural standards, in particular the different power supplies and signalling types

Unlike the current ETR500, the new ETR1000 features 16 engines along the entire train. This solution permits more acceleration and stability, though travelling at higher speed

It is the fastest train ever mass-produced in Europe and hasa lower environmental impact (23%-28% of CO2 emissionsaved) compared to ETR500

(*) In cooperation with Bombardier(**) Top speed of 360km/h is only reached only in the route between Rome and Naples

Hypotheses on the introduction of new ETR1000 fleet (50 trains)

40 active trains

2 daily rides

70% coefficient filling ≈330 passengers

365 days a year

30 minutes saved per ride

2,044,000 daily hours saved

40% business travellers


Economic Capital

Social Capital

Value Value


Knowledge Capital

Hitachi in Italy

Contribution to the education, training and research system of the territory, to the innovation capacity and to the attraction and retention of knowledge and skills, etc.

One Hitachi KPIs: Employees’ level of education

Patents

Collaborations

Value Value

76


Source: The European House -Ambrosetti elaboration on Istatdata, 2017

One Hitachi’s labour force level of education is higher than the Italian average, and it constantly invests in knowledge development for its employees

University graduate

44%

other 8%

High school diploma

48%University graduate

17%

Employees’ breakdown per level of education (%), 2017

other 37%

High school diploma

46%

ITALY

77

*Expert in Energy Management Certification

Leading the Next: aimed at the Leaders of each Business Unit, to increase leadership competencies, change awareness and strengthen the leader’s role

Specialised education: training courses on competencies for special professionals, introduction of skill assessments and certifications, creation of «on-the-job» initiatives

Training course on Water and Energy Management

Training course to achieve «EGE Quality Certification»*

Introduction of a detailed Training plan (i.e. Project Management course) in view of the company’s expansion strategy

Leadership course for managers

Hitachi Rail Italy

Hitachi Drives & Automation

Hitachi Industrial Engineering

78

Source: The European House - Ambrosetti elaboration on Hitachi, WIPO – World Intellectual Property Organisation and Istat data, 2017

One Hitachi’s high number of patents per employees shows a high efficiencyin turning R&D activities and investments into published patent applications

In Italy, the number patents in force per 1,000 employees is equal to 2.9

Italy has the lowest patents/employees rate in Western Europe. If Italy hadthe same rate as Hitachi, the Country would be second after Ireland

48.5 patents in force≈ every 1,000 employees

One Hitachi Patent portfolio (nr.),2017

International 7

National 247

254

79

(*) hours worked in digital working centres

Hitachi Rail Italy has been significantly investing in the digitisation of labour within its productionplants

In 2016, digital worked hours* were equal to 9.4%of the total and will become 14.2% by2018

The digitisation process is leading to an increaseof total hours worked (+9% from 2016 to2018 in the Naples production plant only) and will have positive impacts on occupation

The greater use of digital labour has also a positive effect on the competencies of the labour force, which become more and more technical and qualified

45,314

2017

45,879

5,386

46,840

7,660

+16.2%

+1.2%

Average worked hours per month in Naples plant, 2016-2018

+9%

49,950

4,636

51,26554,500

+42.2%

+2.1%

2016

Non digital worked hours

2018

Digital worked hours


One Hitachi ongoing collaborations (nr.), 2017

One Hitachi widely collaborates with Universities, Research Institutes and Think Tanks to enforce Open Innovation

13 ongoing projects aimed at identifying and resolving societal challenges through collaborative creation

Research Institutes

28%

Universities 72%

28


Source: The European House - Ambrosetti elaboration on Henry Chesbrough, Open Innovation: The New Imperative (2003)

“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation,respectively”

The idea is to share information with the outside, while listening to the feedback and suggestions. This model was initially proven in higher education, however, the model has also translated well in the business world, enabling businesses to test their ideas and receive the necessary input to fine tune their offerings

Key Reasons to adopt Open Innovation within companies:Innovative Capacity

Gain competitive advantage by leveraging a larger intellectual talent pool

Competitive/Financial AdvantageReduce costs by encouraging flexibility, supply chain, research and development units and branding and marketing efforts

External Forces and PoliciesSeek, evaluate, manage and monitor ideas and inputs from a large variety of partners and contributors

Employee Motivation and Organisational EfficiencyKeep employees connected and challenged

82

Source: The European House – Ambrosetti elaboration on proprietary Community Tech survey data and European Commission data, 2017

The diffusion of activities correlated to Open Innovation in Italy represents a critical issue for the countrywide-system

Italy is at the bottom of the ranking when considering companies adopting Open Innovation (5% against EU average of 10% and 12% UK)

Moreover, Italian companies tend to promote R&D activities by 64% through In-house, rather than through Open Innovation (36%)

In order to guarantee a greater capability in innovation, it is essential for Italian companies to implement, to a greater extent, activities of Open Innovation

Companies adopting Open Innovation in European countries (%)

University / Research Centres

Italy

Spain

EUFrance

Germany

Sweden

United Kingdom

5%

6%

10%

11%

12%13%

22%

In-house with other companies

R&D activities through collaborations of Italian companies (%)

64%

2017

26%10%

83

Hitachi Industrial Engineering focused, among other major activities, on Virtual Reality and Digital Maintenance and on how to make the latter useful and usable on the market, in order to support customers with innovativesolutions

The company understood how training, maintenance and simulation can be considered areas where the potential of this particular technology can be carried out, satisfying both technology anddiversification

In order to meet expectations on the product, Intergraph Engineering Environment Services (IEES) was selected by HIEE as a partner, a recognised brand in the world with guarantee of quality, experience and reliability

The company today is integrating the existing technology with their expertise in order to provide to customers a product capable of being a valuable aid to their activities and may give advantages in terms of safety and cost as well as project time execution reduction

84

Advantages of the collaboration: Consolidate Technical Skills

Leverage Worldwide network

Share potential Customers

Propose tools for integrated Customer Solutions

The partnership was able to create the synergy to integrate IEES’ IT capabilities with HIEE Engineering operational skills for the development of:

Simulation training programs in Virtual or Augmented Reality starting from 3D engineering modelsEmpowering Smart Plant suite with actual customer’s feedback and engineering needs

One Hitachi fosters the use of “Open Innovation” in order to giveeconomical and societal benefits to customers and final consumers

85


Innovation partnerships are long-term, in-depth relationships, which are about collaboratively coming up with ideas,in order to address the major challenges of today’s population. Healthcare providers and industry can therefore createsynergies, by adding value to a degree that cannot be achieved separately and generating greater patientvalue

Hitachi Medical Systems has therefore enforced several collaborations with Italian hospitals, including:Policlinico San Matteo (Pavia): development of ultrasound software for a quantitative analysis, scientific publications, development of ultrasound products, testing of new ultrasound software,etc.

Ospedale Borgo Roma (Verona) and Policlinico Umberto I “La Sapienza” (Rome): reference centre for new premium ultrasound machinePoliclinico Paolo Giaccone (Palermo): publications on technologies of fusion between ultrasound and MRI

Ospedale Cannizzaro (Catania): reference and education centre for fusion between ultrasound and MRI

Ospedale Humanitas (Rozzano): reference and education centre for ultrasound-guided surgery

86

“For several years I have been working with Hitachi (Medical Systems) to test and develop solutions and software for internist and specialist ultrasound use and to define clinical protocols in order to improve image quality, ease of use of the machines, diagnostic and therapeutic fitness and the quality of care for the patient, with positive effects also on the costs incurred by the National Health System, thanks to the progressive replacement of MRI with ultrasound. Hitachi offers our centre new and free ultrasound platforms, with the purpose of using it in the field of clinical research and experimentation, training of students, medical doctors undergoing training and young colleagues who start or want to deepen ultrasound activity and allow us to publish articles on scientific journals and contribute to the development of internationalguidelines.“

Prof. Vito Cantisani,Sapienza University of Rome,Department of Radiological, Oncological and Pathological Sciences

87

Collaborations with Italian Universities:University of Florence: collaboration on specific themes (i.e. gear), internship activities and didactics

Sant’Anna University of Pisa: projects on structural integrity

La Sapienza University of Rome: financing of a Master in Engineering

University of Cassino: projects on Power electronics and traction motors

University of Napoli: collaborations on Condition Based Maintenance

University of Salerno: projects on energy saving, energy storage and eco-drive

Other relevant initiatives:Participation at the Lighthouse Plant Project of National Technological Cluster “Smart Factory”: companies, universities, research providers, associations and local authorities together for the Manufacturing growth


Hitachi Rail Italy is partner of the Joint Research Center Trasporti with Politecnico di Milano, Politecnico Foundation, Regione Lombardia, Trenitalia, RFI, ABB, Bombardier and others

The main theme of the research centre is energy saving. The ambitious goal of the centre is to study and test the next generation of innovative transport vehicles, and in particular the first high-speed and last-generation train from a safety perspective

The construction of the first Italian high speed train is a key element of a strategy that has transformed the panorama of rail transport over the last few years; a project that has been enforced by the Ferrovie dello Stato Group and has led to over 11.920 km of electrified lines, equal to 71.3% of the total (vs.. average electrification rate of the rail network in Europe of 52%)


Ansaldo STS has a framework agreement with the Italian Universities of Genoa, Turin, Milan, Rome and Basilicata, with whom the company has been involved in numerous collaborations in the form of PhD programs, annual or biennial research contracts as well as numerous theses and internships

In 2016, Ansaldo STS continued a close cooperation with the University of Genova’s Electrical Engineering Faculty, with whom it shares a goal to find interesting profiles that meet the needs of Ansaldo STS’sbusiness

In addition, the company has signed an agreement with one of the best scientific high school based in Genoa, the Cassini Scientific High School, to make the company active in the job alternation program. This opportunity allows Ansaldo STS to help and guide young people in their future university career

Ansaldo STS, Confindustria Genoa and the Liguria Region’s “Technologically Integrated Intelligent Systems” district (SIIT) have joined forces to promote development of a regional technological grouping for rail transport, involving SMEs, universities and the CRN. Their aim is to present research topics pertinent to the Horizon 2020 programme and especially the European multinational Shift2Rail project to the Liguria Region to be included in the next programmingschedule


FIAMM is industrial partner of Aruba.it, the first Italian company for data centre services, web hosting, e-mail and domain registration, in terms of the supply of accumulators to ensure performance continuity of the datacentre

FIAMM’s supply for the data centre, known as the largest in Italy, encompassed the installation of interconnected accumulators inside of a container, in order to allow the moving of the data centre according the customer’s needs, making the application modular and highly flexible

Furthermore, the system is remotely monitored, in order to ensure the high performance levels

“The partnership between Aruba and FIAMM Energy Technology can now be seen as a guarantee:a partnership built both in data centres and on track. A strong brand with a decade-long experience, FIAMM Energy Technology has demonstrated its high reliability for a component as important as a battery; fundamental to guaranteeing the continuity of a data centre with maximum operational security, especially when critical events might happen, such as an electricity blackout of an entireutility”

Alessandro Bruschini,Infrastructure Manager of Aruba S.p.A.


ERSAT is the latest generation signalling project that interfaces and integrates – for the first time in Europe (and financed by the European Commission (within the Horizon 2020 research plan) – the European Rail Traffic Management System (ERTMS) with the navigation and satellite positioning technology Galileo

The project, coordinated by Ansaldo STS, has the final aim of defining and testing the evolution of ERTMS signalling system through train localisation based on satellite technology

Satellite technology is designed for a controlled and safe management of rail traffic of secondary conventional lines, local and regional lines

The advantages of ERSAT are:to increase railway traffic capacity, favouring those who travel and helping to reduce CO2 emissions;

to guarantee high railway safety standards and punctuality;

to reduce operating costs, as the new technological equipment will require less investments for installation

The project ERSAT has been presented in February 2017 with “Rete Ferroviaria Italiana” and “Trenitalia” in Sardinia


The IoT is changing how the food industry tackles problems like safety, e-commerce, and even waste management:it helps ensure higher levels of food safety, traceability and, consequently, accountability throughout the farm-to-plate supply chain

It impacts the manufacturing process through improved production quality and inventory management techniques

Smart sensors and their associated systems detect continuous data on food as it’s produced, manufactured, transported, and stored. These sensors measure temperature, but they may also be used to prompt workers to perform and verify required inspections and to report other compliance-related data

Connected devices provide opportunities to prevent machinery malfunctions, improve efficiency, and perfect processes through data analysis. Machine-to-machine communications will offer opportunities for real-time tracking of inventory, predictive maintenance and remote monitoring of conditions to ensure the safety and the quality of the finalproduct

93

Source: The European House – Ambrosetti on various sources, 2017

The agri-food sector represents a key value chain for the Country:

€ 132 bln revenues (2016)

465,000 labour force (2016)

€ 230 bln of food consumption in Italian families (2016)

€ 31.5 bln export ~8% of Italy’s export (2016)

56,418 companies (2014)

€ 58.8 bln value added, of which € 27.2 bln of Food & Beverage e € 31.6 bln of Agriculture (2016)

896 Food & Beverage products certified as DOP and IGP (2017)

Counterfeiting representsa significant burden for theItalian agri-food sector

8 billion Euro of estimated turnover value of counterfeiting in the strict sense

54 billion Euro of estimated turnover value of Italian Sounding and Look Alike

94

Data-Driven Farming

IoF2020 will help farmers to change from “management by gut feeling” towards “management by facts”, which is of crucial importance to survive its increasingly demanding business environment

Autonomous Farm Operations

IoF2020 will improve the connectednessand intelligence of farm automation. As such it will enable farm equipment to become autonomous, self-adaptive systems that can operate, decide and even learn without on-site or remote intervention by humans

Virtual Food Chains

IoF2020 will enable to virtualise food supply chain management which allows for advanced remote (re)planning, monitoring and control capabilities and for new business models

Personalised Nutrition

Personalised nutrition monitoring and advices by using smartphones, that make use of connectedsensors, wearables like smart watches, equipment at home (e.g. refrigerators, weighing machines) and outdoor equipment (e.g. in canteens, restaurants, supermarkets, fitness clubs)

Hitachi Systems CBT developed a complex IoT traceability model to ensure the role of Italian Control and Supervisory Bodies and make them able to collect, treat and deploy information from and to their clients


Through traceability, trackability and characterisation of the single chain, the enhancement of the “distinctive” factors of the product is ensured by increasing the company’s level of

competitiveness and supporting business integration among the differentactors

SOLUTIONS

CloudBig Data Analytics Predictive Applications SecurityConnectivity Sensors

BENEFITSSmart Supply Chain Flexibility & Efficiency Cost-effectiveness Pollution Reduction

NEEDS

Data collection & Analysis High qualified products Compliance with Certification Standards More efficiency during the entire process


PRACTICEIoT is the new revolution in agriculture. Thanks to the support of technology, Hitachi Systems CBT is able to collect all kind of data starting from the fields, without losing any step of the long process that ends when the product is brought home by consumers

IoT model for a smarter & more efficient supply chain

96

LATEST INNOVATIONVirtualising the wine cellar and giving augmented reality to the auditor for an enhanced access to the logbooksHe will move inside the cellar and he will have access to wine content of each vat using augmented realityProducing GIS tool will give to the auditor the ability to access to all the vineyard information online

OPPORTUNITIESTo offer quality certification system improvement thatwill:

Lead to a reduction of inspection/certification time/efforts and/or increased reliabilityLimit redundancies (overlapping among certification schemes)

GRAPES SHIPPINGLoading date and timeRoute, time and stops analysis

INSPECTION

WINE CELLARData collection

BOTTLINGProduction Process Analysis

Date and time of bottling

Route, time and stops analysis

DISTRIBUTIONLoading date and time ProvenanceRouteTemperature, humidity Vibrations

STOREData visualisation

INSPECTIONVINEYARDData collection


One Hitachi KPIs: Workplace injuries

Electricity consumption

Gas consumption

CO2 emissions

Waste production

Economic Capital

Social Capital

Value

Hitachi in Italy

Value

Knowledge Capital

Value ValueContribution to maintaining the integrity of the territory and the ecosystem, to the ability to reduce energy and water consumption and regenerate natural resources, to improve the security and safety system, etc.


98

One Hitachi’s workplace injuries frequency rate has been reduced by 28.7% between 2015and 2016, especially thanks to the mutual exchange of best practices among the corporation and the acquired companies in Italy

(*) Number of employees injured over a year in a group of 100 employeesSource: The European House – Ambrosetti elaboration on Hitachi and Inail data, 2017

Hitachi’s workplace injuries frequency rate in 2016 (1.4) is below Italian industry sector average (1.8)

Workplace injuries frequency rate*(injuries/100 employees), 2015-2016

-28.7%1.8

2015

1.4

2016

99

One Hitachi performs particularly well in relevant environmental KPIswith respect to the Italian average

Source: The European House - Ambrosetti elaboration on Hitachi, Eurostat and Istat data, 2017

CO2 emissions(tons per € mln revenues), 2016

Gas consumption(GJ per € revenues), 2016

190.9

Electricity consumption(GJ per € mln revenues), 2016

378.8

25.41

292.4433.2

6.9

Plants of Hitachi Rail Italy, Ansaldo STS, FIAMM Energy Technology

Manufacturing sector average

101.3

Waste production(tons per € mln revenues), 2016

30.7

100

ITALY

Population growth and increasing urbanisation, combined with growing congestion on highways and at airports, is creating the opportunity for rail transportation to re-emerge as an intercity passenger mode of travel

In addition, technology in rail passenger transport is improving, permitting commuters to travel at higher speedand with a decreased carbon footprint

The new Hitachi Rail’s ETR1000 encompasses this technology, resulting as the first high-speed train to receiveEnvironmental Product Declaration certification

ETR1000 (350 km/h) vs. ETR500 (300 km/h)

For 70 daily rides:Energy saved: 92,491,000 kWh/year

CO2 emission saved: 47,600 ton/year

23% less than ETR500

ETR1000 (300 km/h) vs. ETR500 (300 km/h)

For 70 daily rides:

Energy saved: 112,828,800 kWh/year

CO2 emission saved: 58,050 ton/year

28% less than ETR500

New ETR1000 can achieve savings, both from the energy and CO2 emission perspective


In 2016, Ansaldo STS concluded the project of reducing energy absorption of Italian production sites

The project has seen the following interventions:Piossasco (TO) site: replacement of several energy infrastructures showing signs of obsolescence (piping, valves, lighting systems, etc.)

Genoa, Tito Scalo (PZ) and Naples: a more focused approach to rationalising energy consumption (reduction of office lighting, shutdown of PCs and displays in the absence of operators, etc.) and replacement of obsolete facilities with energy saving oriented replacement

Total energy consumption (GJ), 2013-2016


9,654

8,121

2013 2016

19,188

16,943

2013 2016

-15,9% -11,7%

9,99010,127

2013 2016

+1,4%13,964

13,014

2013 2016

-6,8%

Total reduction:-8.7%

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The increase of traffic, the growth of fuel prices and the strict European standards on reducing environmental pollution through the decrease of CO2 emission are continuously representing a challenge for the car industry

In fact, cars and light commercial vehicles account for approximately 12% of CO2 emissions in the European Union. The European Commission has therefore introduced an action plan to reduce the average CO2 emissions of new cars from 135.7 g/km (in 2011) to 95 g of CO2 per kilometre in2020

A possible new solution capable of tackling the above-mentioned issue and challenging the European standards is represented by the Start&Stop technology

The system works by automatically switching off a vehicle’s engine, when it comes to a stop, for example at traffic lights. When the clutch is depressed, or the foot is taken off the brake pedal for an automatic transmission, the engine restarts seamlessly in a fraction of a second

As a consequence, batteries are becoming the beating heart of the car and will be expected to provide increasingly more frequent starts and unprecedented storage capacity, in addition to contributing to reducing harmful emissions

Source: The European House - Ambrosetti elaboration on European Commission data, 2017 103


FIAMM Energy Technology has contributed to fuel saving and CO2 reduction supporting the Automotive Industry to meet the stringent CO2 emission requirements imposed by the EUCommission

FIAMM batteries enable Start&Stop system to work actively to reduceemissions

The company is working with main car makers such as Mercedes, Peugeot, Renault, Nissan, Opel and others to continue developing this green technology

8 Million Start&Stop Batteriessupplied to Original Equipment Manufacturer Car Industry

2.7 Billion Litresfuel saved for a private car users

4.9 Million Tonsof CO2 saved

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Start & Stop technology can reduce fuelconsumption and emissions in city drivingby 8% to 15% (compared to conventionaltechnology)

Source: The European House - Ambrosetti estimations, 2017

According to measurements related to the New European Driving Cycle (NEDC), a Start & Stop system is able to yield fuel savings and CO2 emission reductions of around 8% in average city driving and up to 15% in dense city traffic

In combination with a modern gasoline engine, the amount of fuel required for warm starting is only the same as that used when idling for 0.7 seconds. The stop function thus has a beneficial effect right from the very first second – both for people (savings of fuel) and the environment (reduction of emissions)

10 YEARS

1,167kg – 2,188kg of CO2 saved ≈ Removing approximately one conventional car from Italian roads for one year

€687 – €1,289 fuel cost savings for a private car user

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Start & Stop technology can reduce fuelconsumption and emissions in city drivingby 8% to 15% (compared to conventionaltechnology)

Source: The European House - Ambrosetti estimations, 2017

4 mln tons – 7.6 mln tons of CO2 saved ≈€20mln – €36mln valued as European Emission Allowances average cost 2017

€2.4 bln – €4.5 bln fuel cost savings for private car users

Based on the current Italian car fleet, the potential savings from the Start & Stop technology are:

1 YEAR

106

One of the major challenges for water utilities is the reduction of the difference between the amount of water put into the distribution system and the amount of water billed to consumers (also called “non-revenue water” - NRW)

High levels of NRW reflect huge volumes of water being lost through leaks and not being invoiced to customers

In Italy, the problem correlated to water losses through leaks is of particular concern, with more than 38% of the water volume within the network lost in 2015, in continuous increase with respect to the previousyears

Source: The European House – Ambrosetti elaboration on Istat data, 2017

2012

Water lost through leaks in the main towns of Italian provinces (%), 2012 - 2015

38.2

+2.6p.p.

35.6

2015

107

(*) Including Russia and excluding Albania, Bosnia, Macedonia, Cyprus

Source: The European House - Ambrosetti elaboration on Istat and Global Water Institute data, 2017

Some estimates for the entire territoryindicate a volume of 3.2 billion m3 ofwater annually lost

Approximately 1 billion m3 of waterfor drinking purposes is annually lostin the 116 provincial capital towns, which equates to 2.8 million m3 of water a day

Italy with only 9% of European population totals 20% of European water losses*

Water needed to fill more than1,000 Olympic-size swimmingpools every date

108

Aulos is dedicated to the preservation of water resources andenergy saving, providing innovative solutions for the efficiencyof water distribution networks

To protect water as a precious natural resourceTo optimise the operation and management of waterworks

To save electric power

To keep operating costs of water systems more efficient

To improve the water industry

Aulos focuses on the identification and elimination of the main causes of inefficiencies, through an integrated approach that considers both water loss control and the improvement of pumping systems to achieve energy saving

The aim is to reduce water loss permanently, focusing on pressure management, air control and reduction of pressure transients with a particular attention to energy efficiency

MIS

SIO

N


The Umbria Region has used EU funds for water loss reduction programmes to carry out a project on its own territory, involving several municipalities, including Spoleto, belonging to the same IntegratedTerritorial

Hitachi won the 625,000 euro call for a project to be implemented in 2015,focused on leakage reduction and pressure optimisation, in addition toan operation and maintenance plan

It encompassed different activities, both in terms of searching for leakages and finding its causes, in order to make the intervention lasting and sustainable

The project has achieved a result, which is twice the amount of retrieval losses established by the initial aim:

135 l/s (4.2 mln di m3/year), equal to 63% of leakage and water consumption for 77,000 people850,000 €/year saved


The municipality of Oliena (NU) had an important problem of leakage in its own water system, fuelled by a mountainous natural source (Su Golgone): 70% of water losses with imminent risk of intermittent water supply

In 2016, Hitachi, in close collaboration with Abbanoa (the Water Management Authority), institutions and local stakeholders (co-creation) implemented an experimental project (the first of this type in Sardinia) for the optimised management of this resource, through themeasurement and analysis of the initial situation and the subsequent action on the causesof losses and inefficiencies of the system, so as to reduce the likelihood of futureproblems

17 leaks have been identified and 542 thousand m3/year (water) and 225 TEP (energy) have been saved. The economic value of the savings can be estimated to 190,000 €/year and the payback period of the intervention including all capital works for pressure management and monitoring devices, accounts for 12 months


The project has been selected among the best Italian projects (category of technological innovation) included in the database “Useful for Italy” that contains the results of the first census of best practices in Public Services by UTILITALIA, the federation that brings together 500 Italian water, energy and environmental services companies

Thanks to the enormous success obtained by the project Oliena, it is forecasted that it will be extended to 30 more Italian Municipalities


“Water is one of Oliena’smost important assets,being used not only in family and small businessenvironments for their daily needs,but also for agricultural use. This is an important point as it means everything produced from our land is of the highest quality as, surely, our water is among the best isSardinia.

Even though we had a wealth of water providedby the naturalwater source Su Gologone,our water network system was recording around 70% leakage,meaningfor every 100 litres, 70 litres were lost.

Within this dramatic and paradox situation, the entity responsible for both water and aqueducts, Abbanoa, proposed trying something new,something Sardinia had never done before. The administration said yes, and with the support of Hitachi, this experiment was conducted. Animportant aspect to note here is that there hasalways been a strong synergy between Abbanoa,the municipal administration, and Hitachi.

Within a few months, the water leaks were significantly reduced. This was managed thanks to the technological contribution delivered by Hitachi. In addition, we also noticed how emergency pipe interventions, which were frequently necessary to reduce the losses, have decreased, leading to savings from this point of view. In fact, in a period of great drought such as we are currently experiencing, understanding how best to conserve and not to waste water is definitely a fundamental thing. Technology from this point of view is showing us that, even with limited resources, sometimes we can solveproblems better.”

Martino Salis,Mayor of Oliena

114

Solutions for the efficiency of water distribution networks, as the ones developed by Hitachi in Umbria and Sardinia, have the potential to reduce the percentage of water lost through leaks from 38% to 20% in Italy

The annual water needs of 29 million people, assuming that one person consumes 140 litres each day on average

Annual saving of 330 million euros, assuming that:

90% are real losses with a marginal cost of production of 0.1euro/m3

10% are commercial losses with an average tariff of 1.3 euro/m3

This would be equal to 1.5 billion m3 of water saved

Source: The European House - Ambrosetti estimations on various sources, 2017 115

Source: The European House - Ambrosetti elaboration on data European Commission, 2017

Today’s linear “take, make, dispose” economic model relies on largequantities of cheap, easily accessible materials and energy, and is amodel that is reaching its physical limits

A circular economy, on the other hand, is an attractive and viable alternative that businesses have already started exploring today

The concept of circular economy is restorative and regenerative by design, and aims to keep products, components, and materials at their highest utility and value at all times

In fact, it distinguishes between technical and biological cycles, being contemporarily a continuous, positive development cycle. It is known to preserve and enhance natural capital, by optimising resource yields, and minimising system risks by managing finite stocks and renewable flows

116

Source: The European House - Ambrosetti elaboration on data Ellen Macarthur Foundation, 2017

Principle 1:Preserve and enhance natural capital

Principle 2:Optimise resource yields by circulating products, components and materials in use at the highest utility at all times

Principle 3:Foster system effectiveness by revealing and designing out negative externalities

117

Since the Italian EU Presidency in 2014, Italy is playing a very active role in contributing to the policy discussion on circular economy transition at national, European and international level

Within the United Nations, for example, the Italian Ministry for Environment has actively supported the integration of the principles of sustainability across the whole process leading to the adoption, in September 2015, of the Agenda 2030 for sustainable development

At G7 level, the German Presidency has launched a major initiative for efficient and sustainable use of resources (“Alliance for Resources”). The Italian Ministry of the Environment is actively involved in the initiative together with universities, research centres and agencies and the private sector

The Italian Ministry is also engaged in international and bilateral cooperation with several Mediterranean countries and China with specific circular economy projects and the sustainable use of resources

Given the transversal nature and the interdependence of economic, social and environmental aspects of circular economy, Italy is adopting a shared and synergic cross-sectorial approach to unlock at all levels the Circular Economy potential

Source: The European House - Ambrosetti elaboration on data European Commission, 2017 118

FIAMM Energy Technology has decided notto ignore the potential negative impacts theindustrial sector might have in the future.Thanks to a close collaboration with COBAT,it is promoting the correct disposal of batteries, therefore encompassing the idea of a perfect circular economy

Cobat is a multi-purpose consortium, in possession of quality and environmental certifications, which offers integrated and personalised services, by ensuring best efficiency and effectiveness standards for the collection, treatment and recycling of batteries, electronic devices and others

Waste management

Centre

New purchase

order

Raw material

Collection of used

batteries

Truck shop or dealership

End-of-life batteries

FIAMM Energy Technology is fully involved in an optimised recycling cycle for its acid led batteries, therefore significantly reducing its environmental impact

119

“Cobat is the national battery collection and recycling consortium, considered as one of the pioneers of the circular economy. The consortium has been working for a zero waste Italy for25 years now, collecting and recycling technological rubbish, including batteries, accumulators, photovoltaic modules and WEEE. Every year, Cobat collects 180.000 tons of wastethanksto its 90 collection points distributed across Italy and its over 700 certified manufacturers. Among these, FIAMM (Energy Technology) can be considered as one of the number one partners, being present since the beginning and having a significant share within Cobat’s governance.Thanks to the close partnership between us and FIAMM, 100% of the produced batteries by FIAMM are recycled and the raw materials re-entered into the market for re-use. The process is 100% green; an aspect of great importance and of great added value not only for thecompanies involved, but also and especially for society.”

Eng. Giancarlo Morandi,President of Cobat

120

Hitachi is co-creating solutions that help society and industries move toward what matters

Thanks to its expertise both in operational and information technologies, the company is making complex systems of various sectors more responsive, intuitive and efficient

By implementing IoT and co-creation platforms to analyse data and predict what comes next, it is able to deliver Social Innovation within all sectors, not only today, but also in the future. For example through:

Internet of Things platforms

Predictive Maintenance

Water Resource Management

“Manhole project”

Proton Beam Therapy

122

(*) Hitachi’s IoT Core PlatformSource: The European House - Ambrosetti elaboration on Hitachi data, 2017

“Society 5.0” in Japan and “Industrie 4.0” in Germany creates value by connecting assets and applying digital technological innovations, generating real time

data. In fact, a much higher volume of data, farmore business ideas and far more players will be involved, which need data collecting and elaboratingplatforms

Today, Hitachi connects through Lumada* more than…

>6 MillionHitachi Machines Connected

and will be able to connect every Hitachi machine and more in orderto access larger volumes and variety of data in real time by contemporarily generatingvalue

Construction Vehicle

ATMElevator

MRI

TrainPump, valve Steel

plant Car Navigation

Server Storage

123

Today, data is the biggest asset of business, leading to accurate business decisions, if the extracted information can be effectively analysed. In fact, data is the key to get new revenue streams, better customer experience, more strategic market and fewer business costs

In Italy there is still little to offer, when thinking about the combination of OT and IT skills to fully realise the potential of data

The new Hitachi company, Hitachi Vantara, was born to leverage the broad portfolio of innovation, development and experience from across Hitachi Group companies to deliver data-driven solutions for commercial and industrial enterprises.

This new company will unify the operations of Hitachi Data Systems, Hitachi Insight Group, and Pentaho into a single integrated business as Hitachi Vantara to capitalise on Hitachi’s Social Innovation capability in both operational technologies (OT) and information technologies (IT)

Hitachi Vantara combines technology, intellectual property and industrial know-how to achieve data management solutions that help businesses improve Customer Experience, develop new revenue streams and reduce business costs


Lumada’s ecosystem starts with the connection to assets, which generate data, and provides for multiple layers to optimise solutions by creating realvalue

Data from machines, business and human are blended in the IoT software platform

Based on real world deployments, Hitachi develops solution cores as building blocks with blueprints,software, tools and methodologies

The final step is co-creation with customersand partners to develop innovative solutionsthat deliver superior value


Kiosks for Customer Information

Cameras for Public Safety

Energy Efficiency Management

Retail Operational Efficiency

Customer Service Robots

Trains Predictive Maintenance

Escalator / Elevator Predictive Maintenance

Hitachi’s Lumada platform can be implemented to introduce solutions to multiple societal challenges, including application of predictive maintenance solutions, assistance to travellers, energy optimisation solutions and real time situational awareness to security and law enforcement officers


The emergence of the IoT as well as the need for organisations to reduce costs, maximise asset productivity, improve product or component quality and increaseoperational performance, has led to the implementation of predictive maintenance solutions. The appeal is that these technologies,

whichcanbeappliedto variousverticalmarkets,allowusersto determinetheconditionofin-service equipment and predictwhen maintenance should be performed

Hitachi Vantara’s solution of predictive maintenance for the railway sector helps practitioners evaluate assets, diagnose problems using monitoring tools like sensors and image analytics, design the appropriate solution leveraging advanced algorithms and machine learning principles and deploy sustainable and repeatable maintenance solutions, and an optimised asset lifecycle maintenance plan

The cross fertilisation between railway engineering and Information Technology, requires the utilisation of vertically integrated knowledges (i.e. Lumada) overtaking the paradigms of classical engineering

Thanks to the vertically integrated solution and the early detection of part failures, the rail transport is made more punctual, cost-efficient and safer

127

Public security is a growing problem for cities worldwide. Threats are innumerable, ranging from environmental disasters to terrorist attacks, from data loss to hacker’s criminal activities. Security and

innovation therefore become two key terms to think about when imagining the cities of the future.In fact, these two factors depend on a better quality of life and a more liveable environment. State-of-

the-art technological solutions, in addition to effective and non-invasive infrastructures should be made available to tackle the upcoming challenges

Hitachi provides within this context of Smart Security for private premises and public infrastructuresphysical security solutions, with the following characteristics:

Target:Public infrastructure (bridges, tunnels, roads), private buildings and important events (e.g.G7,Olympic Games, FIFA World Cup)


Risks:Thefts, vandalism, terrorism, unauthorised access etc.

Purpose:Reduction and quick detection of the security risks

128

Manholes are small, inconspicuous and unattended, offering easy access to vital underground infrastructureand therefore

posing a considerable security threat to cities worldwide

Hitachi Systems offers “Safety & Security Solutions” by leveraging real time sensor monitoring with IoT and business process management platforms

The real time sensor monitoring of the vast number of manholes in the city and the automation of activities and processes in an emergency can remove the various risks around social security by protecting social infrastructures from thefts and vandalism, and early detecting possibilities of terrorists and/or spying

Interestingly, the introduced technology also supportsregular and efficient maintenance work

Threats


Critical facilities

129

Today water, even though once being an abundant natural resource, is becoming a more valuable commodity due to droughts, overuse and losses through leaks. In order to

deal with the increasing problematics associated with the lack of water, it is important to implement effective and

efficient water resource management systems

Requirements of an industrial water management through:

Solutions for fixing the problematics

Capability of taking decisions

Hitachi Drives & Automation is evolving towards an activityof industrial consulting for Water Management Operatorsand Authorities

Hitachi will provide solutions through a dedicated Centre of technical and technological competences and Decision Support Systems


Cancer causes over 8.7 million deaths globally and is considered as the second leading cause of death behind cardiovascular diseases worldwide. Even though these impressive numbers are testimonythat the “war on cancer”

has not been won, recent developments in personalised medicine and novel treatment approaches have raised hope of significantly improving cancer survival

After years of research, a broad range of technical and clinical experience and collaborative work with world-class hospitals and cancer centres, Hitachi has become a reliable partner of the medical community for proton beam therapy (PBT), one of the most advanced forms of cancer therapy available

Within the PBT, the dose of radiation to tumour masses (including many rare tumours) is maximised, by contemporarily saving adjoining healthy tissues. Short-term and long-term side effects from radiation to normal tissues and organs are reduced or avoided, allowing the patient to continue leading a normal life (absence of pain, lesser impact on body’s normal functions)

In addition, a new solution for the treatment of moving targets affected by respiration, such as those in the lung or liver, able to achieve high dose delivery while significantly minimising exposure to healthy tissue and organs, has been developed by Hitachi

Radiotherapy


Proton Beam Therapy

131

Hitachi provides clear examples of how businesses can play a central role in dealing with sustainability challenges

Source: The European House - Ambrosetti elaboration on Hitachi and Report ASviS, 2017

SDGs can only be achieved if companies from different sectors work together with governments and other stakeholders

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