HANZA Mechanics Tartu

Environmental report

2016

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Contents

1. Hanza Grupp ................................................................................................................... 3

2. AS HANZA Mechanics Tartu ........................................................................................... 5

3. Year 2016 ........................................................................................................................ 7

4. Environmental Policy .................................................................................................... 10

5. COMPANY ENVIRONMENTAL OBJECTIVES 2017 .......................................................... 12

6. Environmental indicators ............................................................................................. 13

7. Work safety .................................................................................................................. 18

8. Social responsibility ...................................................................................................... 19

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Hanza Grupp HANZA was founded in 2008. The company currently has operations in Sweden (headquarter),

Finland, Estonia, Poland, Slovakia and China. Among some of HANZA’s customers are leading

industrial companies such as Volvo, Ericsson, ABB and Saab Defense.

VISION

To be a Unique, Value-adding Business Partner in Manufacturing.

VALUES

Our core values drives our business and represents our compass. The core values are what we

expect from all our employees and what brings value to our relationship.

Whether you are an employee, customer or business partner of HANZA Group, we always

strive to create the best possible experience. All the five components are equally important

both in our internal work as in our customer and partner relationships. Our goal is to always

exceed our customer expectations.

1. WE MAKE THINGS EASIER

We have a clear value proposal to our customers so they easily understand what we do

differently. In our customer relationships we always have one contact interface for quick

communication. Additionally, we remove processes that does not add value to our customer

business. All you need is one.

2. WE ARE IN CONSTANT PROGRESS

We continuously develop our company to improve our offer, become more efficient and

decrease our spendings. We quickly adapt to our customer needs to always stay ahead of

competition.

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3. WE ALWAYS COMMUNICATE

Communication is an important cornerstone to reach our vision, we work proactively in our

dialogue both internally and externally. Everyone is involved – customers, employees, owners

and other stakeholders.

4. WE ARE COMMITTED

Commitment is a crucial part of our daily work and we make sure to understand our customers

business. With a high level of presence, we are always reachable and we keep our promises.

Our goal is to exceed our customers expectations.

5. WE BELIEVE IN TEAMWORK

We work as ONE team, not as individuals. We believe in a high level of personal relationship

and operate in a project-oriented mindset. Good teamwork leads to great business.

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AS HANZA Mechanics Tartu HISTORY Although AS HANZA Mechanics Tartu was founded in 2008, our factory has produced

electronics since 1907, when he carried the name Tartu Telefonivabrik (Telephone Factory).

Tartu Thelephone Factory in 1928

For our company's employees is the line production not unknown and often work several

generations of one family together in our production .

In chemical handling we have certainly come a long way

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ACTIVITIES NOWADAYS

We handle everything from procurement, manufacturing and assembly with the delivery of

complete units directly to our end customers. The factory is situated in an area with extensive

experience in mechanic production, where we have a high technical level. The company uses

following technological processes: stamping; laser cutting; turnin; milling; metal surfake

finishing (zinc, nikkel, electric polishing, tinning, chemical surfake passivation); assembly

works and final testing (mechanical assemblies, electromechanical assemblies, electronics

assemblies, cable products and the others assemblies); powder paiting; soldering; welding;

sand blasting; tumbling. The main processed materials are brass, steel, stainless steel, plastic,

copper, aluminium.

Sheet metal processing

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Year 2016 The Group discontinued production at its factory in Aruküla, Estonia in the second quarter and

shifted operations to HANZA’s manufacturing cluster in Tartu, Estonia. It was a year of change

and growth for us in Tartu.

We are EMS Company and we care our environment. We have environmental management

plan what is in continuous surveillance by the management group. Last year we had 37 tasks

in environmental management plan. Our goal was to complete this plan 100%. In the end of

the year effectiveness of the plan was 88,24%. Many of our environmental aspects are result

of aged buildings . Therefore we are looking for a way to move into a modern production

facility that would reduce our energy consumption, improve waste sorting options and our

work environment.

THE MAIN ENVIRONMENTAL RESULT OF LAST YEAR

HANZA launched a new service product, Material Compliance Solution (MCSTM), which

enables customers to meet new, stricter environmental directives from the EU and the US.

The service generates complete compliance reports, tracing component data and tracking

material lists, product documentation and technical changes.

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MATERIAL COMPLIANCE SOLUTION Environmental compliance regulations such as RoHS and REACH directives from EU restrict

the use of substances that are known to pose a hazard to humans. Social compliance

regulations such conflict mineral law of the United States (formally known as Section 1502 of

the Dodd-Frank Wall Street Reform and Consumer Protection Act) are an attempt to uncover

the origin of certain substances and discourage sourcing resources from unscrupulous mines.

To meet these stricter directives from EU and United States, HANZA has developed a Material

Compliance (MCS) that is offered to our customers.

At an annual cost, complete reports on part or product level will be created and shared with

customers. This is the only solution covering material compliance from HANZA and is valid

from January 1st, 2017.

Benefits of our Material Compliance Solution (MSC):

We track and manage component data, conpliance data, aggregated compliance reporting

against BOMs, product documentation, Life-cycle status (EOL), engineering changes and

revisions compliance data.

We classify parts that meet (or do not meet) RoHS/REACH/Conflict Minerals and could be

extended to other future environmental standards.

Documented proof of compliance. We store all required compliance declarations/certificates

associated with a part.

Evidence and supported documents/datasheets etc. Is gathered and shared within days

instead of months at a future possible audit.

For more information or asking for a quotation, please send a mail to compliance@hanza.com .

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LEAN AND WORK ENVIRONMENT In 2016 started working new LEAN team. The focus has been on Kaizen projects, the flow of

production and improvement proposals.

We combined safety and 5S resulting with 6S. We have 6S spetsialsit and internal audits in all

units are held every month.

A very important role has also been LEAN training and involvement of all staff. This all

combined together has given great results in our work environment and resource use.

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Environmental Policy

We realize, that our goal in directing all of our activities towards better satisfaction of the

expectations of customers, owners and employees can be achieved only in consideration of

the environmental impacts of our activities. Therefore we shall continuously strive to find the

ways to:

− act responsibly to the environment;

− work preventively in minimizing negative impacts;

− fulfill or exceed existing environmental legislation and customer demands applicable

to our activities;

− ensure effective usage of materials and natural resources.

All of this shall make possible to include the neighborhood and society into the list of our

interested parties and benefit them. Actions taken to improve our environmental

performance are public and information is available to our interested parties on a need to

know basis.

Environmental awareness By arranging trainings and blending

environmental questions into everyday

work we increase the knowledge which

is a cornerstone in our eyes

Waste handling We are sorting waste by types and

directing as much as possible into

recycling, we have two environmental

permits which determine the amounts of

waste and pollutants we are allowed to

emit into environment

Handling of chemicals We organize our way of storaging

and using chemicals so it would not

cause any harm to natural

environment nor to human health

Restricted and/or banned

substances We follow the rules and regulations of

Estonian and also EU’s legislation, for

example RoHS and REACH

Our environmental tree represents our main focus on environment related

issues.

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DESCRIPTION OF THE ENVIROMENTAL MANAGEMENT SYSTEM (EMS) The maintenance of EMS is secured with

Document Management Systems (RMT,

Rektron FMEA), there are periodic internal

audits, inspections and meetings. If

required, a risk analysis and maintain the

environmental record of incidents. EMS

managment reviews are condacted as part

of companys Managment System reviews

and leaded by management

representative.

Hanza Mechanics Tartu operates

according to European Union, national and

local laws, ISO 9001, ISO 14001 and ISO

TS 16949 certifications as well as OHSAS ,

REACH and RoHS declarations.

ENVIRONMENTAL ASPECTS Aspects that have positive environmental

impact:

• Environmental Impact Assessment

and Analysis

• Rise of environmental awareness

Aspects that cause a significant

environmental impact:

• Management of chemicals

• Aging equipment

• Use of natural resources

• Waste generation

• Water used in manufacturing

processes

ENVIRONMENTAL IMPACT

• Depletion of natural resources

• Air, water and soil contaminated

• Contributing climate change

• Reducing biodiversity

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COMPANY ENVIRONMENTAL OBJECTIVES 2017 ImplementationofEnvironmentalPlan(activity%)100%.

RenewalprojectofChemicalRegistry.

Performance ofwastemanagement -municipalwaste reduction and the

increaseofsortedwastequantity(%)5%.

Sustainablenergyresourceuse:

− Electricity(kWh/salesturnover)-capabilityincreasedby5%comparedtothe

previousperiod;

− Water consumption (m3 kWh/sales turnover) – capability increased by 5%

comparedtothepreviousperiod;

− Saving heat energy - capability increased by 5% compared to the previous

period.

THE MAIN TASKS OF 2017

Work Environment:

• OHSAS 18001:2007 certification

• Safety and emergency training of

the staff

• Decrease work injuries, LTIFR ≤ 9

Environmental:

• Environmental training for the

structural units managers

• Improving energy use by replace

outdated equipment

• Recertification Environmental

Management System (compliance

with ISO 14001: 2015 requirements)

• Renewal project of Chemical

Registry

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Environmental indicators WASTE MANAGEMENT

Our partners:

0

50

100

150

200

2011 2012 2013 2014 2015 2016

Wast generation

Non-sorted (t)

Sorted (t)

Total tunover

excl materials

milion EUR

0102030405060708090

100

2012 2013 2014 2015 2016

To

nn

e

Recycled packaging

Carton

Metal

Plastic

Wood

OÜ Vallesburg

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ENERGY RESOURCES Use of electricity

Use of water

Use of heat energy

2010 2011 2012 2013 2014 2015 2016

kWh/tuh EUR 4447 4736 4903 4653 5614 3601 3414

Electricity extra charge to total turnover of manufacturing services kWh/th EUR

kWh/tuh EUR Linear (kWh/tuh EUR)

2010 2011 2012 2013 2014 2015 2016

m3/tuh EUR 19 31 33 30 35 56 24

Water extra charge to total turnover excl materials of manufacturing services m3/th EUR

m3/tuh EUR Linear ( m3/tuh EUR)

2010 2011 2012 2013 2014 2015 2016

MWh/ tuh EUR 4 4 4 3 3 6 2

Heat energy extra charge to total turnover of manufacturing services MWh/th EUR

MWh/ tuh EUR Linear (MWh/ tuh EUR)

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Electricity (kWh/sales turnover) capability 2004-2016

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Water consumption (m3 kWh/sales turnover) capability 2004-2016

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Heat consumption (MWh/ sales turnover) capability 2004-2016

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Work safety

Work safety is connected with environment and we look them together. We have built our

work environment system by using OHSAS 18001 standard and national law.

We want to ensure that our employees have a pleasant, safe and healthy working

environment. Our company is guided by the Occupational Health and Safety (good practice),

and the requirements of the following points:

� we try to avoid negative impact on our workers - we try to reduce work environment

risk factors, or reduce contact with them;

� instruct and train our employees on a regular basis;

� ensure all employees with the necessary personal protective equipment;

� we will conduct regular internal controls and risk assessment;

� value teamwork;

� we prevent and manage risks by recording unsafe conditions, researching and

analyzing work-related accidents;

� we will make sure that our employees are able to act in crisis situations;

� we expect our cooperation partners responsible attitude to health and safety matters;

� to ensure a clean and efficient working environment, we have implemented the 5S

system.

Due to our rapid growth in year 2016 and a large number of new employees, we had lot more

accidents. This year, the aim is to have safety-related training and raise awareness of the

dangers of our manufacturing process and work environment.

We have work environment commissioners in every department.

First aid person is in every department and every shift.

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Social responsibility In year 2016 the Estonian Unemployment Insurance Fund (Eesti Töötukassa) awarded HANZA

Mechanics Tartu with Employer of the Year award in Tartu county. We also signed co-

operation agreement on our common goals.

Estonian Unemployment Insurance Fund award

In September 2016 we also earned the title of best Cooperation Partner from Tartu

Kutsehariduskeskus / Tartu Vocational Education Centre. We have been the training base for

students and we also regularly host international trainees.

Tartu Vocational Education Centre visit at HANZA Mechanics Tartu