Interview with the President

Taking the Initiative to Pursue Innovation towards Resolving Social Challenges, while Seeking to Grow in a Sustained Manner Hand in Hand with Society

Q1

In your view, what should be done under the Taisei Group Philosophy of "To Create a Vibrant Environment for All Members of Society"?

A1

A "Vibrant Environment" represents an environment people aspire to achieve.
Through the construction business, employees must turn this aspiration into reality as a shared mission among employees, and the Taisei Group Philosophy must be passed on by and to employees of different generations.

For an enterprise to survive, it must continue to change itself to adapt in response to a changing society.
Meanwhile, we must always keep intact values about what to provide as "Something Important" to society. The Taisei Group Philosophy is designed to have all employees retain shared values and employees carry on those values from one generation to another.
In addition to demonstrating our values concerning customers and society as a whole, this group philosophy is intended to put employees' values to the test.
It was the tragic Great East Japan Earthquake that put those values in the spotlight in relation to customers and society as a whole. The earthquake renewed a recognition of the construction industry’s role. We felt the need to recreate a vibrant environment for all members of society, due to the fact that we supported disaster victims' lives through debris removal, road restoration work, and relocation of coastal residential zones to areas at a higher altitude.
In addition, I call on employees to turn their workplace into one where they can work with a sense of fulfillment as a "Vibrant Environment," while contributing to customers and society.
A "Vibrant Environment" will remain an environment that people in Japan and abroad always continue to pursue, even after their lives become more affluent in the future. I am convinced that the Taisei Group Philosophy we have established will continue to be universally valuable beyond the boundaries of eras and regions.

Our Structure of Values and Policies

Q2

Could you describe the Taisei Spirit, comprising "Active and Transparent Culture," "Value Creation," and "Evolution of Tradition," that is shared by all directors and employees?

A2

Idea generation based on an "Active and Transparent Culture" leads to "Value Creation" supported by the newest technologies, and the value is passed on in an "Evolution of Tradition." I believe this three-fold spirit will give strength to the Company, while we pursue innovation towards resolving social challenges as a construction company.

The "Active and Transparent Culture," representing the Company's corporate ethos, is its best attribute. While an active and transparent culture sounds attractive, a supervisor must essentially create an environment that allows one to express an opinion easily, and it is a prerequisite for directors and employees to freely exchange their opinions and have detailed discussions in a truly active manner. On the other hand, each subordinate must be serious and earnest in executing duties with a positive mindset. The resultant self-confidence and pride enables subordinates to empower themselves.
Our mission as an enterprise is to create new value on the back of the synergies of the "Individual Strengths" thus developed, and evolve it, while having it passed on as a corporate tradition, as a set of actions that also constitute our competitive advantage. These actions represent the spirit generated by the platform of "Value Creation," "Evolution of Tradition," and "Active and Transparent Culture."
The construction industry, albeit equipped with values and strengths developed through its history as a business that has existed since ancient times, has undeniably failed to break out of undesirable conventional practices.
The Taisei Spirit comprising an "Active and Transparent Culture," "Value Creation," and "Evolution of Tradition" is also a cautionary reminder and is designed to prevent one from easily becoming content with assets accumulated in the past by our predecessors.
The Urban-style Zero Energy Building (ZEB), on which the Company has been focusing in recent years, is an initiative incorporating all three components of the Taisei Spirit. ZEB is an absolute energy-saving building that achieves a net balance of annual energy consumption of zero by reducing energy consumption to the minimum extent possible, using various energy-saving technologies for architecture in urban areas that are densely populated with buildings, and using renewable energy. We set up the ZEB Demonstration Building within the Taisei Technology Center in Yokohama before performing demonstrations and experiments for a period of one year. This resulted in the Company becoming Japan's first-ever company to achieve a net zero balance of annual energy consumption on a single building basis in June 2015.
The initiative to achieve ZEB in an urban area, based on the concept of creating energy equivalent to the amount consumed, was formulated by various departments expressing opinions in a "Active and Transparent" manner, contributing knowhow and combining a variety of conceptual approaches. The newest technologies lead ideas generated towards "Value Creation," which is a form of value that is passed on in an "Evolution of Tradition."
So, Urban-style ZEB is a story of resolving social challenges, based on the three aspects of the Taisei Spirit.

Q3

Could you tell us about the Medium-Term Business Plan basic policy based on the "Deep cultivation of our primary business of construction"? What is the current progress of that "cultivation"?

A3

"Cultivation" represents an attitude that gives top priority to earning high customer satisfaction in terms of quality and service by revisiting fundamental aspects of the construction business. In the first year of the Medium-Term Business Plan, we achieved the financial target of its final year thanks to an improving domestic construction market. Therefore, we recently revised the Medium-Term Business Plan financial target significantly upward. We will continue to tackle business challenges based chiefly on the concept of "Deep cultivation of our primary business of construction," thereby working to achieve new financial targets.

I think Taisei Corporation, which is in a position to lead the construction industry, faces more challenges that need to be addressed. For instance, the Company seemingly has much room for developing technologies and it trails companies in other industries in terms of ICT-based robot utilization and labor-saving activities. Piling work data falsification incidents have resulted in an increasing loss of public confidence in the construction industry. What is required of a construction company first and foremost is to perform the essential task of securing appropriate levels of quality and safety. Based on this understanding, our basic policy draws on the concept of the "Deep cultivation of our primary business of construction," with the aspiration to be a construction company that makes a customer happy about having awarded a contract to Taisei Corporation, and being eager to award that contract, with respect to quality and service, at a time when the Company is likely to enjoy a high level of business towards 2020. It now appears that Taisei Corporation will potentially tap a wider range of new construction business opportunities by stepping up collaboration among its divisions and group companies and alliances with companies in other industries. Such business expansion is also guided mainly by a principle based on the concept of the "Deep cultivation of our primary business of construction." In the first year of the Medium-Term Business Plan, we achieved the financial target of the final year, posting record profits. The construction industry has recently been enjoying generally favorable conditions, supported by an improved supply-demand balance. There has been a growing number of infrastructure development programs and supersized redevelopment projects that require sophisticated technologies and strong procurement capabilities unique to super general contractors. Taisei Corporation will do its utmost to achieve the new financial targets by appropriately catering to strong current demand, such as for state-level projects including the New National Stadium and the Linear Chuo Shinkansen, and by achieving stronger competitiveness in the medium to long term.

Basic Policy [Medium-Term Business Plan (2015-2017)]

Deep Cultivation of Our Primary Business of Construction

Aims

  • To obtain high customer satisfaction through quality and safety assurances
  • To pursue growth in a steady and continuous manner
  • To promote transformation to a high value-added business structure
  • To obtain a high level of credibility and appraisal from all stakeholders

Management Goals

  1. Undertaking strategic approaches regarding focused projects
  2. Actively contributing to improving infrastructures
  3. Promoting the development of next-generation technologies
  4. Establishing next-generation business models in the focused fields
  5. Strengthening domestic construction projects
  6. Developing the structure for healthy growth of overseas projects
  7. Improving the total strength of the Taisei Group
  8. Developing the business foundation

Q4

Could you tell us about your outlook for the construction market after the Tokyo 2020 Olympic and Paralympic Games?

A4

We will strive to grow further by capturing construction demand in focused categories in preparation for the currently strong construction investment subsiding.

The outlook for the construction market after the Tokyo 2020 Olympic and Paralympic Games is still uncertain.
The awarding of contracts for some construction projects is now being delayed to avoid the current busy conditions, a phenomenon which would underpin the market from 2020 onwards, but overall business could potentially decrease from the current level. While supersized projects are currently coming in one after another, what is important is how best to acquire and manage contracts for medium-sized projects after those supersized projects peak out.
In the civil engineering segment, after completion of large infrastructure building projects such as Tokyo Gaikan Expressway, we must essentially endeavor to acquire contracts for aged-infrastructure renewal projects.
Based on the assumption of demand weakening in this way, we will strive to grow further by pursuing a high added value business structure through various projects in: 1) five target fields under the Medium-Term Business Plan, namely, "Renewal and replacement field," "Nuclear Power field," "Environment field," "Engineering field," and "Urban development field"; 2) "Overseas business" in Southeast Asia and other regions where the Company can apply its strength; and 3) the "Energy" area as a whole, which must be solved as serious social issues.

Image of "Business Structure for Creation of Higher Added Value"

Q5

While construction industry leader Taisei Corporation achieves sustainable growth, what relations should it have with society?

A5

Japan's declining working-age population is also a major challenge for the construction industry. The Company is taking the initiative to pursue innovation, developing the industry's future, thereby striving to grow further hand in hand with society and in a sustained manner.

Pondering the future, while the population decreases, and low birth rate and aging population issues continue, construction companies face the very important challenges of securing and developing workforces and improving productivity. In a move to address this situation, we will develop new technologies and construction methods, reform working practices using ICT, and improve the working environment.
Although construction companies have been heavily reliant on specialized contractors equipped with skills, developing workforces and improving skills have so far been partly left to their discretion. I believe it is time for us to change this industry structure with general contractors leading research and development and technological innovation activities, engineer and skilled construction worker development, and working practice transformation.
In my opinion, industry players must launch these proposed innovations as soon as possible, retaining the power to make products in the future.
By taking the initiative for these proposed innovations, Taisei Corporation will explore the construction industry’s future, while seeking to grow further hand in hand with society in a sustained manner.

Q6

Lastly, may I have your message to stakeholders?

A6

To meet their expectations while valuing the confidence of stakeholders, we will pursue activities under the Group philosophy of "To Create a Vibrant Environment for All Members of Society."

Our corporate activities for constructing social infrastructure are made possible thanks to support from an extremely wide range of entities, including shareholders and investors, our customers, business partners, employees, and other entities having direct interests in the Company. At the same time, Taisei Corporation is in a position in which it is required by society as a whole to sincerely engage in corporate activities in all possible aspects of business, not to mention perform perfect quality control as a construction company. If we fail to carry out the essential task of delivering high-quality work and services, we will be unable to obtain the confidence of those many stakeholders.
To solidify their confidence, we rigorously obey compliance requirements and enhance corporate governance. For compliance, clear rules have been established with the entire organization from top management to individual employees sharing an understanding about the rules and obeying them strictly.
Regarding corporate governance, we secure appropriateness, fairness, and transparency in our business decision-making by leveraging the opinions of external directors and external auditors based on their specialist experience and unique viewpoints.
In response to social change, Taisei Corporation will continue to deliver universal value under the Group philosophy of "To Create a Vibrant Environment for All Members of Society." The Company will make the utmost efforts to create value through innovations aimed at resolving social challenges, thereby meeting the expectations of all stakeholders.

Bid-Rigging by TAISEI ROTEC CORPORATION

To date, the Company has been supervising group companies under a policy that ensures bid-rigging is prevented. TAISEI ROTEC CORPORATION (Taisei Rotec), a key group company, has also been developing a system to prevent bid-rigging, while providing relevant training and guidance to employees. Regarding a recent case of Taisei Rotec being charged with bid-rigging, we deeply regret that the training and guidance failed to be conducted sufficiently strictly. So, from now on, in addition to ensuring that the entire Taisei Group, including Taisei Rotec, obeys compliance requirements with increased rigor, we will bolster measures to prevent a recurrence.