Management StrategyInterview with the President

The Taisei Group will contribute to the sustainable development of society by resolving social challenges and build its own strengths to advance to the next stage. Yoshiyuki Murata (President and Chief Executive Officer, Representative Director)
GRI G4-1、G4-15

Towards Moving on to the Final Stage of the Medium-term Business Plan (2015-2017)

With strong confidence regarding "Deep Cultivation of the Construction Industry, Our Core Business," the Taisei Group will strive to achieve growth in the "energy" and "overseas business" areas, in addition to the five target fields.

Basic Policies [Medium-term Business Plan (FY2015–2017)]

Deep Cultivation of the Construction Industry, Our Core Business

Aims

  • To obtain high customer satisfaction by ensuring quality and safety
  • To achieve stable and sustainable growth
  • To promote conversion to a business structure for creation of higher added value
  • To obtain high trust and evaluation from all stakeholders

Management Tasks

  1. Strategic initiatives for target projects
  2. Active contribution to enhancement of social infrastructure
  3. Promotion of next generation technological development
  4. Establishment of next generation business models for target fields
  5. Strengthen domestic construction business
  6. Construct the basis for healthy growth of overseas projects
  7. Increase the Group strength
  8. Evolution of management infrastructure

Looking back on Fiscal 2016

We began undertaking the construction work for the main arena of the new National Stadium Japan last December.
Taisei Corporation, having constructed the old National Stadium Japan, has strong feelings towards the new National Stadium, and we deeply appreciate the honor of receiving the order for its construction work. For the next three years, we will make the most of the benefit of getting involved in the project from the design phase and endeavor to build a legacy that we can be proud of for future generations.

What does the Group aim to achieve by its basic policy of "Deep Cultivation of the Construction Industry, Our Core Business"?

No matter how the world changes, including changes in demographic structure, the Taisei Group believes that becoming a company that is trusted by clients and chosen for our primary business is a prerequisite for achieving sustainable growth. To this end, there are two points on which deep cultivation is necessary. Firstly, we need to solidly deal with challenges for which there is much work to do towards resolving them based on the experience and results we have earned. For instance, we will make greater efforts to improve our technological capabilities, increase productivity by utilizing ICT, and implement work-style reforms. Secondly, we will cultivate our primary business more deeply for the future. Specifically, we will seek to build a high value-added business structure by deepening exchanges with companies in the construction industry, as well as in other industries, both in Japan and abroad.

What are the achievements in the five target fields?

Of the five target fields, we received steady orders for seismic resistance, etc., in the renewal and replacement field. In the nuclear power field, we won safety measure work orders for the decommissioning and restart of nuclear power plants. In the environment field, we set up the ZEB Demonstration Building within the Taisei Technology Center, and our trailblazing effort led to winning orders for new ZEB-seeking buildings. In the engineering field, our efforts have yielded results in winning orders in the pharmaceuticals and food production facility area, backed by a wealth of achievements. In the urban development field, orders are increasing steadily in central Tokyo, as well as in regional cities such as winning orders for large-scale urban redevelopment projects in Sapporo and Kumamoto. In addition to these five target fields, the Taisei Group will strive to achieve growth by focusing on energy, which still poses serious social challenges, and the overseas business related to infrastructure export.

What are short-term risks faced by the Group and their countermeasures?

Considering that a labor shortage is expected to occur from 2018 to 2019 due to a jump in business in the run-up to the Tokyo 2020 Olympic and Paralympic Games, we are developing a thoroughgoing production system as our focused challenge for the current fiscal year. In recent years, we have been implementing human resources management, such as strengthening recruitment, including mid-career employment and transferring employees from regional branches to our offices and branches in the Tokyo metropolitan area. However, these measures are not sufficient to address the looming labor shortage. Therefore, the Taisei Group intends to ride out the extremely busy period by implementing measures to improve productivity, such as strengthening work-site capabilities, utilizing ICT, and work-style reforms. During busy times, we need to be more cautious about the risk of quality problems and take measures to prevent them. Since any error may lead to an incident that would have a major impact on society, we will steadily implement a quality management process.

How do you see the outlook for the domestic market after the Tokyo 2020 Olympic and Paralympic Games?

There are projects for which order placement has been postponed to avoid the current busy period, and we thus anticipate that a certain level of construction demand will continue for some time after the Tokyo 2020 Olympic and Paralympic Games. Although the outlook for the subsequent period is unclear, orders from the growth industry of the time have kept the construction industry going.
The strength of the construction industry is that there is always a growth industry in any given time, even if the growth rate of the overall economy slows. Even so, since competition for winning orders will intensify in a given growth industry, the important thing for us is to earn higher evaluation ratings from clients than other companies in the industry, regardless of the order-taking environment.
With the increase in clients with limitations on construction timeframes and costs in recent years, we have been receiving an increasing number of orders for one-stop solutions from design to construction. We believe that the background behind this is a higher evaluation for general contractors' technological capabilities in the project-planning phase, such as proposals for shortening construction periods and reducing costs, in addition to their construction capabilities. We see this as a very significant change in the long history of the construction industry, and we will work to build a competitive advantage in the future market by steadily improving evaluations from clients in design and construction projects.

Numerical Targets in Fiscal 2017, the Final Year of the Medium-term Business Plan (2015–2017)

Business and Financial Targets
March 31, 2018
Consolidated Non-Consolidated
Net sales ¥1,610 billion ¥1,310 billion
Operating income 125 billion 109 billion
Net income 87 billion 76 billion
Interest-bearing debt Less than 260 billion

*Consolidated net income is presented as net income attributable to owners of parent.

Capital Policy and Guidelines for Return to Shareholders
March 31, 2018
Consolidated
Target Revised Target
Dividend payout 25% or more 25.8%
ROE 8.0% or more 14.8%

Responses to ESG Challenges

The Taisei Group works group-wide towards implementing measures to strengthen corporate governance, easing busyness and promoting women's active participation and advancement in the workplace. Agreeing with the concept of ESG investment, the Taisei Group proactively discloses non-financial information.

Why does Taisei disclose the ESG information?

ESG investment, which takes into account information related to the environment (E), social issues (S), and corporate governance (G), is growing rapidly. It is obvious that companies with appropriate policies and initiatives for social responsibility and higher levels of corporate governance functions will achieve medium- and long-term growth. Taisei Corporation will proactively disclose ESG information, in addition to financial information, through the TAISEI ANNUAL REPORT.
As for our ESG initiatives, we place priority on strengthening corporate governance. As a company engaged in the development of safe and secure infrastructure, we must prevent at all costs any incident that would lead to the loss of public trust.
To this end, we discuss measures to strengthen company-wide risk management at the Board of Directors meetings, and conduct active exchange of opinions with Audit & Supervisory Board members and audit corporation.
With respect to appropriate implementation of compliance, we consider it important to persistently communicate the necessity to each employee to ensure compliance clear of improper accounting, etc.

What are measures implemented to ease employee busyness at construction sites?

We have figured that the high busyness level of employees working at construction sites is attributable to inefficiency in operations of those sites. We will review matters to determine if there is any inefficiency in the conventional approach to work, and will push through work-style reforms with the "courage to change."
In addition to improving efficiency in construction work as mentioned above, by taking this opportunity, we are focusing on productivity improvements by utilizing ICT, such as the introduction of Office365, a tool for improving information and operational efficiency, in the entire Group, to improve the working environment.

How is progress on the promotion of women's active participation and its results?

In 2015, Taisei Corporation was honored with the second Empowerment Grand Prize in recognition of its efforts to proactively expand the job categories of female employees, which led to a significant increase in the number of female employees working at construction sites and as sales persons. In recent years, Taisei Corporation has been supporting women's active participation and advancement in the workplace by taking various approaches involving male employees as well, such as promoting childcare support for male employees by providing a five-day paid childcare leave towards achieving a 100% rate of childcare leave for men, and holding seminars for male superiors who play a significant role in female employees' skill development.
Of the skilled construction engineers working in the construction industry, the percentage of female engineers is still only about 1%. If more female employees of general contractors work at construction sites, it will encourage the hiring of skilled female workers at cooperating companies.
Taisei Corporation will thus promote the creation of a pleasant working environment for both male and female employees.

Empowerment Grand Prize: Prize awarded to an organization taking unique and ingenious initiatives aimed to promote women's active participation in the workplace and improve productivity.

Sustainable Development Goals (SDGs)

SDGs are new goals defined and adopted by the United Nations in 2015 by building on the Millennium Development Goals (MDGs) that expired at the end of 2015.
SDGs, comprising 17 goals and 169 targets to be achieved by 2030 to build a truly sustainable world, require active involvement by countries as well as corporations.

Sustainable Development Goals (SDGs)

Taisei's Initiatives for the UN's SDGs to Be Achieved by 2030

Taisei Corporation has set out "TAISEI i-Innovation" to promote productivity improvement.
As a pioneer in ZEB buildings, we will embark on the development of next generation energy-saving technology.

How is Taisei Corporation going to contribute to SDGs as a construction company?

One major goal to which the Taisei Group can possibly make a significant contribution is "Build resilient infrastructure," which is one of the 17 goals of the SDGs. Specific measures are "promotion of greater national resilience," "recovery from the Great East Japan Earthquake," and "promotion of i-Construction."
Taisei Corporation has regarded the development of safe and highly reliable infrastructure, working on the recovery of disaster-hit areas, and building a disaster-resilient nation as its social responsibilities in the construction industry, and has worked group-wide towards resolving these social challenges.
Regarding the "promotion of i-Construction," the government's Council on Investments for the Future held in September 2016 set out a goal of achieving a 20 percent increase in construction site productivity by 2025. In order to meet that goal, Taisei collectively termed the initiatives for productivity improvement and technological innovation as "TAISEI i-Innovation" and has started deploying it throughout the Group from April 2017.
We are working to improve productivity by promoting TAISEI i-Innovation both from the aspects of hardware, which generates results immediately, and software, ranging from promotion of the utilization of BIM*1 and CIM*2 to the cutting-edge technological innovation.
In this manner, Taisei Corporation intends to contribute to increasing the momentum for the achievement of SDGs, which are universal guidelines for building a sustainable society.

*1 BIM:
Building Information Modeling. It is a process of building three-dimensional computer models of buildings and utilizing the information obtained from model creation in the entire lifecycle process of buildings, including designing, construction and maintenance.
*2 CIM:
Construction Information Modeling is designed to boost the efficiency of a series of construction production systems by introducing three-dimensional models from the investigation and design phases and interfacing them with three-dimensional models in each phase of construction and maintenance.

What are your recognition and initiatives for environmental challenges?

Taisei Corporation takes seriously the fact that it is exerting various effects on the global environment, such as consumption of resources and energy, while conducting its primary construction business.
We will thus contribute to forming a sustainable society by working to reduce the environmental impact, which is inevitably generated during the course of business activities, as much as possible, and by reducing the environmental impact of buildings after delivery, and regeneration of the natural environment.
To this end, Taisei Corporation has focused efforts on developing environmental technology, including energysaving technology and ecosystem conservation technology. As for energy-saving technology, in particular, Taisei Corporation built the ZEB Demonstration Building within its facility ahead of other companies in the industry, successfully demonstrating the achievement of zero annual primary energy balance. In the course of performing the zero energy balance demonstration, we also developed the T-ZEB Simulator, a tool that can calculate the cost in a short time by optimally combining element technologies. As a pioneer in ZEB buildings, we will promote the penetration of market-oriented ZEB.
Taisei Corporation will work on the development of technologies, centering on energy-related technologies, with the intention of contributing to society through ZEB, as well as technologies in the energy field. For instance, in addition to the development of fuel cells, we will pursue the development of CO2 containment technology to reduce the environmental impact, and radioactive waste disposal technology.

ZEB (Net Zero Energy Building)

New Definition of ZEB

As the definition of ZEB for its quantitative judgment criteria released by the ANRE on December 17, 2015, the agency specified the following ZEB levels.

『ZEB』 Building achieving an energy consumption reduction of 100% or more
Nearly ZEB Building achieving an energy consumption reduction of 75% or more
ZEB Ready Building achieving an energy consumption reduction of 50% or more

Taisei Corporation's Road Map for ZEB Penetration with Government's Target

Taisei Corporation's Road Map for ZEB Penetration with Government's Target

To Our Stakeholders

Manufacturing of grand architectural structures is the result of the accumulation of good day-to-day work processes. Taisei Corporation will further contribute to the building of a sustainable society by leveraging its unique strengths.

What do you attach importance to in promoting businesses?

I take pride that we at Taisei Corporation are engaged in great work that excites each employee in their day-to-day work process towards manufacturing grand architectural structures that will remain on the map, and be etched in employee's lives. The Taisei Group Philosophy of "To Create a Vibrant Environment for All Members of Society" is our statement on the ideals of a construction company from the perspective of the relationship with society.
Although it was in 1990 that Taisei Corporation put this philosophy into words, we valued the idea behind this philosophy since long before that time. We will continue our relentless effort to pass it on to our future generations.
Taisei Spirit of "Active and Transparent Culture," "Value Creation," and "Evolution of Tradition", which crystallize the Company's common values based on the Group philosophy, are also enduring assets which Taisei Corporation will continue to value. Taisei Corporation has been known to have an "active and transparent culture." It has a nice ring to it, but we need to work to create an environment that fosters the exchange of opinions among employees, to ensure that it will not end up being merely a pie in the sky idea.

Lastly, may I have your message to stakeholders?

Taisei Corporation has achieved growth by winning the trust of various stakeholders including clients and shareholders. I have long experience in carrying out construction management at construction sites, and I still vividly remember things from those days, such as the sense of fulfillment I felt when we managed to pull off a difficult process, and the excitement of seeing clients' happy faces after successful completion of a challenging construction work project.
I firmly believe that a company can become a trusted company only if it fulfills social responsibilities, in addition to pursuing profit.
Based on the knowledge obtained through the dialogue with stakeholders, Taisei Corporation will contribute to resolving social challenges both in Japan and abroad through technology to bring the Company to the next stage. Also, we will provide new value to stakeholders by taking advantage of our unique strengths cultivated over the course of the Company's history.

Occurrence of Violation of Anti-Monopoly Act by TAISEI ROTEC CORPORATION

Taisei Corporation had always guided its group companies under the policy of never violating the Anti-Monopoly Act. Unfortunately, however, violation of the Act occurred at TAISEI ROTEC CORPORATION, a major group company of Taisei Corporation. Taking the incident sincerely and seriously, Taisei Corporation will further ensure compliance in the entire Group, including TAISEI ROTEC, and will strive to prevent similar misdeeds and recover public trust as soon as possible.