Our Perception of the Business Environment
The construction industry is currently undergoing a time of great change.
The domestic construction market is not forecasted to expand, and, given the limited total market size, we expect continuous, intense competition going forward. Overseas, although there is vigorous infrastructure demand, we face tough international competition. Moreover, the business environment surrounding the Company remains as uncertain as ever due to the delayed recovery of socio-economic conditions in the wake of the COVID-19 pandemic as well as ongoing, highly unpredictable international political conditions.
Meanwhile, global warming has become a universal issue that stretches beyond the bounds of country or generation, and the SMCC Group must also perform its part in society as it moves toward decarbonization.
Latest Initiatives and Future Policies
Amid these circumstances, we established the Business Creation Division in April 2022.
The new division was reorganized from parts of the Business Innovation & Incubation Division and the Technical Engineering Service Division, with its mission being to respond to the needs of the times by (1) establishing a strong management structure by creating new sources of revenue and (2) contributing to sustainability, beginning with decarbonization.
The former Business Innovation & Incubation Division worked on (1) renewable energy-related businesses and expanding the market for the contracts business, (2) the PFI business, and (3) the medical and pharmaceutical facility engineering business. As the foundations of (2) and (3) are now well established, we decided to transfer them to the Building Construction business.
As for the former Technical & Engineering Service Division, the environmental technology and production system technology it handled have been merged into the new division as they transition from the research and development stage to commercialization and on-site implementation.
As a result of the reorganization, the new Business Creation Division will (1) create new and peripheral domain businesses, (2) expand the renewable energy business, (3) develop decarbonization-related technologies and services, and (4) implement next-generation construction systems.
In area (1), we will pioneer specific businesses and formulate a structure that enables the continuous, self-directed creation of new ideas. In area (2), we will secure stable sources of revenue, focusing on floating solar power generation systems, one of the Company's strengths, and aim to work towards decarbonization. In area (3), we will drive the Company's shift to carbon neutrality through medium- and long-term initiatives, including technological development. In (4), we will aim for improved productivity through the utilization of DX, in addition to aiming to create a new business in licensing.
This division has been established to advance the main theme of the Mid-term Management Plan 2022-2024, "Toward new growth--Realizing a sustainable society," from both the technological and business aspects.
Opportunities and Risks as well as Basic Policies of the Mid-term Management Plan as Countermeasures
Risks
- End of the FIT (Feed-in-Tariff) system and fall of electricity purchase price for solar power generation
- Decrease of development scope, opposition from local residents, expansion of local government regulations
- Securing and cultivation of business development human resources
Opportunities
- Global trend towards decarbonization
- Expansion of renewable energy needs which have low risk of price fluctuation
- Progress in DX and robotics technology
Related Mid-term Management Plan Initiatives
In the New Business & Construction Peripheral Business, we will first focus on expanding the renewable energy business, part of the existing peripheral domain businesses. Our specific goal is to achieve 150 megawatts of renewable energy generation (solar power equivalent) by 2030 based on the goal to "Realize carbon neutrality in effect by 2030" as laid out in our Roadmap to Carbon Neutrality. In the renewable energy-related business, in addition to expanding our existing solar power generation business, which currently operates five power plants across Japan, we will diversify our sources of power generation by entering the wind power generation and small-scale hydroelectric power generation businesses.
As part creating new peripheral businesses, the Company will target megatrends such as decarbonization, creating a circular economy, and disaster resilience, and work to commercialize them in areas where we can utilize our capabilities. For example, we aim to enter the product sales and licensing businesses by utilizing building materials and construction methods that contribute to decarbonization in such areas as the infrastructure maintenance and BCP-related service businesses.
Key Projects Completed in Fiscal 2021
| Project name | Hasuike Floating Solar Power Generation Plant |
|---|---|
| Project area | Kagawa Prefecture |
| Power generation capacity | 1,957 kW (panel output) |
| Project period | 20 years beginning in April 2021 |
| Project name | Kibichuo, Okayama Solar Power Generation Plant |
|---|---|
| Project area | Okayama Prefecture |
| Power generation capacity | 1,850.4 kW (panel output) |
| Project periodc | 20 years beginning in January 2022 |