Sumitomo Mitsui Construction Corporate Report 2018
Contact Corporate Planning Department, Sumitomo Mitsui Construction Co., Ltd. 2-1-6 Tsukuda, Chuo-ku, Tokyo, 104-0051, Japan TEL: 81-3-4582-3016 FAX: 81-3-4582-3205 E-MAIL: [email protected] URL: https://www.smcon.co.jp/ Corporate Report online version: https://www.smcon.co.jp/en/investor/ Corporate Principles Charter of Corporate Conduct
1. We take countermeasures to meet the various 5. We recognize the demand of contribution to the Pursuit of Client Satisfaction demands in construction activities through technology society’s healthy and continuous development, and we development and design proposal giving full promote social contribution activities in order to achieve We continue to innovate our technologies and cultivate creativity to consideration to quality and environment. corporate harmony with the society.
provide high quality construction works and services in response to the 2. We strive for improving the corporate value, and at 6. We recognize the demand of contribution to the global the same time, by actively disclosing fair corporate environment, and we actively work toward to preserve, needs and trust of clients and the society. information to the stakeholders and the society, we try to sustain and improve environment. achieve the highly transparent corporate management. 7. In case, our activity against this charter occurs, the 3. We maintain the employment and develop human top management shall work by themselves to solve Enhancement of Shareholder Value resources of employees through long-term perspective, the case, and execute accountability to the society as furthermore, we try to set up the corporate which well as disciplinary action that applies to both the top We make sustainable business development by thoroughly efficient respects human rights and beings. management and employee.
management and maintaining pro tability to boost the shareholder value 4. We improve awareness to comply with laws, social norms, international rules and corporate ethics in order along with the corporate value. to perform fair, transparent and free competition and fair trade.
Respect for Employees’ Vitality Six Priority SDGs We create an open-minded and rewarding company where the employees can fully exercise their ability and individuality.
Social Emphasis We practice fair corporate activities and aim to become a good corporate citizen which the society can trust.
The Sustainable Development Goals (SDGs) were adopted at the United Nations Summit in September 2015, building Contribution to Global Environment on the success of the Millennium Development Goals (MDGs) formulated in 2001. Set out in the 2030 Agenda for We constantly seek to be an eco and human friendly contractor and Sustainable Development, the SDGs are international goals also value harmony between living environment and nature. that not only developing countries but also developed countries should work toward from 2016 to 2030.
Editorial Policy From scal 2006, Sumitomo Mitsui Construction issued CSR Reports in order to • Period Covered: From April 1, 2017 to March 31, 2018 (includes some give a broad outline of its environmental, social and governance (ESG) initiatives, initiatives conducted before and after the period) which were not covered in the company’s financial statements. Starting from • Scope Covered: Sumitomo Mitsui Construction Co., Ltd. scal 2015, Sumitomo Mitsui Construction has instead been issuing a Corporate And its consolidated subsidiaries Report, with additional financial information, including information on operating • Guidelines Referenced: ISO 26000 performance and management strategy as well as business overviews, as a tool for • Publication Date: November 2018 two-way communication with all stakeholders, bringing together overall initiatives for improving corporate value.
1 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 2 Strategies of Sumitomo Mitsui Construction
Group Vision (Aspirations) Table of Contents
Corporate Principles ...... 1 Charter of Corporate Conduct Corporate group that Sumitomo Mitsui Construction and SDGs ...... 2 challenges to address Corporate group that Corporate group that social issues with its expands its activities both Strategies of Sumitomo Mitsui Construction ...... 3 secures solid profitability unique technologies in Japan and overseas by Message from the President ...... 5 and achieves and services placing emphasis on faith Business of Sumitomo Mitsui Construction ...... 9 sustainable growth and sincerity and keeping its pride in participating in Key Projects Completed in Fiscal 2017 ...... 11 building a society Progress of the Mid-term Management Plan ...... 13 Financial & Non- nancial Highlights ...... 14
Value Creation Stories Long-term Management Policies for Accomplishing the Vision Overall Picture of Value Creation Stories ...... 15 I. Enhance manufacturing capability—Commitment to quality and process Sources of Competitive Advantage II. Create an attractive corporate culture—Workplace environment and corporate culture that enable people to take pleasure in their work Technologies that Support Standardization and Industrialization ...... 17 III. Strengthen the competitiveness and pro tability of construction business —Win the competition Reform Production System ...... 19 IV. Build a multilayered earnings base enabling us to respond to changes in the Establishing a Safety Culture ...... 22 business environment—Unfailingly grab opportunities Secure, Cultivate and Vitalize Human V. Promote CSR in management—Ful ll social responsibility Resources ...... 23 Enhance Competitive Advantage Mid-term Management Plan 2016-2018 Domestic Civil Engineering ...... 27 Domestic Building Construction ...... 31 Focus Overseas Business ...... 35 themes Business strategies New Business ...... 39
Domestic civil Domestic building engineering business construction business strategy strategy Foundation for Value Creation Technological strategy Technological Development ...... 41 New business Overseas business strategy strategy Of cers ...... 45 Corporate Governance ...... 47 Restore creditability Restore
Enhance corporate value Enhance Internal Control/Compliance ...... 50 Secure, cultivate and cultivate Secure, vitalize human resources human vitalize Reform productionReform system Risk Management ...... 52 Group strategy Initiatives for the Environment and Local Communities ...... 53 Environmental, Social and Governance (ESG) Activity Report ..... 57
Mid- and Long-term Numerical Targets Period of the plan (FY2018) Long-term (FY2025) Third Party Opinion ...... 59 Consolidated operating profit 5% or higher Consistently 5% or higher on sales Corporate Pro le ...... 60 Percentage of overseas Around 20% Around 30% business Consolidated capital-to-asset 30% or higher 20% or higher ratio as early as possible
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toward building infrastructure that will Plan has two focus themes: reform of labor and manpower with precasting We Will Strengthen satisfy customers and preventing the production system and secure, cultivate and using ICT. Given the recent rapid recurrence of quality defects spread and vitalize human resources. changes in society, we must proactively Competitiveness and across the group, which consequently To reform the production system, invest in the development of new aligned the vectors within the group and the Production System Improvement technologies by forecasting how the Create New Corporate Value helped a new corporate culture take root Committee has led efforts that construction industry will change in at Sumitomo Mitsui Construction. include improving productivity with the future. Through co-creation with for Sustainable Growth We will develop our unique standardization and industrialization, experts and companies from various corporate culture, including the improving work environments in order areas, we would like to aggressively Hideo Arai faithfulness and sincerity we inherited to secure human resources, and and courageously take on challenges in Representative Director from Mitsui Construction and Sumitomo enhancing the safety management technological development for 10 years President & CEO Construction as well as our activities system. Aiming to achieve the supreme from now. for supreme quality, which support our quality, we are carrying out activities To secure, cultivate and vitalize creditability as a construction company, for quality and safety management, human resources, we have launched and consideration for the fi eld, which is appointing quality and safety auditors measures to develop the workplace something I have continued to say ever to the civil engineering and building environment and improve employment since I became president. Leveraging construction businesses to ensure conditions as the entire industry is the corporate culture, we will create that execution process management facing a severe lack of workers as well new value and make it our strength so and quality management, which differ as an aging workforce. Meanwhile, we that we can achieve further evolution between individual construction sites, have been aggressively working on and embark on a stage of new growth. are implemented following the specifi ed the industry-wide issue of work style management procedures, as in other reforms as an urgent management Progress of Mid-term manufacturing industries. In fiscal task. Having formulated the President’s Management Plan 2016-2018 2017, more than 2,000 quality audits Policy on Work Style Reforms and the Q. The second year of the Mid- and patrols were conducted in total Employee Action Guidelines for Shorter term Management Plan 2016- for the civil engineering business and Hours in April 2018, we are developing 2018 has ended. What are the the building construction business. an environment without waste, results so far and future issues? We have also put up “Supreme Quality irregularities and overwork and raising Assurance” banners and distributed awareness among individual employees. Fiscal 2018 is the final year of the helmet stickers at all sites to raise We also developed the Work Style current Mid-term Management Plan. awareness on the ground. As a result Reform Roadmap last year, setting forth The numerical targets set for the final of these efforts, I believe that supreme a policy to achieve two days off per fiscal year are 440 billion yen in sales, quality activities have been established week at all sites, in principle, by fiscal operating profi t on sales of 5% or higher, across the company as something 2021. In fiscal 2017, we tested six-day Celebrating the 15th Anniversary issues that had been lingering for a and concern. The grave consequences, a capital-to-asset ratio of 20% or higher, valued by all and as an intangible closure per four weeks and eight-day of the Merger number of years, including resuming which brought into question our very and a dividend payout ratio of 20% or manifestation of the corporate culture. closure per four weeks at designated Q. Could you express your views dividend payment, enhancing equity existence as a company committed higher. We have steadily maintained Productivity improvement, which model sites. This fiscal year, we are on the 15th anniversary of the capital, and improving the treatment to building infrastructure for people operating profi t on sales of 5% or higher compensates for a lack of skilled promoting closure on the second merger? of employees, and emerged from the everywhere, were extremely regrettable. and achieved the capital-to-asset ratio workers and serves as the basis for Saturday every month at all sites, in stage of rebuilding. I would like to take Driven by remorse, we got back to basics one year ahead of the plan. We are likely future sustainable growth in conditions principle. To promote shorter hours at This year marks the 15th anniversary this opportunity to express my great and revisited our fundamental purpose to achieve all the numerical targets. In of labor undersupply, is a major theme sites, we must change how we operate. of the merger of the former Mitsui appreciation for the support from as a construction company, that is, to fi scal 2017, we have marked record high that we must continue to work on. For instance, we are building a system Construction and the former Sumitomo shareholders, partners and all other provide needed infrastructure that is safe earnings for the main business for the Currently, we are promoting the saving that allows us to even out operations Construction in 2003. Following the related parties, which made this possible. for people to live in. For the subsequent third consecutive year since the merger. merger, we initially found ourselves in a Against this background, defective two years, we made concerted efforts We assume that we are developing Numerical Plan difficult business environment and we piling work for a collective housing to ensure compliance with laws and the business foundation for enhancing FY2016 (actual) FY2017 (actual) FY2018 (plan) caused considerable inconvenience to complex we had constructed in regulations and secure and improve our competitiveness and achieving Sales 403.9 billion yen 417.3 billion yen 440.0 billion-yen level stakeholders, including shareholders Yokohama City was discovered in the quality to restore the credibility that we sustainable growth in the construction Operating profi t on sales 6.9% 7.3 % 5% or higher and fi nancial institutions. In the past few fall of 2015, causing many stakeholders, lost due to the defective piling work. In industry, which will change dramatically. Capital-to-asset ratio 18.8% 23.9% 20% or higher years, we finally resolved the business including the residents, inconvenience the process, a sense of responsibility The current Mid-term Management Dividend payout ratio 14.3% 14.1% 20% or higher
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across the company by using the cloud have continued to build infrastructure Our aforementioned unique more than 50 years ago have started enter overseas markets and projects of Additionally, starting this fiscal year, we to share on-site information between for people everywhere. corporate culture, including the elements aseismic renovation. Taking advantage non-Japanese companies. At the same are also endeavoring to achieve the six sites, the head office, and branches in Together with the integration of of faithfulness and sincerity, supreme of the fact that we have an aseismic time, we would like to aggressively priority goals, which we selected from order to distribute on-site operations. the advantages, the integration of civil quality, and consideration for the field, is device manufacturer in our group, expand business in regions other than the sustainable development goals We can reduce overtime through engineering and building construction the basis of our in-the-field technological we will aggressively work on seismic Asia, starting with our entry into the (SDGs). The six SDGs include Goal 11 raising awareness among individual is ongoing. For example, precasting strength and synergies. We must value it reinforcement for the continued use of Tanzanian market in 2016. Sustainable cities and communities, employees, new technological technology has been used everywhere as a universal basis for our survival even existing buildings. To expand overseas business, Goal 9 Industry, innovation and development, and cooperation from expressways to superhigh- if the business environment surrounding In addition to our conventional securing and developing human infrastructure, and Goal 7 Affordable across the corporate structure. By rise collective housing, that is, in a the construction market changes over contracting business, we are also resources, as well as partnering with and clean energy. considering the human factor and with wide variety of areas in both civil the next decade or two. promoting projects in renewable energy local companies, is crucial. The Human Despite concerns over shrinkage the concerted efforts of all officers and engineering and building construction. and PPP/PFI to find new sources of Resource Development Center in the of the construction market as well as employees, we will develop pleasant, Its use has achieved simplification Direction of Future Growth earnings in industries surrounding Philippines leads our efforts to develop difficulty in construction worker retention satisfying workplaces with no overwork. and the saving of labor for on-site Q. Based on its strengths, how will the construction industry and “stock- human resources who are capable of in Japan, the SDGs have reaffirmed for work while also contributing to quality the company grow its business based” downstream business. In the managing local projects. We will secure us the significance of the roles that the Source of Value Creation for and safety improvements. To take over the long term? area of renewable energy, we engage and cultivate management human construction industry should play in Sustainable Growth another example, the civil engineering in sales of our PuKaTTo proprietary resources who can promote a growth addressing social issues. We believe we Q. What are the sources of sector supports underground work at In the construction market in floating solar power generation system strategy in overseas business, which have a great responsibility to promote competitive advantage that building construction sites, while the Japan, projects for maintenance and power generation using the system. includes shifting human resources from value creation by addressing social Sumitomo Mitsui Construction building construction sector assists the and renovation, rather than new The system can be easily assembled Japan to overseas. issues and to make the construction should maintain to ensure construction of waterworks facilities at construction, are likely to increase. It will and installed on stable bodies of water industry an industry that future workers sustainable growth for the civil engineering sites. Synergies brought be critical for us to further enhance our such as reservoirs for the efficient For Improving Corporate Value will be proud to be part of, as well as coming decades and what are about through collaboration between civil strength under such circumstances. For generation of power. To expand sales over the Long Term to provide satisfactory workplaces. By the management resources engineering and building construction instance, in the civil engineering sector, outside of Japan, we established a local Q. Investment in growth, including proactively working on various SDGs, and organizational capabilities form part of our company’s strength. there is a growing need for infrastructure corporation in Taiwan in December technological development we want to create an environment that that serve as the foundation? Another of our strengths is maintenance and renovation, such 2017. Renewable energy is the area and securing and cultivating encourages virtuous cycles whereby having five plants, including plants as reinforcing the quake resistance where we want to significantly expand human resources, is becoming people involved in our business, As the only construction company of the of group companies, in Japan for of bridges and replacing expressway our business. In the area of PPP/PFI, increasingly important. From including partners, feel satisfied with Mitsui Group and the Sumitomo Group the manufacture of precast concrete floor slabs. Having an advantage as we were commissioned to design, the long-term perspective, their jobs and are thus motivated since the merger, the SMCC Group has members that help convert precasting one of only a few general construction construct and maintain, in an integrated how will you work on corporate to improve productivity, which steadily built up a track record. Because technology into tangible forms. We companies that have plants able to manner, public sewerage facilities in Ube value improvement? consequently improves their treatment of this, the SMCC Group believes it now would like to incorporate technological manufacture precast concrete members City, Yamaguchi Prefecture in 2017. We and further motivates them. has a solid presence in the areas of both innovation, such as IoT management for floor slabs, we will enhance our will step up our efforts in these areas. In the past, we focused on enhancing Based on the assumption that civil engineering and building construction. and automated transportation, into competitiveness by further accelerating As the domestic construction our financial foundation. Having domestic construction investment will The former Mitsui Construction had a series of processes from precast technological development, such as market is expected to shrink, we aim to achieved the target capital-to-asset decrease in the future, we need to strength in residential housing, such member manufacturing to execution rapid construction for saving labor and enhance initiatives in markets outside ratio of 20% or higher in the second change the business model focusing as superhigh-rise collective housing. for future automation at precast plants, manpower and precasting. Japan, particularly Asian markets, and year of the Mid-term Management Plan, on construction contracting. We have Its proprietary technologies include with the goal of further improving quality The building construction sector increase overseas business to 30% we think it will become important for already operated a business in floating SQRIM, a method that allows us to and productivity. also expects expansion of the from about 15% of total business today. sustainable growth to balance growth and onshore solar power generation quickly execute the construction of each Having built a robust execution system maintenance and renovation market, In Vietnam, Indonesia, the Philippines investment, including investment in in the area of renewable energy, but it floor in cycles as short as three days. for overseas business is another of our covering maintenance, conservation, and many other countries, we have human resource development such will become important to identify areas The former Sumitomo Construction strengths. Starting with the entry into the refurbishment, alteration and extension. been involved in development of as work style reforms and securing where we have worked not at all or not had strength in technologies for civil Thai market in 1971, we have operated As we have constructed production infrastructure such as roads, bridges, human resources, and investment enough and address social issues as engineering (e.g., bridges), in particular, in Asian countries east of India for many facilities and commercial facilities of the schools and hospitals for Japan’s official in technological development with part of business operations, by reference prestressed concrete (PC), which years and built a track record in execution. Mitsui Group and the Sumitomo Group, development assistance (ODA) projects. shareholder returns and financial to the 169 targets of the SDGs. enables us to maintain the industry’s The relationships and trust that we have demand for renovating such buildings With the close sharing of information foundation enhancement. With proactive involvement with top technologies and execution built up over the years with contractees will be a great asset for us in the future. between sales forces in Japan and With regard to growth investment, the SDGs, we hope to help build a experiences in Japan. Inheriting these and local partners are precious assets. We will work with affiliates that specialize those outside the country, we would we will balance profitability and sustainable society while improving our advantages of the two companies and Our overseas business has maintained a in renovation to expand the renovation like to increase private sector projects, social emphasis. In the Long-term own corporate value. aiming at further growth by maximizing profit margin at a level equivalent to that of business. Meanwhile, cultural facilities such as assisting Japanese companies Management Policies, we have upheld the integration of the advantages, we our domestic business. that the pre-merger companies built that we have worked with in Japan to promotion of CSR in management.
7 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 8 Business of Sumitomo Mitsui Construction
As a corporate group responding to diverse needs that change with the times, the SMCC Group is operating We Are a Comprehensive Construction Company business that expands its domain of interest around the world, including improving social infrastructure that supports local development, by taking advantage of its technologies and expertise for building infrastructure that Committed to Building Infrastructure That Improves it has acquired in civil engineering and building construction. Through the construction business, the SMCC Group Safety and Convenience for People Everywhere aims to provide value that meets the needs of the times, giving rst priority to being creditable with customers.
Domestic Civil Engineering Domestic Building Construction Overseas Business Business Innovation & Incubation
Our civil engineering business provides optimum Our building construction business creates well-rounded, Taking advantage of networks we have built in Asia ahead To satisfy diversifying customer needs and address technologies for design, execution and maintenance safe living spaces tailored to the needs of customers in wide- of others, we support Japanese companies in entering dramatically changing social issues, we take on of civil engineering structures that support social ranging sectors, from collective housing as the core of our overseas markets and participate in ODA projects in challenges in new business areas regardless of the infrastructure, such as bridges, tunnels, railways and business to commercial facilities, distribution warehouses, order to play a part in building bases that support the conventional areas of business and styles adopted in the water and sewage facilities, all of which are indispensable offices and production facilities in various industries. development of international society. broader construction industry. to urban life. As a top runner in collective housing, which has been The Neak Loeung Bridge (Cambodia) and the What we particularly focus on is projects that address Our strength lies particularly in having the industry’s our focus for many years, we aggressively push forward Second Mekong International Bridge (Thailand-Laos) social issues, such as participation in the operation of public top experience in design and execution in prestressed with the development of technologies and products for we constructed along the economic corridors crossing facilities using private sector expertise, renewable energy concrete (PC) bridges. We provide high quality, durable high quality and high functionality, and work on new Southeast Asia, for instance, have not only eased using unused land or reservoirs, and mid- to large-scale and easy-to-maintain bridges by promoting technological value creation for residents and users in a manner unique traffic congestion but also improved the efficiency of wooden buildings aimed at the revitalization of domestic development, including new structural forms or precasting to a construction company. We also provide facility transportation networks, contributing to the promotion of forestry and reforestation. We provide various solutions for shorter construction periods and labor-saving maintenance and restructuring that are indispensable local industries and improvement of urban environments. combining our accumulated expertise and new ideas. execution. We also develop social infrastructure using to making facilities disaster-resistant or to customers’ Based on the cutting-edge technologies and optimum technologies and expertise supported by our wealth business development. process management that we developed in Japan, we will of experience in wide-ranging areas including tunnels, offer proposals that best fit the local environment, share dams, urban civil engineering, rivers, land development our spirit of being committed to building infrastructure, and and energy facilities. operate a construction business that is based on high- level safety management and quality control systems.
Sales Operating income/operating pro t on sales Net income/ROE Net assets/capital-to-asset ratio Percentage in sales Percentage in sales
(billion yen) (billion yen) (%) (billion yen) (%) (billion yen) (%) Civil engineering 500 40 8 40 40 100 23.9 25 Overseas 7.3 37.3% 6.9 34.4 14.0% 415.0 417.3 82.85 403.9 31.2 18.8 400 382.7 377.8 30.58 80 20 30 5.6 6 30 30 27.94 25.9 Civil Domestic 63.24 23.2 14.3 engineering & business & 300 23.36 60 15 building overseas 20.72 12.3 20 4 20 17.9 20 48.14 construction business 17.04 3.2 10.1 40.19 (unconsolidated (consolidated 200 40 10 basis) basis) 2.1 12.27 30.07 9.90 10 10 Building 10 7.94 2 Domestic 100 6.96 20 5 construction 4.20 62.7% 86.0%
0 0 0 0 0 0 0 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) Operating income Operating profit on sales Net income ROE Net assets Capital-to-asset ratio
9 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 10 Key Projects Completed in Fiscal 2017
Inland Site Development for Toyota/Okazaki Area Middle Zone Land Preparation Jazz Dream Nagashima 5th Phase Floor Increase and Renovation Nidec Corporation Nidec Center for Industrial Science 1st Phase Construction (Contractee: Aichi Prefecture) (Contractees: Mitsui Fudosan Co., Ltd. and Nagashima Resort Co., Ltd.) (Contractee: Nidec Corporation)
National Highway No. 45 Kashinai Area Tunnel Work (Contractee: Ministry of Land, Infrastructure, Transport and Tourism)
Brillia The Tower Tokyo Yaesu Avenue Shin-Meishin Expressway Aigawa Bridge (PC Superstructure) Construction MOL Magsaysay Maritime Academy Construction Lach Huyen International Gateway Port Construction (Road and Bridge) (Contractees: Tokyo Tatemono Co., Ltd. and Mitsubishi Jisho Residence Co., Ltd.) (Contractee: West Nippon Expressway Co., Ltd.) (Contractee: MOL Magsaysay Maritime Academy Inc.) (Contractee: Ministry of Transport of Vietnam PMU2)
11 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 12 Progress of the Mid-term Management Plan Financial & Non-financial Highlights
Numerical Plan Financial Data (consolidated) (million yen) FY2016 (actual) FY2017 (actual) FY2018 (plan) FY2013 FY2014 FY2015 FY2016 FY2017 Sales 403.9 billion yen 417.3 billion yen 440.0 billion-yen level Operating performance Operating profit on sales 6.9% 7.3 % 5% or higher Orders received (unconsolidated; reference) 302,131 356,144 351,997 330,555 351,172 Sales 382,724 377,825 414,958 403,908 417,310 Capital-to-asset ratio 18.8% 23.9% 20% or higher Operating income 7,9 4 4 12,265 23,364 27,9 41 30,584 Dividend payout ratio 14.3% 14.1% 20% or higher Ordinary income 7,9 8 9 11,998 21,801 26,174 28,463 Net income 4,201 6,955 9,902 17,0 35 20,723 Fiscal 2017 Overview Earnings per share (yen) 5.51 8.59 12.18 20.96 127.48 Performance in fiscal 2017, the second year of the Mid-term Management Plan 2016-2018, was as follows. Return on equity (%) 17.9 23.2 25.9 34.4 31.2 On a consolidated basis, sales were 417.3 billion yen (up 13.4 billion yen from the previous year) due to the progress of high- level projects in hand. Price earnings ratio (-fold) 19.6 19.3 8.3 5.8 4.9 With regard to profits, the gross profit margin of completed work exceeded the previous year for both civil engineering Operating profit on sales (%) 2.1 3.2 5.6 6.9 7.3 and building construction despite the rising material cost, due to the profitability-oriented order taking policy and productivity R&D cost 975 1,118 1,380 1,657 2,067 improvement efforts. Financial standing Consequently, we have marked record high earnings for the third consecutive year since the merger, with operating income Total assets 250,716 279,450 293,663 302,152 317,6 8 8 of 30.6 billion yen (up 2.6 billion yen from the previous year) and ordinary income of 28.5 billion yen (up 2.3 billion yen from the Net assets 30,074 40,190 48,136 63,242 82,852 previous year). Profit attributable to owners of the parent was 20.7 billion yen (up 3.7 billion yen from the previous year). In the performance outlook for fiscal 2018, which we announced in May 2018, we expect consolidated sales of 445.0 billion Capital-to-asset ratio (%) 10.1 12.3 14.3 18.8 23.9 yen, operating income of 26.0 billion yen, ordinary income of 24.0 billion yen, and profit attributable to owners of the parent of 15.0 Net assets per share (yen) 30.3 42.4 51.8 70.1 467.7* billion yen. Dividend per share (yen) (common share) – 1.0 2.0 3.0 18* Cash flow Performance Operating cash flow -6,575 14,527 10,742 -3,882 28,279 Sales Operating income/operating pro t on sales Net assets per share Investment cash flow -266 -6,628 805 -1,648 -4,241 (billion yen) (billion yen) (%) (yen) 500 40 8 500 7.3 467.65* Financial cash flow 5,400 3,053 2,168 7,792 -12,576 6.9 417.3 415.0 403.9 * We carried out stock consolidation, i.e., consolidating five common shares into one, as of October 1, 2017. 400 382.7 377.8 30.58 400 30 5.6 27.94 6
300 23.36 300
20 4 3.2 200 200 Non-financial Data (unconsolidated) 12.27 2.1 FY2013 FY2014 FY2015 FY2016 FY2017 10 7.94 2 100 100 70.06 42.40 51.75 Social data 30.34
0 0 0 0 No. of employees (consolidated) 4,007 4,171 4,238 4,444 4,529 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) Operating income Operating profit on sales * We carried out stock consolidation, i.e., consolidating five No. of employees (unconsolidated) 2,430 2,495 2,552 2,617 2,676 common shares into one, as of October 1, 2017. Male 2,240 2,285 2,312 2,349 2,390 Net income Net assets/capital-to-asset ratio Number of employees Female 190 210 240 268 286 (billion yen) (billion yen) (%) (persons) 25 100 23.9 25 5,000 4,444 4,529 No. of newly hired employees 56 79 91 91 93 20.72 82.85 4,171 4,238 18.8 4,007 Female employees on the major career track 20 80 20 4,000 8.9 15.2 24.2 20.9 17.3 17.04 among all new employees (%) 63.24 14.3 15 60 15 3,000 Average age of employees (years old) 46.0 46.2 46.5 46.5 46.4 2,676 12.3 2,552 2,617 48.14 2,430 2,495 10.1 9.90 40.19 Average length of service of employees (years) 22.4 22.2 22.2 22.0 21.7 10 40 10 2,000 30.07 6.96 Frequency of safety incidents 0.96 0.48 0.71 0.59 0.49
5 4.20 20 5 1,000 Environmental data
Unit of CO2 emissions (t-CO2/100 million yen) 21.6 23.7 24.4 23.6 22.3 0 0 0 0 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) 2013 2014 2015 2016 2017 (FY) Construction waste discharged (1,000 tons) 429 500 620 596 751 Net assets Capital-to-asset ratio Consolidated Unconsolidated
13 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 14 Value Creation Stories Overall Picture of Value Creation Stories
Overall Picture of Value Creation Stories
Corporate strategies Create value (=address issues) Enhance the business model to achieve competitive advantage Recognize issues Improve own value Improve social value
• Build long-lived, disaster-resistant social infrastructure Enhance Restore Social issues Own issues Enhance organizational competitive Create value for creditability capability advantage stakeholders
Restoring creditability Qualitative changes in Reform production the construction industry in our execution quality and the public’s system Shrinkage of domestic market • Contribute to productivity improvement • confi dence in us Related activities with technologies for manpower-saving • Developing markets with the Improve and mechanized execution vigor of the private sector, • Standardize/industrialize productivity including PPP and PFI execution Customers • Shift from new construction to • Secure workers by improving Civil maintenance and renovation the working environment engineering • Elimination of occupational • Enhance safety/quality business Shareholders accidents management systems pp. 17–22 • Secure/cultivate construction workers for social capital improvement Employees Pass on Further Building skills Lack of workers • Undersupply and aging Secure, cultivate and construction of workers enhance • Declining birthrate, aging vitalize human resources business population and declining Measures for the decline • Related activities high- Partners productive population in experienced employees quality • Countermeasures against lack • Incomplete in passing on • Work style reforms of skilled workers skills and management • Promote diversity high- • Address social issues, including energy • Cultivate human resources effi ciency Overseas Society Improve issue and global warming Consistently long • Raise awareness of human rights business the workplace working hours • Promote health and productivity services environment/ • Work style reforms management corporate culture to • Productivity improvement pp. 23–26 Global enable people to environment take pleasure in their work New business • Contribute to economic/social New direction in Expand business areas development of emerging/developing New social issues/ countries growing needs shift away from Related activities the conventional Develop and advance Create a Strengthening of the nation • • subcontracting-based technologies and services sustainable Measures for aging infrastructure • business model according to social issues business portfolio • Energy/global environmental and needs issues pp. 39–40 pp. 27–40 • Initiatives for globalization • Public-private partnership
Aggressively develop Enhance group-wide technologies cooperation
Governance supporting strategies of Sumitomo Mitsui Construction and their execution
15 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 16 Value Creation Stories Sources of Competitive Advantage Production System
Technologies that Support Standardization and Industrialization Project Hands-on Camp to Experience Manufacturing from Scratch
For Developing and Using the five plants, including plants of SMCC Group Concrete As part of measures for the focus themes of reforming the production system and securing, cultivating Labor- and Manpower-Saving group companies, we have in Japan, Product Plants and vitalizing human resources under the Mid-term Management Plan 2016-2018, in fiscal 2017 we Methods which is one of our strengths. Intensive started to provide new employees in the Civil Engineering Division with a hands-on camp where they For labor-saving and industrialization in production at plants with precasting produce concrete bridge members all by themselves. execution, we focus on the technology allows fi ne-tuned quality control, saves Sumitomo Mitsui for precasting of a concrete skeleton and labor in reinforcement placing and Construction Notogawa Theme PC Plant on production capacity improvement at formwork in the fi eld under conditions of SMC Preconcrete “Keep failure in your heart” or “cultivate resilience ■ Hands-on items Tochigi Plant our plants. To improve productivity in a worker shortage, and enables workers by carrying through on a task to the end despite • Survey SMC Preconcrete • the field, we are aggressively adopting to perform work in parallel, which is Ibaraki Plant repeated failures” through manufacturing from From material take off for temporary materials and materials precasting, which involves production expected to improve productivity. It also scratch. for main construction to material order placement of reinforced concrete (RC) members enables even unskilled workers to join • Work normally performed by partners, from erecting/ Sumitomo Mitsui at plants or in production yards and precast concrete (PCa) members in the Construction We provide newly recruited engineers who need to improve dismantling scaffolding, formwork support, and formwork, Niihama PC Plant joining the members at the construction fi eld, which saves labor in the fi eld. their knowledge or skills with a hands-on camp where to joining reinforcement rods, placing skeleton concrete, Sumitomo Mitsui site. We are doing this by leveraging Construction they create a structure from scratch all by themselves. and providing PC steel with tension Mitagawa PC Plant This lets them experience failures, which are unacceptable • Safety control with safety patrol of the work area during on-the-job training, in order to acquire knowledge • Mastering inspection and management of completed part Project Operating SQRIM PCa Method Outside Japan that they will never forget and to clearly understand their of construction by using ICT future challenges. The camp also allows them to feel the A refinery and petrochemical plant construction project in Voice of Project Staff satisfaction of completing a structure with their peers, Malaysia adopted our proprietary PCa technology SQRIM, PCa methods have been used outside Japan, but they despite repeated failures (that is, to experience success) and which we have nurtured in domestic building construction, for generally involve on-site concrete placement. SQRIM, which to nurture resilience as well as a willingness to fearlessly take concrete pipe rack construction. A technology that enables most does not require on-site placement, can achieve stable on new challenges. of the main structures to be constructed using PCa members quality and shorten the construction period even in the produced at plants, SQRIM has been evolved and used in challenging construction environments found in Asia. I’m in Content of hands-on camp Japan over the years as a method for achieving high quality and charge of engineering support to accurately communicate the ■ Training programs Full view of formwork assembly high productivity while shortening the construction period. Japanese technology to local workers. Thirty-two new employees were divided into eight four- For the Malaysian plant, according to the plan, 23 large- As operation of SQRIM outside Japan has only just member groups. Each group, modeled on a those at a Placing concrete scale projects will be carried out concurrently at the site, began, I have had diffi culties. But I am working with pride and project site, was tasked with creating a miniature (two-girder) ■ Results which is not yet connected to utility services and a logistics take pleasure in communicating the excellent technology. bridge girder, and undertook training programs following the • Learned the importance of teamwork and communication network. As there is only one concrete plant, creating a Every time I give my first presentation on the technology schedule of a site to master the following: • Felt a sense of accomplishment and satisfaction in high-risk environment, and in light of the status of worker in a new country, I get lots of questions from interested (1) Moderating a morning (4) Creating work procedures manufacturing recruitment and other external factors, we proposed people. That’s when I really enjoy the fun part of my work. meeting (5) Creating a work schedule • Learned how hard each task is, consideration for workers, SQRIM, which requires little concrete placement in the fi eld, Japanese technologies value advance arrangements. I see (2) Creating a plan drawing (6) Learning quality controls and importance and significance of advance planning to the contractee, who adopted our proposal. With the within SQRIM the polite, highly refined spirit of omotenashi (3) Structural calculation and (7) Daily safety control through hands-on experience no-scaffolding system using aerial platform vehicles, we (hospitality). Taking advantage of being able to introduce this review of formwork and • As a secondary effect, young employees from branches formwork support tripled the speed of construction and got man-hours down to technology that embodies the spirit and passion of Japanese who supported the training programs were reminded that about 38% compared to conventional methods. manufacturing from my perspective as a foreigner, I would teaching is learning and took themselves to the next level. like to play an active role in a wider world. • Realized what issues are important in on-site execution management
Evdon Sicat Mechanization & Automation Technology Group Automated Construction Technology & Development Department Technical & Engineering Service Division Plant (pipe rack) construction in Malaysia Full view of completed skeleton concrete placement Completed two-girder concrete placement
17 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 18 Value Creation Stories Sources of Competitive Advantage Production System
Reform Production System Control Activities for Supreme Patrols and audits conducted in 2 Properly assigned engineers. Quality FY2017 3 Promoted purchase of social For civil engineering we appoint quality Patrol by Production Management Division insurance. To be trusted by society and continue to achieve sustainable growth, it is crucial for us to deal with the 222 safety inspectors (QSIs) and for building Director social issues that surround us, as well as our own issues, and develop a mechanism to continue creating QSI patrol (civil engineering) 864 new value. To that end, we are reforming our production system across organizational borders, regardless of construction we appoint quality safety QSA patrol (building construction) 822 2. Worker Retention stereotypical patterns. auditors (QSAs). Both are dedicated to Quality audit by Production Management Sub-committee Division (civil engineering/building 155 site patrol and guidance. They thoroughly construction) 1 Promoted the Action Plan for Two Major Initiatives to Reform the predetermined procedures, rather than To establish supreme quality as perform detailed checking based on Days Off per Week (see page 23). Enhance audit Production System following conventional practice in the Sumitomo Mitsui Construction’s common data concerning past quality defects 2 Enhanced cooperation with Shineikai
One of the focus themes of the Mid- construction industry. As our quality value, intangible asset and corporate and occupational accidents, raise Division (see page 24). Director patrol term Management Plan 2016-2018 control activities do not permit any culture, we have made helmet stickers and awareness of key control points, perform Quality audit 3 Promoted popularization of the Enhance Education for is reforming the production system. compromises in these processes, all banners and distributed them to all sites. inspections and provide guidance for education project QSA audit Construction Career Up System managers, 1 Initiatives set under the theme to officers and employees should continue The banners not only feature the message improvement to prevent occupational chiefs, staff (CCUS) . and Shineikai achieve supreme quality that lives to improve in-the-field quality with of “Supreme Quality Assurance” but also accidents and quality defects in ongoing 1 A system to accumulate data on construction engineers’ in-the-field work experience and qualifications according up to our customers’ confidence in persistence and utmost attention. “Safety First” and the green cross. projects. Meanwhile, the Division Zero quality to the unified rules of the construction industry defects, achieving us are improving productivity with Director of the Production Management supreme quality ASAP standardization and industrialization, Division performs patrol functions and System to promote production system reform Enhance 3. Productivity Improvement improving the working environments Production System Improvement Committee the Production Management Division driving force Sub-committee for worker retention, and enhancing the carries out the quality audit. In fiscal 1 Improved construction work-related safety management system. 2017, the number of quality audits and Priority Measures productivity with the use of ICT Execution System Worker Retention Productivity Improvement Our goal of supreme quality reflects Improvement Sub-committee Sub-committee Sub-committee patrols at civil engineering and building 1 Analyzing causes of past cases (information and communication our aspiration to perform quality control construction sites reached 2,063. In (human/physical/methodological technology) (see page 42). Conduct surveys and examine, Grasp the current situation, Grasp the current situation, (manufacturing processes) that other formulate and promote measures analyze such issues as analyze issues, and examine, the Building Construction Division, factors, measures to prevent human 2 Established the use of cloud servers manufacturing industries take for to improve multilayered responses to undersupply of in- formulate and promote defects pointed out through the audits errors) to store data created on-site. subcontracting, promote the-field engineers and skilled measures necessary for granted, which means to unfailingly compliance with laws and workers and to multilayered productivity improvement, and patrols are shared at twice-a- 2 Expanding workable practices and 3 Rolled out on-site IT tools using perform management tasks, including regulations and proper assignment subcontracting that includes which is regarded as one of the month QSA meetings to ensure shared matters pointed out in quality audit tablet terminals. of engineers, and establish an small-sized companies, countermeasures to address work, quality inspection, recording, execution system with the ability to and examine, formulate and the shortage of in-the-field understanding among QSAs. and QSA audit company-wide 4 Mechanized and automated and confirmation, according to the execute. promote necessary measures. engineers and skilled workers. We also communicate issues 3 Checking key quality-related points precast production system. pointed out at meetings and education in execution process programs for Shineikai, which are organized by project managers, chiefs Production System Fiscal 2018 Production Control Plan and partners. Through these efforts, we Improvement Committee aim to achieve zero quality defects and Activities in Fiscal 2018 Basic Production Control Policy supreme quality as soon as possible. 1. Execution System Achieve supreme quality focusing on execution process as early as possible with awareness raising for sustainable growth. Improvement Sub-committee 1 Promoted compliance with laws and Basic Production Control Targets regulations (“Construction Business Supreme Quality Assurance banner and Safety First and Zero quality defects Achieving supreme quality as early as possible Act Patrol”) (see page 50). green cross sheet
Basic Production Control Plan VOICE Message from a QSA 1. Preventing quality problems 2. Improving operational efficiency and 3. Ensuring legal compliance Priority Measures reducing in-the-field burdens Priority Measures (1) Analyzing causes for past cases Priority Measures (1) Complying with the Construction Our company’s product is our execution process, where “safety first” is the top priority, followed (human/physical/methodological (1) Promoting shorter hours for employees Business Act and related laws and by quality as the second priority and cost as the third. In working on my daily tasks, I recognize factors, measures to prevent human (2) Reducing on-site workloads regulations that it is the responsibility of QSAs to find, through quality safety audits, budding risks and errors) (3) Improving efficiency of site operations (2) Strengthening guidance to companies quality defects that tend to be overlooked in the field, to check and provide guidance in an (2) Expanding workable practices and with ICT that have not taken out social insurance uncompromising fashion, and to expand practices and measures for preventing the occurrence issues pointed out in quality audits and (4) Promoting the Action Plan for Two of similar incidents at other sites. quality safety audits company-wide Days Off per Week (Japan Federation (3) Checking key quality-related points of Construction Contractors) Akinori Suzuki in execution process Production Management Division
19 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 20 Value Creation Stories Sources of Competitive Advantage
From a Site of Value Creation: Quality Audit of Collective Housing Construction Establishing a Safety Culture
For a building construction project, we have a quality safety audit patrol conducted by a QSA twice a month We are improving operational safety by ensuring implementation of the plan-do-check-act (PDCA) cycle in and a quality audit conducted by the Production Management Division at least twice before completion. Using all construction processes from planning to completion in order to eliminate accidents. Additionally, we are high-rise collective housing construction as example, we provide an outline of the quality audit as follows. reforming our production system, a process that includes the development of labor-saving technology and use of ICT, to reduce possible causes of accidents. Quality Audit Overview Subsequent to that, a document audit When any matter is pointed out during A quality audit comprises two phases: was conducted in the office. Finally, a quality audit, the audited site is expected Basic Safety and Health Policy site patrol and document audit. In the staff from the Production Management to promptly correct it and report the Under the principle of “zero-accident” infrastructure building, Sumitomo Mitsui Construction aims to protect the lives and health case of one high-rise collective housing Division gave feedback on the current correction, and the practice is expanded of its workers by providing a safe, healthy and pleasant workplace environment. construction project, the audit started status of safety and quality control. company-wide to prevent recurrence. 1. To eliminate accidents, we observe laws and regulations related to occupational safety and health as well as the Sumitomo with an inspection of bar arrangement Mitsui Construction health rules, and establish workplace rules. on the upper floors, where skeleton 2. To improve operational safety, we ensure the performance of repeated cycles of plan, do, check and act in all processes from planning to completion. work, such as beams, floors and Site patrol Document audit Feedback on audit 3. To improve the level of safety and health control, we cooperate with partners and carry out voluntary safety and health pillars, was underway, then moved on activities, eliminate or reduce risks and sources of harm, promote worker health, and develop a pleasant workplace to checking of sash installation and environment, with the Sumitomo Mitsui Construction Occupational Safety and Health Management System as the basis of thickness of spray-applied insulation on Expanding practice safety and health control. the middle floors and the interior (wall company-wide for Report on correction Corrective measure recurrence prevention cloth, flooring) finish on the lower floors. If anything is pointed out Basic Safety and Health Targets Zero deaths, critical injuries and 1. Eliminating accidents through zero risks major accidents (1) Eliminating public accidents (third-party accident, property damage, publicfacility failure) Frequency rate: Severity rate: (2) Eliminating three major types of accidents (falls to the ground and falls to 0.6 or less 0.02 or less the floor, collapsing and overturning, accidents caused by construction machinery, cranes, etc.) 2. Developing a healthy and pleasant working environment
Priority Measures 1. Eliminating accidents through zero risks 2. Developing a healthy and pleasant working environment
Checking bar arrangement in reinforcement placing Checking the thickness of spray-applied insulation Document audit and audit feedback (1) Improving operational safety with continued implementation (1) Promoting mental and physical health based on work of plan, do, check and act cycles style reforms (2) Preventing recurring accidents by using accident case (2) Developing a pleasant working environment to promote studies and complying with rules diversity (3) Complying with laws and regulations related to each site (3) Developing a worker-friendly workplace environment VOICE In Response to Quality Audit (4) Improving the level of safety and health control by promoting and enhancing the 5S movement (seiri, (Properly applying the Sumitomo Mitsui Construction seiton, seiketsu, seisou, seijitsu) For builders of collective housing, the mission is to provide end users, who will move into the building Occupational Safety and Health Management System) (4) Taking early measures for heatstroke by grasping the and live there for a long time, with a safe and secure living environment. Builders feel proud when all WBGT (heat index) in summer (5) Preventing occupational diseases end users are satisfied with the overall building and their own units. To that end, we must make untiring efforts to secure high quality in all the work we do, fully plan its execution before starting the work, and conduct detailed site checks during and after execution. Safety Performance Safety performance (FY2013–2017) 1 (cases) (frequency rate) Building construction technologies are advancing day by day. Within a limited on-site organization, In fiscal 2017, the frequency rate ground, three cases involving pinching, 50 0.96 1.0 it is difficult to incorporate new technologies, information and reports on quality defects at other sites was 0.49, which met the target of 0.6 and two other cases. 2 40 0.8 to improve execution. Conducting such quality audits at project sites all over Japan is crucial in order or less, while the severity rate was 1 The frequency rate represents the frequency of 0.71 occupational accidents. The rate shows the number of to apply technologies and information on collective housing construction, which is our key strength, 0.31, which did not meet the target of fatal or serious injuries due to occupational accidents per 0.59 30 28 0.6 across the entire company. We would like to create collective housing with superior quality by referring 0.02 or less. There were 13 cases of one million hours worked. 0.49 Toshikazu Okibayashi 2 The severity rate represents the severity of accidents. The 0.48 21 Project Manager to information and feedback obtained through quality audits. absence from work for four days or rate shows the number of lost workdays per 1,000 hours 20 0.4 Tokyo Building worked. 16 longer: four cases involving a falling 14 Construction Branch 13 object, four cases involving a fall to the 10 0.2
0 0.0 2013 2014 2015 2016 2017 (FY) No. of accidents (absence fromwork Severity rate for four days or longer)
21 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 22 Value Creation Stories Sources of Competitive Advantage Human Resources
Secure, Cultivate and Vitalize Human Resources Sumitomo Mitsui Construction Action Program Target The greatest asset in the construction business is human resources (human assets). The development of Achieve two days off per week1 at all sites by raising employee awareness and improving operations and ef ciency. a working environment and corporate culture where all people involved with the SMCC Group enjoy their Build a system for the application of the upper limit of overtime. work and are motivated to work hard leads to the improvement of corporate value. Therefore, under the Mid-
term Management Plan 2016-2018, we are launching measures to improve the working environment and Work Style Reform Roadmap: Action items (excluding sites where application is diffi cult2) treatment of employees, while at the same time formulating and implementing measures to promote work style diversity and workforce diversity and cultivate global human resources who will play active roles in our FY2017 FY2018 FY2019 FY2020 FY2021 future overseas business for securing, cultivating and vitalizing human resources. Test six-day closure Implement five-day or Implement eight-day per four weeks and longer closure per four Implement six-day or longer closure per four weeks or longer closure per eight-day closure per weeks at new project at new project sites four weeks at new Work Style Reforms and a more diverse range of people can upper limit of overtime in the Sumitomo four weeks at sites project sites As the working-age population enter the workforce, which will lead to Mitsui Construction Action Program designated model sites
decreases, the shortage of workers is productivity improvement. (established in April 2018), and drew All sites are closed on the All sites are closed on the All sites are closed on becoming an increasingly serious issue In April 2018, we formulated the up the Work Style Reform Roadmap second Saturday of every second and fourth Saturday Saturdays and Sundays, month, in principle. of every month, in principle. in principle. in many industries. Additionally, the President’s Policy on Work Style towards 2021. 1 Two days off per week: Closing construction sites twice a week (JFCC) construction industry is facing other Reforms and the Employee Action 1 Two days off per week: Closing construction sites twice 2 Sites where application is diffi cult: Sites where introduction of two days off per week is diffi cult, including construction sites with special circumstances, such as disaster relief or stadiums for the Tokyo Olympic and Paralympic Games, or project sites for which the contract was concluded before March 2018 and for which the construction period is fi xed (JFCC) diverse issues that need to be resolved, Guidelines for Shorter Hours to urge a week including the aging of workers and long employees to achieve results in terms Developing Systems for ● Shorter hours/limited days program In the construction sector, there is working hours. To address these issues, of shorter hours and to raise their Diverse Work Styles (for employees who are rehired after a concern over the declining number we must work on both work style awareness as part of efforts to tackle In response to the needs of individual reaching the retirement age) of young workers entering the industry. reforms and productivity improvement issues involved in work style reform, employees with diverse values, we will ● Childcare and family care leave system As an initiative to help the construction at the same time. For the issue of the including employee working hours enhance systems to provide them with ● Paid leave entitlements by the hour industry retain its share of workers, the shortage of workers, it is imperative across the company. workplace environments that allow them Tokyo Civil Engineering Branch Shineikai to promote diversity hiring, including As for the mid-term direction, we to balance their work and personal life Cooperation with Sumitomo has provided an opportunity for high the recruitment of women and elderly set the goal of achieving two days and continue to work in a healthy and Mitsui Construction Shineikai school students to visit construction persons, and to improve individual off per week at all sites1 by raising secure manner, and will distribute the A shortage and aging of workers, long sites and undertake work experience
productivity. If the obstacle of long employee awareness and improving Poster on closure on the Work-Life Balance Handbook covering working hours, and other issues facing since fi scal 2016. working hours is rectified to improve operations and effi ciency and of building second Saturday issues related to child-rearing and the construction industry cannot be Meanwhile, in fi scal 2017, we held 20 work-life balance, women, the elderly a system for the application of the caring for family members. resolved by our company alone but only opinion exchange meetings with branch through concerted efforts with partners. Shineikai on initiatives for two days To address these issues, we are off per week, the purchasing of social Sumitomo Mitsui Construction President’s Employee Action Guidelines for Diverse Work Styles and Programs for Different Lifestyles cooperating with Shineikai, organizations insurance, and worker retention. Policy on Work Style Reforms Shorter Hours ● Satellite offi ce program comprised of our partners. To achieve sustainable corporate growth and cultivate Goal- conscious creative employees for the future, Sumitomo Mitsui Take actions in a way Construction will promote the development of an that is mindful of daily VOICE Message from Shineikai Association Chairman environment where diverse employees can feel results and purpose satis ed with their jobs and have greater awareness. 1 Achieving Shineikai are deepening their cooperation with Sumitomo Mitsui Construction in regard to worker ● Development of the environment shorter hours retention, work style reforms, and in-the-fi eld productivity improvement. With regard to work style Building a mechanism to eliminate waste, irregularities Make time for growth reforms, we fi rst conducted a survey with Shineikai members to grasp the actual situation of each job and overwork, and developing a system for productivity 2 3 classifi cation to ensure future implementation of six-day closure per four weeks. While young workers improvement Time- Team- wanted days off, mid-career and veteran workers were more eager to work and earn money. Due ● Awareness raising conscious conscious to increasing media coverage of work style reforms and our effort to publicize the matter in training Encouraging employees to make time to achieve and Work creatively in Communicate and programs, more and more people will wish to take days off at a faster rate. However, it is crucial to continue their personal development for the future a well-modulated cooperate manner eliminate concerns over consequences of taking days off, such as in relation to income. Through The company promotes work style reforms in accordance Employees of Sumitomo Mitsui Construction Shineikai activities, I would like to improve awareness around taking days off and controlling overtime with the President’s Policy on Work Style Reforms, while work while being conscious of goal, time and while communicating with workers and considering actual situations in the fi eld. Ken Odagiri Chairman employees aim to achieve shorter hours based on the team to achieve shorter hours. Shineikai Association Employee Action Guidelines for Shorter Hours.
23 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 24 Value Creation Stories Sources of Competitive Advantage Human Resources
Initiatives for Diversity for employees using the continued Empowerment Promotion Act. In the Initiatives to Improve Fair are assigned and promoted to appropriate Industry has introduced the Certified Health Promotion Framework employment program to put in place a two years from the formulation of the Treatment positions. & Productivity Management Organization In December 2014, we established well-modulated treatment structure. plan, the number of female managers As part of activities to create an attractive Recognition Program, a system to select and the Diversity Committee and its sub- increased from 12 to 18, while eight corporate culture, we are steadfastly Employee Classifi cation Change certify excellent companies working on health organization, the Female Empowerment Employment of People with female employees were promoted promoting measures to improve the working System and productivity management, and Sumitomo Working Group. Having a strong Disabilities from the minor career path to the conditions of employees and build a well- We have put in place a system that allows Mitsui Construction was certifi ed as one of the corporate commitment and making In April 1, 2018, the statutory rate with major career path under the employee modulated personnel system and structure. employees who satisfy certain requirements FY2018 recognized organizations. efforts to change employees’ awareness, regard to the employment of people classifi cation change system. to change their classification, for instance, In fiscal 2017, we introduced the we are proactively promoting women, with disabilities was raised to 2.2%. As Our efforts to proactively promote Fair Personnel Evaluation from major career path (place of work can be ferritin/TIBC test for determining hidden foreign nationals, senior employees of June 1, 2018, our employment of female empowerment also include We fairly evaluate the efforts and anywhere across Japan) to major career path anemia to our regular health examination, and employees with disabilities and people with disabilities was 2.1%, falling provision of regular training programs for achievements of employees, and reflect (place of work is limited to a region) or vice launched a campaign to subsidize the cost developing a corporate culture that short of the statutory rate. In light of the female empowerment, launch of Aozora the evaluation results in their treatment. versa, or from minor career path to major of outpatient smoking cessation treatment, allows a diverse range of people to make purpose of the laws and regulations, Komachi activities1 in and outside the Employees are evaluated as to their career path (place of work can be anywhere created a health promotion handbook and active contributions. as well as the increase of the statutory company by female employees, and achievement of their targets set through across Japan or is limited to a region). distributed it to employees, and provided Employment status rate to 2.3% by April 2021, we will cooperation with outside organizations employee-supervisor interviews, and get We review the system to raise the upper an e-learning program on health promotion. (unconsolidated; as of March 31, 2018) proactively employ disabled workers that promote female empowerment. feedback on the evaluation results so age limit and add eligibility requirements while Going forward, we will create virtuous cycles No. of Average Length of that they are motivated to work toward promoting the proactive use of the system. whereby company-wide efforts for health and employees age service and support their retention. 1 Aozora Komachi activities: Activities carried out by female employees of Sumitomo Mitsui Construction for Overall 2,676 46.42 21.78 higher targets. We aim to enhance internal productivity management improve working female empowerment Male 2,390 47.28 22.55 Systematic Recruitment of communication through such feedback so President’s Award styles and workplace environments, which Female 286 39.19 15.41 Foreign Nationals Training programs for female that the company will become a more open Every year, to improve employee morale we thereby promotes employees’ health and empowerment We systematically hire foreign students organization. Also, in determining treatment, recognize employees who have conducted consequently improves productivity and Promoting the Employment of ● Career training and business training for female Older Workers studying in Japan as part of our regular employees (minor career path) unlike in the past, when seniority was the excellent activities in light of the objectives corporate performance. ● Career training for female leader candidates sole consideration, we now value ability and of the Corporate Principles in the areas of In accordance with the Act on recruitment process. These recruits are ● Training for managers who have female Stabilization of Employment of Elderly actively working as engineers in and subordinates results to ensure that motivation is enhanced construction, sales, design, technology and ● Diversity training for managers Persons, we established a continued outside Japan, and are expected to and that evaluation is fair and equitable. the environment by presenting them with a employment program for employees who be a significant part of the workforce. General Employer Action President’s Award. have reached the age of retirement (60 We are also improving the personnel Plan based on the Female Empowerment Promotion Act Implementing Self-Reporting years old). In fiscal 2017, 67 employees system for foreign national employees Period of the plan: 3 years from April 1, 2016 to System Promoting Health and out of 73 who reached the retirement age and providing opportunities for business March 31, 2019 Each year, we collect information from Productivity Management Target 1: Ensure that female employees on the major used the system and are now working in Japanese training when necessary. career track account for 20% or more of individual employees on what they desire in To be a company where employees can work frontline positions. Starting fi scal 2018, to all new employees. Double the number of terms of their current or future duties and in a healthy manner, we have worked on health female employees engaged in technical encourage older workers to play active Promoting Female Empowerment work, compared with the April 2014 fi gure. workplace and their career development, and productivity management since fiscal Target 2: Reduce average overtime by 15%. Certifi cation as Health & roles and provide them with satisfying In April 2016, we developed a three- Target 3: Double the number of female managers and use the information to ensure personnel 2016. Japan’s Ministry of Economy, Trade and Productivity Management jobs, we introduced personnel evaluation year action plan based on the Female to 24 from today’s 12. Organization Health promotion handbook Participation in Diversity-related Symposium VOICE Message from Head Offi ce Business Support Center Director
In February 2018, the Oita Alliance Diversity Conference, in which Sumitomo Mitsui Construction has The average age of our employees as of the end of March 2018 is 47.2 years old for men, participated as a partner organization, hosted the Oita University Diversity Research Environment 39.1 for women, and 46.4 overall, which indicates that our workforce is aging. Reasons Initiative (index type) Kick-off Symposium. Under the theme of “enabling female researchers and for us to promote health and productivity management include the increase in health engineers to succeed and play active roles,” the symposium featured lectures and a panel discussion risks in connection with the aging of employees and the need to strengthen mental health that included Executive Vice President Nagamoto, who chairs our Diversity Committee, as one of measures in light of the stresses of contemporary life. Poor physical or mental health not the panelists. The executive vice president introduced the Kensetsu Komachi activities and initiatives only makes individual employees unhappy but leads to a decline in operational effi ciency for developing female leaders at Sumitomo Mitsui Construction, and exchanged opinions with and productivity. Therefore, the company is working on employee health promotion, representatives of other participating organizations on diversity promotion, the signifi cance of gender recognizing it as an important management issue. equality, and ideal alliances. (From left) Ms. Sato (nurse), Employees may feel reassured if a nurse is available for consultation when they have Director Orimoto (Business Support Center), Yoshio Nagamoto health concerns. Currently, nurses are not assigned to all offi ces, but we will start to make Ms. Hirokawa and Ms. Hayashi (nurses) Representative Director Executive Vice President aggressive efforts, in fi scal 2018, to do so. We will also ask nurses to visit project sites as much as possible to directly interview employees working outside the office. Eventually, we will develop a system for company-wide health promotion through cooperation among nurses at all offi ces.
25 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 26 Value Creation Stories Enhance Competitive Advantage Domestic Civil Engineering Recognize issues Address issues ● Aggressively promote initiatives, primarily for expressways, water and sewerage facilities, and energy facilities. ● Measures for aging infrastructure ● Enhance joint initiatives between civil engineering and building construction Social issues and cross-industrial cooperation. ● Lack of workers due to declining birth rate and aging ● i-Construction and i-Bridge with the use of ICT and CIM for saving labor and population manpower ● Quality assurance and safety control ● Enhance supreme quality assurance initiatives with QSI activity. ● Make all-out effort to secure pro t when receiving orders and reduce cost when bidding. ● Establishing pro table system ● Assign human resources through cooperation between Head Of ce and Our issues branches. ● Introduce education on professional practice and build a career development ● Cultivate human resources for the future plan. ● Carry out systematic rotation for the eld, design and engineering sectors. ● Productivity improvement ● Promote mechanization, streamlining of execution and structure, and precasting.
Enhance organizational Enhance competitive Create value for stakeholders capability advantage
For productivity improvement, we are promoting Leveraging our strength as an all-rounder As measures for aging infrastructure, we are precasting of concrete members, prefabrication balancing work for bridges, tunnels, shielding aggressively promoting initiatives, primarily for of reinforcement rods, and saving labor in and civil engineering, as well as balancing civil expressways, water and sewerage facilities, and the field with ICT use. We will also accelerate engineering with building construction, we are energy facilities. We are also addressing the With Consideration for the Field, We Are United and investment in technological development and receiving increasing orders for large projects issue of a shortage of workers caused by the human resource development. integrating civil engineering and building declining birth rate and aging population. construction as well as for large-scale projects Working on Production System Reform Hiroshi Mashiko involving various elements, such as bridges, Director tunnels and civil engineering. toward a New Growth Stage Senior Managing Executive Offi cer Division Director Civil Engineering Division
Business Environment work on work style reforms, productivity Kelani River bridge construction project. projects involving multiple elements, more than ever before, investment As for water and sewerage facility In the short term, projects for restoration improvement, and human resource Thanks to the improved profi tability such as bridges, tunnels and civil in human resource development for refurbishment, in fi scal 2017 we received following the Great East Japan development. With the establishment of large-scale construction projects, we engineering, is increasing. The increase worker retention as well as investment an order for a large project developed Earthquake are likely to decrease, but of two days off per week, work styles, secured profit considerably exceeding in orders received can be attributed to in technological development for under the DBO1 model based on the Act projects related to the Tokyo Olympic including those in the field, are likely that of the previous year. our comprehensive strength. productivity improvement. on Promotion of Private Finance Initiatives and Paralympic Games are in the final to change significantly. It is imperative In terms of floor slab replacement (PFI). We established a dedicated stage toward 2020. After 2020, there will to proactively invest in technological Enhancing Competitive for expressway bridges, demand for Expanding Business Areas section under sales to promote efforts be continued investment in strengthening development such as mechanization Advantage in Existing Areas which has been rapidly increasing in The areas we are aggressively enhancing to integrate civil engineering and the nation, including enhancing measures and robotization with the advancement Japan’s fi rst prestressed concrete (PC) recent years, we are gaining increasing and focusing on include large-scale building construction and enhance for an anticipated Nankai Trough of IoT and AI technology. road bridge was constructed around experience with the Chugoku refurbishment of expressways, water cooperation with machinery and electric earthquake, measures for water damage 65 years ago. With the widespread use Expressway Shimo-kumatanigaya and sewerage facility refurbishment, manufacturers. caused by torrential rain, and disaster Fiscal 2017 Overview of the Dywidag method—which we Bridge and other projects, leveraging and large projects such as the Chuo In such new business areas, we reduction or mitigation measures, such Civil engineering results in and outside introduced ahead of others—the length, our advantage as one of only a few Shinkansen. will promote the assignment of young as developing emergency roads. There Japan in fi scal 2017 were: as well as the number, of PC bridges general construction companies that For large-scale expressway employees in order to develop project will also be investment in large projects, increased dramatically. Since then, we have plants able to manufacture precast refurbishment, we received a total managers in cross-industrial consortiums. such as Chuo Shinkansen construction, Orders received ...... 125.8 billion yen have driven the industry forward with a concrete members for floor slabs. We of three orders, including the Tomei For the shift to growing overseas markets, (up 6.6 billion yen year-on-year) and in renewable energy and other commitment to world-fi rst technologies are also differentiating ourselves by the Expressway (Specified Refurbishment) we need to transfer engineers to overseas energy-related areas. Amount of and have maintained our position as mechanization of fl oor slab replacement. floor slab replacement for the section locations. For this, we will promote young completed work ...... 117.8 billion yen In the mid- to long-term, the market No. 1 in terms of technologies and We are the only construction between the Susono Interchange and employees from a long-term perspective (down 1.9 billion yen year-on-year) is expected to undergo dramatic construction experience in the area of company both in the Mitsui Group and Numazu Interchange (fiscal 2017). We and aggressively hire foreign nationals. Gross profi t on changes as new construction projects in PC bridges in Japan. the Sumitomo Group, two well-known will further enhance our competitiveness 1 DBO: A system in which a PFI operator is commissioned completed work ...... 18.4 billion yen by securing the advantages we have to design, build and operate facilities while the public Japan will decrease while maintenance (up 0.6 billion yen year-on-year) As Sumitomo Mitsui Construction is Japanese corporate groups. Cross- sector procures the funding and owns the facilities. and renovation of social infrastructure, an all-rounder balancing work for tunnels, industrial cooperation with other group built and through cross-industrial Profi t margin of work ...... 15.6% including roads, water and sewerage shielding, and civil engineering, as well as companies gives us a tremendous cooperation. We will also accelerate (previous year: 14.9%) facilities, and energy facilities, will balancing civil engineering with building advantage when entering a new market. technological development, such as substantially increase. Key construction orders received construction, we are receiving increasing To further enhance and use these rapid construction and precasting Under these circumstances, the include the 80th Section of the orders for large projects integrating civil advantages, we are promoting precasting to save labor and manpower, and business environment remains under Tamagawa Pump Station construction engineering and building construction. of concrete members, prefabrication of carry out investment and organization severe strain due to the labor shortage, project, the Hokkaido Shinkansen Line The unit of work order placement is reinforcement rods, and in-the-fi eld labor building for further cost reduction and so the entire construction industry must Sairei Tunnel, and Package 2 of the becoming larger, and the number of saving with ICT. We are accelerating, productivity improvement.
27 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 28 Value Creation Stories Enhance Competitive Advantage Domestic Civil Engineering
Enhance Organizational Capability Results of Value Creation
Technological Advantage With a focus on bridges, the position, as measured with a drone, Financial/Non-fi nancial KPIs Ever since prestressed concrete Bridge Quality Committee carries out so that we can quickly and unfailingly FY2013 FY2014 FY2015 FY2016 FY2017 technology was introduced to Japan, activities to improve element technology identify any confl ict with local geography Orders received (billion yen) 134.6 151.9 122.6 119.2 125.8 Sumitomo Mitsui Construction has specifi c to each of the planning, design, and structures. Amount of completed work (billion yen) 88.5 96.0 123.1 119.7 117.8 developed related technologies, execution and maintenance phases, with Gross profi t of completed work (billion yen) 7.2 12.1 15.9 17.8 18.4 including precasting for bridges and the goal of improving quality with regard Cultivating Excellent Skilled Profi t margin of work 8.1 12.6 12.9 14.9 15.6 various methods for rapid construction. to the entire lifespan of the bridge. Workers No. of engineers1 815 806 810 811 803 We are improving operational While robust construction investment Construction waste fi nal landfi ll 1.7 1.3 1.2 1.3 1.3
productivity in response to the shortage Use of ICT in Design, is likely to continue in line with Unit of CO2 emissions 42.2 43.0 43.7 42.6 40.8 of skilled workers, which is a society- Execution and Maintenance infrastructure improvement aimed at (ton-CO2 per 0.1 billion yen) wide issue, and contributing to building The use of ICT in the production strengthening the nation, preventing 1 Holders of civil engineering qualifi cations subject to evaluation under the Business Evaluation System high-quality, durable infrastructure. process has dramatically improved and mitigating disasters, and renewing To take the example of rapid the efficiency of management work aging infrastructure, the development of construction of the bridge superstructure, in the field. One example of this is excellent skilled workers is a big issue. we are aggressively using precast our “AR-based surface finish control To establish the SMCC brand with segments of various shapes to install system,” which enables us to control regard to bridge construction as one girders (superstructures). Currently, the surface shape of concrete floor of our key business areas, the Civil Project Ube City Public Sewerage Tamagawa Pump Station large-scale projects in overseas slabs in concrete placement in the Engineering Division certifies foremen ■ countries pushing ahead with rapid fi eld. The system renders the results of with outstanding skills in overall Contractee: Ube City (Yamaguchi Prefecture) infrastructure development are adopting measurement, which is performed while execution and leadership as “Bridge epoch-making rapid construction using concrete is being poured, as a 3D data Meister.” Certifi ed foremen are expected ■ Project period: precast segments. Execution methods image and superimposes the image to train young technicians who will lead Design and construction period using precast members have also on the image of the project site using the PC industry in the future and to pass From October 2017 to November 2025 proved effective for securing the safety augmented reality (AR) technology for on their skills to the next generation. Maintenance period of work in high places. visualization. It allows us to improve the In parallel with human resource April 2024 to March 2044 evenness of the fi nished surface as we development, we are working on work ■ Project members: are working on it. style reforms. We are stepping up efforts Sumitomo Mitsui Construction Co., For the construction of prestressed to introduce two days off per week in Ltd. (project representative), Kubota concrete bridges that have complex the field, reduce working hours, and Corporation, Toshiba Infrastructure shapes, we are using the SMC-modeler, enhance work-life balance. As part of Systems & Solutions Corporation, Nihon our proprietary system to efficiently our efforts, we will aggressively introduce Suiko Sekkei Co., Ltd., and Kubota create highly accurate 3D drawings of new technologies, such as IoT and AI, Environmental Service Co., Ltd. bridge models at the design stage. The and invest in technological development, Sumitomo Mitsui Construction started a project for the development of a combined pump station having the function to drain system allows us to superimpose a 3D such as mechanization, robotization and sewage water and rainwater. This was the fi rst project in Japan undertaken based on the design-build-operate (DBO) model. PC superstructure construction adopting precast U-girder model for the entire project site onto effi cient design programs. segments The public sewerage system of Ube City in Yamaguchi Prefecture has been in use for nearly 70 years, so the pump stations the project site landscape at the exact and sewer culverts are aging. In 2017, Ube City, as the facility owner, commissioned a private-sector consortium, represented Operational Process Pursuing by Sumitomo Mitsui Construction, to demolish two old pump stations, the Sakaegawa Pump Station (put in service in 1957) Supreme Quality and the Unoshima Pump Station (put in service in 1967), and design, build and maintain the Tamagawa Pump Station, which The Civil Engineering Division assigns consolidates the functions of the former two in an integrated manner. quality safety inspectors (QSIs) The project is expected to reduce business costs and provide a high-quality public service with the use of private sector dedicated to site patrol and guidance to technologies and expertise. Sumitomo Mitsui Construction is promoting smooth operations as the representative of the prevent quality defects and occupational consortium, with the goal of proper maintenance of social infrastructure. accidents for projects under execution. The number of quality audits and patrols performed at civil engineering sites in
fi scal 2017 reached 864. 3D model created with the SMC-modeler
29 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 30 Value Creation Stories Enhance Competitive Advantage Domestic Building Construction Recognize issues Address issues ● Shorten the construction period with precasting, and save labor and simplify ● Shortage of construction engineers and skilled in-the- eld work with member prefabrication. workers Social issues ● Promote ICT and closure of project sites on Saturdays. ● Large-scale earthquake disasters ● Enhance initiatives in the area of aseismic renovation. ● Enhance initiatives in the area of non-residential building, e.g., production ● Future shrinkage of domestic housing construction facilities and commercial facilities. market due to population decrease ● Enhance initiatives in public works. ● Expand the business area of renovation. ● Secure quality by expanding production at plants. Our issues ● Quality assurance and safety control ● Secure safety with execution in compliance with work procedures. ● Secure pro t when receiving orders. ● Establishing pro table system ● Enhance cooperation with partners. ● Productivity improvement ● Promote introduction of ICT and precasting.
Enhance organizational Enhance competitive Create value for stakeholders capability advantage
For productivity improvement, we are promoting ● We will accumulate experience in superhigh- ● We will refine our proprietary technologies, precasting of concrete members, prefabrication rise collective housing construction with such as precasting, to shorten the of reinforcement rods, and saving labor in industrialization methods that leverage our construction period and improve quality so the field with ICT use. We will also accelerate strength, namely, having concrete plants that we can achieve earlier delivery and start investment in technological development and within the SMCC Group that are able to of service. human resource development. manufacture precast members. ● We will make efforts to extend the life of Path for Stable Growth—Taking on Challenges ● As the only construction company in both buildings with seismic reinforcement by the Mitsui Group and the Sumitomo Group, leveraging our strength of having an aseismic we have built many production facilities and device manufacturer in our group. without Fear of Changes to Stride Yoshitaka Mimori commercial facilities of group companies. Representative Director Forward and Continue to Evolve Executive Vice President Division Director Building Construction Division
Business Environment Fiscal 2017 Overview housing. The profit margin of work and productivity improvement, we large-scale refurbishment of the many buildings, hotels, hospitals, distribution The business environment of building Building construction results in and improved to 11.0%, up 0.7 points from the are pushing ahead with automation, superhigh-rise residential buildings we warehouses, plants, commercial construction continued to be solid from outside Japan on an unconsolidated previous year, due to continued efforts for including IoT management and have built. facilities and cultural facilities, accounted the previous year. Despite underlying risk basis in fi scal 2017 were: profi tability-oriented order taking. automated transportation, at precast In the market category of building for about 70% of our sales in domestic factors, such as rising material prices and plants to more efficiently carry out a renovation, seismic reinforcement is building construction. Orders received ...... 225.4 billion yen a shortage of workers, we expect that series of processes from manufacturing another big market and technology. Sumitomo Fudosan Onarimon (up 14.0 billion yen year-on-year) Enhancing Competitive extensive redevelopment in the Greater Advantage in Existing Areas of precast members to construction. In recent years, we were tasked Tower, which has 22 aboveground Tokyo area will continue, including for Amount of To Be a Leading Company in We are accelerating initiatives to be a with the seismic retrofitting of the floors, two underground floors and completed work ...... 198.3 billion yen facilities related to the Tokyo Olympic and (up 12.3 billion yen year-on-year) Precasting leading company in precasting, which Yamanashi Culture Hall, designed two penthouse fl oors and has adopted Paralympic Games, private-sector capital We have been building up a track record includes already-started R&D efforts for by renowned architect Kenzo Tange, an aseismic structure for the middle Gross profi t on investment due to favorable corporate in the area of superhigh-rise collective automated construction of superhigh- and our work received an outstanding fl oors, is a superhigh-rise offi ce building completed work ...... 21.7 billion yen earnings, and construction and renovation (up 2.5 billion yen year-on-year) housing ever since our pioneering work rise collective housing. seismic reinforcement award from the connected to a subway station. of hotels due to inbound tourism demand in the design and construction of the Japan Building Disaster Prevention The Celestine Kyoto Gion, located Profi t margin of work ...... 11.0% in both urban and rural areas. The current (previous year: 10.3%) first such project, Suncity Building D, Expanding Business Areas Association. Currently, we are working in a picturesque historical district in favorable market environment is likely to completed in 1979. Currently, we are As the only construction company on seismic reinforcement and renovation Kyoto, combines Kyoto’s traditional last until around 2020. Key construction orders received further accumulating experience with in both the Mitsui Group and the of another historic building, the Tsuyama hip-and-gable (Irimoya) roof style with In the mid- to long-term, we include the Konami Creative Center our proprietary technology SQRIM Sumitomo Group, we have built many of Cultural Center, the building for which contemporary architecture to harmonize expect that urbanization and further Ginza construction project, the by leveraging our strength of having the groups’ production and commercial we received our fi rst BCS Award, which with the streetscape. concentration in large cities will Landport Higashi-narashino (tentative SMCC Group concrete plants able facilities. In the building construction is given in recognition of iconic buildings We will further enhance initiatives in continue, resulting in continued building name) construction project, and to manufacture precast members. market, the category of maintenance in Japan. Having an aseismic device general building construction like these construction demand for redevelopment Building A construction for the collective SQRIM is an all-precast-concrete and renovation, covering maintenance, manufacturer in our group gives us an projects. in the Greater Tokyo area, while housing housing project at Ebina Station method that does not involve in-the- conservation, refurbishment, alteration advantage. By leveraging this strength, construction will decline due to the (tentative name). field concrete placement for main and extension, is expected to expand. we will aggressively work on seismic shrinking population. In terms of order intake, we structures. It allows for the rapid As production facilities and commercial reinforcement for the continued use of Additionally, the shortage of substantially increased the number of construction of each floor in cycles facilities must be renovated to update existing buildings. construction engineers and skilled orders received as a result of enhanced as short as three days to substantially their functionality, we will derive further workers is becoming increasingly efforts in the areas of government reduce the overall construction period. sales in the future as the builder of such Enhancing Initiatives in severe. It is imperative to expedite facilities and general non-residential We will launch SQRIM outside Japan facilities. We will work with affiliates General Building Construction work style reforms and initiatives for building construction, in addition to our and apply it to not just housing but that specialize in renovation to expand In fiscal 2017, construction of non- productivity improvement. core area of superhigh-rise collective also other purposes. For further quality our renovation business, including the residential buildings, including office The Celestine Kyoto Gion
31 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 32 Value Creation Stories Enhance Competitive Advantage Domestic Building Construction
Enhance Organizational Capability Results of Value Creation
Operational Process Pursuing efficiency in execution management, and research departments under Financial/Non-fi nancial KPIs Supreme Quality we are introducing tablet terminals that the Building Construction Division. In FY2013 FY2014 FY2015 FY2016 FY2017 The Building Construction Division assigns use dedicated application software to ongoing projects, Kensetsu Komachi Orders received (billion yen) 167.6 204.2 229.4 211.4 225.4 quality safety auditors (QSAs) dedicated all ongoing projects. This has enabled teams, mainly comprising female Amount of completed work (billion yen) 192.1 188.1 197.7 186.0 198.3 to site patrol and guidance. To establish construction engineers to work more engineers, are formed. These teams are Gross profi t of completed work (billion yen) 5.1 5.4 12.4 19.2 21.7 the Sumitomo Mitsui Construction brand efficiently by shortening the time registered with the Japan Federation Profi t margin of work 2.6 2.8 6.3 10.3 11.0 as the top runner in collective housing, required for bar arrangement inspection of Construction Contractors (JFCC) No. of engineers1 936 945 937 924 914 we promote activities of the Quality and and quality control documentation, and conduct all-women site patrols to Construction waste fi nal landfi ll 4.3 4.0 3.2 2.5 2.1 Functional Housing Committee. and by reducing travel time by allowing work on improvement from the female Unit of CO2 emissions 12.1 13.8 13.9 13.4 12.5 engineers to view construction perspective in order to promote diversity (ton-CO2 per 0.1 billion yen) Enhancing Cooperation with drawings, hold videoconferences, use at construction sites. 1 Holders of building construction qualifi cations subject to evaluation under the Business Evaluation System Partners the cloud to share data, exchange We are enhancing our partnership with emails, and check the schedule on Shineikai, organized by partners across the spot. We are also using Building Japan. By sharing project information Information Modeling (BIM), which from the initial stage of a project and is expected to dramatically improve setting a schedule for construction early productivity by enabling the central on, we enable partners to smooth out management of design and execution operations and deploy skilled workers data during the production process for Project Case of Precasting and ICT Use (Hachioji Planning Project, Tokyo Building Construction Branch) in a planned manner. Additionally, by the construction of structures based on Site patrol by Kensetsu Komachi conducting planning with partners from 3D data. the start, we can improve efficiency in To facilitate front-loading efforts in Cultivating Young Engineers Scope of execution planning and processes and design and construction projects with For skills, quality and safety improvement, reinforcement placement strengthen cost competitiveness. We will BIM, we are conducting demonstrations the Building Construction Division further deepen cooperative initiatives. using BIM in individual projects to verify provides primarily young engineers below actions for future robotized construction the job grade of upper-level chief with Residential building Temporary Work Style Reforms and automated construction. We are eight in-house group training programs. yard Commercial In March 2017, we created a sheet also considering using BIM for building In the education program for first-year building that each project site is expected to maintenance with a view to proposing construction engineers, we provide an use to develop measures for work building management or services to opportunity for hands-on training in which
style reforms and two days off per business owners. they build actual concrete skeletons by Civil engineering week, and to report the progress of We will improve efficiency in carrying out all steps from planning to work the measures, with the aim of raising execution management with in-the-fi eld construction all by themselves. As they Unloading Flow of vehicles awareness among project managers quality control by linking tablet terminals learn the importance and difficulties reinforcement for residential bars building and members. This fiscal year, each with BIM for further productivity of execution by hand, they improve project site is using the sheet to develop improvement. their understanding of what the job of In this project, we are constructing a 26-fl oor residential building and a six-fl oor commercial building its policy for shorter working hours at The Ibaraki Plant of our affi liate SMC execution management engineer entails. on a site to the south of Hachioji Station on the JR line. the site and is promoting individual Preconcrete is carrying out initiatives For the aboveground skeleton work for the residential building, we adopted precasting combining initiatives. Successful practices will be to improve operations by improving the our proprietary SQRIM and SQRIM H methods to construct one fl oor, divided into two zones, in four expanded company-wide. internal environment of the plant for days to shorten the construction period. future automation and nonattendance For steel structure erection for the commercial building, we used BIM. By using BIM in meetings Enhancing ICT Use at precast concrete (PCa) plants. with parties related to the project, we could visualize execution procedures rendered as 3D data As a substantial shortage of construction images. Thanks to image sharing, we reduced the time for discussions, improved work efficiency, engineers and skilled workers is Empowering Female improved safety, and facilitated execution. expected in the future, productivity Engineers Hiroyuki Yuri Project Manager improvement, paired with work style We have 72 female engineers working Tokyo Building reforms, is an urgent issue. To improve in our sales, design, construction Construction Branch
33 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 34 Value Creation Stories Enhance Competitive Advantage Overseas Business Recognize issues Address issues ● Participate in ODA projects and put infrastructure into service early by shortening the construction period. ● Economic development of developing countries Social issues ● Promote localization of construction work. ● Pass on skills to local staff. ● Global warming ● Launch sales of oating solar power generation system. ● Transfer personnel from Japan to overseas in a planned manner. ● Shortage of personnel for overseas operations ● Cultivate local staff. Our issues ● Intensifying competition with Japanese general ● Enhance systems for cooperation with local partner companies. construction companies
Enhance organizational Enhance competitive Create value for stakeholders capability advantage
● We are substantially shortening the We are increasing order intake and building a ● We are contributing to the economic construction period by aggressively robust execution system based on years of local development of emerging economy countries introducing precasting, which has been business activities and the trust earned from by putting infrastructure into service early developed in Japan primarily by the Civil contractees and local partners thanks to our through rapid construction. Engineering Division. wealth of construction experience. ● We are helping local staff and partner ● While transferring personnel from Japan to companies improve their skills base. countries overseas, we are cultivating local ● We are contributing to addressing global staff and promoting localization to enhance warming with the use of renewable energy. the execution system outside Japan. ● We are enhancing and improving the execution system focusing on safety, quality We Are Implementing Human, and profitability to cope with the expansion of business areas and the increase in the amount of construction work. Organizational and Strategic Initiatives ● We have started sales of the floating solar Junichi Iwaki power generation system in Taiwan. for a Future Leap Forward Managing Executive Offi cer Division Director Global Division
Business Environment democratic government was established built with local companies with whom to expanding business on the continent involved. In the past, we aggressively Gross profi t on Asian countries, the main arena of in 2015, and expectations are high for completed work ...... 6.1 billion yen we have partnered in joint ventures are in the future. In Taiwan, we established applied the execution method to our operations outside Japan, remain economic development in conjunction (down 0.6 billion yen year-on-year) precious assets. a local subsidiary in 2017 to engage civil engineering bridge construction on track to achieve economic growth with economic liberalization and for With the prospect of the future in sales of our floating solar power work. We have also started all-precast Profi t margin of work ...... 10.4% despite the occasional impact of global construction investment required for the (previous year: 11.4%) shrinkage of the construction market in generation system. execution in plant construction projects events. Various infrastructure projects economic development. Japan, our Japanese peers are entering in the area of building construction. are ongoing across Asia, and voracious In countries in Southeast Asia, the Key construction orders received overseas markets in quick succession. Enhancing Organizational investment for further development is development of expressways and rapid- include Package 2 of the Kelani River Sumitomo Mitsui Construction is further Capability Developing Global Human expected to continue. transit railways is active in anticipation bridge construction project and Package enhancing the relationships of trust Technological Advantage Resources In particular, India, which accounts of economic effects of transportation 1 of the Hanoi City Ring Road No. 3 we have built to increase order intake, In large-scale projects in countries To expand sales areas outside Japan, for around 25% of our orders received infrastructure development. In fact, construction project (Mai Dich-South enhance the execution system, and overseas where rapid infrastructure we must urgently train local staff as outside Japan, and Bangladesh, from Sumitomo Mitsui Construction is currently Thang Long Section). strengthen the foundation for execution. development is ongoing, we are well as Japanese staff. To cultivate,
which we received an order for an urban constructing Vietnam’s first urban 1 Including local subsidiaries introducing epoch-making rapid secure and retain local employees rapid-transit railway construction project railway, Indonesia’s first subway, and Expanding Sales Area execution using precast segments, a outside Japan, we established the in May 2018, have been achieving Bangladesh’s urban rapid-transit railway, Enhancing Competitive In the past, Southeast Asian process we have nurtured in Japan. By Human Resource Development Center remarkable economic growth in recent among others. Japan, through both its Advantage in Existing Areas countries had high levels of country risk substantially shortening the construction (HDC) in the Philippines in 2016. The years and are likely to continue to invest public and private sector, is promoting Starting with the entry into the Thai due to confl icts, internal power struggles period, we can put infrastructure into HDC is not only providing education for in construction. the export of infrastructure systems as market in 1971, we have carried out and political instability. In recent years, service early, which contributes to local employees who work at locations In Sri Lanka, a market we reentered a priority measure, so we expect future sales operations in Asian countries however, such uncertainties have the economic growth of the countries outside Japan but is also developing for the first time in eight years in 2017, expansion of these markets. east of India for many years and built a faded and these countries are targets personnel systems that enable local hotels, offi ce buildings, stores, housing track record in construction. We have of ODA projects and overseas capital employees to work globally. and other buildings and infrastructure Fiscal 2017 Overview worked on construction backed by both investment, resulting in the expansion For Japanese staff, we are also have been developed with the Overseas business1 results in fiscal technologies we have sophisticated of new markets. Sumitomo Mitsui stepping up our efforts to cultivate stabilization of the domestic situation 2017 were: in Japan and our commitment to Construction has established sales global human resources, including following the end of the civil war in quality, which receives a high level of offi ces in Cambodia (in 2010), Myanmar providing programs for study abroad (at 2009. The amount of investment in Orders received ...... 68.9 billion yen recognition from our contractees and (2013) and Malaysia (2014), and is companies or at universities) and short- construction is rising sharply. (up 20.2 billion yen year-on-year) local people. Moreover, our execution making efforts to expand its sales areas, term study abroad (language training In Myanmar, where we are engaged Amount of system, which includes partners who including order intake in Sri Lanka and and internship), as well as opportunities in a project to expand the facilities completed work ...... 58.5 billion yen are indispensable for execution, and Bangladesh. In Africa, we are engaged to work overseas on a rotating basis. (down 0.9 billion yen year-on-year) Lach Huyen International Port construction (road and of Yangon Technological University, the relationships of trust that we have in construction in Tanzania with a view bridge) using precast segment span-by-span method
35 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 36 Value Creation Stories Enhance Competitive Advantage Overseas Business
Expanding Business Areas Results of Value Creation
Financial KPIs Sales by country (billion yen)
Year of entry Bangladesh FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 20181 1 year of reentry Orders received (billion yen) 84.0 58.8 77.1 48.7 68.9 India 14.3 2 Year of entry is not provided because there is Myanmar Taiwan currently no project site, offi ce or local subsidiary, Amount of completed work (billion yen) 75.5 65.7 65.0 59.4 58.5 Vietnam 9.4 2017 although there was previously. 2013 Laos 2 Gross profi t on completed work (billion yen) 6.8 3.2 5.9 6.7 6.1 Indonesia 8.3 Philippines 6.8 Other regions 19.7 India Vietnam 1989 1994 Overseas total 58.5
Thailand Guam 1971 Cambodia Philippine 1984 2010 Tanzania 1995 Project Entry into Sri Lanka 2015
Sri Lanka Malaysia 1 2017 2014
Singapore Indonesia 1977 1976
Ongoing projects
Kelani River Bridge Construction Project Package 2 The Project for the Establishment of Research and Training Complex at the Faculty of Agriculture, University of Jaffna (Courtesy of Japan International Cooperation Agency [JICA])
Sumitomo Mitsui Construction first entered the market of communities to prevent economic disparities and promote Location People’s Republic of Bangladesh Location Socialist Republic of Vietnam Location Socialist Republic of Vietnam the Democratic Socialist Republic of Sri Lanka in 1978. After rural development. Under these circumstances, Sumitomo Project Dhaka Urban Transportation Development Project Project Ho Chi Minh City Urban Railway Line 1 Project North-South Expressway Construction Project name MRT Line 6 Section CP6 name Construction Project (Ben Thanh-Suoi Tien name (Ben Luc-Long Thanh Section) Package J3 Phuoc constructing numerous buildings, including the Parliament Mitsui Construction received two orders for ODA projects in Section) Package 1a Khanh Bridge and Approach Bridge Contractee Dhaka Mass Transit Company Building, schools and hospitals, as ODA projects as well as Sri Lanka from the Japanese government and reentered the In this project for construction of a 20 km Contractee Ho Chi Minh City Management Authority for Contractee Vietnam Expressway Corporation elevated railway in Dhaka City, we are in charge of Urban Railways For the North-South Expressway Construction private sector plants, warehouses and offi ce buildings during Sri Lankan market for the fi rst time in eight years in 2017. constructing four station buildings, including the For Vietnam’s first urban railway construction Project, we received an order for the J3 section, southern terminal station, and a 4.9 km elevated project, we are building the terminal station, Ben following the order received for the J2 section. For track. Thanh, and a track tunnel (total extension: 750 m). the new section, we are in charge of 7.9 km out of the 1980s and 1990s, we withdrew from the country due to With the two orders, we aim to rebuild the execution the entire extension of 11 km. the expanding civil war. system to win and undertake various types of ODA The conflict lasted over 25 years, ending in 2009, and construction projects in the areas of civil engineering and Sri Lanka is currently in the stage of full-scale growth. The building construction and to undertake construction of Japanese government is promoting private sector investment production facilities of Japanese companies entering Sri in the country and aggressively promoting transportation Lanka, the number of which is likely to increase, with the infrastructure development to sustain its economic growth, goal of creating another stable market in South Asia and as well as the development of agricultural and fishing contributing to the economic development of Sri Lanka.
Location United Republic of Tanzania Location Malaysia Location Republic of Indonesia Project The Project for Improvement of Tazara Project Refi nery and Petrochemical Plant Construction Project Jakarta MRT Construction Project CP106 Section name Intersection name Project name Contractee Tanzania National Road Agency Contractee (Anonymous) Contractee PT Mass Rapid Transit Jakarta The project is to construct Tanzania’s fi rst fl yover We adopted SQRIM using precast members for In the project to build Indonesia’s first subway at the Tazara Intersection, which is the site of the fi rst time in a project outside Japan and tripled system, we are constructing two subway station the worst traffi c congestion in the city of Dar es the rate of construction productivity. buildings and a shield tunnel connecting the two Salaam. stations.
37 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 38 Value Creation Stories Enhance Competitive Advantage New Business
Recognize issues Address issues ● Building a sustainable society ● Ef cient development and operation of basic ● Create business that addresses issues identi ed by SDGs. Social issues infrastructure in Japan amid adverse nancial ● Participate in PPP/PFI. situation and population decrease ● Hire mid-career workers who have experience in different industries. ● Shortage of human resources required for new Our issues ● Enhance cross-industrial cooperation with the Mitsui Group, the Sumitomo business models Group, etc.
Areas to Strengthen/Focus on
(1) Expanding floating solar power (2) Creating business that contributes (3) Creating the mid- to large-scale (4) Creating business that contributes generation business and sales of to customized drug discovery wooden building construction to disaster mitigation efforts in the system market preparation for an anticipated triple interlocking Tokai-Nankai- We Aim to Create Business that Resonates Tonankai earthquake
with the Future Satoru Miyake Managing Executive Offi cer Division Director Business Innovation & Incubation Division
Business Operations of manner is our strength, and is Project Expanding Business of Solar Power Generation and Selling of Generation System the Business Innovation & something that is not found in other Incubation Division industries. Japan’s Ministry of the Environment forecasts that the manufactured a fl oating solar power generation system and As we explore new business, we can It is expected that business installed solar power capacity in Japan in 2030 will be 40 GW, started a power generation business using a reservoir in find opportunities to win contracts to targeting the SDGs will become active. six times greater than the 7 GW achieved in 2015. The Kagawa Prefecture in 2017. Taking advantage of the expertise address customers’ potential issues as However, one-off transactions related to renewable energy market is thus expected to expand. developed, in December 2017 we established an affi liate that well as address social issues identifi ed a single theme are insuffi cient. Society The lowering of prices in the feed-in tariff (FIT) for solar sells the floating solar power generation system in Taiwan, by the SDGs with our integrated expects multiple and complex solutions power generation, however, has brought the development of where a renewable energy policy is being promoted. capability. We aim to build a mechanism for social issues. onshore solar power generation to a virtual halt. On the other We will continue our aggressive investment in the fl oating for new consumption in new areas, In our effort to develop new hand, fl oating solar power generation, which, unlike onshore solar power generation business toward the goal of owning generation, does not require land development, is attracting generation capacity of 200 MW and earning 10 billion yen a which differs from the conventional business, we aim to create business Hiragioike Solar Power Generation Plant competitive environment, and rebuild that resonates with the future, while (own project in Kagawa Prefecture) attention. Sumitomo Mitsui Construction has developed and year from electric power sales in the future. business models by incorporating our developing win-win relationships with comprehensive ability to address issues diverse business players. into the mechanism. Business that our division develops is based on the creation of a new Project Creating Business that Contributes to Drug Discovery mechanism in areas where customers are yet to exist or where we must create In the fi eld of drug manufacturing, generic drug manufacturers construction period. demand among customers who may are emerging and the percentage of high-mix low-volume The amount of earnings we can gain in this area depends be looking forward to such business products, such as biotechnology-based drugs, is increasing, on how quickly we get the business on track and on our models. The current business model replacing the conventional mass-produced drugs for general ability to respond to this new class of customers promptly of general contracting is based on consumption. There are moves among pharmaceutical and without fail. relationships with numerous partners. manufacturers to scale down their production facilities in In February 2018, we exhibited at the fourth Interphex Having the ability to bring together line with the changes in the business environment. Against Osaka, the only expo for pharmaceuticals and cosmetics diverse elements to organize the this background, Sumitomo Mitsui Construction aims to be technologies in western Japan. We are now carrying out industrial structure in an integrated a pioneering leader in this area with its proprietary building marketing to help customers become aware of our pioneering construction system that can provide compact, simple and business and its usefulness. Our booth at the Interphex Osaka low-cost pharmaceutical production facilities in a shortened
39 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 40 Foundation for Value Creation Technological Development
Taking on Challenges to Create New Value to Support Sustainable Growth Project Building Productivity Improvement Platform for Bridges: SMC-Bridge SMC-Bridge is a total system for the centralized management bridge modelling system, data from SMC-One Navi that Akio Kasuga and operation of data managed with ICT systems for saves manpower in on-site surveys and management Executive Vice President Division Director bridges, linking data on a cloud platform. Its real-time data operations using smartphones and survey instruments Technical & Engineering Service Division link and easy-to-understand user interface design allows all having an automated tracking function, maintenance data related parties, including contractees, to share information recorded by inspection robots, and so on, to use the data for quickly. The system is significantly improving productivity structural maintenance. We will apply these technologies to In the fi eld of technological development that supports our manufacturing capability, we are taking by expediting operations with the automated creation of specifi c projects to actualize the i-Bridge vision for bridges in on challenges to address social issues, which change with the times, including development of new records, including execution management records. response to i-Construction promoted by the Ministry of Land, materials and execution methods and development of markets with technology transfer to outside Japan. The platform aggregates 3D data acquired through Infrastructure, Transport, and Tourism. The construction industry is facing is SMC-Bridge, a construction platform To accelerate initiatives in these areas, a topographical survey, data from SMC-Modeler, a 3D the aging of skilled workers, lack of used in the area of bridges. We have we are enhancing our organizational workers, aging of social capital and started to provide new solutions in our capabilities with in-house development other serious issues. To address these area of strength. of specialized human resources and issues, we are not only saving labor and Currently, with ongoing IoT, aggressively collaborating with cross- manpower for on-site operations but everything is connected to the Internet, industry partners. We will build a system also reforming production systems to bringing big changes even to the for global technological development SMC-Bridge build a safe, high-quality, durable and operational processes on construction with a view to expanding these (Platform) environment-friendly infrastructure. In sites. We can now easily obtain technological efforts to outside Japan.
terms of technological development, information that we had not been able 1 DIM/CIM/MIM refers to information management in Data link through construction processes 1 design, construction, and maintenance based on the we are developing DIM/CIM/MIM , to see, such as minute changes in concept of building a total, consistent construction a construction management system gigantic structures, the positions and management system common to civil engineering and building construction by effectively using the based on 3D modeling common to civil movements of numerous workers, technologies of Building Information Modeling (BIM) Survey, geological survey, On-site execution Inspection Maintenance engineering and building construction. and deterioration over time, which in building construction and Construction Information Modeling (CIM) in civil engineering. design, execution plan One of the achievements of the initiative allows us to develop new solutions. SMC-One Navi Bridge inspection Save labor in management operations (e.g., building formwork, robot camera SMC-Modeler measuring bridge deck height, inspecting rod placement) 3D bridge modelling system Visible-light Linear Image communication data data positioning system
GNSS crane Project Developing a Non-Metal Highly Durable Floor Slab: Dura-Slab monitoring system
Measure the Applying the outcome of the foregoing research to a end position GNSS satellite highly durable bridge, Dura-Bridge, we have been able to Cable inspection robot SMC-Smart Measure for cable-stayed bridges 3D topographical data 3D complete parts develop a new technology, Dura-Slab. Like Dura-Bridge, inspection system Dura-Slab does not use reinforcing steel or prestressed survey with UAV survey
Standard concrete (PC) steel used in general precast PC fl oor slabs, Filling station
but uses aramid FRP rods for reinforcement to eliminate Wireless position Vertical prestressing monitoring/alarm the possibility of corrosion and deterioration. That will (Aramid FRP rod) prevent accidents involving falling concrete flakes caused (Post-tension) by corrosion, and improve durability to reduce maintenance costs. The new technology is also intended to reduce weight to improve quake resistance, allowing a reduction in Horizontal prestressing the human and economic burden on future maintenance. (Aramid FRP rod) Dura-Slab is expected to be applied to main line structures, (Pre-tension) such as the replacement of expressway bridge fl oor slabs, which are under a severe steel corrosion environment due Overview of highly durable fl oor slab Dura-Slab Note: An aramid FRP rod refers to a rod-shaped bundle of tension-resistant fi bers that can to airborne salt particles and scattered anti-freezing agents. replace PC steel.
41 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 42 Foundation for Value Creation Technological Development
[For Environmental] [For Social] Environmental Efforts and Efforts to Support Technology Bringing Our Precast Concrete Technology to New Markets Sustaincrete is a new concrete material that almost eliminates the risk of
cracking and reduces CO2 emissions. It is expected to be put to practical Creating New Value Suitable for Localities Outside Japan and Licensing with Local Partnership use to contribute to the sustainability of society with its eco-friendliness, as We are launching a precast (PC) concrete method, SQRIM, which we have developed as a technology for high-rise collective well as its superior productivity and design (see Example of Technological housing in Japan, in new markets outside Japan. In Malaysia, the method was adopted for pipe rack construction at a Development for Environmental Conservation on page 54). refi nery and petrochemical plant, and has achieved high-quality construction in a shorter period despite the severe project In the field of renewable energy, we developed floating technology conditions, including lack of infrastructure and labor (see Operating SQRIM PCa Method Outside Japan on page 17). for floating solar power generation systems, and established a company We have also started a SQRIM licensing business outside Japan. We signed the first licensing agreement with in Taiwan to launch its full-scale sales primarily in Southeast Asia (see Alacali Inc. based in Istanbul, Turkey, which manufactures and constructs precast concrete (PCa) members. PCa Expanding Business of Solar Power Generation and Selling Generation technology is drawing great interest for large-scale projects around the new Istanbul Airport, which opened in October System on pages 39 and 40). Placing Sustaincrete 2018, and projects at hospitals and educational facilities for its compliance with the (considerably tightened) new seismic standard under the 2019 Building Standard Code in Turkey.
Floating Solar Power Generation Systems
SQRIM exhibition by Alacali Alacali’s precast plant Project Electricity Supply System Using Electric Vehicles
We are promoting the development of land/sea power connecting system, a power supply system that can reasonably and economically supply electricity from electric vehicles and ships in the event of a large-scale outage caused by a disaster. We developed the Connected EV System in response to the social problem of elevators stopping working following a large- Developing SQRIM-SSUT for Stable Quality, Speedy Execution and Labor Saving scale outage, which makes it very difficult for people to move within mid- to high-rise buildings. It uses the power of light stored in electric vehicle (EV) batteries to supply power to enable elevators to operate even in the event of an outage. We are We are jointly developing the SQRIM-SSUT construction system accumulating knowhow on effi cient operation to put the system to practical use through cooperation with building managers with Satokou Co., Ltd., combining our SQRIM, which is a method of and manufacturers. constructing each fl oor in cycles as short as three days, most quickly in Japan, and Satokou’s SSUT method (modularized interior and exterior finishing). Integrating the advantages of the two methods will enable production management from skeleton work to interior and exterior fi nishing for high-rise and super high-rise RC buildings under an integrated system. As many members will be produced in-plant, the Power transfer execution period can be shortened, building waste can be substantially reduced, and quality can be improved in a field where a shortage of manpower is expected. Hospital In an emergency Power transfer
Supply power to Evacuation shelter hospitals and 電力搬送 Power transfer evacuation shelters Supply power from ships
Collective housing Power supply Power of light Power supply Conceptual image of power supply with the land/sea power connecting system Conceptual image of SQRIM-SSUT module
43 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 44 Foundation for Value Creation Officers
[Photo] Front row, from left to right: Mimori (Executive Vice President), Arai (President), Nagamoto (Executive Vice President), Hanato (Executive Vice President) Back row, from left to right: Sasamoto (External Director), Kitai (External Director), Mashiko (Senior Managing Executive Officer), Sato (Senior Managing Executive Officer), Kimijima (Senior Managing Executive Officer), Nozaki (Auditor), Kato (External Auditor), Harada (Auditor), Murakami (External Auditor), Hoshi (External Auditor) Directors Auditors
Hideo Arai Yoshio Nagamoto Yoshitaka Mimori Kunio Hanato Masashi Nozaki Yoshiyuki Kato Representative Director Representative Director Representative Director Representative Director Full-time Auditor Full-time Auditor (External Auditor) President & CEO Executive Vice President Executive Vice President Executive Vice President April 1979 Joined Sumitomo Construction Co., Ltd. April 1982 Joined The Sumitomo Trust & Banking April 1977 Joined Sumitomo Construction Co., Ltd. Supervising Audit Dept., Secretariat, Public Relations Office, Division Director Supervising Safety and Production Management Division April 2001 Department Manager, General Affairs Dept., Co., Ltd. April 2010 Executive Officer, Sumitomo Mitsui Construction Corporate Planning Dept., Affiliated Business Dept., Building Construction Div. In charge of Safety & Environment Management Dept. Administration Div. November 2011 Chief Investigator, Internal Audit Dept., Co., Ltd. Administration Div., Business Innovation & Incubation Div. and April 1979 Joined Sumitomo Construction Co., Ltd. April 1974 Joined Mitsui Construction Co., Ltd. April 2003 Department Manager, Affiliated Business Dept., Sumitomo Mitsui Trust Holdings, Inc. Global Div. June 2012 Director April 2011 Executive Officer, Sumitomo Mitsui Construction October 2012 Executive Officer, Sumitomo Mitsui Management Planning Div., Sumitomo Mitsui April 2012 Chief, Internal Audit Dept., Sumitomo Mitsui In charge of Audit Dept. April 2015 Representative Director, President & CEO Co., Ltd. Construction Co., Ltd. Construction Co., Ltd. Trust Bank, Limited. April 1975 Joined The Sumitomo Bank, Ltd. (to present) June 2015 Director April 2015 Branch Manager, Tokyo Building Construction January 2009 Department Manager, Audit Dept. June 2012 Full-time Auditor, Sumitomo Mitsui November 2005 Representative Director, President, SMFG April 2016 Division Director, Building Construction Div. Branch June 2011 Full-time Auditor (to present) Construction Co., Ltd. (to present) Servicer Co., Ltd. (to present) April 2018 Executive Vice President June 2007 Full-time Auditor, Daiwa Securities SMBC Co., Ltd. April 2018 Representative Director (to present) Officer in charge of Safety & Environment September 2009 Advisor, Sumitomo Mitsui Banking Executive Vice President (to present) Management Dept. (to present) Corporation June 2018 Representative Director (to present) March 2010 Advisor, Sumitomo Mitsui Construction Co., Ltd. April 2010 Executive Vice President, Officer in charge of Audit Dept. (to present) June 2010 Representative Director (to present)
Shoji Kimijima Tomohiko Sato Hiroshi Mashiko Kumiko Kitai Sakio Sasamoto Michio Harada Aizou Murakami Yukihiro Hoshi Director Director Director Director (External Director) Director (External Director) Full-time Auditor Auditor (External Auditor) Auditor (External Auditor) Senior Managing Executive Of cer Senior Managing Executive Of cer Senior Managing Executive Of cer April 1976 Joined the Ministry of Labour April 1974 Joined Nippon Kokan Ltd. April 1981 Joined Sumitomo Construction Co., Ltd. Aril 1974 Registered as a lawyer April 1975 Joined Sumitomo Metal Mining Co., Ltd. In charge of Secretariat and Public Relations Office In charge of Corporate Planning Dept. and Affiliated Division Director, Civil Engineering Division July 1999 Vice-governor, Shizuoka Prefecture April 2005 Senior Executive Officer, Manager, General June 2011 Department Manager, Audit Dept., Sumitomo April 2001 Executive Governor, Japan Federation of Bar July 1997 Tochigi Plant Manager, Housing & Building Division Director Business Dept. April 1979 Joined Sumitomo Construction Co., Ltd. August 2005 Director-General, Equal Employment, Affairs and Legal Affairs, JFE Holdings, Inc. Mitsui Construction Co., Ltd. Associations Materials Div. Administration Div. April 1977 Joined Mitsui Construction Co., Ltd. April 2007 Department Manager, Civil Engineering Dept., Children and Families Bureau, Ministry of August 2005 Senior Executive Officer, Department Manager, June 2018 Full-time Auditor (to present) June 2002 External Auditor, Airport Facilities Co., Ltd. June 2007 Department Manager, Risk Management Dept. April 1979 Joined Sumitomo Construction Co., Ltd. April 2012 Executive Officer, Sumitomo Mitsui Construction Civil Engineering Administration Div., Sumitomo Health, Labour and Welfare General Affairs Dept., JFE Holdings, Inc. July 2005 Established Kioi Law Office April 2010 Director, Japan Mining Industry Association April 2011 Executive Officer, Sumitomo Mitsui Construction Co., Ltd. Mitsui Construction Co., Ltd. September 2006 Chief of Secretariat, Central Labour June 2009 Representative Director, President, JFE Life June 2012 Auditor, Sumitomo Mitsui Construction Department Manager, Technology Dept. and Co., Ltd. Officer in charge of Corporate Planning Dept., April 2010 Branch Manager, Tohoku Branch Relations Commission Corporation Co., Ltd. (to present) Environmental Security Dept. Affiliated Business Dept. (to present) April 2012 Officer in charge of Secretariat (to present) April 2012 Executive Officer August 2007 Executive Director, Japan Industrial Safety & June 2012 Auditor, JFE Holdings, Inc. April 2014 Department Manager in charge of the June 2013 Director (to present) April 2013 Officer in charge of Public Relations Office April 2015 Division Director, Civil Engineering Div. Health Association June 2016 Director, Sumitomo Mitsui Construction Co., Ltd. Environment, Safety & Environment Control Dept. (to present) (to present) June 2011 External Auditor, Takara Holdings Inc. (to present) June 2014 Department Manager, Safety & Environment Division Director, Administration Div. (to present) June 2018 Director (to present) (to present) Control Dept. and Corporate Planning Dept. June 2013 Director (to present) June 2014 External Director, Kyowa Exeo Corporation June 2018 Auditor, Sumitomo Mitsui Construction (to present) Co., Ltd. (to present) June 2014 Director, Sumitomo Mitsui Construction Co., Ltd. (to present)
45 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 46 Foundation for Value Creation Governance
Composition of Board of Directors, Audit & Supervisory Board, and Appointment and Remuneration Advisory Corporate Governance Committee (as of the end of June 2018) Attendance in FY2017 Appointment & 2018, we achieved compliance with must formulate the next Mid-term Audit & Appointment & Message from the Chairman Board of Independent Remuneration Audit & Name Supervisory Board of Remuneration Directors Officer Advisory Supervisory of the Board of Directors all items of the Corporate Governance Management Plan for the period Board Directors Advisory Committee Board The Ordinary Shareholder Meeting Code before the revision in June 2018. between fiscal 2019 and fiscal 2021. Committee Representative Director, 15 times/ 8 times/ Hideo Arai - in June 2018 appointed Hideo Arai, The Board of Directors will continue Currently, the construction industry President & CEO 15 meetings 8 meetings Representative Director and President & to examine and discuss compliance is delivering strong performance 15 times/ 8 times/ Yoshio Nagamoto Representative Director - CEO, to the position of Chairman of the with the Corporate Governance Code, supported by public investment and 15 meetings 8 meetings 15 times/ (appointed in Yoshitaka Mimori Representative Director - Board of Directors. including the revised parts. voracious private sector investment. 15 meetings Apr. 2018) With the application of the The appointment of external directors After the end of the Tokyo Olympic Kunio Hanato Representative Director (appointed in Jun. 2018) Corporate Governance Code in June to the Board of Directors has activated Games in 2020, however, the 15 times/ Shoji Kimijima Director - - 2015, Sumitomo Mitsui Construction discussions by the Board. It is often said construction market in Japan is likely 15 meetings 15 times/ Tomohiko Sato Director - - has stepped up its efforts to enhance that common sense within an industry to gradually shrink. The next Mid-term 15 meetings its corporate governance, including or company defies common sense Management Plan, which will face a big Hiroshi Mashiko Director (appointed in Jun. 2018) 14 times/ 8 times/ appointing multiple external directors, in the world in general. Accurate and watershed during its period of operation, Kumiko Kitai External Director - 15 meetings 8 meetings establishing the Appointment and professional feedback based on a wealth will play a crucial role, even over the 15 times/ 8 times/ Sakio Sasamoto External Director - Remuneration Advisory Committee, of knowledge from external directors long term. Therefore, the Board of 15 meetings 8 meetings 15 times/ 14 times/ evaluating the effectiveness of the who have held important positions Directors will formulate the plan through Masashi Nozaki Auditor - 15 meetings 14 meetings Board of Directors, and reviewing cross- at government offices or have rich careful review and much discussion. 15 times/ 14 times/ Yoshiyuki Kato External Auditor - held stocks on a regular basis. With the experience in corporate management is 15 meetings 14 meetings introduction of a stock compensation valuable in terms of operating meetings. Hideo Arai Michio Harada Auditor (appointed in Jun. 2018) Chairman, Board of Directors 15 times/ 14 times/ 8 times/ plan for executive officers in fiscal Fiscal 2018 is the year when we Representative Director Aizou Murakami External Auditor 15 meetings 14 meetings 8 meetings Yukihiro Hoshi External Auditor (appointed in Jun. 2018) Board of Directors meetings held 14 5 5 8 : Chairperson or Chair of Committee Total FY2017 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (Average) Directors 9/9 9/9 9/9 8/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 9/9 8/9 - Corporate Governance System (as of the end of June 2018) Attendance Auditors 5/5 5/5 5/5 5/5 5/5 4/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 - Attendance 100% 100% 100% 93% 100% 93% 100% 100% 100% 100% 100% 100% 100% 100% 93% (99%) Shareholder Meeting
No. of agenda No. of resolutions 236312433211345 43 Appoint/dismiss items No. of reports 12 4 9 2 8 7 6 10 7 5 0 5 4 7 10 96 Appoint/dismiss Time required 140 min. 90 min. 140 min. 30 min. 130 min. 170 min. 170 min. 140 min. 130 min. 90 min. 60 min. 70 min. 110 min. 130 min. 170 min. 1770 min. Auditors Audit directors’ performance of duty (Audit & Supervisory Board) Directors Appointment and (Board of Directors) Consult Audit & Supervisory Board meetings held Remuneration Office of Audit & Report Advisory Committee Total Supervisory FY2017 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Select/supervise (Average) Present agenda/report Board Auditors 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 - Member Attendance Report Attendance 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (100%) Directors as Executive Officers Committees Internal Control Committee No. of resolutions 1-25---1------9 Participate Report No. of agenda No. of deliberations --21------1-- 4 as members Instruct/consult Technology Committee items Environmental Management No. of reports 32323331222223 33 Executive Report Committee Overseas Safety Committee Appoint/supervise
Management Meeting relevance Audit
Time required 120 min. 120 min. 120 min. 105 min. 75 min. 120 min. 120 min. 75 min. 120 min. 90 min. 120 min. 120 min. 150 min. 105 min. 1560 min. Appoint/dismiss
Business Investment information share Report/cooperate/ Report Examination Committee
Instruct/supervise Diversity Committee Production System Appointment and Remuneration Advisory Committee meetings held Improvement Committee Other committees Present Total FY2017 1 2 3 4 5 6 7 8 Participate in (Average) agenda/report committee activities as Directors 6/6 6/6 6/6 6/6 6/6 6/6 6/6 6/6 - Executive Officers members Attendance Auditors 2/2 2/2 2/2 2/2 2/2 2/2 2/2 2/2 - Head Office, branches, Audit Accounting Accounting Auditor Internal audit Attendance 100% 100% 100% 100% 100% 100% 100% 100% (100%) group companies Department audit, etc. (auditing firm) Time required 80 min. 50 min. 120 min. 120 min. 90 min. 90 min. 80 min. 150 min. 780 min.
47 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 48 Foundation for Value Creation Governance
Remuneration of Officers Officer Appointment and Sumitomo Mitsui Construction has set Internal Control/Compliance We have established the Appointment Successor Development the Successor Succession Plan, which and Remuneration Advisory Committee, The Appointment and Remuneration clarifies requirements for successors, Basic Concept of Internal Internal Control Committee holds distribute the cards to all staff members comprising representative directors and Advisory Committee examines officer the appointment process, and the Control System meetings to identify issues related to engaged in our operations, including part-time external officers, to carefully appointment proposals made by development plan. The Appointment To improve the value of our corporate emerging risk events, recognize risks, officers, employees, temporary workers discuss senior management proposals the president as to transparency, and Remuneration Advisory Committee egroup, Sumitomo Mitsui Construction and work out preventive measures, and secondees, and require them to on the officer remuneration structure of fairness and timeliness and examines each successor appointment and the SMCC Group continually with the goal of improving effectiveness carry the card with them at all times. Sumitomo Mitsui Construction from an evaluates their appropriateness and proposal made by the president as to develop and enhance the compliance in building and operating the internal The compliance posters are displayed independent and objective perspective rationality according to the creteria transparency, fairness and timeliness system in line with the basic stance control system within the SMCC Group. in noticeable locations within the Head and provide appropriate advice and for appointment. By referring to the and evaluates its appropriateness regarding internal control: take quick The committee discusses correction Office, branches, sales offices, sites and opinions. By referring to the advice evaluation of the committee, the Board and rationality according to the Plan. and appropriate actions against risks and improvement of issues pointed out affiliates in order to raise awareness of and opinions of the committee, the of Directors makes decisions on By referring to the evaluation of the that may have a significant impact in the operation of the Basic Policies for the purpose. Board of Directors makes decisions on appointment of officers. committee, the Board of Directors makes on management, properly disclose Internal Control, as well as the progress remuneration of individual officers. As for successor appointment, decisions on appointment of successors. information to stakeholders and of preventive measures taken as Construction Business Act society at large, and develop a highly necessary, and monitors the status of Patrol transparent management system. operation of the internal control system. In response to having received an Sumitomo Mitsui Construction instruction in January 2016 from the Overview of Results of Evaluation of Effectiveness of the Board of Directors regards its Basic Policies for Internal Compliance Education Kanto Regional Development Bureau Based on the Corporate Governance Code (Supplementary • The system for information provision, support personnel Control as providing the basic direction Each fiscal year, we formulate a of the Ministry of Land, Infrastructure, Principle 4-11-3), Sumitomo Mitsui Construction seeks structure, cooperation with internal audit department, for efforts that continue over multiple compliance education plan, and provide Transport and Tourism pursuant to the evaluation on the current effectiveness of the Board of training fiscal years, and reviews their content compliance education for all employees. Construction Business Act with regard Directors by directors and auditors, as well as their advice (4) Initiatives by officers every fiscal year. Meanwhile, the Internal We incorporate education about the to the case of a collective housing and opinions for further improvement, and discloses an • Communication between internal officers and external overview of the results to improve the effectiveness of the officers, active discussion, supervision by external Control Committee holds quarterly Construction Business Act and other complex we constructed in Yokohama Board of Directors. directors, provision of information required to discuss meetings where the progress of the related laws and regulations into meetings City, we have systematically carried The analysis and assessment of the results of the Board agenda items, opinion exchange outside meetings review, correction and improvement and programs, including training for new out the “Construction Business Act of Directors evaluation in fiscal 2017 and the future policy are (5) Appointment and Remuneration Advisory Committee of issues identified in the operation recruits and group training for different job Patrol.” Branches conduct patrols of as follows. • Setting of the proportion of performance-based of the internal control system, and categories or ranks, to keep employees construction sites that they oversee remuneration, discussion on successor plan the progress of preventive measures informed of and raise awareness of legal to check compliance with the 1. Methods and contents of analysis and (6) Feedback to the Board of Directors on dialogues with assessment in fiscal 2017 shareholders (investors) taken as necessary, are reported, and compliance. We also provide group Construction Business Act, including For analysis and assessment in fiscal 2017, we conducted monitors the status of operation. The companies with compliance education assignment of engineers and also an anonymous survey (asking respondents to enter scores 2. Overview of analysis and assessment results results are reported to the Board of for top-level executives. Each group covering subcontractors. Results of for each question and provide feedback) of all directors and in fiscal 2017 Directors to properly build and operate company familiarizes its employees with patrols, issues and other information auditors, and received responses. For this year’s evaluation, (1) Items evaluated positively the internal control system. the content of the education to promote are shared among all branches. The we commissioned an external organization to set the • Number of board members the understanding and penetration Execution System Improvement Sub- questions and aggregate the responses in order to provide • Frequency of board meetings us with an objective view of the company from a third-party • Uninhibited, constructive discussion at board meetings Actions to focus on in fiscal 2018 of corporate ethics and compliance committee, which is established under perspective. The results were reported to the Board of • State of opinion exchange between external officers management. the Production System Improvement 1 Further enhance group control Directors for analysis and assessment. outside board meetings (governance system, internal control, Committee, examines, formulates and
49 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 50 Foundation for Value Creation Governance
Bid-rigging Elimination Program has established its own bid-rigging Internal Reporting System Risk Management We have established a bid-rigging elimination program and ensures For the early detection and correction elimination program and keep all compliance with it. of misconduct for the purpose of Risk and Crisis Management In fiscal 2017, we acquired a To examine, formulate and promote offi cers and employees informed of it. In light of the case of order intake enhancing compliance management, To reduce risks that may affect resilience certification. The resilience measures for securing the safety The program clearly states the adjustment regarding the Chuo we operate an internal reporting system business operations and prevent certification system was set up based of employees engaged in overseas recognition that complete elimination Shinkansen construction project, based on the Internal Whistleblower their materialization, we operate a risk on the Guidelines for Certification of business, including local staff, and and prohibition of bid-rigging requires we provided group education on Protection Regulations. control system developed, run and Organizations Contributing to National maintain the system, we established the the upholding of all the following: (1) the Antimonopoly Act given by our In response to reported incidents, constantly improved based on our Risk Resilience, which were established by Overseas Safety Committee, which will the clear and unshakable commitment corporate lawyer as a guest lecturer for including those at group companies, Management Regulations. the National Resilience Promotion Offi ce hold meetings in the event of a terrorist of senior management to completely offi cers and department managers and we take appropriate and necessary To take fast and appropriate under the Cabinet Secretariat to certify incident and as necessary. eliminate and prohibit the practice, above at our Head Offi ce and branches. actions in a timely manner through action in response to a materializing companies and local governments that (2) the establishment of internal close cooperation with our corporate risk that does, or could, seriously are aggressively carrying out initiatives Serious Risk Event compliance and monitoring systems, Measures to Raise Awareness lawyers, with due consideration given affect our business operations, we for business continuity in support of the With regard to the case of a collective and (3) a full understanding and high of Human Rights and Address to the protection of the whistleblower. In have established Crisis Management purpose of national resilience. housing complex we constructed in level of compliance awareness among Harassment the event a problem is found, we take Regulations. To fulfill the construction industry’s Yokohama City, we will continue to have company offi cers and employees. For all employees, we provide education necessary action against the persons In our business operations, our mission of disaster relief, we will further meetings with the rebuilding association, Based on the program, every April, to raise awareness of human rights involved according to internal rules, committees and meetings examine enhance our business continuity seller and other stakeholders as our officers and employees are required and assign at least one male and one and implement measures to prevent potential significant risks of each structure. necessary, and take appropriate actions. to pledge in writing not to conduct or female staff member to the Personnel recurrence. project to prevent their materialization. In November 2017, one of the become involved in bid-rigging and submit Department at Head Office and the In 2017, we integrated the existing For events that do materialize, we are contractees of the housing complex the written pledges to the company. Administration Department at each internal reporting system and harassment enhancing our response system to brought an action claiming compensation Meanwhile, each group company branch. When new personnel are counseling system into “i-message.” We enable fast action through rapid and from Sumitomo Mitsui Construction and assigned to replace the staff in charge, established external counseling contact unfailing information sharing. the two companies that undertook the we provide the new personnel with points at a specialized private sector piling work for expenses related to the education on their task. To make institution as well as at a corporate law Business Continuity Plan (BCP) rebuilding of the entire housing complex workplaces harassment-free, in fiscal firm to rebuild the system as an easier- Recognizing that we have the important and for temporary accommodation 2017 we provided an e-learning program to-use, common group-wide internal social responsibility of providing safety during the reconstruction period. on harassment prevention, which allowed reporting system. By properly operating and security through our construction Safety Measures Outside Japan We consider the demands to be participants to learn about the actions that the system, we are fostering a more business, we have developed a To secure the safety of expatriate unreasonable and lacking evidence and constitute harassment and think about disciplined corporate culture and more business continuity plan (BCP) to employees (and accompanying family grounds, and will properly present our the appropriateness of their own views pleasant workplace environment. make efforts to maintain and continue members) as well as employees views in court. Group education on the Antimonopoly Act and ways of thinking using a Q&A format. key functions of our own business on overseas business trips during activities while carrying out restoration, emergencies, Sumitomo Mitsui [i-message] (collective term for Sumitomo Mitsui Construction Group internal reporting system and reconstruction and relief activities for Construction has established the workplace harassment counseling system) affected areas and infrastructure in the Overseas Crisis Management Manual event of a disaster. and the Overseas Safety Manual.
Corporate law firm VOICE Message from Manager of Department in Charge of BCP
1 contact External
Specialized private-sector institution Cooperate Report/ • Board of Directors We recognize that emergency measures and early recovery of infrastructure following a seek advice User • Representative large-scale natural disaster, such as an earthquake or fl ooding, are the circumstances Report Directors Sumitomo Mitsui Construction Administration Division • Auditors under which the existence of construction companies in charge of social capital • Internal Control Sumitomo Mitsui Construction development is typically questioned. Therefore, with the acquisition of the resilience Committee branches (workplace harassment) certifi cation, we will make our BCP more effective than its name would suggest, and build
Group contact Group Group companies a system that enables us to immediately take action no matter when a large-scale natural Cooperate 1 Reporting in English and Chinese can disaster occurs. be made at some contact points.
General Affairs Department Manager Abe (right) and Section Manager Takahashi (left) holding the resilience certi cation
51 Sumitomo Mitsui Construction Corporate Report 2018 Sumitomo Mitsui Construction Corporate Report 2018 52 Foundation for Value Creation Initiatives for the Environment and Local Communities
Project Example of Biodiversity-friendly Construction Project Sumitomo Mitsui Construction Environmental Vision Green Challenge 2020 (Nakatsu No. 3 Tunnel Construction [Section 2])
We promote CSR activities based on the Charter of Corporate Conduct. We carry out activities together with We are working on the Nakatsu No. 3 Tunnel Construction (Section 2) in Oita Prefecture with due consideration to maintenance local communities for the development of a sustainable society and to ful ll our corporate social responsibility. of the water environment and prevention of the diffusion of night illumination as the Koda River, which runs in front of the tunnel entrance, is the habitat of a fi refl y species, Luciola cruciate. ■ Maintenance of the water environment Sumitomo Mitsui Construction Environmental Vision Green Challenge 2020 Addressing We purify unclean water from the tunnel construction work by using global warming a turbid water treatment system (capacity: 60 tons/h) and release With a focus on spiritual richness rather than material af uence, we will leave Coexisting Proposing the purified water into the Koda River. During the construction to future generations an earth that we can take pride in. with nature low-carbon lifestyles period, we collect water from both the upstream and downstream sections of the river and measure pH and turbidity in order to Sumitomo Mitsui Construction contributes to the development of a sustainable Development society, with focuses on of a sustainable monitor water quality. Giving society Developing 1) addressing global warming, 2) developing a recycling-oriented society, and consideration a recycling- 3) giving consideration to biodiversity, and by to oriented ■ Measures for night illumination biodiversity society a) proposing low-carbon lifestyles, b) coexisting with nature, and We work day and night for the tunnel construction. At night, while c) eliminating negative legacies Eliminating negative ensuring work safety, we lower the height of lights, install louvers through the innovation of the construction business. legacies and put in place sound insulating walls, panels and shields to control the refl ection of light on the Koda River. We disclose the details of our environmental initiatives on our website (http://www.smcon.co.jp/csr/csr-environment/). Firefl ies fl ying over the Koda River (Yellow lines are fi refl y trails.)
Major recognition in fi scal 2017 Organization Award Award-winning work Fiscal 2016 Tanaka Award (Excellence in Bridge Design Project Example of Technological Development for Environmental Conservation Shin-Meishin Mukogawa Bridge and Construction) High-performance Concrete for Sustainability: SustaincreteTM Japan Society of Civil Engineers (JSCE) Same as above (Technical Service Award) SMCC employee Same as above (Continuing International Contribution SMCC employee Award) Sumitomo Mitsui Construction pursues higher durability of Wooden convenience store (Lawson Vina Japan Institute of Design Promotion Good Design Award concrete structures to contribute to the sustainability of society. Gardens store) Fiscal 2017 Excellent Building Award for Excellent Seismic Yamanashi Culture Hall Seismic Retrofi tting Jointly with the University of Tokyo Graduate School and the Japan Building Disaster Prevention Association Renovation Buildings/Contributors Project Tokyo University of Science, we developed “Sustaincrete,” a high- Japan Dam Foundation 37th Dam Construction Contributor (fi scal 2017) SMCC employee Fiscal 2016 Disaster Relief Project for performance concrete for sustainability with five characteristics. Fiscal 2016 Zenken Award (Road category) Expressway Affected by Kumamoto Earthquake * SMCC was a supporting member. Coined by combining the words “concrete,” which etymologically Japan Construction Engineers’ Association Takizawa City Community Center Development means “grown together,” and “sustain,” the name Sustaincrete Same as above (Building category) Project * SMCC was a supporting member. signifies “concrete that supports the increase in production and Mitsui Shopping Park Kanagawa Prefecture 10th Kanagawa Barrier-free Urban Development Award LaLaport Shonan Hiratsuka quality, including environmental aspects, of concrete structures in Fiscal 2017 Shizuoka City Excellent Construction Project a sustainable manner.” Sustaincrete almost eliminates the risk of Shizuoka City Award for Construction Industry Worker Retention and Kashio JV Project Cultivation cracking and improves productivity, design and eco-friendliness of Ministry of the Environment, Environmental Consortium Leadership Development Award 2016 Encouragement SMCC for Leadership Development Award concrete structures to contribute to the sustainability of society as Shin-Meishin Mukogawa Bridge Project Forms produced with Sustaincrete a whole. 3R Suishinkyogikai Fiscal 2017 Chairman’s Award for 3R Promoter Chuo-ku Shinkawa 2-chome Construction Project (tentative name) ■ Characteristics Estimated CO2 emissions
Super-low carbon (kg/m3) Most CO2 emissions from concrete production come from Portland cement. Sustaincrete can be 400 produced without the use of Portland cement, which contributes to a substantial reduction in CO2 emissions. Super-low shrinkage 300 Almost eliminates dry shrinkage and autogenous shrinkage that cause cracking. Super-low heat generation Eliminates the need for mass concrete measures (almost zero temperature crack) and improves both 200 the quality and productivity of large-scale structures because of extremely low heat generation at the time of hardening.
High fl uidity 100 High fluidity helps prevent defects caused by poor infilling work and saves labor (improves productivity). Can be used for a wide variety of shapes, and therefore expands possibilities of architectural design. 0 Shin-Meishin Mukogawa Bridge Takizawa City Community Center Development Project Wooden convenience store (Lawson Vina Gardens store) High strength General high-strength Sustaincrete 2 (Big Roof Takizawa) 2 concrete (78.4 N/mm ) High-strength concrete (70 N/mm or above) to enable creation of high-rise structures (67.6 N/mm2)
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Comm munity: 1 Enhancing Environmental Raising Environmental unication with Local Com Communication Awareness Supporting Education on Wood Exhibiting at EcoPro 2017 To raise employees’ environmental awareness, we put in place an award program (environmental category) to grant a President’s Award to excellent environmental activities, and provide environmental education through e-learning and group training. We also hold environmental events, including the Green Curtain campaign and a Departure shaft overview We asked local junior high students to write messages Shizumi Aquarium photo contest to see the results of during a site tour Shizumi, offi cial the campaign, and participated in the water character of Shizuoka City In July 2017, we supplied kits for Kumiko We exhibited at EcoPro 2017— Ministry of the Environment’s Light- Following the merger of Shizuoka City and Shimizu City, a project was set up to (technique of assembling wooden pieces International Exhibition on Environment Down Campaign. In recognition of these supply water from the Abe River (former Shizuoka City) to the Okitsu River (former without the use of nails) as educational and Energy, held in December 2017 at activities, we received the Encouragement Shimizu City) and vice versa to secure a stable supply of water even in the event of materials and sent an instructor to give Tokyo Big Sight, for the first time since Award at the Leadership Development the recurrence of the abnormal drought that used to affect the former Shimizu City. a family woodworking class organized 2014, when we exhibited a wooden Award 2016, sponsored by the Ministry of We are working on the project’s northern route to ensure an adaptable water supply. by the parent-teacher association (PTA) building, Tamakian. This time, under the the Environment and the Environmental Part of our task is to bury water pipes along a 1,330 m section using the pipe at an elementary school in Shimotsuke concept of “New Eco Life Style ‘NECO’/ Consortium for Leadership Development. jacking method1. Although most of our work is done underground and is thus low City, Tochigi Prefecture to support comfortable lifestyle,” we created a cat- profi le, this project is unprecedented in terms of scale and method. As part of efforts wood-related education. The class, shaped booth (a play on “neko,” which for worker retention, we are proactively opening our project site to the public and attended by 71 students and 18 parents, means “cat” in Japanese). Our booth conducting publicity activities for it. started with an easy-to-understand talk received more than 800 visitors during In our offi ce we established an information center themed on water. “Shizumi Land” Project Manager on the relationships between lumber, the three-day event. As well as presenting has an aquarium featuring local river fish species to communicate the importance Maeda Kashio Project the forest industry and the environment a panel exhibition we also invited visitors of water and nature conservation to children, and introduces the latest technologies Daily management and maintenance of Shizumi given by a plant manager at a lumber to play an eco building game, exhibited to deepen children’s understanding of water supply operations. We are proactively Land, where we raise living organisms, is diffi cult, company that is one of our partners. In a model to simulate how wind power publicizing in-the-fi eld activities in the local area by raising fi refl ies, exhibiting water pipes, but children like fireflies and fish and we enjoy the subsequent workshop, the instructor can be used to help the environment, and organizing a “civil engineering school,” which provides elementary school students seeing them smile. Communication with local people has provided us with a great opportunity to and our employees worked with the provided an opportunity for people to Leadership Development Award 2016 Encouragement Award with a class on water supply, through cooperation with local university students. look at our own work anew. children to build the Kumiko kits. experience the aroma of wood and its 1 Pipe jacking method: A method to bury pipes from a departure shaft to an arrival shaft in which a tunneling machine is attached to the end of a pipe (mainly reinforced concrete pipe) to drill underground, followed by a hydraulic jack, posterior People tend to think that woodworking benefi ts, and offered other environmental to the tunneling machine, that literally presses forward. is difficult and thus avoid it, but all contents. The aim was to get visitors 2 participants successfully put the kit interested in, and help them understand, Communication with Local Community: together. Participating employees, our technologies and initiatives related to meanwhile, enjoyed the time spent the environment and energy. At our Head Offi ce we held a public lecture for local residents that was attended by amid a cozy atmosphere. Responses more than 40 participants. We plan and hold the public lecture on a regular basis to to the survey we conducted after the contribute to communication with local people and to local community activities. The class revealed children’s thinking about fi rst lecture was themed “Life with wood” and the second was on disaster mitigation. wood and their unique, innovative ideas As we have realized that daily communication is crucial for disaster mitigation, we Work that won the highest award in the Green Curtain regarding wooden products, which were photo contest decided the theme for the third lecture would be the re-discovery of Tsukuda/ quite useful for our business of wooden Tsukishima and its community. The Tsukuda/Tsukishima area in Chuo-ku, Tokyo, product development. where our Head Office is located, is a typical example of Japanese city planning, with traditional neighborhoods of single-family houses existing right next to blocks Lecture by Prof. Hideaki Shimura, School of Architecture, dominated by 21st-century high-rise collective housing. The area gives us inspiration Shibaura Institution of Technology regarding communication. The third lecture gave us an opportunity to learn about community activities among residents that continue to develop with changes in people’s lifestyles in the historic Tsukuda/Tsukishima area, and to actively exchange opinions to deepen understanding.
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Environmental, Social and Governance (ESG) Activity Report Fiscal 2017 Major Activities and Results Self-evaluation: Achieved the target and efforts were sufficient; Achieved the target; Failed to achieve the target or efforts were insufficient
ISO 26000 core Self- ISO 26000 core Self- Major activity FY2017 activity target FY2017 activity result Page Major activity FY2017 activity target FY2017 activity result Page subjects/SDGs evaluation subjects/SDGs evaluation
• Provided e-learning education for all employees: twice ● Promote shorter hours. Enhance environmental ● Provide environmental education through • Provided group education: 12 times 55 • knowledge e-learning/group education. • Provided education for branch-level environmental Initiatives in fiscal 2017 based on the Shorter Hours Program 2016-2018 staff: twice • Employees working in the office: Achievement Targets: All employees’ annual overtime/work on holidays 92.9% • Granted a President’s Award (environmental category). • Employees working in the office: Less than 720 • Employees working outside the office: Achievement ● Raise awareness by holding internal environmental • Held the Green Curtain Campaign and a photo hours (less than 60 hours/month on average) 55 80.2% events. contest. • Employees working outside the office: Less than 23 Raise environmental • Held a seminar for Eco Test preparation. 840 hours (less than 70 hours/month on average) awareness ● Build a system to promote environmental activities • Environmental staff meeting: twice • Reduce overtime. at affiliates. - • Launched the Green Curtain Campaign.
● Expand floating solar power generation business. Social • Provide diversity education. subordinates. Environmental • Operated the existing proprietary solar power ● Stably operate existing solar power generation • generation plant (1 case; annual energy production Provided diversity training for managers. Use renewable energy plants. 40 of 1.3 million kWh). • Provided education by job grade 100% based on ● Start operation of a new floating solar power ● Provide education by job grade and classification. - • Commercialized a proprietary floating solar power the yearly plan. generation plant. generation plant (1 case; annual energy production • Developed a new personnel system for local core of 1.18 million kWh). employees outside Japan. • ● Develop technologies for reducing environmental • Average progress of technological development Provided professional education by job classification for local employees at the Human Resource Reduce environmental impact. themes for reducing environmental impact: 95.4% ● Cultivate/retain local core employees outside Japan. 36 54 Development Center in the Philippines (159 impacts with technology Target: 93% or higher rate of progress for ongoing Including a case of developing Sustaincrete, high- Cultivate human resources participants). themes performance concrete contributing to sustainability (human assets) • Appointed local core employees outside Japan (50 ● 1.45% or higher built environment efficiency (BEE) Reduce environmental employees including 5 managerial employees). for new houses with a floor area of 5,000 m2 or • Average BEE of 5 cases: 1.58 - impacts in the design phase • Improved motivation by operating meister systems. larger • Improved the safety/quality/execution level by ● Reduce CO2 emissions from the execution phase. ● Cultivate partners. holding presentations on improvements. 24 • Community 22.3 ton-CO2 per 0.1 billion yen - • Held site tours, organized by partners, for high Target: 22.5 ton-CO2 per 0.1 billion yen, or less involvement and school students. ● Reduce construction waste generated. development Reduce environmental Targets: • Civil engineering final landfill: 1.30% • Participated in local cleanups or other volunteer impacts in the execution - ● Participate in volunteer activities. - • Civil engineering final landfill of 1.30% or less • Building construction final landfill: 2.10% activities. phase • Building construction final landfill of 2.32% or less Build good relationships with ● Participate in education programs. ● Use 3 or more priority green procurement items. • Percentage of building construction sites handling 3 - local communities Target: Hold a tour at the Technical Research • Held a tour at the Technical Research Institute: once Target: 82% or higher at building construction sites or more items: 91.1% Institute. • Hosted students who wish to undertake work - ● Control quality in the execution phase. Target: Host students who wish to undertake work experience: twice • Conduct quality patrol regarding important projects • Conducted quality patrol based on the plan: 100% experience. by Head Office execution-related departments. • Continued evaluation of the effectiveness of the ● Control quality in the execution phase. Board of Directors and confirmation/evaluation of • Conducted quality audit by QSAs and QSIs cross-shareholdings. • Conduct on-site quality audits twice per site. 19-20 according to the yearly quality audit plan. • Conducted advance discussion on executive • Ensure that quality safety auditors (QSAs) check Improve the governance ● Improve/operate a governance system compliant Consumer issues • Conducted a precast concrete piling test with a quality appointment and examination of the remuneration 47-49 compliance of the execution processes with major 2 safety auditor (QSA) witnessing, and conducted a system with the Corporate Governance Code. Provide safe, secure, high- quality control items (in building construction). system by the Appointment and Remuneration quality audit on other major quality control items Advisory Committee. quality construction works • Check the progress of patrol by quality safety according to the production control plan. • inspectors (QSIs) (in civil engineering). Held results briefings for analysts twice/year (year- end and interim). • Promoted/spread technological development • Conducted examination as to maintenance/ themes for quality improvement, including improvement of BCP’s viability at the company level. ● Maintain/improve the business continuity plan (BCP). 52 a case of building SMC-Bridge, a productivity • ● Promote technologies for quality improvement. 17,42 Acquired a resilience certification (as an organization improvement platform for bridges; and a case of contributing to national resilience). launching the precast concrete method SQRIM • There were zero major information security incidents. outside Japan. • Improved information security awareness by ● Eliminate accidents. Organizational conducting a targeted attack drill using a simulated Ensure safety and health ● Achieve zero major information security incidents. - Targets: Frequency rate of 0.6 or less • Frequency rate: 0.49; severity rate: 0.31 22 governance, fair e-mail. management Severity rate of 0.02 or less operating practices • Provided education on information security Social management system through e-learning. • Provided human rights education during new Raise human rights employee training. ● Achieve zero major compliance violation incidents. • Achieved zero major compliance violation incidents. - ● Provide human rights education. 51 Governance awareness • Provided workplace harassment prevention Human rights, ● Provide education based on the annual plan for • Provided compliance education 100% according to education for all employees through e-learning. Operate/improve the internal compliance education. the annual plan. labor practices control system, ● ● Secure employment of people with disabilities at raise compliance awareness Ensure compliance with the Construction Business the statutory rate or higher. • Employment rate of people with disabilities as of Act and other related laws and regulations. • Provided education on the Construction Business Target: Employment of people with disabilities at March 31, 2018: 1.85% • Provide education on the Construction Business Act. the statutory rate of 2.0% or higher Act as specified in the annual plan. • Conducted checks and provided guidance with the • Check compliance with the Construction Business ● “Construction Business Act Patrol.” Reemploy employees who desire to continue Act by conducting the “Construction Business Act working after reaching the age of retirement until 50-51 • Reemployment rate: 93% Patrol,” and provide guidance/correction. Promote diversity they turn 65. 24,25 • Provided education on the Antimonopoly Act. Target: Reemployment rate of 85% or higher ● Provide education on the Antimonopoly Act as • Collected written pledges of legal compliance to specified in the annual plan. • Introduced a shorter hours/limited days programs eliminate bid-rigging, including pledges from affiliates. ● Collect written pledges of legal compliance to for non-regular (senior) employees. • Developed bid-rigging elimination programs and ● Improve the personnel system for diverse work eliminate bid-rigging. • Introduced a satellite office program for those who provided education for awareness raising at affiliates styles. ● Improve/operate programs to eliminate bid-rigging have difficulty commuting to their place of work due engaged in execution in Japan with a construction at affiliates. to childcare/family care. business license. 1 Details of our environmental initiatives are available on our website (https://www.smcon.co.jp/csr/csr-environment/). 2 Details of the governance system improvement are available in the Corporate Governance Report on our website (https://www.smcon.co.jp/investor/corporate-governance/).
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Masahiko Uomori Former Auditor RIKEN, Japan Former Professor Shibaura Institute of Technology Graduate School President NPO Peet-Greening Association Executive Director Company Name Sumitomo Mitsui Construction Co., Ltd. Capitale 12 billion yen Center for Collaborative Interdisciplinary Sciences Family conciliation commissioner, Tokyo Family Court Founded October 14, 1941 Number of Employees Author of Nihon no gijutsu to kokoro (as of the end of March 2018) (Japanese Technology and Spirit), Maruzen Head Office 2-1-6 Tsukuda, Chuo-ku, Tokyo, 104-0051, Japan Sotan no kagaku (Science of Peet Greening), Unconsolidated: 2,676 Waseda University Press Representative Hideo Arai, Representative Director, President & CEO Consolidated: 4,529
First of all, I would like to express my heartfelt sympathy to forest industry and the environment through wood-related people affected by the torrential rain in western Japan in July, education for the next generation (page 55). Key Sales Offices in Japan Typhoon No. 21, and the Hokkaido Eastern Iburi Earthquake. ● It is my opinion that the hands-on camp that enabled new Head Office Hokkaido Branch Tohoku Branch Eastern Kanto Branch (Chuo-ku, Tokyo) (Chuo-ku, Sapporo City) (Aoba-ku, Sendai City) (Mihama-ku, Chiba City) employees to experience manufacturing from scratch, Tokyo Civil Engineering Branch Tokyo Building Construction Branch Yokohama Branch Shizuoka Branch I would like to offer my congratulations on the 15th conducted as part of human resource cultivation measures (Chuo-ku, Tokyo) (Chuo-ku, Tokyo) (Kanagawa-ku, Yokohama City) (Aoi-ku, Shizuoka City) anniversary of the merger, and hope for further progress in the (page 18), provides new employees with a good opportunity Chubu Branch Osaka Branch Hiroshima Branch Shikoku Branch (Naka-ku, Nagoya City) (Chuo-ku, Osaka City) (Naka-ku, Hiroshima City) (Niihama City, Ehime Prefecture) future. I find that this year’s corporate report is more enhanced to cast off the stereotypes of their school days. Kyushu Branch International Division Technical Research Institute in terms of both volume and contents, signifying substantial ● Supreme quality is an important concept that helps uncover (Hakata-ku, Fukuoka City) (Chuo-ku, Tokyo) (Nagareyama City, Chiba Prefecture) efforts by the personnel involved. root causes and contributes to the made-in-Japan brand, Many readers may have noticed that something was wrong thus helping gain trust in Japanese quality around the world. with the cicadas this year. Each year cicadas chorus during the It also helps resolve complaints and other problems. It Affiliates in Japan aboveground stage of their life cycle after seven years spent should be continued. SMC Preconcrete Co., Ltd. SMC Reform Co., Ltd. underground. The different species do this in the following Engages in manufacturing, in Established in 1987 for large- order: Platypleura kaempferi, Graptopsaltria nigrofuscata, Requests for Next Year’s Report Kanto area, of concrete members scale repair of superhigh-rise Cryptotympana facialis, Hyalessa maculaticollis, Meimuna Multifaceted opinions from external directors and external used for precast concrete and housing, which is the key strength prestressed concrete methods as of Sumitomo Mitsui Construction, opalifera and Tanna japonensis. This year, they all buzzed auditors should be shared. core technologies of Sumitomo and engages in maintenance, simultaneously and in random order. When it cooled down a bit, Mitsui Construction, as well as large-scale repairs and seismic manufacturing of secondary reinforcement of buildings as Tanna japonensis, which is usually the last to sing, joined the Aspects to Be Continued or Promoted concrete products and renovation well as heat shield measures and chorus earlier than usual. I wonder if the cicadas sensed some ● By continuing to introduce proprietary technologies, of buildings. energy-saving renovation of plants kind of change. It is imperative to address climate change. such as Dura-Slab presented on page 41, Sumitomo and warehouses. Mitsui Construction can publicize its large capacity Characteristics of This Report for technological development. Publicizing unrivaled SMC Civil Technos Co., Ltd. SMC Tech Co., Ltd. ● The Message from the President at the beginning of the technologies will lead to the creation of new customers. Creating high-quality social Specialized in machine-power report reflects on the case of the collective housing complex ● The common format for recognizing and addressing issues capital by pursuing refurbishment, technology, having two divisions: including repair and reinforcement, civil engineering for PC bridges, in 2015. I appreciate the attitude to make company-wide helps compare the divisions and identify division-specific of bridges as the main pillar, in PC tanks, tunnels and shield efforts to regain trust and build a new corporate culture for issues. It is also useful for checking back in the next fiscal addition to river civil engineering construction, and leasing of Sumitomo Mitsui Construction, rather than simply moving on year. and PC construction as multiple construction machinery, including axes of sales, amid the ongoing vehicles for bridge superstructure from the episode. ● The visualized “Expanding Business Areas” of overseas shift from the age of manufacturing construction and tower cranes for ● Initiatives of each division are clearly stated. Photographs of business should be continued, using more space. How to the age of maintenance, repair high-rise housing. and reinforcement. the key projects completed in fiscal 2017 are very impressive the living environments of local people are improving with and prove the success of the merger. infrastructure development leveraging Sumitomo Mitsui ● Each division is using a common table (Recognize issues, Construction’s technologies should also be communicated. Sumiken Mitsui Road Co., Ltd. Paving, road construction, landscaping and general civil engineering Address issues). Categorization into “Enhance organizational SMC Co., Ltd. Sale of building materials, insurance agency Seiwa Co., Ltd. Contract construction capability,” “Enhance competitive advantage,” and “Create While preparations for the 2020 Tokyo Olympic and Aseismic Devices Co., Ltd. Sale of seismic isolation and control equipment value for stakeholders” is easy to follow and deepens Paralympic Games are steadily underway, it is imperative to Fibex Co., Ltd. Aramid fiber reinforcement readers’ understanding. take measures for existing infrastructure that will age in the Yoshii Planning Co., Ltd. Real estate business (development of the Dogodaira housing complex) ● Commitment to the environment is evident, particularly in next 20 years. Roads and bridges are the areas in which Amenity Life Co., Ltd. Operation and management of private retirement homes Cosmo Planning Co., Ltd. Printing, information systems and personnel and general affairs services, and sale of measuring instruments and software the example of a biodiversity-friendly construction project Sumitomo Mitsui Construction has its strengths. Advance (page 54). I was also impressed by the effort to raise preparations should be started now. awareness regarding the relationship between lumber, the Subsidiaries Outside Japan SMCC Philippines, Inc. (Philippines) SMCC (Thailand) Co., Ltd. (Thailand) Response to Third Party Opinion SMCC Overseas Singapore Pte. Ltd. (Singapore) SMCC Construction India Ltd. (India) Pt. SMCC Utama Indonesia (Indonesia) SMCC Malaysia Sdn. Bhd. (Malaysia) This year’s report features a Value Creation Story that incorporates the perspective of SDGs. Incorporating SDGs into their management strategy is SMCC Taiwan Co., Ltd. (Taiwan) now indispensable for companies that focus on global business operations. The SMCC Group has just started the initiatives but intends to launch them in an aggressive fashion. I greatly appreciate Mr. Uomori’s precise and favorable opinion of this report. We recognize that, as he pointed out, continuing supreme quality is an everlasting activity for a manufacturing company committed to carrying out the execution process in a reliable manner. We will make continued efforts to communicate our group’s initiatives for improving corporate value and achieving a sustainable society in an easy-to-understand manner so that stakeholders can improve their understanding. Tomohiko Sato Director Senior Managing Executive Officer In charge of Corporate Planning Department
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