Home > Investor Relations > IR News > 2006 > Formulation of Medium-Term Management Plan
April 25, 2006
Hitachi Plant Technologies, Ltd.
Hitachi Plant Technologies, Ltd. (Head office: Tokyo; President & CEO: Masaharu Sumikawa) was inaugurated on April 1, 2006 through the integration of Hitachi Plant Engineering & Construction Co., Ltd., Hitachi Kiden Kogyo Ltd., Hitachi Industries Co., Ltd. and part of Hitachi, Ltd.'s Industrial Systems group. The Company operates businesses involving mainly Social Infrastructure & Industrial Machinery Systems, Mechatronics, Industrial Plant Systems, Air Conditioning Systems and Energy Systems, aiming to become a global corporation supporting social and industrial infrastructures.
In order to realize this goal, the Company has formulated a medium-term management plan. This plan focuses on enhancing the Company’s overall capabilities and creating a synergy effect through the combination and collaboration of “engineering capabilities,” “monozukuri (manufacturing) capabilities” and “project expertise.”
Specifically, we will develop top-share/one-and-only technologies, strengthen our solution proposal capability, boost overseas operations, expand sales routes, integrate “people,” “bases” and “systems” at early stages, enhance our procurement capability, and expand in-house production.
Through these efforts, we aim to achieve sales of 400.0 billion yen in fiscal 2010, up about 20% from fiscal 2006, and an ordinary profit of 20.0 billion yen, up about 120%.
Business Strategies
- Social Infrastructure & Industrial Machinery Systems
We will take advantage of our capability to carry out integrated operations, ranging from planning, design, and construction to maintenance and management of water treatment systems and equipment, and industrial machinery such as, pumps and compressors.
In the public area, the Company will actively enter into new markets, including the collective renovation of water treatment systems and equipment, the comprehensive operation and maintenance of the water supply business, and the private finance initiative (PFI) system.
In the industrial machinery area, we will strive to double the business of after-sales services for pumps and compressors, while globalizing the business. Outside Japan, we will expand sales of pumps and compressors for the petrochemical and gas sectors, and market large water pumping systems chiefly in China and the Near and Middle East. To this end, we established two companies in China in February 2006: Hitachi Pump Manufacture (Wuxi) Co., Ltd. and Hitachi Environmental Technology (Yising) Co., Ltd. We will endeavor to start up operations at these companies at an early stage, as well as continue to use our units in Venezuela and Egypt, which have sound business records.
- Mechatronics
In the mechatronics business, the Company will focus on the businesses of liquid crystal panel manufacturing equipment and material handling systems, businesses in which we boast the world's top share, and cranes.
With respect to manufacturing equipment and material handling systems for liquid crystal panels, we will enhance our production capacity by mutually accommodating manufacturing bases (Ryugasaki Works, Sano Works, and others) and engineers that have the same technologies, and strive to win the largest share in the Chinese market while maintaining the top share in Taiwan region and South Korea. In addition, we will focus on the establishment of technologies conforming to eighth-generation liquid crystal panels, the development of technologies for post liquid crystal panels, and the horizontal spread of clean material handling systems to other fields.
In the crane area, we will expand after-sales services and develop replacement demand using diagnosis, prevention, and preservation technologies.
- Industrial Plant Systems
In this business, the Company will expand the collective receipt of orders at plants by fully capitalizing on our integrated system through merger of process design and construction technology, which was realized by integrating operations.
In the pharmaceutical area, we will boost our overseas operations, while putting the emphasis on taking orders for items in the processes from bulk chemicals to preparations and validation*1 for the processes.
In the chemical sector, we will make great efforts to increase orders for the conventional licensing business, centering on high-performance resin plants overseas, and for EPC*2 including downstream operations, with process technologies, manufacturing capabilities and construction capabilities as the pillars.
In the food and fine chemicals area, we will strive to win more orders for total engineering based on HACCP*3 and clean technology as well as for high-purity drug solutions and highly absorbent resin plants, in which we have an excellent track record.
For the environment systems sector, we will focus on increasing sales of advanced fluorine wastewater treatment systems and soil decontamination systems, mainly for electronic, automobile and chemical plants.
*1 Validation: Verifying whether the structures, facilities, operational procedures and processes at pharmaceutical manufacturing plants provide the expected results, and summarizing the verification in a written document.
*2 EPC: Engineering, Procurement and Construction
*3 HACCP: Hazard Analysis and Critical Control Point - Air Conditioning Systems
In this business, the Company will expand state-of-the-art clean room systems based on proprietary total clean technology, air conditioning for buildings based on abundant energy-saving control and energy management systems.
As for industrial equipment and clean rooms, we will increase sales targeting mainly the semiconductor and flat panel display sectors, aiming to further raise our market share for clean rooms (our Company currently has the largest market share for clean rooms in the domestic market). In addition, we will boost sales of cell-processing center facilities, the key component of the promising regenerative medicine field, trying to acquire the top share in Japan.
With respect to construction equipment, we will boost the renewal business for offices subject to the revised Law Concerning the Rational Use of Energy, and expand overseas operations particularly in the Middle East and China, regions where we are actively making investments.
- Energy Systems
Hitachi Plant Technologies is the only company in Japan that can handle total construction of nuclear and thermal power plants. The Company also has large-scale plant construction technology called the large block or module method, and we have advanced our own construction capabilities realized by a group of specialized technicians.
As for nuclear power plants, we will strive to securely obtain orders in the next new projects, and if we win orders, we will do our utmost to smoothly start up these projects. We will also expand the scope of receiving orders for preventive and maintenance work by leveraging excellent construction technologies and special skills.
In the thermal power plant business, we will reduce costs together with the Hitachi group while winning orders from manufacturers other than Hitachi, Ltd., and expand orders received mainly in overseas markets.
- Overseas operations
In addition to the above measures for each business, we will expand the overall scale of operations through an early implementation of cross selling by the sales department, whose structure we reinforced, targeting companies which became our new customers following an increase in our sales routes E one of the synergistic effects of the merger. We aim to raise overseas sales to 100.0 billion yen by fiscal 2010, through expansion of operations particularly in China and the Middle East.
Enhancement of Profitability
The key issue that we need to solve in the medium-term management plan is how to enhance profitability and expand business operations. In order to enhance profitability, the Company will develop top-share/one-and-only technologies by strengthening our development capability, and reduce fixed and other expenses by reinforcing our procurement capability, improving human efficiency and optimizing bases.
- Enhancement of technological development capability
The Company will endeavor to develop top-share/one-and-only technologies at early stages. To this end, we will strengthen cooperation between laboratories, including Matsudo Research Laboratory, Tsuchiura Research Laboratory, Amagasaki Research Department and the research department of the Mechatronics Group. Under this powerful R&D structure, we will combine the expertise of each of the integrated companies while further strengthening tie-ups with the Hitachi Group.
- Reinforcement of procurement capability
The Company will boost in-house production of equipment and handling of construction work that were previously outsourced by each former company, by taking advantage of the synergy produced by combining the excellent manufacturing capabilities of the Tsuchiura, Kasado and Amagasaki works and the project expertise of the former Hitachi Plant Engineering & Construction Co., Ltd. In addition, we aim to reduce the amount of procurement by 4% in fiscal 2006, through the concentration and consolidation of procurement volume, which increased due to the merger, and by increasing international procurement.
- Improvement of human efficiency
In order to fulfill the social needs for coping with the so-called 2007 problem and the stable employment of the elderly as well as to improve human efficiency, the Company will flexibly shift human resources to growing areas and utilize capable and healthy elderly people. Through these measures, we will improve human efficiency and ensure that skills are passed on, while reducing fixed costs.
- Optimization of bases
The Company will consolidate offices, integrate organizations and enhance functions, aiming to strengthen sales, technology, and service networks, reduce expenses and improve work efficiency. As part of these efforts, we plan to relocate the head office to Rise City Ikebukuro (tentative name), which is under construction, in May 2007. During fiscal 2006 we will deliberate on what course of action we should take for the reorganization of production bases, aiming to decide on a plan by March 2007.
Enhancement of Efforts for CSR
The Company, involved in highly public businesses such as the establishment of social and industrial infrastructures, stresses corporate social responsibility (CSR) in its management vision, recognizing it as the top priority for management. We will proactively make efforts not only to create economic value, but also to fully implement compliance, enhance corporate governance, further raise the degree of quality, safety and environment protection, and promote social contribution activities. As a result, we will continuously improve our corporate brand value. As part of these efforts, we will publicize the CSR Report of the Hitachi Plant Technologies Group in the current fiscal year after improving the contents of such report, in place of the conventional Sustainability Report.
Numerical Targets in Medium-Term Management Plan (consolidated)
(Billion yen)
| FY2006 (estimate) |
FY2007 (target) |
FY2008 (target) |
FY2010 (target) |
Change (FY2010/FY2006) | |
|---|---|---|---|---|---|
| Orders received | 369.0 | 379.0 | 380.0 | 410.0 | 111% |
| Sales | 330.0 | 340.0 | 350.0 | 400.0 | 121% |
| • Social Infrastructure & Industrial Machinery Systems | 114.2 | 116.0 | 120.0 | 128.0 | 112% |
| • Mechatronics | 48.4 | 44.0 | 45.0 | 50.0 | 103% |
| • Industrial Plant Systems | 47.2 | 52.0 | 55.5 | 67.0 | 142% |
| • Air Conditioning Systems | 84.5 | 85.0 | 85.5 | 100.0 | 118% |
| • Energy Systems | 35.7 | 43.0 | 44.0 | 55.0 | 154% |
| Ordinary profit | 9.0 | 10.5 | 13.0 | 20.0 | 222% |