1. Machinery & Steel Structures
Business Operation
June 9, 2010
Syunichi Miyanaga
Director, Executive Vice President,
General Manager,
Machinery & Steel Structures Headquarters
1
2. Contents
2
1. Summing Up of 2008 Business Plan
2. Target Figures in 2010 Business Plan
3. Strategies to Achieve the Business Plan
4. Reform Process
(1) Decentralization
(2) Reconstruction of printing and packaging
machinery business
5. Growth Process
(1)Business model reform
(2)Robust regional strategies
6. Summary
3. 1. Summing Up of 2008 Business Plan
FY2009 figures were significantly lower than
targets due to the delayed impact of the global
economic downturn, which manifested itself in
the deferment of fertilizer plants and Iron and
Steel machinery (FY2010 is recovering)
Both net sales and operating income in
general exceeded the figures in the plan as
the construction of large-size chemical and
transportation plants and iron and steel
machinery progressed steadily.
2008
Actual
performance
542.2 542.0
5229
30.1 30.0
2009
Actual
performance
2010
Forecast
323.8
490.0
(500.0)
(25.2) (25.5)
(505.0)
Operating
income
31.6
= 2008 Business Plan figures
(JPY 100 million)
(517.0)
(523.2)
(528.6)
(553.0)
Net sales
Net sales
Operating
income
Orders
Orders
received
527.8
1. Enhanced profitability by business structure
reform
2. Development of foundations for long-term
growth
Achievements
1. Quick recovery in orders received
2. Further upgrading of capability to respond
globally
3. Reconstruction of printing and packaging
machinery businesses
Challenges
Achievements of numeric targets
470.0
3
4. 730.0
600.0
550.0
625.7
727.2
2. Target Figures in 2010 Business Plan
(JPY 100 million) [The figures include printing and packaging machinery as well as the food packaging
machinery and injection molding machinery businesses]
2008
Actual performance
2009
Actual performance
2010
Forecast
2012
Intermediate target
2014
Target
Business structural reforms
Orders
received
Net sales
Operating
income
28.5
Achievement of growth
Early completion of
3.0
18.0
32.0
40.0
Efforts to
increase figure
reform process process ahead of schedule
(Promotion of Decentralization)
4
404.9
570.0
640.0
810.0
669.1
5. 3. Strategies to Achieve the Business Plan
– 2009 2010 – 2012 2013 – 2014
Reform process
(1) Early completion of the reform process, which aims to achieve high profitability
(2) Acceleration of global growth by completing the growth process ahead of schedule
Development of upstream/
downstream businesses
Strengthening of solution businesses
Growth process
Highly-profitable, globally
growing business corporation
Full use of comprehensive strengths
Reconstruction of printing
and packaging machinery
business
Wrapping up the
Decentralization
Strengthening of mainstay
and core businesses
Strengthening of
regional strategies
Upgrading environmental
infrastructure-related businesses
Innovation in business model
5
6. (1) Decentralization
4. Reform Process
2006 2007 2008 2009 2010 2011 2012
(2000/10)
Iron and steel
machinery
(Mitsubishi-Hitachi
joint venture)
(2005/4)
Parking
(2006/4)
Bridge
First establishment of
business companies
Wrapping up Decentralization
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Thorough implementation of order management
and construction execution management
Cutting unprofitable
constructions
Reorganization and merger of small businesses
(benefits of integration > benefits of single business)
- Merger of steel structure businesses (bridge and chimney, gas holder, etc.)
- Merger of small Kobe area businesses (electrostatic precipitator, shield machine, etc.)
Transfer of business: Turbo-molecular pumps (TMP)
(to Shimadzu Corporation)
(2010/7)
(2009/10)
Shift to the business
division system
Waste processing Compressor Printing and packaging
Second establishment of
business companies
(2009/10) (2010/4)
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6
7. Business company
Business
headquarters
Environment and
chemical plant
Environment and
chemical plant (Yokohama)
(Yokohama)
(Mihara, Kobe)
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.
(Kobe)
(Hiroshima)
Compressor
Compressor
Tokyo
Hiroshima
(Hiroshima)
Machinery
Machinery
Transportation and
advanced Technology
Transportation and
advanced Technology
(Mihara)
Common operations Cross-sectional projects
Overall management and
horizontal coordination
- Adjustment and coordination of
strategy
- Allocation of management
resources (planning and adjustment)
- Management plans and various
indexes
- Compliance
- Risk management
- IT (management, development,
and support)
- Civil engineering
- UAE Office/Abu Dhabi Office
- Global Production Promotion
Department
- High-speed railway project
Business division
- Optimal operationby
business field
- Support of business
companies
- Self-regulated business
activities based on
independent management
strategy
- Businesses that would
clearly benefit from a
single business structure
will be transformed into
business companies
(machinery equipment
and manufacturing)
(core equipment, small-sized EPC,
system coordination)
(EPC, EPCm)
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Structures
Engineering
Manufacturing
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(Hiroshima)
(Yokohama)
(Chiba)
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(Nagoya)
(Nagoya)
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(Mihara)
4. Reform Process
(1) Decentralization
(products that were transformed into business companies and the relationship between related business divisions and business headquarters)
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Transformed to a
business company in
July 2010
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8. (2) Reconstruction of printing and packaging machinery business
Printing and packaging machinery
business company
Printing and packaging machinery
business company
[Merger of sales company
and the main body of business]
- Integration of functions
- Streamlining the system
- Transformation into a single
business
(April 2010)
About 500
staff
- Medium- and long-term decline in the advanced markets
(the declining trend in publishing)
- Emerging economy markets (including China):
Gradual expansion and lower-price orientation
Rapid shrinking of the market due
to the global economic crisis
Incorporation into the Machinery and Steel
Structures Headquarters
- Smooth promotion of operations and personnel
measures
- Horizontal implementation of Decentralization
(April 2010)
- Focused efforts in emerging economy markets
- Strengthening of packaging field business (paper
converting and package printing)
- Upgrading actions toward electronic publishing
Early-stage independence as a business company
- Design and manufacturing of transportation and
advanced equipment
- Service business, such as maintenance
(July 2010)
About 1000
staff
Merger of transportation and printing and package
group companies
Merger of transportation and printing and package
group companies
- Merger of two printing and package companiesand
one transportation company into a single company
- Review of organizational system, etc.
About800
staff
Early reconstruction by reviewing
business system
Early return to
profitability and
further expansion of
profitability
4. Reform Process
8
9. DIAMOND 300
LED-UV
drying system
G design
Gold Award
awarded
New type of sheet-fed offset press
Power consumption is cut by 70-80%
Able to be installed in double-sided printing machines
Paper converting machinery
State-of-the-art
box making
machine
EVOL
(box making)
New
technology
(2) Reconstruction of printing and packaging machinery business (focused products)
Printing machinery (sheet-fed offset press)
Printing machinery (newspaper offset press)
Newspaper
offset press
DIAMONDSTAR
4. Reform Process
9
10. (1) Business model reform (Part I)
5. Growth Process
Customer and market needs
(customer’s perspectives)
Customer and market needs
(customer’s perspectives)
- Alteration of equipment and infrastructure,
including countermeasures against global
warming
· Efficient alteration technology for facilities
· New energy-saving technology/system
improvement
- Reduction of life cycle cost
· Long-term maintenance and service, etc.
- Rapid development of industries and social
infrastructures
- Localization and/or technology transfer
· India, China, and Brazil
- Packaged contracting (EPC, EPC+O&M)
· Middle East, Central Asia, and Africa, etc.
Business model reform
(Our viewpoint)
Business model reform
(Our viewpoint)
- Full use of comprehensive capability
· Offering intricate, high-level solutions
· Global development of long-term service
- Collaboration with other companies (shift away
from the in-house policy)
· Supplementing MHI’s technology and manpower
· Utilizing prominent partners by region
To promote the above:
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Meeting the needs listed on the left
Solution business
Business development that builds on
core business with upstream and
downstream businesses
10
11. (1) Business model reform (Part II)
(i) Environmental and infrastructure-related businesses (actions)
The market for combating global
warming and the infrastructure market
will both grow in the long-term,
especially in emerging markets.
Model 1: In cooperation with customers, turning
MHI’s differentiated technologies into
marketable ones
Model 2: Joint promotion with major partners in
specific regions
11
(Actions taken by the Machinery and
Steel Structures Headquarters)
- CO2 capture
· Joint promotion with other companies by
region and use (see p. 12)
- Responding to the MASDAR plan (see p. 13)
· Exploring business opportunities by
participating in long-term, comprehensive
business development
(including the solution business)
[Uncertainty in timing, etc.]
- Speed of market growth by region
- Technology and business area which
are expected to grow
[Spread of projects by region]
- Business negotiations and F/S are
progressing around the world.
5. Growth Process
12. 12
(i) Capture of CO2 emitted by coal burning
- Constructing a verification plant that collects 100,000-
150,000 tons of CO2 jointly with Southern Company of
the United States (construction began in April 2010)
- Basic design order received from E.ON-UK of the
United Kingdom to build a plant capable of collecting
2 million tons a year (June 2009)
(ii) Capture of CO2 emitted by gas burning
- Collaboration with Abu Dhabi/MASDAR
(Negotiating basic design package and promotion
methods for the near future)
(iii)Others
- CO2 capture plant for increased urea output
Promoting order taking (nine orders received)
- Promoting a review of CO2 capture from Integrated
coal Gasification Combined Cycle (IGCC) with MHI’s
Power Systems Headquarters
CO2 capture plant designed for Malaysia
Capacity: 200 tons/day
Joint promotion of CO2 capture business Delivered plants
Plant
constructed
Technology
transferred
5. Growth Process
(i) Environmental and infrastructure-related businesses (Example Initiative 1)
13. (i) Environmental and infrastructure-related businesses (Example Initiative 2)
Participation in the MASDAR plan
Zero-emissions eco-friendly city in Abu Dhabi
Fusion of transportation infrastructure
and energy infrastructure
(Rendition of MHI’s proposal)
Artist’s rendition
of the completed
MASDAR-City
Quoted from the MASDAR web page
5. Growth Process
Needs MHI products and corresponding technology
Environment/
Industry
- Catching and storing CO2 emitted by power stations CO2 captureplant
- Substitution of natural gas for boosting crude oil output EOR, CO2 compressor
- Modernization of port facilities Container cranes, yard, unloader facility, etc.
Social
Infrastructure
- Transportation systems
Integrates Transport System, Electronic Road Pricing,
LRT/APM
- Energy savings in other areas
Regional energy management, eco-house designed for the
Middle East, etc.
Regional air conditioning/heating system
- Short-range aviation network MRJ
13
14. 5. Growth Process
(1) Business model reform
(ii) Strengthening of solution business
Diverse product mix of the Machinery and
Steel Structure business
Diverse product mix of the Machinery and
Steel Structure business
Grasping global market needs
(collaboration with the corporate division)
(i) Diverse technology integration type
(ii) Upstream/downstream business
development type
- Maintenance (preventative maintenance
and remote surveillance)
- O&M integration service
- Optimization of alteration construction, etc.
Categorization and analysis of
needs
Standardization of offered
technology and service, and
development of system
Focused fields and prioritization
Solutions
Solutions
Full use of comprehensive
capabilities
by collaborating with the
corporate division (technology and
overseas strategy) and other
business divisions
14
15. ボイボ
イララ
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脱 硝
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Cap ture
Makeup of coal-burning thermal power plant
(1) Business model reform
(iii) Developing into upstream/downstream business (1/3)
製 造 EPC 改 造 ・サービス メンテナンス オペレーショ
ン
下 流
コアビジネス
上 流
(
材 料 ・
部 品 他
)
環
境
・
化
学
Alteration to
extend life
Waste
incineration
Core
equipment
(manufactured
in-house)
inci
Waste
neration,
etc.
Feedback of
know-how
Differentiated
equipment
(manufactured
in-house)
- Preventative
maintenance
- Remote
surveillance
CO2 absorbing
solvent
Cases in which
customer
satisfaction and
MHI needs
(accumulation of
know-how) match
Increased urea
production, etc.
Fertilizer plant
CO2 capture
Environment/Chemical
5. Growth Process
CO2 captureplant
Supply of CO2
absorbing solvent
Upstream
(materials,
components, etc.) Manufacturing
Core business
EPC
15
Alteration/service
Downstream
Maintenance Operation
16. (1) Business model reform
(iii) Developing into upstream/downstream business (2/3)
製造 E
P
C 改造・サービス メ
ン
テ
ナ
ン
ス オペレーショ
ン
上流
(
材料・部品他)
コアビジネス 下
流
交
通
Air Brake
Rubber tire
vehicles
APM/LRT LRT (the Philippines, Singapore)
APM (USA: Washington,
Atlanta, Florida)
Large-scale
transportation
system
Dubai
Upstream
(materials,
components,etc.)
Transportation
5. Growth Process
Manufacturing
Core business
EPC Alteration/service
Downstream
Maintenance Operation
Large-scale transportation system
Metro Manila Strategic
Mass Rail Transit (Line 3)
Air Brake
Coil-type
Air compressor
Dubai Metro
16
17. 製造 E
P
C 改造・
サ
ー
ヒ
゙
ス メ
ン
テ
ナ
ン
ス オ
ペレ
ー
シ
ョ
ン
上流
(
材料・
部品他
)
コ
ア
ビ
ジ
ネ
ス 下
流
機
械
(1) Business model reform
(iii) Developing into upstream/downstream business (3/3)
Electric furnace
continuous cast Rolling facility
Rolling
plant
Boosted capacity
and higher quality
Remote
surveillance
Compressor
Turning into
a module
Increased
capacity
- Preventative maintenance
- Remote surveillance
Hot Rolling plant
(overall line)
Compressor module
(Future)
Plant (EPC)
Automatic
roll polish
ORP
(Online roll profiler)
Machinery
5. Growth Process
Upstream
(materials,
components, etc.) Manufacturing
Core business
EPC Alteration/service
Downstream
Maintenance Operation
17
18. Existing market strategy
(2) Robust regional strategies (Part I)
Japan, South Korea, Taiwan,
the United States, and Southeast Asia
China
China
India
India
Middle East
and Africa
Middle East
and Africa
Brazil
Brazil
-Responding to the local production orientation
Developing localized business that covers production to s
a
l
e
s
/
A
S
-Use as a low-cost production base
- Localization of service business (including repair and alteration)
- Actions toward EPC business negotiations (Collaboration with local
construction companies, etc.)
- Intensive and comprehensive market development that focuses on targets
- Collaboration with major local partners
- Upgrading actions toward EPC (+ O&M) business negotiations
-Achieving lower-cost corporate culture by increasing the efficiency of business
system
-Boosting profits by strengthening service and solution businesses
Emerging market strategy
18
5. Growth Process
19. (2) Robust regional strategies (Part II)
Development of domestic bases
-Phased focusing onto core functions and main body of technology
R&D, design, production of differentiated components, etc. Production
Technology Enhancement Center, high-level testing and test run facilities,
and small-sized high-value-added components
-Development of inter-base functions in Japan (elimination of duplication, etc.)
Development of overseas bases
-Efficient distribution of production bases promotion of the shared factory
p
l
a
n
-Development and upgrading of LCE (low-cost engineering) bases
-Merger of existing bases (the United States and Europe)
-Strengthening of sales and service network (including utilization of external
sources) Especially China, India, and the Middle East
19
5. Growth Process
20. Deployment in markets
( Distribution of plant deliveries)
Chemical plants
Transportation systems
Iron and Steel machinery
Compressors
Existing markets
Emerging markets
(2) Robust regional strategies (Part III)
Taking advantage of extensive track record
in the global market to network
comprehensive services
20
5. Growth Process
21. ADVATECH
(Joint venture with URS)
Mitsubishi-Hitachi
Metals Machinery
USA, Inc.
GFG (painting
machines)
(Mitsubishi-Hitachi 70%)
CMS (transportation O&M)
Houston Office (compressor)
Tire Machinery
Business Division
Responding to the
Middle East and
Africa
Abu Dhabi Office
Dubai Office
(2) Robust regional strategies (Part IV, plans for the development of overseasfacilities)
(Iron and Steel
machinery) Introduction of
shared factory
Transportation
(maintenance)
Merger of European bases
(compressor, exhaust gas
desulfurizers, etc.)
(Development of the
African market)
(Collaboration in India
sales expansion)
Crane, tire, etc.
(to be transformed into
a production base in
the future)
Collaborating
maintenance plants
(compressor)
Shared factory
(in review)
Changshu shared factory
(tire machinery, etc.)
Low-cost engineering
(chemical plant)
5. Growth Process
(Sales expansion and
localization in India)
Mitsubishi-Hitachi India
Engineering (JV)
(China localization)
Mitsubishi-Hitachi
Metals Machinery
(Shanghai), Inc.
BLHI (JV)
Baoling
21
22. (2) Robust regional strategies (Part V, shared factories)
Changshu Ryoju Machinery Co., Ltd.
Tire machines, etc.
(Established: February 2010)
Iron and steel machinery,
tire machinery, etc.
(Plan to be finalized within FY 2010)
Jundiai, Brazil
S
S
h
h
a
a
r
r
e
e
d
d
f
f
a
a
c
c
t
t
o
o
r
r
y
y
c
c
o
o
n
n
c
c
e
e
p
p
t
t
Changshu,
China
India
(conceptualized
as a future base)
Leetonia, USA
Promotion of overseas advancement for
small- and medium-sized businesses
Shared plant management staff, etc.
22
Strengthening the ability to effectively
respond to fluctuations in construction
volume by product
Efficient use of facilities and workers
(Other benefits)
- Integrated organization brings:
More efficient business execution
Higher levels of risk management
Collaboration
network
Iron and steel machinery, Material
handling system, compressor, etc.
(in review)
5. Growth Process
Pursuit of benefits from the joint
production method
23. 6. Summary (1/2)
23
Makeup concept for product business: high-ranking global share
and/or stable profits + state-of-the-art technology
24. Business model reform
Development of
bases
Strengthening overseas staff
Finishing up Decentralization
Reconstruction of printing
and paper converting
machinery business
Growth of environment and
infrastructure businesses
Expanded share in
emerging markets
Growth of service business
in existing markets
Strengthening of
regional strategies
Prompt shift from reform to growth process
Evolved mix management of midsize businesses
Achieving both global growth and high profitability
Reform process Growth process
Development of upstream
and downstream businesses
Achieving a highly profitable
corporate culture
FY 2014 target
Orders
810 billion yen
Net sales
730 billion yen
Operating income
40 billion yen
24
6. Summary (2/2)