Annual Report 2000 For the ended March 31, 2000
Construction Business: Domestic Operations

 

Saitama-Shintoshin National Government Building Tower-1 Sapporo Media Park(SPICA)
Tachibana-Bay Power Plant Coal Silo
Yume-Saito Shopping Mall

Despite reports that the Japanese economy's recent period of negative growth has ended, the long-term decline in construction investment created an extremely harsh operating environment characterized by unrelentingly intensifying competition during fiscal 2000. Public demand decreased due to the fiscal problems of the central and regional governments. Private-sector demand for construction services has tended to shrink, principally owing to the weakness of capital investment, and intense price competition has become increasingly widespread in the private-sector construction market. The operating environment has thus deteriorated to an extent greater than anticipated at the end of fiscal 1998, when Kajima's current three-year management plan was drafted. Although demand related to IT and housing is projected to increase during fiscal 2001, the steadily rising cost-consciousness of those placing work orders will make it imperative that construction companies quickly make additional reforms to augment their competitive capabilities.

Faced with this harsh operating environment, Kajima proceeded with various measures during the second year of its current three-year management plan. The Company thereby achieved steady progress in maintaining the profitability of construction projects; reducing general and administrative (G&A) expenses, interest-bearing debt, and total personnel expenses; and otherwise strengthening its financial base. Rather than focusing exclusively on cost-competitiveness, Kajima attained these results by providing performance guarantees and maintenance services that cover the entirety of buildings' life cycles as well as by proactively creating and proposing project plans that include provisions for the supply of such services as land and tenant brokerage, project commercialization planning, and fund-raising and other financial services. The Company is well positioned to offer such services due to the considerable know-how it has accumulated in domestic and overseas operations in the fields of performing due diligence and real estate asset securitization. As measures to securitize or otherwise increase the liquidity of real estate assets become increasingly popular, Kajima intends to further step up its Companywide efforts to increase orders by proposing low-fund-requirement and non-asset projects.

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Miyagi Stadium

During fiscal 2001, Kajima has set the Companywide goals of increasing the volume of orders, obtaining the requisite level of profitability, proceeding with the introduction of IT-based internal systems, stepping up efforts to develop new business projects and fields, and expanding the scope of revenue opportunities.

To augment orders and profitability, the Company believes it necessary to thoroughly analyze cost structures in the construction industry and then collaborate as a general contractor with related industries and cooperating companies in taking proactive measures to reduce each individual cost element. To this end, Kajima intends to invest a greater share of its resources in the development of technologies for reducing costs and shortening construction periods.

Regarding IT-based enterprise management, the Company is endeavoring to further advance its related infrastructure creation and personnel training programs. Kajima has announced the creation of the Companywide Kajima Digital Network Service (KDNS), which will serve as a framework for the effective utilization of information and communications technologies through the global network. To radically reform traditional business and decision-making methods and create systems for increasing operational efficiency through the application of diverse IT, the Company is already using and expanding a system for the unified execution of quantity surveying, estimating, procurement, budget control, and related accounting tasks. Plans call for extending the system's coverage throughout the Company during fiscal 2001. Kajima has also created a new decision-making unit that will facilitate the implementation of the Company's plans to proactively and expeditiously expand its involvement with e-business in construction and related fields, such as e-commerce and project hosting and collaboration services. 

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Tokushima Highway Ikedako Bridge Stage 2 (Upper Portion)
Tsuchiura Municipal Landfill Fadlity
Sannokai Dam
Joshinetsu Highway, Joetsu Junction

With respect to new business, Kajima is entering peripheral business fields that offer potential synergies with construction contractor operations. Among the many fields the Company is targeting are:

  • environmental business in such fields as soil decontamination and waste-product recycling services, for which the market is expected to rapidly grow due to the increasing stringency of regulations;
  • construction industry IT business that utilizes the Internet;
  • building life-cycle management business, such as that associated with building maintenance and facility management;
  • private finance initiative (PFI) business, which local government bodies are expected to make increasingly active use of;
  • real estate development business, including real estate securitization; and
  • project management/construction management (PM/CM) business, which relates to new project delivery methodologies. 

To strengthen its consolidated operating base, Kajima is striving to strengthen its own capabilities and financial position while also endeavoring to upgrade the performance and profitability of domestic and overseas Group companies. In line with this objective, the Company is thoroughly reconsidering the distribution of management resources among Group members, withdrawing personnel and financial resources from fields where resources are underutilized and fields with limited growth potential, and shifting resources to strategically emphasized fields.

Construction companies are increasingly recognizing that their development and very survival during the 21st century will be difficult if they do not fundamentally reform their operations and develop business in new fields. Rather than waiting for market changes to occur, general contractors must autonomously and quickly undertake reforms by radically revising traditional thinking and business methods as well as by further proceeding with structural reforms. As a leader in Japan's construction industry, Kajima is proactively endeavoring to promote greater responsiveness to 21st century challenges within the industry. The Company has positioned fiscal 2001 as "the year of Kajima's full-scale approach to the challenges of the 21st century."

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Haneji Dam Reservoir Bridge

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New Building Construction Contracts
Roppongi 6-Chome B-Area Tower-A
High-rise multifunctional tower including offices, stores, and an art museum\RC, SRC, and steel structure; 54 floors above ground and 6 below; Floor area: 380,105u

Shiodome C-Area Kajima Tower
High-rise multifunctional tower including offices, a hotel, and a parking facility\SRC and steel structure; 38 floors above ground and 4 below; Floor area: 79,786u

Yokohama Portside F-1 Block Redevelopment Project
Apartment building(s), office building(s), supermarket, shopping center, parking facility, and a disaster response facility\RC and steel structure; Site area: 17,174u; Floor area: 116,504u

Hamaoka Nuclear Power Plant Unit No. 5
Nuclear power plant; SRC (steel/SRC portion) structure\5 floors above ground and 3 below; Floor area: 53,500u

Press Conference and Working Center & Cafeteria for Kyushu-Okinawa Summit 2000
Two buildings with rooms for press conferences and amenities\Press conference and working center building; Two-story steel structure; Floor area: 9,927u; Cafeteria building; One-story steel structure; Floor area: 1,750u

New Civil Engineering Contracts
Reinforcement Work for Main Dam of Yamaguchi Reservoir
Embankment height: 35m; Embankment length: 691m; Embankment top width: 10m; Embankment volume: 2,370,000; Water storage volume: 19,530,000; Located in Saitama Prefecture

Kanaya Tunnel West for Tomei No. 2 Highway 
Excavated length: 422m (lanes to Tokyo) and 2,300m (lanes from Tokyo); Cross-sectional area: 191u; Located in Shizuoka Prefecture

Toyota Portion of Sanageyama Tunnel for Tokai Ring Road
Excavated length: 5,164m; Cross-sectional area: 74u; Located in Aichi Prefecture

Rokujizo North Portion of Tozai High-Speed Railway
Construction of 56m crossover railway line extension and 697m ordinary railway line extension; Located in Kyoto

Mitaka Dam for Okimi Portion of Hatakechitai Water Control Project
Concrete gravity dam; Height: 44m; Length: 202m; Embankment volume: 119,000; Water storage volume: 584,000; Excavated soil: 90,000; Base preparation: 18,000m; Concrete required: 79,000; Located in Hiroshima Prefecture

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