Chapter 2.
2015 2016
Evolution of Business Domains and Stable Management

Contributing to Improving Social Infrastructure

The New Abenomics Growth Strategy and Improving Infrastructure

Business continued to suffer in the construction industry following the 2008 financial crisis. Meanwhile, Prime Minster Abe formed his second Cabinet in December 2012, which launched a series of economic measures known as the “three arrows” of Abenomics (aggressive monetary policy, flexible fiscal policy, and growth strategy to private investment). Expectations toward economic recovery grew, with the measures leading to a sharp recovery in demand for private construction, such as urban real estate redevelopment projects and office buildings.

Moreover, Tokyo was confirmed in 2013 as the host of the 2020 Olympic and Paralympic Games, which stimulated improvements to public transport infrastructure and private sector capital investment. Domestic construction demand saw its biggest jump in recent years. While there were some labor shortages and price hikes in construction materials, the industry also enjoyed an increase in highly profitable construction projects. Investment in construction in the non-manufacturing sector, such as offices, commercial facilities, and logistics facilities, was robust, due in large part to urban redevelopment. The number of orders received by Obayashi Corporation also rose consecutively over a four-year period from FY2011.3.

At the same time, international demand for infrastructure also increased overseas on the back of factors including economic growth in developing countries. The Strategy for Rebirth of Japan, which was approved by the Cabinet in July 2012, indicated that new international orders for the construction industry valued in excess of two trillion yen per year would be carried out by the 2020 fiscal year. In addition, the Infrastructure System Export Strategy, compiled by the government in May 2013, outlined a target of 30 trillion yen for commissioning infrastructure systems projects by 2020.

With regard to developing countries in particular, there was a need for investment in infrastructure that prioritized quality and quantity, while also taking into account several factors including life-cycle costs, safety, resilience to natural disasters, social environment standards, the transfer of expertise, preservation of regional communities and environments, and creation of jobs for local people. This infrastructure investment was required for the achievement of both sustainable growth and wide-reaching development. The Japanese government announced the Partnership for Quality Infrastructure in May 2015. This was followed by the declaration that improvements would be made to systems for yen loans and overseas loans and investments as a way to meet the enormous demand for infrastructure in the Asia region. Furthermore, the approach set forth in the Partnership for Quality Infrastructure was similar in content to the Sustainable Development Goals outlined in the 2030 Agenda for Sustainable Development adopted by the United Nations in September 2015. Japan took the initiative in sending this message to the world.

Obayashi Corporation has been working on developing infrastructure that allows people to live safe, secure, and comfortable lives, along with constructing environmentally friendly production facilities and community building, all based on this approach. Some examples of projects the company has been involved in include construction of expressways and grade separation of railways to alleviate chronic traffic congestion in cities in developing countries, and the installation of sewers and drainage tunnels to prevent flooding, among others.

Growing Demand for Construction

When Tokyo was confirmed in September 2013 as the host of the 2020 Olympic and Paralympic Games, there was an increase in demand not only for projects directly related to the Games, such as the construction of each competition venue and the Athletes’ Village, but also for tangentially related projects—for instance, building new hotels and expanding existing ones, city center redevelopment, constructing commercial facilities, and installing and maintaining transport infrastructure. Investments in related construction were predicted to reach a total of approximately 10 trillion yen. New-build construction and renovation of accommodation facilities in particular had begun to see an increase from 2011, before it had been decided that the Games would be held in Tokyo. Investments made in 2015 exceeded 250 billion yen. Aside from competition venues, Obayashi Corporation has also had a hand in constructing related facilities and developing infrastructure.

Demand was also growing for construction to prevent and mitigate disasters due to a series of large-scale natural disasters in recent years—most notably the Great East Japan Earthquake—along with predictions of disasters in the near future, such as a potential earthquake with an epicenter directly below metropolitan Tokyo and Nankai Trough megathrust earthquakes. Against this backdrop, the government announced the enactment of the Basic Act for National Resilience Contributing to Preventing and Mitigating Disasters for Developing Resilience in the Lives of the Citizenry in December 2013. The law set forth fundamental policies that included maximizing the protection of human life, avoiding fatal damage to important national and social functions and ensuring sustainability, and combining soft and hard policies. As countermeasures against flooding and tsunamis, the law determined that river and coastal embankments were to be improved, while at the same time, hazard maps were to be created and implemented, and emergency evacuation drills were to be conducted. The next year, in June 2014, the Cabinet approved the Fundamental Plan for National Resilience, with the concrete steps to be implemented toward its implementation indicated by the Action Plan for Building National Resilience.

Along with taking on contracts for construction works related to disaster prevention and mitigation, the company continued in its efforts to carry out recovery and restoration works after each new occurrence of a natural disaster during this period. The year 2015 saw regions all over the country hit by a string of volcanic eruptions and large-scale typhoons making landfall. Typhoon Kilo brought about record levels of rainfall across the Kanto and Tohoku regions in September that same year, which led to landslides, in addition to the collapse of the embankment of the Kinugawa River. Obayashi Corporation was responsible for emergency restoration work on the Tobu Nikko Line, which had been damaged by the landslide. The company poured its efforts into removing mud from the tracks, repairing slope collapses, and other urgent construction works, managing to get the train line operational in just one week. Construction work was also undertaken as part of emergency measures to restore Kumamoto Castle following the Kumamoto Earthquake a year later in April 2016. During works to prevent the collapse of the Iidamaru five-story turret, which was barely being held up by a column of stones left standing at a corner of the stone wall (the “miraculous single pillar of stones”), the company succeeded in the difficult task of inserting a “steel arm,” a mechanism that reused temporary bridge girders in its construction, into the gap underneath the tower. Also, as part of restoration work on the Kumamoto Castle keep, the company also started designing and implementing seismic retrofitting, which focused on preserving traditional methods while also introducing the latest technologies.

(Reference: Special Contents > Six Stories > Kumamoto Earthquake)

In FY2015.3, the company decided to upgrade its Tokyo and Osaka Machinery Factories, which function as logistics bases during a disaster. Accordingly, office buildings, buildings for machinery and tool maintenance, and BCP (business continuity plan) support facilities were newly set up that were capable of operating for seven days even if the energy supply was cut off, thereby strengthening the company’s BCP capabilities (completed in Tokyo in December 2015, and in Osaka in June 2016). These upgrades ensured that the company would be able to carry out support and restoration activities swiftly and effectively in the event of a large-scale disaster.

Meanwhile, as demand for construction connected with disaster prevention and the Olympics grew, the company worked on setting up a system for accepting foreign technical trainees, which it hoped would alleviate the deep-seated issue of labor shortages in the construction industry. In January 2015, the Foundation for International Transfer of Skills and Knowledge in Construction (FITS) was established. With five major general contractors, including Obayashi Corporation, at its center, the organization provides the necessary support to ensure that people from overseas who want to learn about and apply technology, skills, and knowledge in the construction and related sectors are accepted for training, and that their education and training is conducted appropriately.