The global economy is on a mild recovery track partly supported by monetary easing in the U.S. Euro zone is showing signs of bottoming out, although some concern remains about fiscal conditions and the price level. In Asia, modest growth is expected overall, despite the situation in China, which is no longer as robust as it once was.
Meanwhile, the Japanese economic conditions are improving mainly in the service sector, driven by the correction of the yen appreciation and the recovery of stock prices as a result of the government's bold monetary easing and aggressive fiscal policies. In the manufacturing sector, especially in the auto industry, the market is becoming brisk. As for MHI Group's business, the demand of the market is increasing in certain segments, but it still needs some time for full-scale recovery.
In such domestic and international business environments, we are entering the year 2014, which is a milestone year for the MHI Group:
·the final year of the 2012 Medium-Term Business Plan
·the 50th anniversary of the merger among the three forerunner companies of Mitsubishi Heavy Industries.
"Strengthening international competitiveness" was the first of the goals set for the merger 50 years ago and has been even more significant in these years. In this crucial year, we will make solid progress in this direction through globalization under the 2012 Medium-Term Business Plan and lay the groundwork for our pursuit of a ¥5 trillion company.
With this annual goal in view, I would like to ask you to focus on four areas this year.
1. Launch of a four-domain business structure and a joint venture in thermal power generation systems
In October last year, we established the three business domains of "Energy & Environment," "Commercial Aviation & Transportation Systems," and "Integrated Defense & Space Systems." With the addition of the "Machinery, Equipment & Systems" domain expected in April this year, the conventional business segments will be completely converted to a four-domain business structure.
Through this conversion, we eventually aim to survive and succeed in intensifying global competition by concentrating our consolidated business resources on the four domains and achieve their optimal allocation, in order for us to better serve and respond to customer needs.
Toward this goal, every one of us needs a shift in paradigm. By going beyond our conventional assumptions, we can produce significant results by flexibly allocating business resources, sharing technology across organizations, and performing work more efficiently.
Another major event this year is the establishment of a joint venture with Hitachi, Ltd., in thermal power generation systems, which will be a key growth driver for the MHI Group. I expect that the new company will become the world leader in thermal power generation systems by taking advantage of long-standing strengths of both MHI and Hitachi, and reaping the benefits of the merger and integration.
2. Reliable technology met the needs of the market
The MHI Group owns a wide array of outstanding technologies continuously developed by our predecessors, and our business is based on enhancing and improving these underlying technologies. As for our business environment, the needs and competition in the market in the technological fields are changing constantly, including the approach to quality assurance, while the pace of change is accelerating, and the severity of competition increasing. Therefore, we need to make relentless efforts to bring innovation to existing technologies and to develop new technologies as we calmly analyze from a global viewpoint what kind of technology and service customers look for.
The MHI Group's strength will be boosted further if we increase our adaptability on the ICT front and our competitiveness in dealing with complex systems and projects. Although our expertise may be insufficient in some fields, we should expand our horizons by using external and other untapped resources, with the aggressiveness to learn and the willingness to take on new challenges.
Regarding the MRJ*1, which is considered our next-generation growth business, the project is reaching a crucial moment this year for a successful first flight. At the same time, MRJ has been attracting major public attention as the symbol of the MHI Group's technical and development competence. As people in the Commercial Aviation & Transportation Systems domain have been fully committed to the endeavor, the rest of us should continue to support them in this "dream-inspiring project pursued by the entire MHI Group."
3. Strengthening the financial base
To compete in the global market, we must be more resistant to risks associated with increasingly massive projects, in addition to risks arising from changes in economic policy and difference in systems by country or by region. The corporate divisions and the business departments need to accumulate, share and utilize their knowledge and information to become able to manage risks more wisely. At the same time, we should generate more profits than ever in order to build a solid financial base that gives us new potential, such as the ability to venture into a new field and the ability to launch an enormous development project.
4. Safety and reliability
Under the policy of giving top priority to product safety, we should pursue the highest level of safety at work as well. I would like to remind you that safety comes first in any business.
Aiming for zero accidents, all departments should identify every possibility of potential accidents and problems in the workplace, exchange knowledge with one another, and work together to ensure safety.
*1: Mitsubishi Regional Jet