Long-Term Contraction of the Domestic Construction Market and the Shift from New Construction to Maintenance and Repair

「The market for the large-scale renewal and repair business at the core of operations is on a declining trend, and although orders are expected to continue for approximately the next 10 years, earnings growth will be limited.」

「Although the market for the large-scale renewal and repair business at the core of operations is on a declining trend, it is expected to continue steadily in the future.」

「Although private-sector capital investment steadily recovered from the COVID-19 pandemic and the volume of orders in the building market increased, the Group continued to face significant earnings risks due to fierce price competition and soaring labor, fuel and material costs.」

「In the construction industry to which the Group belongs, orders for private-sector building projects remain on a recovery trend in the building segment. However, higher construction costs resulting from soaring material and resource prices have caused signs of weakening construction demand and intensified fierce competition for orders, making highly selective bidding essential to securing profitability.」

「However, construction materials have also become more expensive due to overseas developments, potentially weighing on construction investment, which is still recovering from the downturn caused by the COVID-19 pandemic, and becoming one of the concerns for the future construction market. In addition, construction work is undergoing a rapid qualitative shift from new construction to maintenance and repair, making the reconstruction of the business earnings model, taking higher construction costs into account, the greatest challenge.」

「Amid a major transition involving a qualitative shift from new construction to maintenance and repair, companies are expected to face increasingly strong demands to respond to social changes such as a shrinking working population and diverse working arrangements, as well as to strengthen their efforts to address the global environment.」

「In the construction industry to which our group belongs, there have recently been signs that companies are restarting capital investment that had been postponed or suspended due to the impact of COVID-19. However, fierce competition for orders continues as the construction market contracts rapidly following the end of demand related to the Tokyo Olympic and Paralympic Games. Meanwhile, in civil engineering, construction investment remains firm, including public investment in recovery from natural disasters, disaster prevention and mitigation, and the development of aging infrastructure. In particular, orders for large-scale renewal and repair work and six-laning of expressways are reaching a full-scale peak, and the qualitative shift in civil engineering investment from new construction to maintenance and repair is expected to accelerate further.」

「In civil engineering, construction investment remains firm, including public investment in recovery from natural disasters and disaster prevention and the development of aging infrastructure. In particular, orders for large-scale renewal and repair work and six-laning of expressways are reaching a full-scale peak, and the qualitative shift in investment from new construction to maintenance and repair is expected to accelerate further.」

「In civil engineering, construction investment remains firm, including public investment in recovery from natural disasters and disaster prevention and the development of aging infrastructure. Orders are expected to continue for six-laning of expressways and large-scale renewal and repair work, and the qualitative shift in investment from new construction to maintenance and repair is expected to accelerate further.」

「The business environment surrounding our group is highly uncertain due to the global spread of and concerns over the prolonged impact of COVID-19, and challenging conditions are expected.」

「The business environment surrounding our company includes positive developments such as construction of the Linear Shinkansen and the Osaka Expo. However, with the Tokyo Olympic and Paralympic Games approaching next year, construction demand is peaking, and the qualitative shift in investment from new construction to maintenance and repair will enter a major turning point after 2020.」

「The composition of construction investment is shifting from new construction to maintenance and repair more rapidly than expected, bringing a major turning point. In addition, changes in social conditions, including a declining and aging workforce, promotion of work-style reforms and widening regional disparities between urban and rural areas, are expected to accelerate further, and a challenging business environment is anticipated.」

「A future contraction of the domestic construction market is unavoidable, and, as is clear from the examples of advanced Western countries, mature nations are expected to see a qualitative shift in construction activity from new construction to maintenance and repair work.」

「In the civil engineering segment, as orders for new bridges decline, we have worked to establish a structure capable of responding to social needs by maintaining stable orders for new bridges while seeking to expand our business in large-scale renewal and maintenance, including bridge deck replacement work, one measure for extending the service life of existing expressways and bridges.」

「A future contraction of the domestic construction market is unavoidable. As is clear from the examples of advanced Western countries, in mature nations the composition of construction activity is expected to undergo a qualitative shift from new construction to maintenance and repair work.」

「In the precast concrete industry, the core market for our civil engineering division, newly constructed bridge projects are declining while demand for renewal and maintenance work is expected to increase. Adapting our Group to these changing social needs has therefore become an urgent priority.」

「Over the long term, contraction of the domestic construction market is unavoidable, and the composition of construction investment is expected to undergo a qualitative shift from new construction to maintenance and repair work.」