TOYO CONSTRUCTION I INTEGRATED REPORT 2024revise strategies on all fronts, notably, people, materials, and capital. If the Company can deliver results in offshore wind power construction, the gateway to peripheral growth areas will open up. To capitalize on emerging opportunities, management must strengthen discussions on strategy and figure out how to translate these discussions into tactical moves. Fujii: Offshore wind power construction projects require longer lead time and more significant investment than civil engineering and building construction projects, and consequently demand unprecedented approaches and systems to manage risk. In-depth discussions will be more crucial than ever before. Management will also have to accelerate organizational decision-making and set priorities. To avoid letting time pass without making any decision, I believe the best way to manage risk is to make a decision, take action, and amend the decision later if factors that led to the initial decision no longer apply. Uchiyama: I think investment in the offshore wind power construction business is probably the largest outlay of capital in the Company’s history, so there may be room for improvement in terms of the financing scheme. Since it will take time to recoup investment of that scale, management must repeatedly engage in discussions about handling risk associated with invested capital. Matsuki: We need to discover areas other than cable-laying where the Company can demonstrate its technological expertise and also explore entry into new domains. Going forward, management must look beyond offshore wind power construction and engage in multifaceted discussions with a view toward inorganic growth. Management must also actively communicate with shareholders, investors, and other people outside the Company so that these stakeholders understand the challenges it faces. The fact that profits are not currently increasing could negatively affect the stock price and other indicators of investor sentiment if that information is communicated incorrectly. It is therefore important to present the future potential of this business as accurately as possible. Uchiyama: Human resources are the key to creating new pillars of business. Human resources management is likely to take on greater importance given the need to boost the mobility of human resources within the Company, secure the input of outside experts, and, with an eye toward business overseas, attract foreign talent. There is also a chance that human resources involved in a new business might feel like outsiders within the Company, like newcomers anywhere. The division responsible for the offshore wind power construction business employs many mid-career hires and foreign talent—people with different outlooks or perspectives than employees in traditional business segments. I hope this trend in recruitment becomes a positive force for revitalizing the corporate culture. Matsuki: This will also prompt a review of the salary system. The current structure has a low performance-linked I hope that directors, inside and outside, in both oversight and executive roles, will attempt back-and-forth dialogue, evaluate it, and make efforts to understand each other’s intentions. This approach will foster a strong and shared desire to expand the business portfolio, which will lay the foundation for growth.—— Yoshiko FujiiSpecial Feature 2: Roundtable Discussion with Outside DirectorsUchiyama: The Company has always pursued order-based projects particularly for clients in the public sector, so efforts have undoubtedly been directed toward securing market share in this sector. While public works are extremely important as a source of profits, we need to help management recognize where the potential for growth lies and acquire the ability to turn this potential into real growth. Matsuki: Management must picture a Toyo Construction of the future, think about what is needed to become that company, then clearly lay out a strategy and a path to growth for each division. Our role as outside directors is to point out such issues from an external perspective. A good place to start would be to raise awareness of a vision for the future within the Company. Uchiyama: The Company has tapped the offshore wind power construction business as a growth driver. Indeed, this business presents enormous growth potential. The decision to zero in on the niche segment of cable construction appears to have been a good one, in that this segment allows the Company to demonstrate its accumulated expertise in marine construction. The Company has also earmarked funds for large-scale investments, including construction of a self-propelled, cable-laying vessel scheduled for completion in fiscal 2026. It must be noted, however, that this business is still at the up-front investment stage and has not yet generated any profit, and there are ongoing risks to consider. I am confident that this business will become a stable source of revenue once it is operational and the Company can secure a certain slice of the market pie. That said, it will take several years to see a return on investment, which means management has to constantly 28
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