3. Growth strategy
3.1 IA and control business
The IA and control business is expected to see sustained growth in the mid- to long-term mainly due to steadily rising demand for energy in emerging countries. By the year 2015, it is expected that power-related investment worldwide will be 1.4 times larger than at present. In comparison to 2008, it is estimated that the demand for natural gas will be 1.6 times larger in 2035. Demand for oil will also grow steadily. As for renewable energy, biomass is already well established and has good growth potential. In industries other than energy, the demand for chemical products, particularly specialty chemicals used in secondary batteries and other products, is expected to outpace GDP growth.
For these expanding control markets, Yokogawa will implement a growth strategy that centers on the business of providing customer-focused solutions.
In Japan, Yokogawa already holds a large share of every process industry related market. We are strongest in the downstream sector, which includes oil refining and petrochemicals, and have actively expanded our business in the global market, almost doubling our sales outside Japan over the past decade.
The IA and control business is expected to continue growing. With advantages that include highly reliable products and excellent project implementation capabilities, Yokogawa will grow its business in the years leading up to 2015 by strengthening its coverage of geographic regions and forte industries and expanding its product lineup. Our long-term vision is to become the world’s No. 1 company in the IA and control business. As a first step in this direction, we aim for this business to achieve sales of 350 billion yen by fiscal year 2015. To reach this target, we will implement the following regional, industry, and product strategies:
(1) Regional strategy
We aim to increase our market share mainly by winning new projects in resource-rich and emerging countries that are growing rapidly. Our main targets are the BRICs, the Middle East, Southeast Asia, and Oceania, and we will reinforce our resources accordingly. Growth is also anticipated in Africa, Central Asia, and South America; we regard these markets as a new frontier and will open new offices and facilities to enhance our sales channels.
While the European and U.S. markets are large, only moderate rates of growth are projected there. To efficiently and steadily increase our share in these mature markets as well as our presence in the global market, our strategy will be to strengthen relationships with major global companies in each industry.
In the Japan market, we will rely on strengths such as our large installed base of production control/management systems, sophisticated engineering capabilities, and strong service network to achieve growth through the following activities:
- Helping our customers achieve a high level of efficiency and add greater value by offering services that enhance productivity, safety, energy saving, and environmental conservation at their plants
- Utilizing our global network to help Japanese manufacturers expand their operations in other countries
- Using our comprehensive system integration (including third-party products) capabilities to offer high value-added solutions mainly for major industrial complexes, ranging from the development of production processes and the establishment of production technologies to the construction, operation, and maintenance of production control/management systems
- Expanding our business in new markets such as high-performance materials for secondary batteries
(2) Industry strategy
We already have a large share of downstream markets such as oil refining and petrochemicals. In these areas, we will expand by strengthening relationships with major global energy and chemical companies and offering a greater range of services covering the entire plant lifecycle.
In addition, we will increase market share by globally focusing on a larger number of industries. Our new target industries are oil and gas field development and production (upstream), electric power, and specialty chemicals, all of which have a large market and a high growth rate. To increase our share in these markets, we will set up centers of excellence in Japan, Singapore, the United States, Europe, and other regions to bring together all our industry-specific control expertise. This will help us broaden the sharing of this knowledge throughout the Group.
This expertise, which will become the source of our competitiveness, includes energy saving and plant energy management in Japan, gas drilling in the United States and Europe, oil drilling in the Middle East, fine chemicals in Germany, and electric power in Australia. We will share this expertise with all Group companies worldwide. Moreover, we will actively enter the renewable energy market including biomass, geothermal, wind, and solar heat power generation, where we can make full use of our track record and strengths.
(3) Product strategy
Regarding production control systems, we will continue developing products with world-class reliability and functions that are fully backward compatible with previous versions, ensuring that our customers can continue to use our products for a long time. We will enrich their functionality for our new target industries such as electric power and specialty chemicals. We will also provide product solutions that address specific customer needs. These include software for improving production efficiency and field digital solutions for using plant information effectively.
With sensor products, we aim to take the largest share of the global market with our highly competitive differential pressure/pressure transmitters and process gas analyzers. Rather than adhering to an in-house development policy, we will consider expanding our product lineup through alliances and M&A. We will also strengthen our after-sales service, which helps our customers operate their plants safely and efficiently for long periods of time. For this purpose, we will expand the provision of high value-added consulting services to improve production efficiency, in addition to conventional maintenance services.
3.2 Test and measurement business
(1) Measuring instrument business
In this field, Yokogawa Meters & Instruments Corporation, a Yokogawa affiliate, will play a major role in achieving steady growth and stable profits. In the environment-related electrical and energy markets and the optical communications market, which are expected to continue growing, we will become the world leader in niche areas where we can exert our strengths. Specifically, we will improve basic measuring instruments such as power meters, optical measuring instruments such as OTDRs, portable test instruments, and indicating instruments (meters). In addition, we will strengthen our sales channels outside Japan and set up a planning and development organization in China that will focus on products for emerging countries.
(2) Life science business
Our proprietary confocal scanner and drug discovery support systems are internationally competitive. With this business’s core products, we will attract new customers in the growing biotechnology research and new drug discovery markets. In addition, we will expand this business, make it highly profitable, and maintain its competitiveness by developing new products based on our measurement and control technologies.
3.3 Other businesses
In our aviation and marine equipment and environmental measuring instrument businesses, we will provide a steady flow of products to existing customers and maintain efficient business operations to secure stable profits.
Presentation Materials of Mid-term Business Plan for 2015 (PDF: 444KB/30P)
