Friday, 01 April 2016
Message from the CEO on MOL Foundation Day
occasion of Mitsui O.S.K. Lines' 132nd anniversary, we are pleased to bring you
a message from our President & CEO, Junichiro Ikeda.
Unite as 'One' to Overcome Difficult Times
I am honored to join all of my MOL Group colleagues in celebrating the 132nd
anniversary of the MOL Group's founding. We launched the midterm management
plan "STEER FOR 2020" in April 2014, and set a course toward solid
growth through three innovative changes. While we have no doubts regarding the
appropriateness of the steps outlined in the plan, we have since witnessed
sweeping changes in the business environment underpinning those innovations.
Namely, China's economic growth stagnated, while plummeting prices for crude
oil, iron ore, and other resources took their toll on the economies of
resource-dependent emerging nations. This in turn led to a slowdown in sales of
materials and equipment due to delays in resource development. At the same
time, the energy mix changed in step with rising environmental awareness. In
other words, the end of the energy-driven economy put us in our current
situation. We also realize that it will take time to resolve the fleet
oversupply issue, as many high-priced newbuildings are still on order,
undelivered, while scrap prices remain low.
business environment surrounding the ocean shipping industry is extremely
difficult. In particular, markets for our main fleets-dry bulkers and
containerships-show no sign of recovery. To successfully adapt to the new
business climate, enhance the quality of our businesses, and return to a
sustainable growth path for the next 100 years, we need to fully implement
business structure reforms and steadily execute the action plans to restore our
business performance, including those we are carefully reviewing internally.
The profitability of the tanker and ferry divisions, which had stagnated, has
shown a sharp recovery thanks to the hard work of those involved. These
divisions are now making significant contributions to our group's consolidated
business performance. I am confident that every other division can do the same.
let me start with two items I want to emphasize as we move ahead with our
business structure reforms.
of all, we must strengthen our business, and develop deeper, broader trust in
our customer relationships. We cannot complete our series of business structure
reforms simply by scrapping high cost vessels, streamlining our organization,
and scaling down our business to a realistic level. Nor will fully executing
these reforms automatically bring about a V-shaped recovery. Our business
environment is in the midst of major changes. These reforms are not just an
extension of the past. Our strategies must now assume a vastly different
business environment than what we experienced before. Whether the company will
be able to stay on a growth path by leveraging these business structure reforms
depends on how we can strengthen our business in the short term, and in the
medium and long term, to create business models in response to an evolving
we must work with our existing customers to expand business by leveraging our
strengths. But we must also take a proactive approach, especially with overseas
customers. For example, under the watchwords "One MOL," we must forge
stronger ties, expand trade and strengthen long-term relationships with
overseas customers. We recently hosted receptions for customers in India and
Singapore at which Japanese and national staff cross-divisionally united as a
"One MOL" team, to promote the group's collective strength. Our
objective is to become the logistics partner that customers think of first. We
will bring together the specialties of each business division, meet detailed
customer needs, and encourage every member of our group to meet face-to-face
with customers at every level. I know we can become that kind of a corporate
group. To realize One MOL, One Goal, I am also making it a high priority to
play the role of the group's top salesman.
we work to strengthen our business, we can't rely solely on idealistic
approaches like willpower and individual legwork. We must revamp our
organizations and systems to get the job done.
April 1, a new management system takes effect, with new executive officers and
division and office general managers. From this year on, we will synchronize
the beginning of the business plan with the simultaneous launch of new
organizational changes and systems. I think this will make it easier than ever
to get moving toward our targets.
the Tokyo Head Office, we launched two new business units. The Dry Bulker
Business Unit is a cross-functional organization aimed at further energizing
our activities. Its main missions include reliably advancing business structure
reforms to optimize the fleet portfolio and making more efficient use of
management resources. The new Energy Transport Business Unit, meanwhile, aims
to precisely meet the needs of a diverse lineup of customers in energy-related
industries and develop our business activities on a global scale that
transcends divisional frameworks.
the same time, the Asian region continues to grow in importance to our company.
Last year, in order to enhance intra-regional ties and convey the group's
comprehensive strength and brand power with One MOL, we introduced the Chief
Executive Representative system in three regions of the world. And now in Asia,
the Middle East, and Oceania, we have designated key strategic countries and appointed
Chief Country Representatives who report directly to the Chief Executive
Representatives of their respective regions. As the face of the MOL Group, they
will promote and support various activities in their countries, bridging the
lines between divisions. I am especially hopeful that the business divisions
will make effective use of this system.
second topic I want to emphasize centers on awareness of our company's
strengths and where we are No.1. Businesses that already have advantageous
business models and key differentiators should keep working to expand and
become No.1. Of course, we must objectively assess whether our current business
models will maintain our competitiveness five to 10 years from now, as the
business environment continues to change. In the present phase, which requires
reform, I especially hope that our managers will lead according to their
vision, with a focus on strategy and innovation. I plan to ask the relevant
executives and division general managers to outline their divisional strategies
and visions, which focus on the next five to 10 years.
general managers, please be sure to share your strategies and visions within
the organization. And younger people, try to inspire those around you with new
ideas and an eagerness to take action. Have faith in your managers and
colleagues, and unite as a team to overcome our current difficulties.
addition to the points I mentioned above, we must keep pace with our
competitors in taking advantage of IT and other new technologies, such as
artificial intelligence (AI), while responding effectively to environmental
issues. We established the IT Strategy Committee and Technology, Innovation and
Environment Committee as expert panels to address those two themes. I am
personally involved with those committees and look forward to deepening
discussions about the ideal image of the MOL Group, and working to realize it
as quickly as possible.
addition, as I take a broad view of our group companies, it is clear that many
of them have shown steady growth, recovered from poor business performance in
the past, or gotten themselves on track for strong growth. By making effective
use of group companies' assets, both tangible and intangible, we are in a
better position than ever to take an aggressive approach to business
development. For example, we have several group companies in Japan offering
warehousing, customs clearance, and truck transport services, targeting both
export and import cargoes. Reorganizing our domestic logistics businesses,
while adding the extra dimension of ferry service, will create added value and
allows us to offer one-stop services to our customers. Aside from the logistics
business, it is indispensable for us to sow the seeds of growth, which will
shape the future, both in our existing group businesses and other new business
biggest tasks we face during FY2016 are, first, to rebuild the foundation
needed to complete our business structure reforms and win through global
competition. Second, we must address fleet oversupply and scale down our market
exposure. Third, we need to rationalize unprofitable routes. Fourth, we will
focus on responding to our customers' transport needs. We absolutely must
achieve our financial targets for this fiscal year by accomplishing these
tasks, enhancing our cost competitiveness, and improving profits through our
existing business activities. Under today's drastically changing business
environment, we must make these tasks our top priorities, and address them
swiftly and carefully.
mentioned when I took over as president that our company has faced heavy seas
time and time again over the past decades, such as the rapid appreciation of
the yen, resource price bubbles and busts, the financial crisis stemming from
the Lehman Shock, skyrocketing bunker prices, and ongoing losses. Despite these
challenges, our company has continued to grow to where it is today through the
united effort and accumulated ingenuity and creativity of everyone in the MOL
Group, from top management to front-line employees. As we move ahead, we all
must pay utmost attention to compliance, commit ourselves to safe operation and
dependable service that our customers can count on, and deepen the trust that
our predecessors have built up over the course of our company's history.
FY2016 is only one of 133
years for our company. But if everyone, executives and employees alike, is
ready to meet the challenges of the next 100 years, this year will mark a
turning point in our history. Let's pull together and win!