The Hitachi Group’s Growth Strategy

Story of Value Creation in the Industry Sector
In the world of industry, the speed and complexity of market changes caused by factors such as climate change and resource shortages
are increasing along with the working-age population decreases and global competition intensifies. Under these circumstances, thecreation of new services and innovations using advanced digital technologies, such as AI, IoT and big data analysis technologies, is indemand in a variety of different fields. As a result of this demand, the global IoT market is expected to experience a high rate of growth.

Results and Targets*1
Revenues (¥ billion)/
Overseas revenue ratio (%)

Principal Products and Services
Adjusted operating income (¥ billion)/
Adjusted operating income ratio (%)

30%
22%

843.6
251.8
169.1
419.8
FY2018 (Results)

1,000.0
348.0
181.5
470.5
FY2021(Target)

FY2018 Revenues¥843.6

IndustrialProducts Business

50 %

9.1%

91.0
6.9％

30.5

58.2

16.0

12.7
12.7billion

Industry &Distribution BU

Mass-production business (32%)
Air compressors

45.1

32.9

Drive systems

Water &Environment BU

Marking systems

FY2018 (Results)

FY2021(Target)

Power distribution equipment, etc.

ROIC

Drive systems
Pumps

86.0
56.6
9.4
14.5
32.9
FY2018 (Results)

31.9
16.0
39.3
FY2021(Target)

solution business*2

Radial compressors

8.6%
6.7%

10.8%

Transport systems, etc.

9.0%
FY2018 (Results)

FY2021(Target)

Industry & Distribution BU
Water & Environment BU
Industrial Products Business*1 The impact of a large-scale overseas Engineering, Procurement, Construction (EPC) project of the Industry& Distribution BU has been excluded. Figures for Hitachi Plant Services and Hitachi Plant Mechanics, whichwere transferred in FY2019 from the Industry & Distribution BU to the Water & Environment BU and Hitachi
Industrial Products, respectively, were revised retroactively. Figures for each subsegment include intersegment
transactions. Figures for each BU include the control systems business, which is posted in the IT Sector.
*2 Air conditioning and water treatment facilities for factories, social infrastructure, etc.

Vision and Targets under the 2021 Mid-term Management Plan

seamless solutions that achieve overall optimization. The keys to achieving“Increasing the efficiency of customers’ production and processingsimultaneously possesses products, OT and IT; the use of Lumada andsystems,” “providing safe and secure water environments” androbotic SI, which drives digital innovation; and the construction of value“reducing CO2 emissions”

chains that range from management to workplace and from procurement toIn the Industry Sector, we aim to become the best solution partner for

manufacturing while spanning across fields such as logistics, sales, services

customers in the industrial field by utilizing our strengths in “Products ×and maintenance. With these keys in place, we will aim to become the best

OT × IT.” Furthermore, we will create social and environmental value bysolution partner for customers in the field of industry.

these goals are the Industry Sector, which is a business entity that

“increasing the efficiency of customers’ production and processing
Improving the Overall Value of Customer Businesses

systems” through the provision of solutions that contribute to

Maximize environmental value Maximize social value

distribution fields; “providing safe and secure water environments” to70 million people per day worldwide using water and sewage
infrastructure and seawater desalination technology; and “reducingCO2 emissions” through energy-saving products.

Growth Strategies under the 2021 Mid-term Management PlanAs the world changes and customer needs diversify and become morehigh-level, we face various issues that arise between the workplace,

Total seamless solutions

productivity and quality improvements in the manufacturing andCyber space

Management

Manage data
mentManagement

Manage data
ment

Workplace

WorkplaceManagementdata

huMan
Method Material
MachineWorkplace 4M data

huMan
Method Material
MachineWorkplace 4M*4 data

Management

Manage data
ment

Total seamlesssolutions

WorkplaceManagementdata
huMan
Method Material
MachineWorkplace 4M data

Management

these issues as “boundaries.” By connecting cyber spaces and real spaces

WorkplacehuMan
Method Material
MachineWorkplace 4M data

Real space

using digital technology, we will solve “boundary” issues and provide total

Hitachi Integrated Report 2019

Vision of the Industry Sector*3 Supply Chain Management (SCM)*4 4M: huMan, Machine, Material and Method

huMan
Method Material
MachineWorkplace 4M data

management and the supply chain. In the Industry Sector, we recognize

5820 %

Water supply and sewage, utility

Built-to-order business (18%)

EBIT (¥ billion)/EBIT ratio (%)

30 %Digital solution business

Global SCM*3network

ManagementWorkplace

Collaborative Creation of Value within the Industry Sector
Total Seamless Solutions that Solve “Boundary” Issues
In the Industry Sector, we will provide total seamless solutions while
focusing on four next-generation solutions (manufacturing, logistics,maintenance and utility) and connected products, thereby helping toimprove the overall value of our customers’ businesses.
One Lumada solution contributing to the achievement of these goals
is the digital twin solution, which was launched in November 2018. Thesolution facilitates AI analysis and simulation by using an advanced
data model to link manufacturing workplace OT and IT data in cyber
space, supporting the optimization of the entire production process.
Data Modeling of Business Operations and 4M and theOptimization of Production Processes through Digital Twin

Strengthening of OT Area through the Acquisitionof the Robotic SI BusinessIn the Industry Sector, we believe that the manufacturing industry will
evolve from “manufacturing through people and machines” to“manufacturing through people and robots” before progressing to“manufacturing that connects management with the workplace.”
Under these circumstances, we have decided that OT areas related to
the Robotic SI business, which accumulates field data, will become
increasingly important in addition to rising needs for advanced andoptimized manufacturing conducted using robots. In accordance withthis judgment, we reached acquisition agreements in 2019 with JRAutomation, a United States-based robotic SI business operator, andJapan-based KEC.
The industrial world is facing a growing need for automation due tolabor shortages and rising labor costs, and the robotic SI market isexpected to grow rapidly as a result. In the Industry Sector, we will
work to expand the Robotic SI business on a global scale by mutually
utilizing the resources of JR Automation, KEC and Hitachi Industrial
Equipment Systems and the research and development capabilities ofHitachi.
In the Industry Sector, we will globally develop Lumada solutions thatutilize digital technology based on 4M data obtained workplace fromcustomers by acquiring technology, expertise and customer bases
from these two companies in the robotic SI market. This will enable us

Production
planParts

to contribute to the improvement of our customers' management andProduction

Products

Conceptual diagram of the digital twin solution

to help raise the overall values of their businesses through seamlesscollaboration between workplace and management.

One example of the application of Lumada at manufacturing workplaceis our collaboration with the AMADA Group, a major metalworking
machinery manufacturer. After delivering servo motors used in pressing
machines, we constructed a tooling IoT production line by applying
robotics in 2017. We also contributed to the improvement of productivity
and operational efficiency in 2019, when we built Assembly Navigation
System with the goal of upgrading manufacturing workplaces.

KEC’s Robotic SI business

In Pursuit of Further Growth in the Industry Sector
In the Industry Sector, we will strengthen and expand total seamlesssolutions that leverage the strengths of “Products × OT × IT” andaccelerate and enhance global expansion in pursuit of further growth.
Assembly Navigation System at the AMADA Group’s Fujinomiya Works

Furthermore, we will aim to become a business entity that provides
high added value by expanding recurring business*5 and improving

Furthermore, because of the importance of connected products in
the Industry Sector, in 2017, we worked to increase our global strength
in terms of connected products by acquiring Sullair, an air compressor

capital efficiency.
*5 Cycling business that exists after sale service market and continual replace demand such as replacement
parts.

manufacturer in the United States.

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