Turnkey Construction of Factories in Asia - Hitachi …

1 Hitachi Review Vol. 62 (2013), No. 4 244. Turnkey Construction of Factories in Asia Yoshihiro Kimoto OVERVIEW: An increasing number of companies are seeking to operate Jin Qi Chang multiple production sites, and many are choosing sites in the ASEAN and Takumi Sugiura other nations of the Asian Belt Zone*. However, this poses numerous challenges, including the collection of local information and differences in culture, business practices, laws, and legal systems. In particular, many companies considering the Construction of new plants are looking to resolve problems in a variety of fields, especially those that relate to know-how and conformance with local requirements. Based on its extensive past experience, Hitachi is able to supply integrated solutions for industry that extend from plant Construction through to things like air conditioning, utilities, and waste water treatment, and that take account of local customs and the relevant planning and legal systems.

2 INTRODUCTION that extend from Construction through to things like AS globalization proceeds, corporate interest in air conditioning, utilities, and waste water treatment. establishing offshore operations is growing. In This article discusses the challenges facing the addition to the necessity of conducting the various establishment of overseas operations and describes planning, design, procurement, and Construction examples of relevant solutions. stages of an overseas factory Construction project in accordance with local laws and work practices, such CHALLENGES AND SOLUTIONS FOR. projects are also characterized by the need to deal with OVERSEAS PLANT Construction . many different overseas companies.

3 Corporate interest Companies seeking to establish operations in in operating multiple production sites is currently foreign countries often face a range of concerns that running very high, with many companies choosing to extend from basic planning through to Construction focus their international operations in Southeast Asia. and maintenance, including planning, site selection, Japanese companies, for example, see about standards and other destination country rules, 30% of the barriers and challenges associated with application procedures, assessment of suppliers, and overseas operations coming from differences in plant maintenance management (see Fig. 2). culture and business practices and differences in legal systems, and about 20% coming from the difficulty of collecting local information(1).

4 Companies are looking Number of operations worldwide to resolve problems in a variety of fields, especially those that relate to know-how and conformance with local requirements. Hitachi builds industrial plants, such as clean rooms and Factories for pharmaceuticals, food, and chemicals, with a track record of operations in the Republic of Singapore and other parts of Asia in particular that dates back more than 30 years (see Fig. 1). Based on this extensive experience, the Japan 40 Europe 1. company is able to supply Asia and the rest of the Asia (excluding Japan) 24 Oceania 1. Middle East and Africa 7 Central and South America 1. world with integrated solutions for industrial plants As of September 2012.

5 * The coastal region of Asia extending from Japan to the Arabian Fig. 1 Overseas Operations of Hitachi . Peninsula, encompassing 24 nations or territories, including China, the Association of Southeast Asian Nations (ASEAN), India, and the Hitachi has operations at 24 sites in Asia to support the Middle East. Construction of plants. Turnkey Construction of Factories in Asia 245. Based on its many years of experience, Hitachi Standards can provide comprehensive support for Construction Planning, Concerns about technical and site acquisition, etc. environmental standards, that considers factors such as ensuring that planning Concerns about site regulatory requirements, preparationand infrastructure and so on takes account of local design standards, and that work such as water, electricity, and gas conforms with the country's legal system and other practices.

6 The company offers a total plant solution Assessment of suppliers Civil engineering, that includes support for maintenance management as Construction , plant and equipment, well as Turnkey contracts that cover everything from water, waste water, maintenance, and so on earthworks to design, Construction , and the delivery Consent application of plant and equipment (see Fig. 3). procedures Dealing with different states and ministries Maintenance management ORGANIZATIONAL STRUCTURE FOR Which applications need to be made to which agencies DELIVERING TOTAL PLANT SOLUTIONS. This section uses the example of collaboration between Hitachi and a company considering the Fig. 2 Challenges Facing Plant Construction .

7 Construction of a new overseas plant to describe the Plant Construction needs to deal with local practices, including organizational structure used to deliver total plant such things as design standards and the legal system. solutions. A range of different factors need to be considered Construction company (see Fig. 5). However, because in an overseas Construction project, a process that of concerns such as the lack of information on extends from basic planning through to Construction quality assurance and similar, the customer decided and maintenance management. These include instead to consider a collaboration with Hitachi . standards, regulatory consents, and environmental Hitachi then worked through a process with the rules (see Fig.)

8 4). customer's headquarters to clarify responsibilities, The customer initially considered entering into a set up collaborative arrangements with the parties in Turnkey contract with a local Construction company the target country, and established a comprehensive in order to minimize Construction costs. Under this organizational structure that could achieve a short model the work would be done by subcontractor Construction time and high quality (see Fig. 6). This companies that had a business relationship with the organizational structure allowed the customer to Basic planning, consent applications, design, Construction , and maintenance management Building Plant and equipment Design, Construction , and Delivery and management management Construction , interior finishing, fire prevention, air conditioning, electrical equipment Overhead cranes Turnkey contract Compressors Utilities Clean room Water, purified water, ultra-purified water, waste water treatment Fig.

9 3 Scope of Total Plant Solution. Hitachi provides full support, covering everything from earthworks to design, Construction , the delivery of production machinery, and maintenance management. Hitachi Review Vol. 62 (2013), No. 4 246. Considerations Responses Basic planning Design conforms to Convert Japanese design local standards. to local standards. Company formation Lack of capacity at Have checks performed Site acquisition local design office by experienced designer. Design and environmental assessment Numerous and complex Appropriate actions Construction consent regulatory consents based on extensive experience Construction work Strict environmental rules Turnkey supply of Importance of assessments water treatment Fig.

10 4 Key Considerations for Inspection by government agencies Overseas Plant Construction . Equipment delivery Ambiguous division of responsibility A range of factors need to be between different suppliers Responsible design Official plant operation and work based on considered when constructing Quality assurance capabilities single organization a plant overseas, a process that Maintenance management of local companies extends from basic planning to maintenance management. Customer (subsidiary). Responsible for basic and Construction design Construction design company (design office). Construction design Local Construction company Selection of Construction company Supervision and technical guidance Detailed design Work supervision Construction subcontractors Plant and equipment subcontractors Fig.