Special Feature 2: Value Creation Story (SMARTCONSTRUCTION and Forestry Machinery Business) (4,700 KB)

Komatsu's Growth Strategies

Special Feature 2: Value Creation Story

KOMATSU offers SMARTCONSTRUCTION in the USA and four countries in Europe.

(United Kingdom, Germany, France, and Denmark)

A video of the presentation by Rod Schrader, Chairman & CEO of Komatsu America Corp., at CONEXPO-CON/AGG 2020, a construction equipment tradeshow held in Las Vegas in March 2020, can be found below.

https://www.youtube.com/watch?v=dd7oeh6MkCM&t=23s

Realization of the Safe, Highly Productive, Smart, and Clean Workplaces of the Future

Launch of "SMARTCONSTRUCTION Digital Transformation"

Komatsu launched "SMARTCONSTRUCTION DigitalTransformation," a solution comprising four new IoT devices and eight new applications that accelerate digital transformations through SMARTCONSTRUCTION, in April 2020.

While the previous version of SMARTCONSTRUCTION only digitized part of the construction process ("vertical digi- tization"), these new IoT devices and applications will allow for digitization of the entire process ("horizontal digitiza- tion").This will enable worksite operations to be optimized by synchronizing the real workplace with its digital twin, thereby realizing drastic improvement in the safety, productivity, and environmental performance of the entire worksite.

Customer Construction Process

Surveying

Planning

Construction

Inspection

Traditional

Analog Process

"Vertical digitization": Digitization of individual construction processes (previous SMARTCONSTRUCTION)

	Drone 3D	Construction	3D construction /
	management with	Drone 3D
	measurement /	simulation /	ICT-intensive	finished landform
Digital	visualization	digital task preparation	equipment and apps	inspection
Transformation					Solution
"DX"
Digital
Process

"Horizontal digitization": Digitization and connection of all processes to optimize entire construction process

Digital transformation of construction

("SMARTCONSTRUCTION Digital Transformation")

Komatsu's Business Model		Komatsu's Growth Strategies		Resolution of ESG Issues		Corporate Profile
		through Growth Strategies

Rodney Schrader

コマツアメリカ（株）会長（兼）CEO

Senior Executive Officer

RodneyChairman & CEO,Schrader

Komatsu America Corp.

Optimization of construction through synchronization

between real workplace and its digital twin

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Komatsu's Business Model		Komatsu's Growth Strategies		Resolution of ESG Issues		Corporate Profile
		through Growth Strategies

Komatsu'st 's Growthr th Strategiestr t i

01Special Feature 2: Value Creation Story

SMART

CONSTRUCTION

Profitability and Growth

Compared with other industries, the construction industry is lacking in terms of safety and productivity and has significant room for improvement via digitization.

SMARTCONSTRUCTION is still in the early stages of its introduction. Nonetheless, we have verified its significant benefits for contributing to improved safety and productivity at adopting workplaces. We therefore anticipate that the use of this solution will spread steadily against the backdrop of labor shortfalls and aging workplace operators. The global COVID-19 pandemic also presents an opportunity in the form of potential for the rapid digitization of construction workplaces.

Since its introduction in February 2015, SMARTCONSTRUCTION has addressed the labor shortages facing the Japanese construction industry by realizing improved productivity and safety at customer worksites.This has been made possible by openly employing digital technologies in both Japan and overseas; domestically, these technologies have been introduced to more than 10,000 customer worksites. Komatsu is dedicated to contributing to the realization of the safe, highly productive, smart, and clean workplaces of the future by digitally transforming both products (automation and autonomation operation) and processes (optimization).

SMARTCONSTRUCTION promotional videos and introduction case studies can be found below.

Safety- and Productivity-Related Tasks

Diffusion of Innovation Curve and Earnings Growth

(as Projected by Komatsu)

More dangerous than other industries

• The digitization of construction workplaces is projected to advance more swiftly

No. of deaths per 100,000 employees*1

Financial

0.4

than the popularization of enterprise resource planning (ERP) systems, a similar

Safety

solution launched in the 1980s, due to the current availability of sophisticated and

Information &

1.2

communications

1.9

affordable technologies.

Retail

• The global COVID-19 pandemic is expected to further accelerate this digitization trend.

Manufacturing

2.2

Public utilities

2.6

Service

2.6

Customer type

S-curve

Construction

9.5

Adoption rate

Mining

14.1

Laggards

			Lower than other industries		Smartphone
SMARTCONSTRUCTION promotional videos	SMARTCONSTRUCTION introduction case studies			Adoption in Japan
	Nominal productivity by industry (¥1,000/hr.)*2		(Past Nine Years)	Digitization of
(Japanese only)	(Japanese only)		Late majority
Productivity					construction
http://smartconstruction.komatsu/movie.html	https://smartconstruction.komatsu/case/	Public utilities		12.8			workplaces	Sales at Companies at Which
			Finance & insurance		7.5				ERP Systems Are De Facto
			Information &		7.4			Acceleration due	Standard (Past 40 Years)
			communications
			Manufacturing		5.6	Early majority		to COVID-19
			Retail		4.0			pandemic
			Construction		3.1
			Health		2.8
Strategic Directives			Agriculture, forestry &	1.5		Innovators
			fisheries		Early adopters
		*1 Source: National Census of Fatal Occupational Injuries in 2018, U.S. BUREAU OF LABOR				Time
			STATISTICS				FY2020 N years N+4 years
		*2 Source: Labor Productivity Trends in Major Industries, JAPAN PRODUCTIVITY CENTER

By accelerating the digital transformation of

construction through both products (automa-

Workplaces of the future: Safe, highly productive, smart and clean

tion and autonomation operation) and pro-

cesses (optimization), we will realize the

Level 5

Contributions to Resolution of Environmental and Social Issues

workplaces of the future.

Optimization

Digital Transformation of Construction

of Construction

TOPICS

Processes: Optimization

• Automatic generation of daily tasks from daily

In addition to digitizing individual processes,

optimized construction plans

such as condition surveys by drones ("verti-

Level 4

• Collaboration and autonomous operation of

Launch of SMARTCONSTRUCTION Retrofit kit

cal digitization"), we will link the 3D work-

Construction)of

"Visualization" of workplace data

equipment on the workplace

surement, to conventional construction equipment in Japan in late April through LANDLOG Ltd. Currently, conventional construction equipment

mote the automation and optimization of

Automation of

place information gained from such

Construction

Provision of ICT Capabilities for Conventional Construction Equipment

digitized processes with our LANDLOG

Planning

Komatsu launched SMARTCONSTRUCTION Retrofit kit, the add-on kit to offer ICT capabilities, such as 3D machine guidance and payload mea-

platform ("horizontal digitization") to pro-

entire workplaces.

Level 3

Level

with no ICT capabilities accounts for over 98% of all construction equipment working at construction workplaces in Japan.

3-Dimensional

Products: Automation and Autonomation

Construction

(Optimization

Retrofit kit, Komatsu is going to promote digitization of conventional construction equipment and digital transformation of construction in order to

Level 2

Operation

Planning

To accelerate the pace of achieving digital transformation of construction workplace operations, the SMARTCONSTRUCTION Retrofit kit can

Realizing the safe, highly productive, smart,

be added on not only Komatsu-made models but also other models as long as they are hydraulic excavators. With the SMARTCONSTRUCTION

and clean workplaces of the future will

ICT Construction

require all construction equipment to work

3-Dimensional

Processes

• ICT-intensive

realize safe, highly productive, smart, and clean workplaces of the future soon.

autonomously while collaborating with other

Topographical

construction & machines

equipment at the workplace. At the same

Map

• Visualization of progress

• Utilization of

time, it will be crucial to enhance ICT-

topographical data

intensive equipment, specifically through

ICT-intensive

SMARTCONSTRUCTION

increased automation and through autonomy

Level 1

models

Retrofit kit

Non-ICT-intensive

achieved via communication and coordination

3-Dimensional

models

Design Data

Introduction of advanced ICT-intensive models

among equipment. Komatsu is moving

ahead with research and development on

3D construction based

3D construction:

3D construction:

3D construction:

Advanced

sophisticated automation and autonomy

Conventional

Products (Level of Automation and Autonomous Operation)

ICT-intensive equipment

on 3D design data

Impossible

Possible

Possible

technologies with an eye to the introduction

construction

Possible: Machine

Impossible: Limited

of 5G and other ultrahigh-speed mobile com-

3D control

Impossible

Level 1

Level 2

Level 3

Level 4

Level 5

control

to machined

munications systems and the utilization of

guidance

Limited Operation

Advanced Operation

Advanced Solo

Advanced

Advanced

high-precision global navigation satellite

Support

Support

Automation

Collaborative

Decision-making

Staking & assistant

Autonomous Operation

Autonomous Operation

Necessary

Unnecessary

Unnecessary

system technologies.

workers

3D construction

High-precision 3D

High-precision 3D

Impossible to obtain

data: Possible to

data: Possible to

records

obtain

obtain

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Equipment with SMARTCONSTRUCTION

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Retrofit

Kit (provisional name)

Komatsu's Growth Strategies

02Special Feature 2: Value Creation Story

Forestry Machinery Business

Sustainable forestry is an undertaking with the potential to contribute to the accomplishment of the Sustainable

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		through Growth Strategies

Profitability and Growth

Komatsu's forest machine business has continued to grow smoothly since the 2004 acquisition of Partek Forest AB (currently, Komatsu Forest AB) of Sweden. Looking ahead, economic growth in emerging countries is expected to drive rises in housing starts and pulp demand. In addition, we anticipate stable growth in timber production volumes as a substitute for plastic amid rising environmental awareness.

Development Goals (SDGs) advocated by the United Nations.These contributions include helping mitigate climate change by reducing the amount of CO2 in the atmosphere and preserving biodiversity and water resources. Komatsu regards a forestry business as an important industry that contributes toward the achievement of the SDGs. In forestry, it is important to contribute to realizing the forest management cycle of planting, cultivating, and harvesting trees, and it is required to operate in a way that places due consideration on forest environments. Komatsu operates a wide-ranging forestry machine business on a global basis to help increase safety and productivity in forestry operation.

Videos on forest machines, including a look at a forestry project adopting ICT in Sweden, can be found here.

https://youtu.be/_D-EfqsrGT0

Strategic Directives

Komatsu is working to mechanize forestry operation, including planting, cultivating, and harvesting trees, to contribute to sustainable forestry. In the realm of planting, we have developed subsoiling machines and automated tree planters based on our bull- dozers. These machines are currently being supplied to the Brazilian market.

Forest Machine Business Sales

(Billions of yen)

140
105
70
35
0												(FY)
2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024

Global Timber Production Volumes

(Millions of m3)

2,400

1,800
1,200
600
0			2025 (FY)
2010	2015	2020
Total industrial timber	Sawtimber	Pulp materials

Source: Food and Agriculture Organization of the United Nations (Figures for 2019 forward are the Company's projections.)

Moreover, in the area of timber harvesting and extracting operations, where most forestry-related occupational accidents tend to occur, we are making progress in developing and selling forestry equipment that enables to harvest and extract trees in steep area without people having to descend to the forest floor.

TOPICS

Contributions to Resolution of Environmental and Social Issues

• Introduction of NewTree Planting	• Improvement of Harvesting and
Products	Extracting Productivity and Safety
Planting			Harvesting

	Cultivating
D61EM-23M0 automated tree	Sustainable		PC130F Harvester
Forestry
planter		(forest machine based on hydraulic
Planting		Harvesting	excavators)
Land preparation			Extracting

D85EX subsoiling machine	Forwarder 895
	Forest Forwarder Usable on Slopes

Smart Forestry Powered by ICT

We have been working on a smart forestry concept that makes it possible to visually monitor forestry supply chains. In Japan, we have been using drones to conduct tree planting and growth management surveys including forestry resource quantity estimates. This has enabled us to reduce the labor hours needed for surveys for felling from around five people per hectare per day to one person per hectare per day. Moreover, by using ICT-equipped harvesters for processing and soring logs, we have been able to reduce the labor hours needed from about 13 people per hectare per day to about 0.5 people per hectare per day. We are also focusing our efforts on developing applications that are capable of drawing on the accumulated log processing and timber transport data of the LANDLOG open platform. We will thereby contribute to streamlining operations in the future by sharing information with forestry business operators on lumber markets as well as lumber consumers.

Going forward, we hope to help promote cyclical forestry around the world by facilitating further safety and productivity improvements in forestry.

3D image

Through Komatsu's smart forestry solutions, drone photography can be utilized to prepare 3D images of forests, which can be used to automatically estimate the number of trees, diameters of trees, and the volume of timber to be produced, thereby contributing to higher levels of efficiency in pre-felling forest resource surveys.

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