[New Year's Message] Ha Seok-ju, CEO of Lotte Construction, "Will Achieve 100% Cost Reduction Target"

Ha Seok-ju, CEO of Lotte Construction

[Asia Economy Reporter Donghyun Choi] Ha Seok-ju, CEO of Lotte Construction, emphasized company-wide cost reduction, strengthening developer capabilities, and securing new growth engines as management policies for the upcoming new year.

In his New Year's address on the 31st, CEO Ha stated, "In the new year, we will implement a company-wide cost management system that achieves cost reduction in all areas, from orders and design to construction," adding, "We will achieve 100% of our cost reduction goals through bold reviews of new construction methods and process improvements."

CEO Ha also mentioned strengthening comprehensive developer capabilities. He said, "Beyond simple contract-based business models, we must continuously discover projects that maximize profits by overseeing the entire business process?from direct project discovery and planning to financing, construction, and operation management," emphasizing, "Through this, we will shape the future Lotte Construction that stands out as a developer."

He also called for securing new growth engines. He stated, "We must proactively discover new businesses such as group-linked complex development projects with high profitability and silver housing," and added, "At the same time, by securing innovative technological capabilities, we should build the capacity to participate in bids for challenging domestic and international public civil engineering projects such as cable-stayed bridges and deep tunnels, and accumulate construction capabilities."

Furthermore, CEO Ha stressed, "We must continuously expand overseas business," and reiterated, "We should expand our successful experiences in key markets such as Vietnam and Indonesia, and strive to compose an optimal portfolio through expanding new businesses and diversifying construction types."

Below is the full text of CEO Ha’s New Year's address.

Dear Lotte Construction family! The year of the Ox, 2021, has dawned. I wish you all good health this year, great achievements in all your hopes, and a home filled with happiness. Happy New Year.

To all Lotte Construction employees! Looking back on the past year, we endured a year of constant unease amid the global low-growth trend and the worst domestic economic recession caused by the spread of COVID-19.

Dear Lotte Construction employees!

The business environment in 2021 is itself a continuous crisis. The contraction of the real economy due to the spread of COVID-19 makes it difficult to predict the timing of economic recovery, and changes in government real estate policies signal fluctuations across the construction market. In this challenging management environment, the reality we face is not a crisis that can be resolved by simply enduring and waiting; without approaching it with a completely new perspective and attitude, we will only regress and face an insurmountable survival crisis.

Therefore, amid such uncertainty, rather than being dependent on external circumstances, we must actively recognize the direction of change accurately, gather new capabilities, and move forward unwaveringly with the determination to overcome the crisis.

Starting the new year with the slogan, "A year to strengthen the foundation for sustainable growth through innovation across the organization!" I would like to urge you to focus on profitability-centered management and sustainable management with renewed determination.

First, this year we must innovate our business structure centered on profitability.

First, at the company-wide level, all employees and organizations will participate to implement a total cost management system that achieves cost reduction in all areas from orders to design, construction, and after-sales service.

Cost competitiveness is an absolute weapon to survive fierce survival competition and prolonged recession. The scope for reducing costs by existing methods is very limited. We must create innovative ideas that break away from existing methods and practices and eliminate inefficiencies at every stage of the cost input process. Based on this, let us achieve 100% of the cost reduction goals through bold reviews of new construction methods and process improvements.

Second, we must accelerate the creation of new high added value by advancing comprehensive developer capabilities. Beyond simple contract-based business models, we must continuously discover projects that maximize profits by overseeing the entire business process?from direct project discovery and planning to financing, construction, and operation management.

In the future, we should add the concept of Development to the concept of LOTTE E&C and envision ourselves as a developer who stands out.

Third, we must thoroughly manage fundamental risks to remain unshaken even in the worst crisis situations. Establishing scenario plans for various situations in response to external volatility and maintaining financial stability based on cash flow through constant monitoring of investment and equity projects are the basics for securing the company's substance and strength.

Also, quality control that guarantees customer trust and prevention of safety accidents are fundamental responsibilities of the company. If we act only from a short-term functional perspective, damaging these ultimate values, the company cannot survive regardless of losses. Therefore, quality innovation and safety management must not allow any concessions under any circumstances.

Another request is sustainable management that secures core competencies through continuous change and gains an advantage in survival competition. To this end, first, while solidifying the foundation of existing core businesses, we must secure new growth engines that guarantee the company's future.

We must proactively discover and promote new businesses such as group-linked complex development projects with high profitability and silver housing.

At the same time, by securing innovative technological capabilities, we must build the capacity to participate in bids for challenging domestic and international public civil engineering projects such as cable-stayed bridges and deep tunnels, and accumulate construction capabilities. Moreover, in the plant business, we must secure experience and technological competitiveness in all areas of chemical downstream and LNG thermal power plants to advance project execution capabilities.

Advanced technological competitiveness will be the driving force that leads new growth engines and an important key in the virtuous cycle that enhances our company's sustainability, enabling differentiated value creation.

Second, to grow Lotte Construction, we must continuously expand overseas business. The expansion of global market entry, which I have emphasized since my inauguration, is a clear solution to the fierce competition and low-growth concerns in the mature domestic construction market.

Therefore, we must expand our successful experiences in key markets such as Vietnam and Indonesia, and strive to compose an optimal portfolio in overseas business through stable expansion of new businesses and diversification of construction types based on a local-oriented business structure and partnerships with excellent developers.

Third, companies that maintain today by doing the same as yesterday have no tomorrow. We must constantly strive to create a smart organization. Sometimes, just as you must let go of small things in your hand to grasp bigger ones, we must boldly discard unnecessary tasks, meetings, and reports that have been habitual until now and comprehensively review whether they are truly necessary and if there are areas for improvement.

Along with this, we must not forget that an open organizational culture based on autonomy and flexibility is a core competitiveness for sustainable growth. We must thoroughly break away from conservative and outdated thinking, embrace open-minded thinking and behavioral patterns, and all employees must work together to establish an efficient organizational culture based on autonomy and responsibility through healthy communication.

Finally, as social and moral value standards required of companies are rising, ethical management, compliance management, and adherence to compliance are non-negotiable for sustainable growth. Even if it is difficult, let us walk the right path that allows us to look far ahead together with partners and customers.

Proud Lotte Construction family!

Our company has shone even brighter in difficult environments. Although the uncertainty we have never experienced before is increasing, who will seize the new markets and opportunities that arise when the crisis and confusion subside and the global economy enters a recovery path depends on how we respond now. The right time to discover future businesses that will sustain the company for decades and secure the strength and competitiveness to overcome upcoming difficulties is now.

Let us achieve the goals we set for 2021, prepare swiftly and meticulously for environmental changes, and rather than shrinking from the incoming waves, ride the waves of opportunity and move forward together to a bigger world.

I believe in the strength of Lotte Construction, which has overcome countless trials over 61 years. Let us boldly challenge and achieve our goals in 2021, turning the coming crisis into an opportunity and making every day fulfilling.

Thank you.

This content was produced with the assistance of AI translation services.