The year 2024 problem can’t wait! Stocks that are in the spotlight due to “Construction Tech”, where demand continues to grow | Special Feature – Stock Search News

-Measures to deal with the worsening labor shortage and aging population are attracting attention, and the review of “analog regulations” is also a tailwind-

From April 1, 2024, upper limit regulations on overtime work based on the “Work Style Reform Related Act” will also be applied to construction companies. The construction industry, which is suffering from a serious labor shortage, has been trying to respond to the “2024 problem” by improving the efficiency of all operations, but not everything is ready in April. Many companies are starting to fully implement DX (digital transformation) to improve operational efficiency, and business opportunities for companies involved in construction tech, including construction DX, are likely to continue to expand for the time being.

●The upper limit on overtime work will start to apply from April.

The upper limit on overtime work based on the Work Style Reform Act was applied to the construction industry from April of this year after a five-year grace period. Unless there are special circumstances, overtime work must be kept within 45 hours per month and 360 hours per year, the same as in general companies. Additionally, even if labor and management agree on special circumstances, upper limits are set such as “up to 720 hours per year,” “up to 80 hours per month on average for 2 to 6 months,” and “less than 100 hours per month.” (Excluding those engaged in reconstruction projects).

If a company violates the regulations, the company will be subject to up to six months in prison or a fine of up to 300,000 yen. If the company receives a penalty, it will be deemed to have violated the Labor Standards Act and will be prohibited from accepting future public construction orders. will also be affected. Therefore, companies are required to appropriately manage working hours so as not to exceed the upper limit.

●More than half of companies are unable to implement a two-day work week

What was the situation regarding overtime work in the construction industry before the introduction of the Work Style Reform Law? According to the “Member Company Working Hours Survey Report – FY2022-” released in July 2021 by the Japan Federation of Construction Contractors, which is made up of general contractors nationwide, in a survey conducted among 140 member companies in FY2012, 22.7% of the workers at the 72 companies surveyed had overtime hours that exceeded the upper limit regulations. In addition, according to the “Follow-up report for the first half of 2023,” an action plan to realize two days off per week, which was released by the federation in December 2013, the association has also implemented a “4-week, 8-day closed facility,” which gives 8 days off in 4 weeks. Of the 104 companies that responded to the survey, fewer than half of them responded to the survey.

Of course, the Ministry of Land, Infrastructure, Transport and Tourism, in anticipation of the application of upper limits on overtime work, had announced a policy of working on two days off per week in principle, with all directly managed construction work designated by the client. This means that the construction industry has not been able to implement this two-day work week system. This meant that the labor shortage was serious.

●Increasing labor shortage and aging of construction workers

According to the Ministry of Internal Affairs and Communications’ Labor Force Survey, the number of people employed in the construction industry in 2013 was 4.83 million, an increase of 40,000 compared to the previous year, but the number has gradually decreased from the peak of 6.85 million in 1997. The number of people has decreased by more than 2 million people in 26 years. Additionally, 36.6% of employed workers are 55 years of age or older, which is 4.7 percentage points higher than the 31.9% for all industries. On the other hand, 11.6% of people under 29 years old are 5.1 points lower than the 16.7% for all industries, and the aging of the population is also a serious problem.

If the number of working hours per person is reduced by the Work Style Reform Act, simply put, more people will have to perform traditional tasks, which will exacerbate the labor shortage. What we need to do to solve this problem is the introduction of construction technology.

●There is a lot of room for growth in the introduction of drones and the introduction of IT.

Construction tech is an initiative to improve efficiency in construction by introducing IT and cutting-edge technology. The introduction of IT is progressing mainly among major general contractors, and there are cases where productivity has improved at some sites, but many construction companies are said to be slower to introduce it than other industries. ing.

Additionally, the review of the “analog regulations” announced by the government in June 2022 will also provide a tailwind for construction tech. In the construction industry, this includes abolishing regulations that require visual inspections of infrastructure and regulations that require a permanent presence on-site, allowing for remote inspections using drones and internet cameras. The fact that IT adoption has been slower than other industries means that there is a lot of room for growth, so we need to pay attention to related stocks.

●Construction tech related stocks are

As mentioned above, although the cap on overtime work began to be applied in April, not all companies have introduced construction technology. However, there is no time for measures to be taken to address the labor shortage, and it is not difficult to imagine that companies that have not yet introduced it will be forced to do so.

The most popular brand to watch is Spider Plus <4192> [東証Ｇ]right. We are developing the construction DX service “SPIDERPLUS”, which centrally manages construction site drawings, photos, construction status, etc. in the cloud. As of the end of December 2023, the number of companies that have introduced it has reached 1,841 (20.8% increase compared to the same period last year). According to the company, in addition to major companies, implementation is progressing among small and medium-sized enterprises looking for solutions to the 2024 problem, and they will continue to expand optional functions in order to increase ARPU (contract unit price per ID). Anticipate.

Arent <5254> [東証Ｇ]is engaged in DX consulting mainly for the construction industry, with a focus on new business creation (product co-creation and development business), as well as a co-creation product sales business that sells products created with client companies. The product co-creation and development business consists of main development costs (flow income) and ongoing development costs (stock income), and because the development period spans a long period of time, it achieves stable revenue growth. On the other hand, in the co-creation product sales business, we offer SaaS “PlantStream” specialized for the plant engineering industry.

Fukui Computer Holdings <9790> [東証Ｐ]is a major domestic manufacturer of BIM/CIM, which is increasingly being introduced in the construction industry. BIM stands for modeling of building information, and CIM stands for modeling of construction information, which is a digital technology that creates three-dimensional structures, but overseas companies are dominant. Fukui Computer Architect’s “GLOOBE” has the advantage of being compatible with Japanese design methods, such as architectural data in accordance with Japanese standards, and is increasing its market share.

CTS <4345> [東証Ｐ]As a company specializing in construction ICT, our main focus is on providing cloud storage services that manage construction-related data such as files, drawings, photos, and videos in the cloud. In particular, rental and subscription services are currently growing. Additionally, in July of last year, we released the “Site Assist Service,” which allows you to understand the situation even when you are not on site, and contributes to improving work efficiency by supporting progress management in conjunction with storage services.

Core concept technology <4371> [東証Ｇ]The two pillars of our business are DX support and IT human resource procurement support, and DX support is centered on the manufacturing and construction industries. The company’s DX development platform “Orizuru” is characterized by its ability to respond to customer requests quickly and at low cost, and it has a strong track record in supporting the development of BIM/CIM management systems.

Blue Innovation <5597> [東証Ｇ]uses drones to inspect social infrastructure such as building exterior walls, roofs, and bridges. Utilizing GPS-equipped drones, which have the advantage of outdoor inspections, we perform photography, inspection, and surveying while flying stably, supporting remote confirmation.

Genoa <5570> [東証Ｇ]provides high-precision GNSS (Global Navigation Satellite System) correction information distribution services, and the surveying field is a source of stable growth. In addition, the company is focusing on the civil engineering, agricultural, and drone fields, and plans to sign new contracts.

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