Diversification and digitalization are revolutionizing piping and plumbing

In the past few decades, we have seen regional manufacturers located in countries such as China, Korea, and Taiwan replicate Japanese processes and products at cheaper costs. Despite this, Japanese companies still have large market shares in niche B2B (business-to-business) fields. What should Japanese companies do to combat such stiff regional competition?

We are indeed facing a fierce price competition now. However, consumers at the bottom of the pyramid still require high-quality products and services. As a result, our company is trying to draw customers closer and to meet their demands through the uniqueness nurtured from our long history. Through time, we have built a trusted relationship with our customers. Instead of overfocusing on a particular business segment, we are diversifying our business to meet the new needs of our clients. Our main business is in piping and plumbing construction, so we must provide new products and services in this field. For example, we use 3D CAD/CAM software that allows us to provide special adjustments to the piping system before installation. We use this software to make adjustments or create certain conditions within the pipes, electrical, mechanical, and other parts of a building to eliminate potential problems ahead of time.

With regards to piping and plumbing, we have created a modular system whereby we assemble the piping and plumbing network in a factory beforehand so that we can bring partially completed parts to assemble onsite. Doing this allows us to reduce the number of people required on-field, lower assembly time, and reduce construction-related risks.

We also provide real-time progress reports by 3D CAD software to our customers.

In recent times, smart plants with sensors to gather information via IoT which is then analyzed by AI have simplified core building facilities such as HVAC (heating, ventilation, and air conditioning), plumbing, and lighting equipment. In your case, you are using 3D CAD software and the AutoPIPE analysis software, which analyzes piping conditions such as heat, vibrations, and wind. What has been the impact of digital technologies on your firm?

Japan’s construction boom occurred around 50 years ago. Consequently, the buildings and facilities that were built back then are aging. Old public buildings had a bulky design and therefore use a lot of space, so there is an increasing need to either maintain and repair them or build new facilities. Japan is also suffering from a declining population, which limits its workforce, and the country is becoming increasingly depopulated. As local governments try to reduce the space occupied by old facilities, building new ones has proven to be a difficult task. As such, Japan has chosen to renew existing buildings and facilities, which is cost-effective and opens opportunities to hire local people. At Asahi Synchrotech, we have developed a modular strategy that allows us to combine and pre-assemble different parts of a system at a factory prior to shipping the system on-site. We do this in advance at our factory, leveraging our 3D CAD software and engineers. On top of allowing our clients to save time and cost, this also decreases on-site danger for construction workers.

There are several technologies we have incorporated into our company, the first one being the webcam. We use it to remotely control and visualize the development of the worksite, enabling us to share concerns or issues with the relevant people. Next is the iPad, used for when we have drawings that need to be fixed and renewed quickly in real-time. We also use cloud services to upload photos, videos, and information that can later be accessed and sorted remotely. The third is spatial adjustment and coordination, which allows us to make swift modifications to existing designs. The fourth is RFID (radio frequency identification), which uses electromagnetic fields to identify and track components on-site. This technology is still in the experimental phase. However, once the technology is ready to be rolled out, it will enable us to track our project’s status more accurately, identify issues ahead of time and significantly enhance our supply-chain management.

Furthermore, we are currently utilizing information devices to assist our engineers in conducting piping and plumbing design, and to create information reports.

The Japanese population has been declining and ageing and is now the oldest in the world. In the next 15 years, it is expected that a third of the Japanese population will be over the age of 65, thereby creating a potential labor shortage.  How is your firm tackling and adapting to the challenges caused by Japan’s demographic decline?

Integrating information devices in our processes allows inexperienced workers to start working right away, enabling them to handle applications such as 3D CAD/CAM and spatial coordination & adjustment. Furthermore, we use drones instead of humans to monitor the worksite, thereby reducing the need for human labor. When requesting maintenance and repair work, our customers demand labor-saving technologies.

From an internal perspective, Asahi Synchrotech provides continuous employment. As long as our workers are healthy and have the desire to keep working with us, we provide employment until they are 70 years old.

When it comes to HR development, transferring technological and engineering knowledge from seasoned workers to new employees is of paramount importance. While young workers are swiftly able to read drawings, they still need to be trained on how to run the business in the field, which includes the added factor of fostering human relationships. In Indonesia, we hired local engineers, brought them to Japan for training and improved their engineering skillset. This allows us to complement the labor shortage experienced domestically.

As an SME, Japan’s tight employment market is a very tough situation for us. We usually hire about ten to twelve new graduates every year. This year, seven people are joining us in April. We also utilize external organizations and educational facilities to train our new hires, who are trained for three years. After that, we expect them to understand the company, as well as our customers.

After understanding the basics, we want them to consider their personal career path and project themselves in the future. Asahi Synchrotech collaborates with over 300 partner companies. Thanks to these collaborations, we can achieve big things. Even though SMEs deal on a smaller scale, we would like young people to understand that our company, together with its partners, makes a positive impact on the world. We would like new hires to experience a sense of achievement by gaining expertise that can help guide them on a good career path.

Can you share with us some successful co-creation projects that you have been involved in?

Asahi Synchrotech is a subsidiary of TOENEC, which itself is a subsidiary of the Chubu Electric Power Company. This corporate structure nurtures synergies between group companies.

Furthermore, our business is collaborative in essence. Our clients’ demands vary from sector to sector, and from plant to plant, so we must carefully listen to their concerns and tailor our offering based on their demands. Some manufacturers require hardware, others require software services, so we must be able to offer both. To provide our customers with quality, safety, and swift delivery, we collaborate with our parent company as well as with other manufacturers and affiliated to increase our efficiency and service offering.

Looking to the future, are you looking for more corporate partnerships?

We usually receive construction design drawings from engineering or water treatment manufacturers, and we then improve efficiency with 3D adjustments. In the construction field, our existing partners include TOYO ENGINEERING, CHIYODA, and JGC JAPAN. In the water treatment business, our existing partners include METAWATER and KUBOTA. Looking at the future, we foresee that these types of requests will increase.

We also undertake work directly from customers in the paper manufacturing business. By virtue of our long experience in the sector, we have gained a holistic understanding of the paper manufacturing industry and can provide integrated services, ranging from behavioral confirmation to raw material procurement and plumbing. In the past, there were many papermaking companies in Japan, but not anymore. The decline of the papermaking industry caused many of our competitors to exit the business. Consequently, while the size of the market has shrunk, our market share has increased, and we are currently the only company in Japan that can offer such a level of integrated services. Furthermore, our experience catering to the papermaking industry has allowed us to explore new sectors, including biomass and geothermal.

Asahi Synchrotech offices

As you mentioned, Asahi Synchrotech caters to a variety of fields, including papermaking as well as chemicals, pharmaceutical, and energy, amongst other. How are you able to cater to such diverse sectors?

In the past, we were focused on papermaking, industrial plant construction, and general construction facilities. However, these sectors are heavily dependent on economic trends, which can be unstable. This resulted in business deterioration and led us to diversify to new industries. Having a wide variety of clients allows us to achieve stability: when a certain sector underperforms, another one can balance it out. Right now, with our history and track record, we receive a lot of requests and orders from different customers.

On top of maintaining our main business of piping and plumbing, we are diversifying to other fields. We started working on the creation of a modular system, spatial adjustment technology, and visualization technology. As a result, our engineering skillset has greatly improved.

Since 1991, Asahi Synchrotech has been present in Jakarta, Indonesia. Where do you plan on expanding your business next and how will you do so? Can you elaborate on your international strategy?

In the past, we did business in Thailand and the Philippines, and had a temporary office in Hong Kong, but we decided to close them for various reasons. As of now, our only oversea subsidiary is in Indonesia. Performance is strong, so we will continue to invest in our overseas business.

Our office in Jakarta is offering the same modular system as our office in Japan. Looking at the future, we will continue to train local engineers by transferring them to Japan. We also plan to share our method with our subsidiary in Jakarta.

Prior to Indonesia, we established an operation in the Philippines to support Taisei Corporation, one of Japan’s largest construction firms. After that, we moved to Indonesia, and it has been 30 years since we established our Indonesian operation. Without a good track record, we would not have been able to keep doing business there. Many customers are even surprised when they learn that our small company in Indonesia is running very well! The truth is that it took us twenty years to turn a profit in Indonesia. We finally gained the trust of local customers and established a good relationship with Japanese, European, and local Indonesian companies. We decided to keep the business in Indonesia at a time when many Japanese firms left because they could no longer make profits. We kept the business until the number of our customers grew. Indonesian engineers have a strong skillset in the electrical field; they are sometimes even more advanced than their Japanese counterparts. We also have skilled Filipino staff in the Indonesian office, one of whom is a mechanical engineer and the other an electrical engineer. Because we had a history with the Philippines, we have Filipino workers educated and trained in Japan, who later transferred to Indonesia. This is our company’s unique employment model. Our subsidiary in Jakarta is valued at IDR 200 billion and is supported by 100 employees.

Imagine that we interview you again on the last day of your presidency. What hopes and dreams would you like to have achieved by then?

To be honest, I am not trying to increase our business size tenfold. Rather, we are thinking about what we can do to better the lives of our employees. In line with the Japanese government’s new working regulations, our objective is to provide a better working environment for our employees. This can mean a salary raise or more time for leisure, depending on the situation.

From a more personal standpoint, my goal is for all our employees to feel a sense of pride and achievement when working for Asahi Synchrotech. I want them to feel that we are making a difference in the world; I want them to feel proud of the company, and of themselves.