Wednesday, May 18, 2022
Industry & Trade | Asia-Pacific | Japan

Japan

Japan’s hidden champion of metal work architecture


6 months ago

Yoshihiko Utsuno, President of Kikukawa Kogyo Co., Ltd
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Yoshihiko Utsuno

President of Kikukawa Kogyo Co., Ltd

Leveraging on its almost 90 years of history as Japan’s premiere metal work architect, Kikukawa Industry Co., Ltd. has become a mainstay for architectural projects around the world. We sat down with President Yoshihiko Utsuno to discuss everything Kikukawa: past, present, and future.

In the last few decades, we have seen the rise of regional manufacturing competitors in places like China, South Korea, and Taiwan, that have replicated the Japanese monozukuri process. Taking advantage of a lower labour cost, they create products that are cheaper, but have a higher rate of defects. Despite such competition, we still see Japanese firms maintaining a high global share, especially in B2B markets and niche fields, characterized by High-Mix Low-Volume production. As a Japanese premier designer, manufacturer, and seller of metalwork products, what are the competitive advantages that allow Japanese manufacturers to maintain such a high global market share?

Japanese society has a combination of factors that provides a stable environment for solid human relationships. It is a secular society where there is a separation between religion and state and eighty percent of the population is highly educated. With such stable conditions, companies can thrive, develop, and pursue excellence in different fields of discipline. Our company's motto is “Never Say No” and this mentality can be seen not only in our company, but throughout entire Japanese population. As a people, we never say no. We take on challenges. We are resilient, persistent, and tenacious. These are the elements behind Japanese companies' ability to take on complex projects such as the Dubai Metro and Olympic stadiums. It definitely involves higher risks taking on these projects and sometimes they might not even be profitable, but Japanese companies are willing to see them to completion, even if it will cost them. Once they have committed to a project, they will never leave it unfinished.  This is the work ethic of the Japanese people.

An example that I can give is the Shinkansen, or bullet train technology that Japan has been trying to export overseas. Due to pricing, we lost the bid in Indonesia, which decided to take the Chinese bullet train technology. Taiwan has decided to adopt the Japanese Shinkansen technology though. When we compare these two projects, the Indonesian project has stalled and has not yet been completed, whereas the Taiwan project is already finished and running smoothly and safely. Although we might not be competitive when it comes to cost, we have strengths in other areas that make us a strong candidate for overseas companies to consider.

 

When Western media covers Japan, they always talk about Japan's ageing society and population decline. The statistic is that in 15 years, one out of three Japanese people would be 65 or older. This year in the construction field, one in four of all construction workers are already 65 years old. As Japan's premier architect, what challenges does Japan's ageing and demographic decline pose for you and how are you planning on overcoming these challenges?

The average lifespan of a Japanese male today is about 75 years, and the average retirement age is 60.  We can see that people are starting to work longer to sustain themselves. There are about 60 million among the working-age range between 16 to 65, however the only people retiring at the actual stipulated age are the ones that work for large companies. When it comes to SMEs (small and medium-sized enterprises), there is a trend of people working long after they are 65 if they are still capable of doing the work. In the construction field, many workers are 70-75 years old, who continue to work, but not in the high-risk construction areas.  We can see that we are trying to address the nation's demographic decline by having people working longer if they can. There is also progress in digitalization and incorporation of various ICT (information and communications technology) in the manufacturing process to support the ageing working population. Big Japanese construction companies and general subcontractors are advancing in their robotics to address this issue.

 

The construction sector in Japan is notorious for being slow to embrace digital technology. But we see Kikukawa using CAD (computer-assisted design) software since 1986. Why do you think the construction sector in Japan is slow to digitally adapt and what role does DX (digital transformation) play in your company?

I cannot speak for civil engineers, but when it comes to other types of construction and architecture, it is still more cost-effective to utilize human labour than it is to install various robotic machinery. The labour cost  is half  of the United States and 70% in Germany, but as the labour cost increases, there will be an increased need for introducing robotics and other technologies in the  construction site. We have not reached the point where we seriously have to decide between human labour and machinery yet. Once the labour cost doubles, we will need to incorporate new systems in our manufacturing process.

We can introduce assembling parts at a separate site or factory and then transport the assembled product to the site for installation rather than doing everything on site. There were discussions about introducing various systems like this within the industry during the bubble in Japan when construction was at its peak, but it did not work out because implementing would create more issues and it was not cost-effective.

The salary during the bubble period in Japan compared to today is the same, even after the bubble burst and the market declined. Our company had been affected when metal construction materials depreciated, but it is slowly getting better. When the time comes to increase salaries, big construction companies and contractors will start introducing digital technologies.

 

A response to DX is the diversification of business and product lines. Since 2017, you started an environmental business called Ecosia.  You also have Solar Park, which is a car charging port, and ecoAvenue, which is a solar-powered streetlight. It has almost been one year since Prime Minister Suga's carbon-neutral mandate whereby in 2050, Japan will be a carbon-neutral society. What initiatives has your company developed and are developing to lower your carbon footprint?

You can count on the Japanese people to work on this mandate and take it seriously. The corporations are doing everything they can to reduce their CO2 (carbon dioxide) emissions and work towards a carbon-neutral society. In our company, we have been promoting eco-friendly products such as the LOUVER, which is metalwork for the exterior of buildings and other different materials that help conserve energy, making our products cost-effective. Also, we have slowly cut down our carbon emissions by 5% annually on our in-house manufacturing processes. We are working hard towards attaining SDGs (Sustainable Development Goal) and are hoping to start by the end of October. We have already taken several projects to ensure that we meet the ISO 14000 and SDG requirements.



Fuji Television Headquarters


Kikukawa has been involved with many famous projects such as the Fuji Television Headquarters, Tokyo Tower, Tokyo Skytree, and Ginza Station. You worked on towers, educational institutions, hotels, and train stations. How were you able to apply your expertise to so many different kinds of projects?

We believe the essential qualities of architectural metal products for us is same even though the type of buildings are different.  We deeply think about clients what they are really looking for.  Everyone of our company work hard to exceed clients’ needs and expectation.   Also, everyone work hard Kaizen activities.  These cooperate culture create makes us to be able to work on variety of buildings.


Art Tower Mito



In a 2021 Worldfolio interview with the president of YKK AP, he mentioned how it was important to find local partners in the United States. This was the key to unlocking their international business. What role does collaboration and cooperation play in your business model? Are you currently looking for either domestic or international partners?

We have a solid track record of collaborating with others. It is in the form of technological exchanges, as well as various types of co-creation and cooperative partnerships. But our stance has always been to take on these collaborations in accord with the emergence of unique situations that require them. When there is a need for collaboration, we are ready to pursue it, both domestically and overseas. However, we are not actively looking for partnerships.

 

When it comes to your international strategy, you set up in Hong Kong in 1983, before expanding to Vietnam, and most recently, Shanghai. Are there key markets or regions you are particularly interested in entering to introduce your company to?

Of course, Asian market is important market for us.  However, main target we are interested in is North America and Europe market.   This is because their market puts more focus on quality and we feel that their culture is willing to pay value for that.  Our products can provide differentiate for architects, designers, and owners who are looking for something special for their buildings.  We believe our products meet their needs for that.  Therefore, those 2 markets are important for us.

 

Your company has a "Never Say No" policy which drives you to constantly innovate new products. This year, you created the Minamo panel that resembles rippling waves with a new model coming out in September. What is your midterm strategy and what are your key targets in the next three to five years?

The characteristic of the market that we are in is tumultuous. There was a big peak moving towards the 2020 Olympics, and then it went downhill after that. Our metalworks are made to order by specific projects. Overseas projects also follow such a tumultuous trend. For example, when we worked on the Bloomberg Headquarters office in London, we supplied 700 tons of bronze plates. Our business boomed for three years during that project, but when the project came to an end, we did not have much work, and this can be a challenge for our management team. For our business strategy, we would like to work towards supplying a market that has more of steady demand. That is why we started business lines and diversified to stabilize our business operations. We are looking to have 1,000 companies in our client portfolio because if we have a diversified portfolio of clients, even if we only have one order in two years, we can have a stable business. We want to shift our business strategy, start creating favourable scenarios for our company and not fully rely on big projects. We would rather target smaller scale, but stable businesses. The domestic and international trends seem to be moving in this direction.





Bloomberg London Headquarters


If we come back on the last day of your Presidency for another interview, what would you like to have achieved by then and what legacy would you like to leave the company?

My goal is to have 1,000 companies in our client portfolio. We worked hard within the last three years and currently, we have 600 companies in our portfolio. I am hoping to increase that number in the next two years by promoting online because this form of advertising had been a great help in promoting our company.

https://www.kikukawa.com/en/


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