In the race for carbon neutrality, a major emphasis has been placed on the production of clean energy. However, preventing energy loss, and therefore maximizing the efficiency of the energy we use, will be just as key in reaching a carbon neutral world by 2050. Window producer YKK AP understands the pressing need for innovation to drive society towards carbon neutrality, and its energy saving vinyl windows are a great first step.
By 2035, one-third of Japan's population will be over the age of 65. This is a demographic trend that is already affecting the construction sector, as one in four construction workers is now considered elderly. How has this demographic decline impacted your company and how do you plan to overcome these challenges in the future?
The new housing market, which is the main market for our products, is expected to decline over the next few years due to Japan's declining population. The same is true for the renovation market, which is not expected to increase in the future.
Our company had its highest sales ever in 1996. The market has declined significantly since then. However, we expect to surpass that sales record this year. This is due to the fact that our competitors have been eliminated. In addition, our share of the market has also increased significantly.
You have three main business segments: residential products, commercial products, and industrial products. What are some of the ways you have differentiated yourself from your competitors? What synergies can you create between these three major business lines? And what benefits do those synergies bring to your clients?
There are two main types of materials used in our window products: aluminum and vinyl. In recent years, we have been expanding sales of vinyl windows for residential use. Windows for commercial buildings are made of aluminum. Since large investments have been made in aluminum manufacturing facilities over a long period of time, aluminum windows can be manufactured at a relatively low cost due to these facilities.
Vinyl windows, on the other hand, are more expensive than aluminum at this stage. However, we believe that vinyl windows are the best choice for residential buildings to improve the living environment in Japan, as they have high thermal insulation performance and lead to comfortable living. In order to promote the use of vinyl windows in Japan, the challenge is to reduce the cost and lower the price. We are designing our own production lines for vinyl windows and developing the manufacturing equipment used in them. We are trying to reduce manufacturing costs by designing our own labor-saving production lines.
Thermal Insulation Windows System「APW330」
Commercial products, on the other hand, require more stringent requirements than residential products, such as water tightness and wind resistance performance. For this reason, we have accumulated specialized know-how in commercial products. We are also looking to apply the technologies used in commercial products to residential products.
One example of such technology is SSG (Silicone Sealant Glazing). This technology is a high-performance curtain wall system and is widely used in commercial buildings to improve thermal insulation and reduce energy consumption. Using this technology as a reference, we have adopted the glass bonding technology for vinyl windows for single family houses. This vinyl window has been very successful as a differentiated product in Japan.
In November 2020, former Prime Minister Suga announced that Japan will become a carbon-neutral society by 2050. What initiatives is YKK AP developing to contribute to a carbon-neutral society?
We are working to reduce CO2 emissions both in the manufacturing stage and in the use of our products. We also aim to become a carbon-neutral company by FY2050, and in the medium term, we are aiming to reduce CO2 emissions by 50% from FY2013 levels by FY2030.
In the manufacturing area, we are working on using more recycled aluminum and less ingot metal. Recycling of aluminum materials is an important step in creating a carbon-neutral company. We are also changing the energy sources we use in our manufacturing process. We are moving away from CO2 emission sources to more natural and sustainable ones.
In the product area, we are developing windows with excellent thermal insulation performance. By using windows with high thermal insulation performance, residents can reduce the cost of heating and cooling their homes and contribute to the reduction of CO2 emissions. In order to popularize these products, we are aiming to develop a product lineup with excellent cost performance. Products that are excessively expensive or suspiciously cheap will not sell, as middle class wages are the most common income level found in the Japanese labor market. Mass production must be able to supply products that are reasonably priced but still meet market expectations.
There are many ways to improve thermal insulation performance. One way is to use new types of materials. Most existing houses in Japan have windows that contain only a single pane of glass. However, relatively newly constructed houses are being built with double-glazed windows that use two panes of glass. This allows you to coordinate with the materials used to hold the window glass, so you can find those double or triple glazed and vinyl windows, a combination that provides the optimum level of insulation, energy savings, and cost effectiveness.
Triple-glazed vinyl windows 「APW430」
The properties and performance of windows help maintain the thermal environment inside the house while saving energy. According to estimates, in a typical single family house, in the summer, natural heat from sunlight is taken in and causes the indoor temperature to rise, and about 70% of this heat comes from windows. In winter, on the other hand, windows release about 50% of the heat inside the house. That is how large the heat flow in and out of a house is through windows, and improving the performance of windows can affect the living environment.
Since so much energy gets transferred in and out through windows, we developed a method to do this without having to remove and replace existing windows, which is too time-consuming and a major renovation. It can be done in less than half a day and the windows can be replaced.
Mado remo, a window product for renovation
Therefore, these are a few ways to consider to maximize the reduction of CO2. This means, we are using more vinyl in the windows, we are greatly reducing the time it takes to replace old windows with new ones, and we are promoting more environmentally friendly windows.
The YKK Group is working on Passive Town, a project to build housing complexes for the use of natural energy. How did the project come about and what impact do you see it having on the construction sector for the future?
This project is being carried out by YKK FUDOSAN CO.,LTD, a subsidiary of YKK. Passive Town is located in Kurobe City, Toyama Prefecture, and has attracted the attention of many architects and media. The basic features of the project are the use of natural energy sources such as groundwater and sunlight while reducing energy consumption of electricity and fossil fuels as much as possible.
The project has completed its third phase and is currently constructing the fourth phase, which as YKK AP provides the highest-performance windows for all buildings.
This project has won many architectural awards so far. This project also has a demonstration aspect to it, and after construction we are taking various measurements and conducting experiments and surveys, including on how people live. I expect that we will eventually be able to gather a great deal of knowledge.
Panoramic view of the Passive Town
In 2018, YKK AP unveiled a prototype of a new AI-equipped entrance door called Update Gate that uses facial recognition to scan the user. Tell us how else you are implementing DX technology at YKK AP.
Smart Door equipped with face recognition functions
Technologies such as AI and IoT are being adopted in the housing sector in Japan. We are trying to connect our products to digital platforms developed by various companies such as Amazon and Google. This year, we are planning to launch a smart door with facial recognition technology. It will be equipped with a function that recognizes registered faces and unlocks the entrance door. What we are considering in the future, for example, is a door with a self-sliding function that opens and closes automatically just by using Alexa voice commands. This is ideal for wheelchair and stroller users. This product has attracted a great deal of attention from people in Japan, as the country has a relatively large elderly population compared to other markets.
Digitization in the commercial building sector, on the other hand, is a matter of how to integrate existing products into BIM (Build Information Modeling). BIM is the process in which a building is constructed digitally by a design or construction firm before the actual building project begins. BIM involves the generation and management of a digital representation of the physical and functional characteristics of a place. It is a digital confirmation of how our sashes will be installed in the building, and we believe that BIM will be increasingly deployed in the future. Therefore, we think it is important that we are able to provide enough BIM data of our products to architectural firms.
We also undertake installation of our products for large building projects. The number of technicians who can install sashes is decreasing due to the aging of the population.
For this reason, we are conducting research with a university in the U.S. to install sashes using robots instead of humans. This is still in the experimental stage, but we are working on how to install sashes in the future.
Photo of joint research with CMU (Carnegie Mellon University). A team of students and YKK AP researchers working on the technical development of window frame opening as part of CMU's joint research (photo taken in 2020).
What role does co-creation play in your business model and are you looking for international co-creation partners? How do you define your future international expansion strategy and which markets do you prioritize?
Currently, more than 80% of our sales are in Japan, and our business is overwhelmingly domestic. In order to grow with the declining population and market in Japan, we need to expand our business overseas. Our products and manufacturing are at a high level. We also produce our own manufacturing machines. On the other hand, we believe that what we lack is an understanding of local needs and product development for the local market. In this regard, we need to conduct due diligence. We have recently carried out a company acquisition (M&A) in Canada. We have also acquired a company with a factory in India. These mergers and acquisitions have allowed us to purchase the time needed to gain local experience. We will continue to implement whatever is necessary for us, whether it is partnerships or acquisitions.
Canada Erie AP /Unit Curtainwall
By country, the U.S. is still a growing market with a growing population and a strong economy. The window market is five times the size of Japan's, making it very attractive. Also, business practices are very fair, and even new companies are accepted if their products are good.
China is also an interesting country. Originally, we have been supplying products for super high-end buildings for investment in China. Recently, however, we have been trying to expand into the building market for the general public. To do so, we are working on cost reduction.
Residential Window in China
Third is India. We had developed a good, cost-competitive product and were about to roll it out, but due to the spread of the coronavirus, most of our projects had to be postponed. However, when everything returns to normal, the plant in India will be in full operation. Then, we can expect further expansion of our business in India.
As for the EU, we have established an R&D center in Germany, but we have not expanded our business there. The EU is historically considered to be the birthplace of windows and has established a very high level of insulation performance. For the challenge of the technology we would like to expand to that region as well.
We also have an R&D center in Indonesia. Here, we hope to develop windows with good performance suitable for hot and humid regions.
In China, many window manufacturers from all over the world are developing, and the situation is like a window Olympics. Among them, German products are highly valued. German manufacturers are still the market leaders in the world. The same industrial product, the automobile, is not so different all over the world, but the window is very complicated, with different products, standards, and commercial distribution in different countries. I am convinced that these differences will be very interesting to develop our business and that we will grow to face new challenges.
What personal and professional goals do you hope to achieve by the end of your presidency?
I would like to expand our presence in the overseas market. The timing was right for YKK AP to further strengthen its position in the overseas markets, but the coronavirus pandemic stalled our business activities. It is a pity that I myself can hardly make overseas business trips. When I used to work in the U.S., I remember how exciting it was to see the view of the buildings of New York from New Jersey over the Hudson Bridge. America holds a special place in my heart and I have many good memories of it. I would like to start business trips to the U.S. and other parts of the world to expand our business development.