HEXEL Works, one of Japan’s leading electrical construction companies, boasts a top-class track record in electrical work for large condominiums and U.S. military bases, and has received high praise from its customers. Our history is supported by our outstanding technical capabilities, diverse human resources, and sound financial base. We promise that our know-how and ability to implement will help you with issues that other companies are not able to. We speak with president and CEO, Yoichi Nagae, to learn more about the company’s operations and partnership with the US military.
How are you able to create synergies and complementarity between the various business sectors that you operate in?
It’s interesting because people often consider the systems of air conditioning and electrical power to be closely linked in construction projects but when you actually dig deeper, you realize that the processes involved are completely different, and it's good for a business to be able to say that it can take care of several different services in an integrated way on site.
It's really important to focus and decide where you're going to concentrate - on which sectors - and we decided to focus on residential apartment buildings. This sector allows us to integrate our core business activities into offerings that can provide all the relevant electrical, air-conditioning and such sort of infrastructure for these kinds of buildings.
So when you consider the best way of optimizing on-site workflow and the processes involved, you first set up the scaffolding then you put up the walls and then you install all the electrical wiring and the plumbing and the related sockets and mountings in all of the relevant areas.
Up until now, it's all been done on site - when the scaffolding is in place and the wall mounting is happening you then do the precise measurement of where to drill the holes to mount the sockets and other elements of infrastructure, but nowadays things have advanced to such a level that you can use 3D BEAM systems to create blueprints so detailed that they tell you exactly where to drill the holes, so in a sense they are a part of our strategy.
In future we’d like to optimize the on-site construction flow process by, for example, acquiring a number of companies that are focused on specific parts of the process and maybe working with a factory that already has a CAD system in place where they're able to create all of the different components using the new blueprint generating technology. When you bring all of those components to the construction site, it then makes for a much more efficient and optimized process.
So for example, when it comes to flooring there’s a vacuum between the concrete that is laid first and the flooring itself. On top of that comes the carpet. All the electrical lines, pipes and conduits also must be taken into account. Rather than installing all of these elements on site, our idea is to prefabricate all of the elements in a factory and when those integrated units are brought to the site you're able to shorten delivery time. It would also address the serious issue of an aging workforce, especially when it comes to construction workers.
So this is an idealistic goal. It’s not necessarily that we've been able to already actualize all of these things that I'm sharing, but this is the direction in which we want to go. So the vision is to have factories dedicated to specific areas of integrated systems such as taking care of the walls, or taking care of the floors, all utilizing technology and 3D CAD systems in order to create foolproof blueprints. Bringing all these things together on site would greatly speed up delivery and also make it easier to deliver projects overseas. This still remains an ideal and no company here in Japan has yet implemented it, but moving forward I think this is the trend and what is required of the industry.
Can you tell us more about how you're going to ensure the sustainability of your partnerships with the US military, as in Guam for example, as you move forward?
Well, when it comes to overseas expansion, we have a rigid protocol in place in which we've chosen only to work in terms of construction and facilities with the US military. At one point in our history we did cater to civilian buildings and such infrastructure, but we experienced a mixed bag of successes and failures and so we decided that it would be best for us to only work with US military related structures and such facilities and infrastructure.
Another reason for this is that there's a global standard for US military buildings so wherever they go in the world, they use the same materials and that has enabled us to roll out seamless operations with regards to and we will continue to operate in this way.
There are many strategies in terms of how we've worked to maintain and forge the partnership with the US military that we have. We could have been directly contracted by the US military but since they are effectively a US government agency it would have been difficult for them to have us be their sole contractor. So although we’ve remained a general contractor we’ve been able to specialize in terms of the kind of know-how and expertise related to sourcing the materials. For example, there are materials that are used for the US buildings for which there is no market in Japan, so it's very difficult but we've been able to steadily accumulate the channels to source those materials. The actual outcome of this is that we’ve achieved almost a monopolistic status whereby when it comes to electrical lines and flooring, for example, they have no choice but to use us.
I believe that the goal moving forward is to create such a robust ecosystem that even if we were to lose a bid to another competitor that competitor would have to rely on our ecosystem, and so even if maybe we didn't win that contract, they would still need to rely on our system and we would reap the benefits of that as a consequence. We want the US military to know that if at some point in the process Hexel works is involved, then they have nothing to worry about.
Before your partnership with the US military, how were you able to gain the trust of your clients and how were you able to train your company to adopt US standards like the National Electric Code?
At that time, many construction companies felt that catering to the US military was just a tedious waste of energy and resources, so they avoided doing so. So the US military had to rely on small local companies for these jobs. But being so small, there's a limit to how much you can ask them to do, and so the US military was at the point of giving up on them. That was when I realized that there was an opportunity to grasp. The reason why we decided to work in that area is actually quite personal. I like airplanes, I liked their planes and so for me it would be a joy to be able to do such work, and so I was the one who was really pushing for our company to take on such work.
Before working for this company, I was working at a US-based hard disk manufacturer so I was already well versed in terms of the different standards that the US works with regarding construction standards and safety standards so I decided that this strength of mine would actually be made into our corporate strength.
Of course in the beginning we really didn't have much knowledge but we continued to learn and pursue it, and that knowledge became our competitive advantage. Whereas it was hard for the smaller companies to respond swiftly to the US military requests, we were already well versed in the codes and standards that they were working in, and so that enabled us to gain the trust that we now enjoy.
Can you tell us more about your international expansion strategy and what is the that method you will be employing as you look to strengthen your operations overseas?
We see our energy businesses and our US military work as being equally important. People often think that companies in this sector want to expand overseas – maybe work on an oil pipeline project in the Middle East or work on a residential housing project in the US, for example. For us, however, overseas expansion is linked very closely to our work for the US military as we can definitely compete in that market.
But if you were to ask whether we would be able to compete when it came to other sectors, that would not be as easy. We may find ourselves working in a location that happens to be outside of Japan's borders, but that doesn't mean the business itself changes much. Our dream is to be able to expand and utilize the expertise that we have gained in the importation and sale of US made materials, and use that here in Japan where there is a need, for example, for certain US made kitchen units.
We believe that by being able to extend our business into these small scale type of projects we'll be able to cater well to Japanese projects that require the import of such US made materials and that by facilitating that process we can also be more competitive in bidding to work with US partners as well, and I think that is something that also becomes an advantage when we're working in in the US with non-military contractors.