We sat down with Mr. Hisanori Matsui of Kodensha, a comprehensive energy facility construction and technology trading company, and key member of the Mitsubishi Electric Group to discuss the outlook of Japan’s construction sector, zero energy buildings and the nation’s bid for Carbon Neutrality.
The last construction boom occurred 50 years ago, and since then, much of the infrastructure and buildings require maintenance and repair. As a specialist in energy distribution, what is your take on the construction sector in Japan today, and how do you expect it to change in the future?
The construction and infrastructure industry are certainly a mature industry, but we do not consider it a "dead" industry with no more room for development.
It is one of the oldest and most enduring industries for mankind since ancient civilizations, and it will continue to be needed as long as human activity continues in the future. I am not pessimistic about the future.
Looking at the Japanese market over the next 10 years, there will certainly be a downturn due to the recession following the Tokyo Olympics and the Corona disaster.
However, we believe that the market will remain at the 60 trillion yen level, or 10% of GDP, supported by reconstruction demand for buildings constructed during the high-growth period in the 1970s, maintenance and repair work, redevelopment demand in Tokyo and core regional cities such as Sapporo and Fukuoka, and investment by the government and local governments for disaster prevention and mitigation.
This is approximately 1.5 times the volume of the 42 trillion yen market in 2010, and considering the expected expansion of investment toward carbon neutrality in the future, it can be viewed as a growth industry.
Japan is very advanced in its push for carbon neutrality. In the last decade, we have seen the popularization of renewable resources like solar and wind power, but 30% of carbon emissions today still come from coal-fired power plants. As a company involved in the energy business, what strategies are you employing to achieve this carbon neutrality goal?
We are committed to various initiatives to become carbon neutral, specifically, solar, hydroelectric, and other renewable energy facilities, ZEB(Zero Energy Building), ZEF(Zero Energy factory), and microgrids on a regional basis.
In October 2018, the Company obtained ZEB Planner certification and provides support and other services to businesses seeking to realize ZEB through design, construction, and consulting.
In addition, from November 2021, the company will begin full-fledged consulting activities to "improve the efficiency of power operation" and "optimize power receiving and transforming methods and equipment configuration" by analyzing power usage data of customers.
Through opportunities to upgrade and optimize power receiving and transforming facilities and power operations, we will help our customers achieve permanent energy savings and BCP measures, while contributing to the realization of a carbon-neutral society.
As global warming progresses, the proliferation of zero energy buildings will be key to achieving a sustainable society. Your ZEB project will also help significantly in energy savings while maintaining the quality of indoor environments. As ZEB begins to grow exponentially in the future, can you elaborate on the technologies that you will provide for zero-emissions buildings?
We are planning to work with Mitsubishi Electric Corporation on the ZEB project. To this end, we will utilize energy-saving technologies and systems such as energy-efficient air conditioners. We will also propose Mitsubishi Electric products such as transformers for energy saving. We then verify how we can combine all our technologies and equipment to achieve optimal energy savings. Mitsubishi Electric has a ZEB building for testing and quantifying energy efficiency, and we are constructing the electrical installation work.
Japan's power grid has an annual power transmission loss of 5%, which is the equivalent of five powerplants. The high-efficiency power transformer that you have developed can reduce this power loss by 13,000 watt-hours per year. Could you tell us more about these transformers and how they limit power loss?
Although Kodensha Co., Ltd. is not a transformer manufacturer, what we have done is to select and offer the best transformers on the market. Since we are a subsidiary of MITSUBISHI ELECTRIC CORPORATION , we believe that Mitsubishi Electric equipment is the best. However, we do not hesitate to look for and use better products than Mitsubishi Electric equipment.
Kodensha Co., Ltd. is a part of the MITSUBISHI ELECTRIC CORPORATION Group that has a very diverse ecosystem that includes Mitsubishi FA electrical equipment and Sanwa Electric, which manufactures in-vehicle electronic devices. What synergies does being part of the MITSUBISHI ELECTRIC CORPORATION Group provide for Kodensha Co., Ltd.?
In social infrastructure systems, MITSUBISHI ELECTRIC CORPORATION is the prime contractor and Kodensha Co., Ltd. may collaborate as a subcontractor.
Kodensha Co., Ltd. is also working to expand its business by using competitive equipment such as elevators and air conditioning systems, with Kodensha Co., Ltd. acting as the contracting entity for building companies that are general contractors.
In the internal wiring business, MITSUBISHI ELECTRIC CORPORATION has a stand-alone equipment business model. Kodensha Co., Ltd. role is to link them together and provide them to building companies, which are the general contractors.
You have been a part of notable projects such as the Mitsubishi Ichigokan Building, Karuizawa Station on the Hokuriku Shinkansen, and the Pacific Century Place in Marunouchi. Can you tell us how you got involved and what role you played in those projects?
The Mitsubishi Ichigokan Building and the Pacific Century Place in Marunouchi are part of our internal wiring projects. MITSUBISHI ESTATE CO., LTD was our client for the Mitsubishi Ichigokan project; they chose our proposed plan for electric equipment and wiring for their construction. Most of the equipment was provided by MITSUBISHI ELECTRIC CORPORATION . We were a subcontractor for TAKENAKA CORPORATION for the Pacific Century Place, and we supplied the electric equipment. Also, we supplied electrical equipment for the station building at Karuizawa Station on the Hokuriku Shinkansen Line.
Are you looking to get involved in more similar projects domestically or overseas?
Our base is the domestic market. Even though our field has the potential to grow, we must consider that there are limits to that growth. In the past, from 1939 to 1945, we did significant business in the Chinese market. But when Japan lost the war, we lost all our capital as well. However, as China's economy grew, the market expanded and we resumed our business in 1998. We developed a customer base of mainly Japanese factories in China. Given Kodensha Co., Ltd. management resources, we are looking to expand one more area: ASEAN is our main target, and Thailand, where there are many Japanese companies, is at the top of the list.
What is your strategy to penetrate those markets? Will you be looking at M&As?
I believe that the construction industry cannot compete in overseas markets alone and that partnerships with local companies are necessary. We opened an office in Thailand in 2019, and we are investigating local companies with which we can establish partnerships. I think it is difficult to expand business only in the electrical wiring business overseas, so cooperation with HVAC and sanitary equipment companies is necessary. As of now, we are investigating whether it will be best to collaborate with Japanese companies that have already expanded overseas or to prioritize building partnerships with local companies.
Would you plan on expanding with other business segments, such as your social infrastructure, power transmission, or sales business?
Given our resources, I think it is best to start small. We would like to start with the extension business first, and then position ourselves as a company that can provide a one-stop shop for all electrical equipment for buildings and factories.
Are there any new projects or products that you would like to showcase to our international readers?
In power transmission projects, equipment has been transported by human labor and helicopters, but Kodensha Co., Ltd. is probably the first company to put drones to practical use on a construction site. Since we move heavy machinery and equipment weighing up to 50 kilograms, we worked with a company called Total Tech to develop a drone that carries power transmission equipment. It is a top-of-the-line drone that is wind resistant and can control the shaking of the equipment. It is not a fully automated drone and was not developed for sales or logistics purposes, but it can make about 50 round trips, over a distance of 3 to 5 km.
Imagine we come back for your 115th anniversary and have this interview all over again: What would you like to tell us? What are your dreams for this company? What goals would you like to have accomplished by then?
As I explained, Kodensha Co., Ltd. is a company that engages in electrical installation and equipment sales, but if I had to describe Kodensha Co., Ltd. in one word, I would say that it is a "connecting company.
For example, solar power generation, which has been the focus of renewed attention due to its carbon neutrality, tends to focus on panel performance, but it does not function on its own, including peripheral devices such as power conditioners, power distribution equipment, and batteries. Functionality is achieved only when equipment and devices are optimally placed, installed, and connected with cabling.
As a general facility construction company and a technology trading company, we have continued to think about what will happen when we connect facilities and equipment, manufacturers and users, people and people, digital and analog, virtual and real, for more than 110 years since our founding in 1910, and have remained a technology group that anticipates the needs and changes of the times. We believe that our company has been able to survive for more than 110 years because society has recognized this attitude and approach. We will continue to pursue sustainable growth and contribute to the realization of an affluent society and the SDGs, which is our management philosophy, by maintaining this attitude and approach.
Based on this philosophy, we would like to contribute to society for next 100 years.