Since its inception in 1959, Nihon Suido Consultants (NSC) has been contributing to various business solutions through sustainable growth in the field of water supply and sewerage systems in over 70 countries as a leading engineering consulting firm.
Most experts say that Japan's construction sector today is very mature. On one hand, the ageing infrastructure created an increased need for maintenance and repair projects. On the other hand, the decreasing demographics has lowered the number of construction projects. As a leading consultant in Japan's water and sewage fill, what is your analysis of Japan's construction sector and how do you foresee its evolution in the years to come?
Back in 1982 when I joined the company, Japan was focused on our social capital which was falling behind other developed nations such as some countries in Europe and the United States. I was already working in water piping related jobs in the Fukuoka area before I joined the company. At that time, Japan was struggling with its water sources. The demand for clean water supply was higher than what our facilities could provide. In the '80s, there was a massive focus on public building projects to make sure we had enough infrastructure for clean water supply and sewage treatment. Right now, we are already over the peak of population growth in Japan. We feel that we have already completed everything we needed to contribute to having a full clean water supply and sewage system in Japan as a country.
On the other hand, when I joined the company as a technician, our highest priority was speed because we simply didn’t have enough supply and infrastructure to meet the demand. We were so fully focused on meeting such demand that we had to put quality and energy conservation as a second priority. This has given us burdens that we have to deal with today because we recognize that the next generations will have to deal with reconstructions of everything that we have done in the water supply infrastructure. These will be challenging but meaningful projects for the new engineers.
With the current situation of our society, there will be a decrease in generated income because of the decrease in the working population. There is also the ageing and deteriorating public facilities to consider. We have to figure out a way to maintain and repair our infrastructure with limited financial resources. Our engineers and technicians need to be creative because there are no manuals or national policies that will address and resolve this issue. There is not one solution that can solve all of the problems that would arise in all of Japan. Some solutions might need to be customized and this requires the engineers to come up with creative results.
Western media often mentions the fact that in the next 15 years, a third of the Japanese population will be over the age of 65. This impact is already felt heavily in the construction sector. In 2021, a quarter of the workers are already over the age of 65. This presents challenges such as the lack of new projects and also the problem of not being able to pass on the technical knowledge to the next generation, creating a labour crisis. How has this demographic decline affected your company, and how are you overcoming this challenge?
We need to accept the fact that the decrease in our labour force is inevitable. Right now, even university graduates are declining every year. As a consultant, securing proper talents for the company's business is our lifeline. These past couple of years we have been promoting reforms to our working styles. We want to focus on extending the employees’ working lifespan to stay healthy and keep working for the company. We make provisions where people can work from home or remotely. We also want to create an easier working environment for employees who have just given birth so they can keep working with us. We also tried to create a nicer office atmosphere overall.
With regards to hiring foreign students that study in Japan, if they do not have Japanese language proficiency yet, we also consider hiring them for some of our subsidiaries overseas. Furthermore, we are strengthening our PR (public relations) efforts because we think that it's important for people to know how good working as a water consultant in our company can be. We have the branding market section of the corporate planning department taking care of this, and we even added more staff in this department.
In Japan's future with a limited working population, it is critical for us to develop the new water infrastructure. We might need to put business sectors together and try to reconstruct that way so we can flexibly work with the talent we have. We also have to go to different localities in Japan and build sustainable water infrastructure models that would continue to grow as a business. We see the shrinking population as a chance for us to be at the frontier of growth and for us to use our knowledge and expertise as consultants and engineers. Digital transformation (DX) is also one of the tools we can use to support the next generations.
The construction sector seems to be quite traditional in many aspects and hesitant to embrace new digital technologies. But we know that you have your Blitz Glow ( cloud-based water facility ledger system) and Blitz GIS (cloud-based water pipe monitoring system). Can you tell us more about the advantages of this system and its distinguishing features? As a leading consultant, what impact do you foresee for the water and sewage treatment services? What impact does DX have on the construction field in Japan?
In general design, we have traditionally designed using 2DCAD (2D Computer Aided Design), but this is a blueprint used only for construction. We are currently using 3DCAD (3D Computer Aided Design). This allows us to associate information with each part of the blueprint, which can also be used for maintenance and repair management.
We also perform dynamic analysis using 3D data. This is a cloud service that manages facility (sewage treatment plant / water purification plant) information in a hierarchical manner, links maintenance information, and efficiently manages assets.
In addition, an urban flood damage simulation system based on Blitz GIS (cloud-based) is linked (NSC seamless model). Blitz GIS captures rainfall forecast X-Rain data (by X-band radar) in 1 hour automatically. Utilizing X-Rain data, Blitz GIS predicts urban floods that will occur one hour later, and the information will be delivered to customers automatically.
A water level gauge is installed in the manholes at key points to transmit the water level in the pipe in real time. Since the simulation calibrates the water level in the pipeline in real time, it provides highly accurate urban flood prediction. After accumulating data with this NCS seamless model, we also utilize a system for predicting urban floods by using the results of AI learning materials. AI-based urban flood forecasting does not require calculations, so it is possible to provide results instantly. With this two-stage system, we would like to eliminate the damage to human lives caused by urban floods.
To inspect deterioration in the sewer pipeline was very expensive because it was done by a self-propelled robot. We have developed a product with a high performance 360-degree camera, accelerometer and LED lighting into the ball. We can see inside of the sewer pipe just by flowing this ball into it. Then, AI reads the data and instantly identifies the location of deterioration.
Several experts have predicted the next world war would be about water because it is starting to become a scarce resource around the world. As a comprehensive water consultant, how do you foresee the evolution of water as a resource and what do you think can be done from a global standpoint in order to ensure that this water war will be prevented?
We cannot really influence governmental policies because it is not up to us, but we can focus on the technologies that can tackle these issues. One example, we have the technology that simulates nature's water cycle. In the simulation, we first model the ground. Then we make it rain 100,000 to 1 million years on the simulation. The time when the groundwater level rises in the model and matches the current groundwater level, this is the base of the simulation. We build a city and infrastructure model on this base model, rain on it, and simulate the future water environment.
We have not used these yet, but it is available to us should we decide to use them. If we want, we can conduct simulations on a 10-20 year forecast of water cycles. When a global need arises due to water scarcity, we can use this technology to conduct accurate simulations.
We have materials and matter cycles that work along the water cycle. If there are radioactive substances like caesium, we can detect them and see how they are flowing alongside the water cycle in the system. We can run it in addition to the water cycle simulator. If there is a problematic substance coming out from a certain spot, we can use this technology to see how far the contamination has spread. This produces an accurate illustration of potential problems that may come about in certain localities.
Access to drinking water and sanitation has been declared a basic human right. You have done extensive work as part of ODA (Official Development Assistance) projects in many developing countries to provide resources to people. Can you elaborate on these environmental initiatives for sustainable development?
Water management is critical when we anticipate scarcity in the future. This scarcity is related to the nature of water. It is a resource that cannot really be moved but everyone needs it for survival. A locality’s rules and customs with regards to water use have long been established by its own people. We need a good understanding of these customs, so it is important for us to establish our roots in these local areas and proceed from there.
Outside Japan, we have to think about how we can work together with the local people. We have limited human resources as a company, so we need to have a strategy. We need to determine the area that we would need to focus on and think about how we are going to go about it.
We are involved in ODA business to support developing countries both for clean water supply and sewage treatment. We start by researching first on what appropriate systems should be used to provide water as well as a sewage system. We provide supervision until the completion of the building project, then we hand it over to the local people. Sometimes, it is not the best situation when foreign companies from the US or Europe take over the operations of those systems. We often encounter these less-than-ideal situations on our ODA projects, but we strive to build relationships with these developing countries and gain their trust. It might be good for us to change our approach; instead of just handing over the system after it's completed, we can try to work together, be with the local people and provide support in the usage of the systems afterwards.
You have done some incredible projects. In 2015, you improved the water and sewage system in Brazil, you also did the sewage system in La Habana, Cuba in 2002 and Sri Lanka in 2003. Is there one particular project very dear to your heart that you think has the biggest contribution?
I can divide our ODA projects into 3 main types. One type is projects that are fully sponsored by the Japanese government where we are hired by the government to help a particular country. People are thankful for what we do, and it feels very nice to work with them on those projects. The second type of project we do is technical support to teach the local people how to build the systems with our technology. We also receive a lot of gratitude for these projects. The third one is a long system; the Japanese government finances the project, but it is a loan, so they would need to pay it back, because these developing countries are developing quicker than before, we are shifting more to this loan system rather than the Japanese financing them. They are using this loaned money to hire us. With this new relationship, we do not get a lot of thanks. People are stricter in the way they use their funds because they have to pay it back.
We are facing quite a lot of challenges in these projects due to the changes in the situation. And the coronavirus pandemic on top of it has made things even harder.
What role does co-creation and collaboration play in your business? We recently spoke with Nakano san, from a valve and piping manufacturing company Asahi Yukizai, who mentioned the importance of their collaboration and eventually acquisition of a company called DRICO which is known for treating greywater in office facilities in urban centres. Combining their expertise was the key to innovation and growth. Are you currently looking for new partners domestically and overseas?
The technology involved in water and sewage systems is multifaceted. We have civil engineering, construction work, mechanical instruments and machinery, chemistry, biology, and even business administration. In reaching out to local people, we also need good communication skills. We never thought of being able to accomplish things on our own, so we always look forward to working with others. One of our company’s strengths is that we have many different departments that can help. We can oversee projects in other areas from here. We can be the link between the company that placed the order and the local people. We understand the local needs and we can collaborate with other companies to help them.
There's a global oil company in Japan called JGC and they create all kinds of tanks and plants for crude oil. They are fully dependent on fossil fuels. Recently, they realized that it would not be a sustainable business because at some point the fossil fuels will run out. They started working in the water business which uses a sustainable resource. We have started on a new collaboration with JGC initiating projects all over the world. We thought we could lead them in the water business, and they can also help lead us into the energy field.
Earlier you mentioned the importance of being physically present in the locations you operate in for your international strategy. You have a diverse global portfolio including Indonesia, Singapore, the Philippines, and China. As you look towards the future, are there any particular key regions you are considering? Can you please tell us more about your international business strategy?
Our main target is Asian countries. Forty percent of the Asian market is China, and this year, we started an office there. We have invested in one local company already, but we are hoping to invest in one or two more. We are still doing our research into these companies. We have two objectives when doing business in China. First, we want to bring our Japanese technologies there into the company that we have invested in and hopefully, they can grow the business. Secondly, we want to bring to Japan Chinese products that are cheaper but of very good quality.
While we deliver our technologies to different parts of the world with Singapore as a central hub for international expansion, we also take in other technologies from other countries back to Japan.
In Indonesia, we started off with ODA projects. We bought companies in Jakarta and made that a hub for our business once those projects were completed. Indonesia is a country with the youngest average age in the world so there is a potential for market growth. We would like to use the local company we acquired to meet the demands for such growth.
The Philippines is an area where English is spoken as a major language. One of our initiatives is to train and educate Filipino engineers and explore the Philippine market together with them. In the end, we can send these engineers who can speak English to other parts of the world. The Philippines also has very strong financial groups so there are private business projects that we are involved in.
India is also an important market. Through the ODA scheme, we were involved in two big projects there. We have faced challenges in this country so we are quite hesitant about entering that market but it is a market we cannot avoid. We are currently thinking of strategies of how we can move forward in India because there were political struggles before, but we believe that the government will continue to be stabilized. We have representatives over there to see how we can proceed.
The Middle East is very well-financed but they have very scarce water resources. There are big projects there where they are focusing on turning seawater into drinking water. We were involved in a project doing that before, but it is almost time for the facilities to be updated and renewed. We look forward to continuing to support these projects.
What objectives would you want to be accomplished during your tenure as President?
I am not thinking of anything tangible for the goal I want to achieve. I was born in 1959 when this company was founded; I am as old as the company. The younger generation who joined our company recently is going to see our company's 100th anniversary. I want to leave for them a company that can be sustained until that 100-year mark. It is important to leave the company with talented people. I have to decide what to keep and what to discard in order to ensure the sustainability of our company.