Supporting the future with unique technologies

Rapid urbanization and a rise in demand for maintenance services have been positive influences on the Japanese construction industry in recent years but the country’s aging population has had a more negative effect on demand for new construction projects. What is your assessment of the Japanese construction industry at the moment and what do you foresee for it in the future?

There’s been a trend in the Japanese construction industry towards maintenance and refurbishment rather than building new projects. This trend is partially due to an increase in natural disasters due to global warming as well as things like earthquakes.

In order to accommodate such a trend, the Japanese government is pursuing policies to make things safer by investing 15 trillion yen over five years into various public projects so the public side of things is very active. However, private investment is decreasing.

About 50 years ago, around the time of the Tokyo Olympics, we had the construction of the Shinkansen, the major road networks and many other infrastructure projects to support the Olympics. Now, 50 years on, it’s time to perform maintenance or refurbish the road and rail networks in particular but also infrastructural systems such as the water and sewage pipe networks, and this is a higher priority than the construction of new projects.

I expect that even after the refurbishment projects associated with the Tokyo Olympics projects have been completed, refurbishment projects in major urban areas would still continue. As you have mentioned, Japan is now experiencing a decrease in population and there is a trend towards more urbanization, so urban areas such as Toranomon will be redeveloped.

Large areas of Shinjuku and Shibuya have already been redeveloped and major cities like these will continue to be maintained, refurbished or actually redeveloped to renew them because they’re already over 50 years old. I also predict that since Japan doesn’t have major ports or airports that can act as regional hubs such as those in China or South Korea, there will also be a trend towards the expansion of such facilities.

Japanese construction projects are famous for their safety and reliability. However, Japanese construction firms have been slow to adopt new technologies such as AI, IoT and CAD/CAM. How is your company answering the needs of your customers when it comes to ICT (Information and Communication Technologies) and new innovative technology? And how are you implementing these technologies into your construction projects?

Japan is indeed behind in incorporating ICT in the construction field. I believe this is because companies in Japan often tend to work alone, in-house and without any collaboration with other companies, and this makes it very difficult to move forward when it comes to innovation.

We realize this issue so we are now trying to incorporate ICT by working together with other companies that have ICT engineers and related technologies. We are now particularly focused on the automation of our machinery because as you mentioned there's a lack of skilled labor due to the aging population so in order to accommodate the loss of human resources, we are trying to replace it with the automation of machinery.

So for example we are now able to operate machines which previously required five people to operate with only three people, and in the future hopefully it will only need one person to operate 3 machines at the same time. These machines are semi-automated so they require less human involvement and still provide the kind of high precision performance you’d associate with experienced craftsmen.

Visualization is another important component in this trend, and it's important to let our customers monitor the progress of the construction work. Since work can be happening at the same time in different places, we have established and developed a system which allows monitoring at many places simultaneously. We also envision something similar to the automation of automobile production, but applied to construction machinery that deals with ground improvement.

Given the variety of environments your company works in overseas, could you please tell us how it is able to adapt to different types of soil during construction projects and what solutions can you provide to your customers overseas, in Asia for example?

As you mentioned, the nature of soil varies depending on the area it is in. It also depends largely on how much water it contains and its history. It's also important to consider what is to be built on top of it - a building or a road or a railway? Depending on these factors, the required strength of the ground differs, so we have to analyze all these factors and then provide a finalized design.

We also determine the most appropriate techniques for each case and have a few dozen different soil improvement technologies to choose from including the sand compaction pile method and also the method to mix cement slurry to strengthen the ground. So we analyze each situation individually to arrive at the best solution.

With regards to Asia, the structure of the soil is totally different from what we have in Japan, so we have to analyze the soil structure of that region to find out how much water it contains and what the size of its constituent particles is and also the hardness and the strength of the ground.

Could you please tell us what your international strategy is and how you plan to take advantage of the expected construction boom in Asia and beyond?

We have three main branches of business. One is civil engineering, another is ground improvement and the third is blocks and environment. We have been actively pursuing international expansion with the ground improvement and block – particularly Tetrapod – products. The Tetrapods are environmentally friendly blocks and are used for wave dissipation under water and along shorelines.

Our main targets are Southeast Asia and the United States. In Southeast Asia we operate with the ODA – the Japanese Overseas Development Assistance program, and we also have an office in Jakarta and also in Vietnam, in Ho Chi Minh City, and we have Japanese staff stationed there.

We also have a US subsidiary which is called Fudo Inc. in California, and we have been working together to construct an airport there. During Obama's time in office we executed soil improvement works for a breakwater in response to Hurricane Katrina in the Mississippi River.

We are now working together with a company called AGI - Advanced Geosolutions Inc. - and have bought 49% of their stock in order to partner with them and increase our market share because previous to this we were having difficulty in achieving that by going into the US market by ourselves. AGI is a local US company with an established sales network that will help us advance our technological capabilities. We have already collaborated on building the foundation for a warehouse for Amazon and believe that there is a lot of potential for growth in demand for our ground improvement technologies in the US particularly in the fields of energy and public construction projects.

Are there any specific countries in which you would like to operate in the future? And will your overseas expansion be driven by M&As, joint ventures or going in alone?

Through our past experience, we realized that it's better to engage in joint ventures and work with local companies in order to penetrate overseas markets. As for western markets, we don’t exactly do M&As, we partner with companies such as AGI. In Southeast Asian countries, we engage in joint ventures in order to get projects in those local areas.

Regarding ground improvement projects, we are mainly focused on the US and South East Asia, but for the wave dissipating blocks – such as the Tetrapod – we follow the Japanese Overseas Development Assistance program for example into countries like Madagascar. We also have a patent leasing contract for our technology in Korea. We realize that it's very difficult for us to just go directly to Korea, so we're leasing patents of our technology to them so they can build and install the blocks themselves.

Could you please first of all tell us what are your main competitive advantages as a company? What makes you the go-to partner when it comes to construction and what synergies are you able to create between the three business areas of civil engineering, ground improvement and environmental blocks in which you operate?

Domestically speaking, there's a big synergistic effect by having those three branches of businesses that you mentioned. For example, in Japan, by having both the technology of ground improvement and also the blocks, we oftentimes can receive big civil engineering work and that is a very good synergistic.

Internationally speaking, however, and as far as civil engineering overseas is concerned, we don't have enough human resources and capacity to go overseas with this line of business, so we are more focused on the blocks and also our ground improvement technologies, which are unique and very high tech in terms of international standards.

And even in the US, which is very advanced in construction work, they consider our ground improvement capability and technology as being unique and very advanced. So that is a key strength, and since all of our technologies are developed in-house we can respond much better to their various requirements.

Last year your company celebrated its 75-year anniversary. Looking towards the future, what would be your mid-term strategy to continue your corporate growth and which project that you’ve already completed are you most proud of?

As a company we want to continue growing in a manner which may at times be slow, but is always sure and stable. To this end, we have established a mid-to-long-term strategy for the next 10 years with milestones along the way. For example, we have a major target which is to grow the company from 70 billion to 80 billion yen worth of business over the next 5-6 years. Our other targets include further development of our unique technology and growing the company in size.

Regarding my favorite project, there are two. One was about 10 years ago when we were involved in the construction of the fourth runway at Haneda airport. We had about 250 staff working on it in alternate shifts, 24 hours a day and we completed it in a year and a half. That was remarkably quick. The other experience I’d like to relate is when I was a new employee and I was dispatched to Hokkaido to construct an oil tank but it was very difficult because despite it being in the month of May, it was snowing very hard which presented me with a significant challenge.

Imagine we come back in three years to interview you all over again. What would you like to have accomplished by then?

It's my fourth year of being the president of this company, and my goal is to make this company as comfortable for the workers and conducive to high levels of motivation as possible. I’d like to further promote a healthy working environment in which workers can comfortably reach their goals. I’d also like to promote further equality between the male and female employees.