Oriental Consultants Group has brought the strengths of Japanese infrastructure to the developing world since its establishment in 1957.
As a consulting firm specialized in public infrastructure, what is your analysis of the current state of Japan’s construction sector, and how do you foresee its evolution in the years to come?
As you have pointed out, Japanese infrastructure has been aging since most of it was built during the rapid economic growth period, and because of that, there is big demand for the reconstruction of existing infrastructure.
One aspect of this is refurbishment and the other is reconstruction, where you demolish it and create something new—scrap and build. On the other hand, with global warming, natural disasters have become more severe, especially ones that are related to water. Water based disasters have been quite severe recently.
Since 2018, the Japanese government has laid out a strategy to fortify the land and has been taking steps to decrease, mitigate and protect the land from natural disasters, as Japan is very vulnerable to events like earthquakes, besides the previously mentioned water-related disasters.
This is especially important as now there's a pending earthquake in the Tokyo metropolitan area, as well as the Nankai area, so the Japanese government has secured a budget for the fortification of the land, and there's been a growing number of opportunities in that field.
At the same time, with the decreasing population, there's a need to revitalize rural areas, and in order to do so, connecting cities has become crucial. Connecting those cities to a network is important, which means that there's a growing need for transportation, which means more transportation construction. In the post covid era there would certainly be growing demand for connecting internationally, so there is an increasing need to strengthen ports, harbors and airports, and there are more demands in this field.
Carbon neutrality is a big theme and we're taking active steps towards achieving it. We have aging infrastructure, reconstruction, redevelopment, and also the fortification of national land to protect it from disasters, together with regional revitalization and carbon neutrality. There are so many things that we need to tackle.
Regarding the declining population and labor force, how will Japan’s demographic evolution affect your business in the years to come?
Speaking specifically about our company, since we are a consulting firm providing services, we still hire young people, so the average age of our group company has been consistent. However, aging will be inevitable so we have three strategies to maintain a comfortable working environment.
One is focusing on women. Even after they bear children, they can come back and work, so we're trying to create a system to let women work longer and more comfortably. The second strategy addresses the working environment for senior generations. We have increased the retirement age to 70 years old now. The third strategy is to try and diversify working styles so some people can do teleworking or have flexible hours, making it easier for people to work. At the same time, it's important to promote an increase in productivity by introducing DX and other IT/IoT means to increase the efficiency of the work.
Construction has long been a very traditional sector, often slow to embrace new technologies. What impact do you foresee digital transformation will have on construction in Japan?
The Ministry of Land and Infrastructure, which oversees the construction industry, is actively promoting the introduction of DX, including BIM (Building Information Modeling), and next fiscal year many of the consulting firms seem to be introducing BIM in their businesses.
In Japan’s construction sector, each step of the building process (studies, design, and construction) is conducted by a separate entity (for example, consulting firms, research companies and construction companies). For this reason, it is vital to introduce BIM in order to have a means of comprehensively managing data.
There's a big difference between private and public construction work. When it comes to private work, general contractors tend to be the ones to manage the entire process in most cases.
However, when it comes to public construction, the appointment of the work is done individually and separately, so a job is allotted to a certain consulting firm, and to a research company and also to a builder, separately by the government. We want to be able to oversee, as a consulting firm, all the processes of this public construction.
As you mentioned, you're the president of the holdings company and of Oriental Consultants, but as you mentioned, there are many other members such as Oriental Consultants Global which handles global activities, ATK, CSE, ATEC, and R&S. Can you tell us more about the advantages of the group and your structure, and the synergies you are able to create between the different members of the organization?
We have a big strength in working together as a group and creating a synergistic effect. That is because there's a growing need for a total and comprehensive service. Speaking of public construction work, in Japan there's the national level, prefectural level and the city, or municipal level. Recently there's been a growing need to combine different sectors, such as mitigating the effects of natural disasters in combination with carbon neutrality, regional revitalization, and the implementation of digital transformation.
Preventing disasters cannot be accomplished with one single measure—it requires a combination of multiple hard and soft measures. It's not only just about hard measures, such as roads, water and sewage systems, or rivers and bank protection; it is also necessary to use them with complementing soft measures, such as appropriate and effective emergency information collection and promotion of appropriate evacuation behavior.
By having multiple group companies which can work together in different fields, we can create an optimal solution and provide optimal services to the clients, which are municipalities. For example, recently there was a big incident in Atami involving the erosion of topsoil on a mountain which led to mudslides. Combining the strength of ATK and our consulting firm, we were able to present a proposal to the local municipality for countermeasures and mitigation.
I’d like to know to what degree you collaborate with companies outside of the group. We read in a press release that you're working with a company called Intelligence Design Corporation, for example, to use object analysis and AI to manage the flow of people on a construction site. Are you interested in working and collaborating with foreign firms outside of your group?
You researched well about Intelligence Design, and in fact we are actively approaching and collaborating with companies outside of the group because we know it's important to collaborate with professionals in each field, such as the AI field, which Intelligence Design is an expert in.
We are collaborating with other companies overseas also, especially through Oriental Consultants Global, our global group company. When we join an overseas project, it tends to be a big project and we often collaborate with overseas consulting firms to provide the optimal solution together. We’re also working with SoftBank and collaborating together to do road management overseas. In this manner, Oriental Consultants Global is collaborating with domestic and international companies and entering new fields.
It's on our website as a news release, so please have a look. Oriental Consultants Global has been working together with this satellite company, and domestically we're collaborating with NEC to utilize this SAR（Synthetic Aperture Radar）satellite. With regard to domestic alliances, we will be releasing the news this week, actually.
Japan has a lot to teach the rest of the world in preparing for natural disasters that are becoming more and more frequent given the effects of climate change. The United States is a great example. There was Hurricane Harvey five years ago in Texas that was devastating. In Florida there was a similar event of extreme flooding. What do you think Japan can teach the rest of the world in terms of preparing for these kinds of events, and as a consultant, what regions are you looking towards as potential markets where you could bring your expertise and help mitigate the impact of natural disasters?
We have already provided these services to countries from Indonesia to Philippines, Chile, Mexico, Guatemala, Peru, and from Turkey to Sri Lanka, Maldives, Nepal, Mozambique, Tonga. We have already been working together in providing disaster mitigation and disaster prevention.
Is there any specific market that has the most potential going forward?
Oriental Consultants Global is focusing on the Asian market in the Philippines, Indonesia, India, Thailand, and Vietnam. In terms of transportation infrastructure, there's a growing need for big railway construction, and we are very much involved in that.
After Asia, it probably will be Africa, but of course it's not only us who are looking into new markets. Chinese and Russian companies are among those expected to be our competitors there, and at the same time, South America is an attractive market for us, so we want to slowly but surely enlarge our overseas business by providing bases in new regions.
What would you say is your main competitive advantage that differentiates you from those competitors?
Our strength is that we have a long-standing history in overseas business, providing optimal service to each and every region of the world. We have been accumulating trust through providing our technology, and at the same time of course, we have an accumulation of high-end technologies that can provide optimal services.
Let's say we come back to interview you again in five years' time for your company’s 70th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe? What would you like to have achieved by then?
Our company, the holding company, has a 2030 vision with the slogan of “Establishing and Creating New Social Values”, which means that we are a responsible company in tackling social issues, and by tackling each and every social issue, we can create new value in society.
We have three strategies in our midterm plan. The first is innovation. We are actively doing high end research and development on the latest technology. The second is digital transformation - introducing DX, and the third is investing in our companies in order to take on the challenge of solving social issues.