Sunday, Jun 23, 2024
logo
Update At 14:00    USD/EUR 0,00  ↑+0        USD/JPY 0,00  ↑+0        USD/KRW 0,00  ↑+0        EUR/JPY 0,00  ↑+0        Crude Oil 0,00  ↑+0        Asia Dow 0,00  ↑+0        TSE 0,00  ↑+0        Japan: Nikkei 225 0,00  ↑+0        S. Korea: KOSPI 0,00  ↑+0        China: Shanghai Composite 0,00  ↑+0        Hong Kong: Hang Seng 0,00  ↑+0        Singapore: Straits Times 0,00  ↑+0        DJIA 0,00  ↑+0        Nasdaq Composite 0,00  ↑+0        S&P 500 0,00  ↑+0        Russell 2000 0,00  ↑+0        Stoxx Euro 50 0,00  ↑+0        Stoxx Europe 600 0,00  ↑+0        Germany: DAX 0,00  ↑+0        UK: FTSE 100 0,00  ↑+0        Spain: IBEX 35 0,00  ↑+0        France: CAC 40 0,00  ↑+0        

Sakai Heavy Industries: Rolling out road infrastructure projects in Asia and US

Flag USA Flag JAPAN
Interview - May 14, 2021

One Japanese company set to play a major role in major infrastructure drives in both the US and Southeast Asia over the coming years is Sakai Heavy Industries, which is a leading manufacturer of road construction machinery with a long-established presence in both regions. In this interview president, Ichiro Sakai, discusses the company’s plans for the global market, as well as Sakai’s high-performing machinery, such as its vibratory pneumatic tire rollers and high-frequency vibratory rollers, which were used in the paving of San Francisco International Airport. 

ICHIRO SAKAI, PRESIDENT OF SAKAI HEAVY INDUSTRIES
ICHIRO SAKAI | PRESIDENT OF SAKAI HEAVY INDUSTRIES

Your company recently celebrated its 100-year anniversary. Historically speaking, we see that Japan had a construction boom as a result of the 1964 Tokyo Olympics. Can you tell us the history of your company and its contributions to Japanese infrastructure?

In 1918, the company was founded by my grandfather, Kinnosuke Sakai. The business began in the repair of automobile parts and steam locomotives. In 1929 the company began producing road rollers. Then, in 1935 we started our first overseas venture by exporting our road rollers to Thailand.

As you know, our factories were destroyed during World War II. In 1946 my father, Tomoyoshi Sakai, rebuilt the company, and continued the manufacturing of road rollers and locomotives. As well as supporting infrastructure growth in Japan, we exported our products to Pakistan, Philippines and Thailand. At the time, our locomotive business was so successful, because trains were used as the primary transportation source for lumber. In 1967 we stopped building locomotives, due to two important changes in Japan. First, the use of rail transportation declined due to the Forestry Agency initiative requiring lumber transportation to be made by trucks. Secondly, we realized our opportunity with road rollers because of the tremendous increase in country-wide road construction projects in Japan.



In 1970, we established our first international joint venture with a company in Jakarta, Indonesia. The Japanese Government was leading an initiative to provide Official Development Assistance (ODA) for supporting infrastructure projects in Indonesia, which eventually led to building manufacturing facilities there as well.

Populations in large Asian cities, such as Tokyo and Osaka continue to rapidly grow. Accordingly, investment in construction-related projects throughout the region is booming, with about $1.6 trillion expected to be spent every year. Compare that to about $700 billion earmarked for construction in the US. What role will Japanese companies play in the growth phase in Asia?

One reason we have been so successful across Asia, is because of the durability and reliability of our rollers. The machines will be used for 10 to 15 years here in Japan, then exported throughout Asia. So, for the past sixty to seventy years, Sakai machines have been circulating throughout Asia. With our brand and quality recognition of used machines, we now see growth selling new machines as additional areas have become more prosperous. Though Asia is our primary market, we have seen our business grow across North, Central and South America, Middle East and Africa.

 

Sakai began selling machines in the United States in 1976. With experience in the US market for almost 50 years, what is your analysis of the American market and their needs for infrastructure construction and repair? How does that tie with your growth strategy for Sakai Heavy Industries?

President Biden recently proposed investing nearly $2 trillion for civil engineering and infrastructure projects in the US. If that budget is approved and enacted by Congress we could see many new roadway projects this fall. We offer a number of asphalt and soil compaction machines in the United States, so we are very optimistic about these future projects. We developed a unique series of oscillatory rollers (insert photo, see below) for highway, airport and bridge pavement projects. We offer asphalt rollers for all sizes of construction projects from residential, commercial to interstate paving. We have put a lot of emphasis recently into the US market, as competition is fierce. We promote our simple, yet durable designs and reliability when comparing ourselves to the competition there.



Sakai machines are used in two primary segments: machines for new construction projects, such as your rollers, and road repair machinery, such as the road planer and reclaimer. Can you explain what contractors look for when using these machines?

For road construction, we work with specialty construction contractors for roadway projects. Road construction contractors are looking for new technology to help them complete their projects more quickly, but with results to meet job specifications. Soil compaction is a little more forgiving, as mistakes can easily be corrected. However, when paving roadways with hot asphalt mixes, mistakes are costly and hard to correct. For this reason, road construction engineers and contractors need to know the specific capabilities of the equipment they use. They are quite particular when selecting road construction equipment. When promoting our road equipment to these companies, we stress machine features and durability which will enable them to meet their quality requirements for road density and smoothness during construction.

 

When speaking of technology, automation has become important within the heavy equipment industry. Improvements in safety, efficiency and cost reductions headline the trend for autonomous control. If we look at Caterpillar, a US manufacturer of construction and mining equipment, we know that they have heavily invested in automation technologies since 2017, not only in hardware but also software and licensing fees. Can you tell us how Sakai is adjusting to this trend towards automation in the heavy equipment industry?

One of the most important aspects to achieving appropriate pavement density during road construction, is consistency in compaction from the roller. If a roller operator compacts the new surface unevenly, that less compacted portion of the road will be the weakest section. Automation will help during compaction to insure consistent density results. Intelligent compaction systems have become increasingly popular in the USA, Japan and Europe. These systems are an excellent tool for roller operators to use when evaluating the quality of compaction in embankments and asphalt pavement layers. At Sakai, we have developed a Compaction Control Value (CCV) system for both soil and hot mix asphalt. This system has been proven on several test projects by the Federal Highway Administration (FHWA) in the US and the Ministry of Land Infrastructure and Tourism (MLIT) in Japan. The CCV can be connected to our intelligent compaction system called “Compaction Meister”, which displays a set of mappings for CCV, roller pass numbers and mat temperature and records them in a cloud server through the Internet. All location data and coordinates are linked by GNSS. 


Photo: Compaction Meister with CCV stiffness sensor


Is this something that can be retrofitted into other machinery or is it only exclusive to your company’s equipment. Are you looking to develop it for other machinery as well?

I think the key for adoption of autonomous technologies will come from government agencies research and recommendations. When agencies such as the FHWA in the US and MLIT in Japan, evaluate the benefits of these technologies and begin to promote them, we will see increased demand. For example, here in Japan, we are going to begin offering this new technology this year. Prime Minister Suga and officials in Japanese construction ministry are excited to see autonomous technologies and the digital transformation available.

 

I understand that Sakai recently collaborated with a regional information and communication technology (ICT) company on your autonomous roller technology. How did this collaboration come about?

Actually, our bank staff introduced us to our partner company. Their team is proactive and ambitious, so we decided to work together on this project. They traditionally don’t work with large corporation partners, as creativity can be obstructed by excessive red tape and paperwork in order to make decisions. Though we are a publicly-traded company, they realized that our family-led executive team was nimble enough to make necessary decisions quickly, so we agreed on the partnership.



Japan is famous for being able to develop new technologies and products when they are needed because they are heavily invested in research and development. We know that up to 3% of annual GDP is reverted back to R&D. Can you tell us more about your R&D strategies and what products would you like to share with our international readers?

I would have to say that our primary competitive edge is our compaction technologies. We put a lot of our R&D time and effort into improving compaction from our rollers, which ultimately leads to better results for our end-users. For example, our Vibratory Pneumatic Tire roller which was introduced in 2000 and available worldwide, is unique as the only tire roller with a vibratory mechanism incorporated into the tires. It can achieve levels of compaction density and pavement uniformity not available from competitive machines. Rollers are the last machine in the train of paving equipment, after the milling machine, emulsion spray truck, material transfer machine and paver when building roadways. So, the roller can have a big impact on the success of the entire road building project.

According to a recent research study in the US, it was shown that increased density, measured in density percentage, leads to a longer useful lifespan of the pavement. Even a 1% density improvement could add longevity to the asphalt. This specific study found that each 1% of increased density equated to about 10% additional asphalt life. In the US, contractors are working hard to continue to improve roadway lifespan by achieving higher density levels. When contractors meet density specifications set on a project, they can earn a bonus on the job, so every percentage point can mean additional money. Our business is really about providing the best machinery to these contractors in order to build the best roads possible.



I understand you had a project in Kenya, where you taught the locals how to use your machines to make their construction sites more efficient. Sakai has also contributed to big airport infrastructure projects in the United States. Is there a project that you are particularly proud of?

Yes, definitely! Our Vibratory Pneumatic Tire roller and High Frequency (4,000 vpm: vibration per minute) Vibratory roller were used in the paving at the San Francisco International Airport. As you could expect, a smooth runway is extremely important for an airport. The finished project was very successful, with all density and smoothness specifications exceeded. When working with hot asphalt mixtures, temperature during the compaction process is a key component for meeting density and smoothness requirements. On a wide-open surface with limited buildings, a cool wind that is frequent in the San Francisco area, can be a factor during paving. Our contractor partner was very pleased with the results our rollers offered, and with the overall performance on such a large important airport job.



You have spoken about several projects outside your home country of Japan. Obviously, Sakai has not been shy in expanding outside of Japan. Can you tell us more about your international sales and production goals?

This past year, we had about 5% market share in the US, so there is still a lot of growth potential. We optimistically believe we can reach 10% to 15% in the near future, so that would be a nice growth curve for us. When it comes to building roads in developing communities such as in Kenya, Nicaragua and Uzbekistan, we sell a lot of road stabilizers, as those regions tend to have a lot of unpaved dirt roads. Here they frequently mix the construction aggregate right on the dirt road itself, then use the road stabilizer and a roller to flatten the road and harden it.

Building roads in more developed countries like the US or Europe, with more established paved roadways, the process requires removing the current deteriorated asphalt pavement, then delivering new aggregate to the building site before utilizing a roller. 



You said you were looking to gain a 10% share in the US, what strategy will you be employing?

We have had upwards of 8% market share in the US, but business has fluctuated quite a bit over the past 10 years or so. It will take some time, but I believe we will be able to get to 10% to 15% share, given our technology and track record. We have a solid distributor network established in the US, but strengthening and growing that network of companies that represent Sakai, will be very important for us. We also believe several European-based roller manufacturers exiting the category in the US, which may open up some great business opportunities.

 

You are the third generation of the Sakai family to be president of Sakai Heavy Industries. Someday, you will eventually retire and hand leadership responsibilities of the company to another generation. When that happens, what kind of legacy do you want to leave for your successor?

I definitely want to leave a legacy that builds upon our past successes. Continuing the tradition of high-quality, reliable machines, made with end-users in mind, is key. I want our tradition of expertise in the road-building industry to continue driving meaningful new technologies and capabilities.



 

Since 2014, average annual sales were about $250 million. In the graph, Japanese sales are in blue, Asia is green and red represents the US. This graph shows fiscal results from when I became president of Sakai. About 80% of our sales has been domestic, and my next goal for us is to get to $300 million per year.

  0 COMMENTS