With the world rapidly urbanizing, the need for reliable ground improvement services has never been more important. Sanshin Corporation is well placed to fulfill this demand.
The last Japanese construction boom occurred more than 50 years ago, prior to the 1964 Olympic games and currently, Japan is experiencing a massive shift in its demography. On one hand, there is an increased need for maintenance and repair when it comes to buildings and infrastructure and on the other hand, there is less of a demand for newer construction projects. As a specialist in ground related and foundational civil engineering, what is your take on the current state of Japan’s construction market?
As you may know already, the Japanese construction industry basically operates around the general contractors, and as we are a specialized construction company, we work very closely with the general contractors. As a specialized constructor, our view is limited, however, we believe there is a growing need for more disaster prevention and maintenance work. There is still a demand for new construction, mostly focused on redevelopment and rehabilitation projects, especially in urban areas such as roads and railways. In terms of infrastructure redevelopment projects, there are pre-existing ones, especially in Tokyo. Therefore, the work underground becomes very important. With that trend, we have more capacity to provide our technology. There is public work and private work, and once that private work diminishes, competition will become harsher, which in turn will impact us too. For the upcoming two to three years, we foresee very little change, however further ahead, perhaps ten years from now, there may be a decline in both public and private work due to the declining population problem hitting Japan currently.
As we know Japan is the oldest society in the world and has a shrinking population. This is most prevalent in the construction market, where one in four workers are over the age of 65. With the aging society comes many issues, one being that there is a smaller pool of talented graduates to replace older, more seasoned workers. Additionally, a smaller population presents less demand for newer construction projects. What challenges and opportunities is Japan’s shifting demographic line having on your company?
We actually do not feel the impact of the aging and declining population yet. The government and various research institutes are sending warnings out, however, companies and the general public have not exactly felt a huge impact over this yet. It is true that the number of workers in the construction industry is declining, however, I would say that we don’t really feel the impact yet regarding this matter. The country’s workers have aged, that is true, but we feel there is no crucial shortage of workers so far. Of course, in the long run, we will have a smaller population of workers, so in that case, the use of automation will be critical. This will also see a decrease in the number of engineers too. With fewer university graduates, we see a trend where they are more often vying for positions in major companies rather than mid-to-small size ones such as ourselves. We feel that in order to acquire good, talented engineers and staff members, it is critical for us to improve our brand awareness and to change the working style of our company so that it is more comfortable for workers.
We know that automation is very good at increasing output and efficiency. How would you adapt to automation and integrate it into your business?
We are taking small steps. For instance, we have upgraded our boring machine. Before it required three people to operate it and now it only requires one with automation.
Previously it required experience to operate these machines, and it relied heavily on the capabilities of the individual operating them. Now, through numerical data collection, we have made it so that even an untrained or inexperienced individual can operate such a device.
In addition to young engineers vying for positions at large companies, the same can be said of customers. They can tend to go with large businesses due to brand recognition. What would you say is your main competitive advantage as a firm and what differentiates you from these large corporations? What solutions can you offer to your customers?
Our business strategy focuses on the development of new technologies and conveying that to our customers and clients. In addition, we focus on having experienced engineers that are capable of operating and fully utilizing these new technologies. That is what we have been doing for over 60 years now. We are not interested in markets that have stiff price competition. Instead, I would say that customers choose us for our unique technology and the reliability that we provide. Essentially, you could sum up our strategy as focusing on individual projects where we can offer optimal technologies, rather than the acquisition of a large market.
One technology you have developed is your V-JET construction method, which is a form of high-pressure grout injection, basically cutting the ground with high-pressure liquids or slurry. Your method focuses on the use of ultra-high pressure cement materials that can create the solidified columns at high speeds while also being more economical. Could you tell us more about your method and how it’s superior to more conventional ones?
The jet grouting technology on which V-JET is based actually originated almost 50 years ago, and around that time, machines would create a column of only one meter in diameter. Now with V-JET, the ejection of ultrahigh-pressure cementitious slurry with the surrounding compressed air, the ground is cut and broken, and the column from 2.0m to 6.0m in diameter is rapidly created. A special monitor consists of two nozzles with differences in levels and directions to achieve very high efficiency of cutting. This monitor realizes faster construction and a larger diameter than the conventional methods. The uniqueness of this method is that it applies high pressure in order to reduce energy loss. The collaboration with the machine manufacturing company was to take care of the reduction of energy loss from the pump produced by the manufacturing company to the injection nozzle.
What role does collaboration play in your business model?
We do a lot of good development with our fellow companies, mainly due to our limited development budget. We only have specialized technology, so the technology we do not have requires collaboration with other companies. Examples include the pump we just mentioned in our V-JET system, and our boring machine operation scheme. We work very closely with material providers. It is important for us to take the initiative and to be the ones to know what the clear outcome is.
Are you potentially interested in working with overseas companies in a collaboration effort?
We have been interested in working with overseas companies. On the other hand, we have incorporated the latest overseas technologies in the field to the Japanese market.
At 3% of the annual GDP, Japan is one of the highest spenders in the world when it comes to R&D. Can you tell us more about your R&D strategy and are there any new technologies or construction methods that you are working on that you would like to showcase?
The CPG (compaction grounding) method was introduced in the US and its purpose is to fill in the hollow ground and correct the settlement of it. We took this technology and realized that this could be effective in correcting liquefaction. Liquefaction takes place when loosely packed, water-logged sediments at or near the ground surface lose their strength in response to strong ground shaking. Liquefaction occurs beneath buildings and can cause major damage during earthquakes. We have collaborated with other companies to create new technology based on the world’s interest in catering to liquefaction issues. We succeeded in this development and it has been utilized in Haneda airport to prevent liquefaction occurring in the runways there. In fact, there are multiple CPG works and projects going on even today. The way conventional construction correction is done is through a hole that is dug in the runway at midnight, meaning work can only be done late at night with the conventional method. This has created situations where work cannot be done due to some airport links having constant traffic. Additionally, conventional methods use a vertical directional drilling machine. We have improved upon this with the CPG Guide Arc, enabling horizontal directional drilling. This CPG method treats soils beneath the existing structures by using curved boring. We can install the injection pipe from outside the perimeter of a structure and inject without interrupting the operation of the structure. This means that work can be done during the daytime and without interrupting the runways themselves.
Japan is a very disaster-prone country, as the main island of Honshu sits upon the intersection of three tectonic plates, which makes it susceptible to earthquakes. Having the correct foundations is the most crucial factor in a building's survival from an earthquake. How do you ensure the safety of buildings in natural disasters when conducting foundation work?
Our main disaster prevention technology is focused on earthquakes and the secondary damages derived from the earthquake. Our injection method, deep mixing method, compaction grounding method and ground anchoring method all have a focus on this. These technologies can all be applied directly for the purposes of disaster prevention, and indirectly act as the technology to assist in this prevention too.
Can this technology be applied overseas or is it primarily for the Japanese market?
Many of our unique technologies have been developed over the years, especially after the 2011 Tōhoku earthquake. Of course, a lot of Japanese infrastructure was pre-existing 10 years ago, so there was an urgency in applying disaster prevention technology to the existing infrastructure and buildings. The technology was developed so as to not disturb existing structures. Therefore, if cities overseas are urbanized like Japan, then our technology can be applied in those markets. If the infrastructure is not yet built, however, there are much simpler methods of applying disaster prevention from scratch. We are not sure yet whether our technology is readily applicable to overseas markets.
Japan has some of the most complex soil composition in the world due to heavy tectonic plate activity. In fact, in Hiroshima prefecture, the ground is made up of 40% granite and this can make construction difficult in certain scenarios. How do you adapt your technologies to suit different sorts of composition types in international markets such as Thailand and Singapore, where the hot and humid climates create very different soil?
Our understanding is not us applying our technologies based on the soil structure, rather it is a case of where there is demand for our services in areas where our technology is applicable. We have mentioned that we possess a unique technology that is applicable to urbanized areas. Singapore, for example, is currently boring and constructing a new subway system. With them going deeper than before, there is a need for ground improvement, which is ideal for our technology. However, on the flip side, Indonesia has less urbanized systems than Singapore so far, so our technology may not have abundant opportunities like it does in Singapore..
In 2015 your technology was applied in Germany with the V-JET system. Could you first tell us about this case study, and what was the outcome? Secondly, are you looking to introduce new technologies to urbanized cities? If the answer is yes, which countries are you looking into?
Our current focus is on Southeast Asian countries with urbanized areas, so we are currently working in Singapore and also in Bangkok on their metro construction project. Our main focus is on ground injection rather than deep mixing. Deep mixing has a lot of competition from Chinese and Korean companies. As we mentioned previously, we are not interested in the high price competition markets. With both the jet grout and ground injection, we have less competition. I would like to add that both jet grout and ground injection can reach depths of 50 meters whereas deep mixing methods can only go to depths of 30 meters.
The tactical alliance we have for the V-JET is with an Austrian company. We initiated talks with this company when we discovered their technology, and we invited them to visit us in Japan. During their visit, they saw our V-JET technology and were really fascinated by it. We made a technical alliance with them so that they may utilize the V-JET technology in European construction markets. We also provide tools for them too, and we are seeing an increase in the amount of V-JET work they are conducting.
We know that in 1991 you opened your first office in Taiwan, and since then you have expanded to Hong Kong, Thailand and most recently Singapore. What strategies will you employ to further expand your operations overseas? Could you elaborate on your international business strategy?
We are interested in expanding overseas through both direct and indirect means. By establishing a base in local areas, we are able to acquire information about the area and if there is a demand for ground improvement. The local base also allows us to collaborate with the geotechnical institutes there, and work with local constructors, material providers, and machine providers. The obvious first steps in this plan require moving directly into the locality and conducting projects to demonstrate our technology and gain local trust. Collaboration with local specialized companies will come after that, with the eventual goal of transferring our technology there.
Which project do you feel most proud of here at Sanshin Corporation and which do you feel most defines the advantages your company holds?
Personally speaking, I was involved in the V-JET project. That has been a remarkable success that I can reminisce about fondly. However, if you talk about the project that has the biggest impact on our society, I would say that CPG is by far our most successful and important. The correction of liquefaction problems in Japan is critical to us.
Imagine that we come back to do this interview again in four years. What would you like to tell us? What are your goals for the next four years?
My rule in management is to not only develop and progress the company, but at the same time. to pass the company on to the next generation. I would probably be focusing on making ground, so I could pass it on to the next generation's management team. Expanding the company overseas will, of course, be a target too. I am actually the seventh president of the company, and all presidents other than the founder have been promoted through the ranks from employees all the way to the top.