More than just a trading company, Ishihara has established a total support system to reduce construction time, cost and environmental burden.
We would like to use your company to challenge the misperception that Japanese firms have somehow lost their innovative or quality edge in the eyes of the West. As both a trader and a manufacturer of construction materials, what do you believe to be the core strengths of Japanese enterprises that allow them to compete in the global market?
There are different perspectives on how to judge this problem. Obviously, there are pluses and minuses, so basically we are talking about two sides of a coin. If we are to think about the industries themselves, both the construction and raw material industries are not in a good shape. Our company itself deals with wood, as well as other construction materials that are used on construction sites. You can imagine how much is coming from the social problems existing here in Japan, such as the elderly population. Currently, we are sitting at around 20 million people here over the age of 75. The average age here in Japan is already approaching 50 years old, so needless to say the elderly population as well as the drastic decrease in population is causing a big effect on the construction sector. This is a big minus.
Every cloud has a silver lining however, in order to promote carbon neutrality, the wave of wooden construction is surging not only in conventional houses but also in commercial facilities, schools, nursery schools and offices. As for housing equipment, highly energy-saving products are being expanded. Increasing the availability of wood and reducing the burden on the environment is inherently a good thing.
Another good aspect is the fact that we can expect many more foreigners to settle down here in Japan. There is the potential for a company like ours to find new customers from this, and we can provide construction on residential housing for newcomers to Japan.
As I said, there are pluses and minuses, and I like to think that we here at Ishihara are much more on the positive side. Another aspect we need to draw into the discussion however is the decrease in birth rates. The big baby boom happened after WWII, with some families having 6-7 members of a household. Right now in Japan, it is no longer this way, and people are just not having enough children anymore. This means that construction companies are no longer oriented to building huge houses with lots of space. Shrinkage in the market is happening not only in the volume of people, and the number of children but also in the amount of space being used in residential areas. In the future, we may need smaller housing for one or two people.
As a trader related to construction industries, there are several aspects in which we as a company overcome these problematic points. First, as an environmentally friendly company, when using gypsum board, it is pre-cut at the factory, so no waste is generated at the construction site. All gypsum board cut in our factory is 100% recycled. With the scarcity of raw materials here in Japan, we feel this is a very important point to be strict over.
Another activity is optimization, and due to the labor shortage these days, it is difficult to secure human resources, and it is difficult to improve work efficiency, so we have to introduce new technologies such as robots. These integrated systems help alleviate the burden on actual operators, and this is key because domestically we have a scarcity of this human capital. It also contributes to short lead times and helps increase the overall quality of our products. We actually have a subsidiary in the Philippines that utilizes CAD and CAM systems to make things easier so that the customer will have complete satisfaction with the final package.
It is actually very simple because the products are precise. Basically, you just drill the holes on the machined surface and supply those to the customers. Assembly happens at sites directly, which also helps decrease the time of production. Essentially it is creating a win-win situation for us as a manufacturer and a trade house, plus the customer on the side of procurement.
You’ve alluded to the advent of digital technologies in the construction sector, and as you mentioned, this is a key strategy in combating an aging society. Your company is a great example of Japanese companies embracing new digital solutions, but that is not always necessarily the case in Japan. What impact do you think DX will have on the construction sector in Japan? Can you give us an example of how you are using new technologies in your own operations?
Needless to say, CAD and CAM systems allow us on the software side to design pre-cut wooden panels. This itself is something that the company has been doing for a long time now. Embedding software in conventional production sites is something that we find very crucial. In that aspect, it is very important to think about the aspect of embedding data because there are different sources of data you can implement throughout the system. If you are a company that does it accurately then the whole process can be simplified.
It really is as simple as that, and automation steps have been taken inside the company. It isn’t something new for us, and we have already been optimizing production sites by introducing new machines that can be run with less effort from the operators. Optimization and automation are things that are considered very important for construction sites right now.
It is not enough to just provide part of the building construction itself such as pre-cast plywood, there are so many other aspects. So many other aspects need to be drawn together such as the wall manufacturing companies, roof manufacturing companies, and other component manufacturing companies that build up the structure of the entire house. We are just part of that process, so the aim here as a company has been to provide overwhelming support towards the full structure of the cost, starting from the design point to create a self-sustaining building in terms of energy resources, and also creating insulation. This is very important in itself because it's done in most cases inside the production where the house is actually built. You can provide as many components as you like for a good house, but in the end, if you don’t have good insulation then the environment inside the house will not feel good. You have to remember that Japan is a nation of four seasons with wildly varying temperatures throughout the year. Bringing all things together to create houses really is the ultimate goal here as a company. The introduction of IT and robotics is one part of this project that we are trying to implement here domestically.
Earlier you mentioned having a 100% recycling rate for your materials. Could you tell us in a little more detail about the recycling scheme you’ve set up and how you’ve managed to become a one-in-the-world type of company when it comes to a sustainable approach to making buildings?
To answer your question, it is very important to us here at Ishihara that we make positive steps toward decreasing the burden on the environment, especially when you consider the scarcity of resources here in Japan. It is a necessity to utilize raw materials to their maximum. We have a cooperative company, and they send gypsum panels to us and we pre-cut them. I personally feel we have some very good connections in the industry and we are able to make things happen.
Let me tell you a little about the benefits of having a pre-cut panel. Panels are pre-cut before they are installed inside construction areas meaning that nothing needs to be done at the actual production site itself. It eliminates the scraps and byproducts there, which usually doesn’t happen in other countries like America. All these things I’ve mentioned can be found in Japan. Having everything pre-ready saves time, resources, manpower, and energy.
If you are on the site and you process it there, the material has to go somewhere. When it is pre-cut here at Ishihara, everything is saved and everything is used again. Everything is used precisely by the way it is initially designed, and you really don’t need anything besides that.
Another point to bring up is the weather. At a construction site, the weather is always changing, and that weather could potentially damage the pre-cut materials. We don’t allow that, and we tend to keep up the quality of the produced materials by keeping them inside the factory until they are needed.
Fularika is the name of your new housing brand designed as a new service for local builders and building contractors. Can you tell us about the inspiration to establish your own concept housing brand, introduce us to the platform, and tell us some of its strengths?
The idea behind this came because we have so many divisions related to construction. There was always a thought of “how can we combine all of their products into one service,” and from that, we made the decision to go with this kind of idea. Fularika combines all the best features of our company including the manufacturing capabilities to create a concept house.
The goal of Fularika is to introduce it to our already existing customers’ portfolios. We are living in a very fast-paced and constantly changing world. Every day something new is coming, and for that reason, it is very important for any company to apply its best traits and best features to ride the flow of time. For local construction companies, product development and advertising takes a lot of time and effort. By playing a part in this and providing appropriate support, local construction companies will be able to focus on construction work and provide highly satisfying services to their customers. Most construction companies nowadays are looking to wood materials, essentially because wood has become a popular choice once again simply thanks to its eco-friendly nature. It is better than concrete in terms of insulation, and even in terms of human health, it just is an all-around better material. We would like to take this opportunity to actively promote the superiority of wooden houses centered on Fularika and do our best to provide our customers with the best possible service.
You mentioned foreign partnerships and connections in terms of sourcing materials, but earlier you mentioned that this kind of prefabricated method is not something you are going to find in any other country outside of Japan. Do you think that this will always necessarily be the case? Is exporting this type of prefabricated housing technology to other countries something you are interested in?
That is certainly a possibility because these prefabricated materials might be something that others outside of Japan might find useful. We do have a satellite company in the Philippines doing CAD, and there is potential for that to act as a distribution channel to Southeast Asia.
You mentioned there that your CAD center in the Philippines could act as a good gateway for you. Are you looking to replicate this model elsewhere? If so, where do you have your eye on?
No concrete steps have been taken so far, so right now the answer is maybe. Currently, we haven’t even thought about what strategy we might employ should we follow this path.
Of course, it is also possible to expand the base to other countries in the future. If there is a partner that would like to utilize our technologies, then there are open doors to create a feasible situation.
We previously established a CAD center in China, but later moved to the Philippines. We have also been promoting the introduction of a 2x4 panel factory in China. We felt that Chinese people who had studied in the United States and Europe would have a strong attachment to wooden houses, so we were thinking of supplying 2x4 houses with panel processing in China, but due to the housing situation in China, we gave up on this business.
With the Fularika brand, you explained earlier how it is the result of consolidating all of the efforts of the company into a final product. You also said that you will be selling this product to your existing customer base. What is your mid-term strategy for this product and how do you plan to increase its sales?
First things first, we are thinking about the domestic market. Shizuoka and Aichi prefecture are the two clients region-wise, and we have manufacturing locations in only these two areas. The Fularika concept house is targeted at these two areas only for these reasons, at least at this point in time. When the time comes we will think about it more.
Imagine that we come back in 6 years' time and have this interview all over again. Is there a goal or ambition that you would like to have achieved by then?
I would like to make a contribution to the region we are located in now, between Shizuoka and Aichi prefectures. We would like to introduce our best efforts in order to revitalize the region. We are very dependent on our customers' portfolio here in the area, so for that reason, we would like to treasure them and provide them with the best services possible. When the time comes we would like to take that strength of ours and introduce our business overseas as well.
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