Sustainable Wood Innovation and Premium Craftsmanship: How Yamagataya Industry Is Elevating Japan’s Construction Future

Thank you, Mr. Yoshida, for taking the time to speak with us today. To begin, let me ask: how do you assess the current state of Japan’s construction market, and where do you see growth opportunities for your company?

The Japanese housing market has been in decline for some time, particularly since the post-war recovery period. In fact, Japan has already accumulated a very large stock of housing—about 60 million homes nationwide. With a population of approximately 123 million, this effectively means there is one house for every two people. From an international perspective, that might sound like the “Australian dream,” but in reality it presents a challenge: we already have sufficient housing stock, and demand for new homes is naturally decreasing.

At the same time, material costs have risen sharply, making new home construction increasingly unaffordable for many families. As a result, the number of newly built homes continues to decline. For decades, our focus was on providing better, higher-quality housing, but today the situation demands something different. The market has shifted away from large-scale new construction and toward renovation, refurbishment, and the maintenance of existing infrastructure.

This is where we see the most significant opportunity for growth. Companies like ours, which can deliver both high-quality building solutions and expertise in renovation, are well positioned to respond to this structural change in Japan’s construction sector.

That connects to the broader theme of sustainability. With Japan targeting a 46% emissions reduction by 2030, how do you see the construction industry becoming more sustainable—both environmentally and economically? And how can wood-based products contribute to this transformation?

This is indeed a difficult but essential question. If we are to decarbonize meaningfully, we must replace as much steel and concrete as possible with wood. That transition is central to Japan’s future.

The urgency is clear: this summer alone, Japan experienced over 50 days with temperatures exceeding 35 degrees Celsius—four times more than 50 years ago. In Gifu, we even reached 41 degrees on a single day. We are also experiencing an increase in extreme weather events, such as torrential rains in regions like Kyushu and Akita. The link to global warming is undeniable. Decarbonization, therefore, is not a choice but a necessity.

Wood plays a critical role because it naturally captures and stores carbon. Unlike energy-intensive steel or concrete, timber is renewable and far less costly to process. By using wood in structures—whether in decoration, interiors, or even in large-scale architectural frameworks—we not only reduce CO₂ emissions but also enhance energy efficiency through better insulation.

Japan has an extraordinary natural advantage: roughly 60% of our land is forested, compared with a global average of 30%. In Gifu Prefecture, that figure is even higher—around 80%, the second highest in the nation after Kochi. However, unmanaged forests can actually pose risks, as excessive growth can lead to instability and natural disasters. For this reason, sustainable forestry is vital.

We must create a cycle: cutting trees responsibly, using them in construction, and replanting. This ensures continuous renewal while also promoting carbon neutrality. In short, moving from concrete and steel toward wood, combined with energy savings and renewable energy use, is the path forward for sustainable construction.

Let’s turn to another pressing issue: Japan’s demographic crisis. With a declining birth rate, an aging population, and a shrinking workforce, what challenges and opportunities do you see, and how is your company responding?

Yes, this is one of Japan’s greatest challenges. The birth rate has been falling for nearly a decade, and today it stands at around 1.15. While this is still higher than South Korea, it is far below the level required to sustain population stability. If this continues, Japan’s population could fall below 100 million within the coming decades, and perhaps even to around 80 million.

At the same time, foreign workers are slowly increasing in number, and I believe it is absolutely necessary to establish systems that allow Japan to welcome and integrate more of them. It will be extremely difficult for us to sustain our economy and society relying only on Japanese labor.

But population decline is only part of the issue. The larger problem is Japan’s low labor productivity. Among OECD countries, Japan ranks around 30th. Productivity is particularly low among small and medium-sized enterprises compared to large corporations. Contrast this with countries like Ireland or Finland—nations with smaller populations but far higher productivity levels.

If Japan is to maintain happiness and prosperity, we must focus on improving productivity rather than simply lamenting population decline. That is the real challenge. For companies like ours, the key is to invest in efficiency, innovation, and ways of working that make better use of limited human resources.

In many of our interviews, we hear that internationalization is one way to counterbalance the domestic demographic challenges. Currently, exports make up about 3% of Yamagataya’s revenue. What are your future targets for overseas expansion, and which markets do you see as most promising?

It is true that our exports are still relatively modest, but we see strong potential for growth. When we consider which countries to enter, we evaluate three main criteria:

1. Low country risk – Political stability is essential. We cannot afford to operate in markets with risks similar to Myanmar, where instability can disrupt both sides.
2. Affinity with Japan – Countries that have a friendly perception of Japan are easier to work with. Hostile or unfavorable perceptions make business extremely difficult.
3. Proximity – Logistically, closer markets are easier, though this is not always the decisive factor.

Historically, Gifu Prefecture targeted China and Korea, and later Germany, with whom we had an academic and forestry partnership. Personally, I would like to expand further in Europe, but regulations such as the EUDR present challenges. The United States is also a market of great interest, though the current political environment raises some uncertainty. Nevertheless, we have recently formed a sales partnership with a U.S. company, and we see excellent opportunities in the North American and European hospitality sectors—particularly high-end hotels and restaurants.

Mass production is not our model. Instead, we focus on premium markets where quality, tradition, and uniqueness are valued. For this reason, high-end dining and luxury hospitality in Europe and the U.S. are ideal.

Regarding certification, in the U.S. our products can be exported without special certification. In Europe, requirements are tightening, but our premium woods—some over 100 years old—are often exempt due to the difficulty of tracing their origin. For general timber, certification is needed, but for prestigious wood sourced responsibly from temples, shrines, or under government forestry plans, we operate transparently within legal frameworks.

Let’s talk about your company’s philosophy. Yamagataya was founded in 1918 and has grown into a comprehensive wood solutions provider. Your corporate vision is expressed in the phrase “Living with Trees”.  Could you define this vision in practice and explain how it guides your strategy?

“Living with Trees” is deeply rooted in Japanese culture, which has always valued wood as an essential part of daily life, from vessels to architecture. For us, it means creating a harmonious relationship between people and forests, using wood responsibly and respectfully.

One of our key areas of expertise is meiboku—precious, prestigious woods. These are limited resources, highly valued for their unique patterns and grains, which can differ vastly from tree to tree. The value of a single log can be 50 or even 100 times higher depending on these characteristics. This market is sometimes called the “jewelry industry of wood,” because, like diamonds, each piece is unique.

Handling meiboku requires exceptional skill, judgment, and appreciation. Large corporations often avoid this sector because of its complexity and risk. But for us, it is an area where we can truly add value, integrating meiboku into architecture, interiors, and furniture.

In practice, our vision means extending wood’s role beyond construction to every aspect of modern life—design, wellness, sustainability, and innovation. We aim not to be the largest provider, but to be the most unique: not number one, but only one.

One technical challenge in exporting wood is its tendency to warp due to humidity and temperature changes. Yamagataya developed Itakura 2.0 anti-warping technology with academic partners. Could you explain how this works?

Warping is indeed a serious challenge. Our solution combines traditional methods with advanced technology.

First, we rely on long-term natural drying—two to five years of air drying, carefully managed so the wood acclimates to its environment. This process requires patience and meticulous care.

Second, we use specialized Japanese machinery unique to our factory, which applies precise pressure and treatment to stabilize the wood. This machinery, developed domestically, does not exist in other countries and gives us a distinct advantage.

By combining time, human expertise, and technology, we are able to significantly reduce warping, ensuring that our products maintain both their structural integrity and their aesthetic beauty, even across diverse climates.

Finally, I’d like to ask about your research collaboration with Gifu University, which has explored wood’s potential to improve air quality, reduce stress, and even enhance productivity. What applications or new products might emerge from this research?

Our ambition is to move beyond being a “total solutions provider” and instead position ourselves as a wood innovation company. The power of wood is still not fully understood, and we want to bring its hidden potential to light.

Scientific studies already show that wood can enhance concentration, improve cognitive ability, and support mental well-being. For example, scents from cedar and cypress have measurable effects on sleep quality and productivity. In housing, wood can provide superior insulation, helping to create comfortable, energy-efficient living environments.

One of our goals is to extend healthy life expectancy—not just lifespan, but the years during which people can live independently and in good health. If we can extend this by even three years through the use of wood in our living spaces, the societal benefits would be enormous, including significant reductions in medical costs.

This is how we see our mission: addressing social challenges such as aging through innovation in wood. By combining wood with other materials—stone, steel, paper—or with traditional Japanese crafts like kimono and indigo dyeing, we can create new value and preserve Japan’s monozukuri (craftsmanship) culture.

Again, our vision is not to be “number one,” but to be only one—a unique company that creates singular value for society.

That is a powerful message to close on. Thank you, Mr. Yoshida, for your insight and for sharing Yamagataya’s story with us.

Thank you. As someone born and raised in Gifu, I am deeply committed to making the best use of our natural resources and traditions, and to combining them with innovation to create a better, healthier future.

To read more about Yamagataya, check out this article about them.