On course towards a new era in shipping

Japan as an archipelago has a long history of shipbuilding and seafaring. Today, Japan is one of the biggest nations in terms of shipping assets owned, ¥ 150 billion of all shipping assets are owned by Japan. What is the key contribution that Japan brings to the shipbuilding industry worldwide?

It is quite difficult for us to estimate the entire level of ship building activities in Japan because we are one of the suppliers to the shipyards. Our growth was accompanied by the development of shipyards, after World War 2. As some major heavy industries have been shifted away from shipbuilding recently, the global market share of Japan in this industry is getting lower relatively. However, some types of vessels are growing in price these days and we expect further progress of specialized shipbuilders.

When we got the opportunity to speak with Kawamoto-san of the shipbuilding firm, Tsuneishi, he told us that the shipbuilding industry is quite unique and involves a lengthy process, from the signing of the contract to the delivery of the ship takes approximately two to three years. For that reason it is critical to have a team of market researchers looking at the latest trends in the industry and adapting to them. Can you tell us more about how your company is adapting to the latest trends in shipbuilding?

The trends in the market are very crucial for shipbuilding projects and while this is true, as a designer and a fabricator of ship accommodation interior, we still give more value in addressing the immediate needs of the customers than the current trends. For more than 75 years, we have gained clients’ trust with providing a stable quality of work at all times and with sticking to delivery dates strictly.

In the last two or three years the shipbuilding sector has been widely covered in the media especially here in Japan due to the competition with Chinese and South Korean shipbuilders. In 2018, Japan sued South Korea under the WTO because the Korean government subsidized their local shipyards therefore lowering the price and starting unfair competition. Amidst this tough price competition with China having lower labor costs and South Korea being subsidized, how can the Japanese shipbuilders compete?

It is hard for us as suppliers to shipyards to say for certain what is really happening in the shipbuilding industry as a whole. I believe that the challenge for the Japanese shipbuilding industry is the decline in the global market share which is led by the growing share of China and South Korea. Particularly in such a situation that some major heavy industries are distancing themselves from shipbuilding, I feel it is important to keep up the level of ships' price as well as technical skills so that we do not fall behind other countries. Since Japanese shipbuilders are undergoing mergers and alliances in this environment, I expect the volume of shipbuilding in Japan to increase again.

You seem to be pessimistic about Japan’s shipbuilding sector in which your company is very reliant on. What is your strategy to lessen your dependence on the trends involved in the shipbuilding industry?

We may sound pessimistic about Japan’s shipbuilding sector, but we are not.We have a steady market share in the domestic market and it is about 65%. To increase our market share more, we aim to become an interior company which can take charges of whole accommodation works with trying those surrounding works too. On the other hand, since the limit of expanding on the domestic market share is approaching, it is getting more important to expand our business to the world. We are currently working on a large passenger ship which is being built in China with a Chinese partner. It would be after the coronavirus pandemic settles down, but we are also planning to expand our business to Southeast Asia. For the future, we are willing to expand into the market of cruise ships' interior in Europe. Besides the ship interior business, we are focusing on our overland business too.

You have seen a lot of changes on how the interiors or the ships are manufactured. In the recent fourth industrial revolution we see the adoption of smart sensors and 3D printing capabilities. Speaking of 3D printing capabilities, I believe this is something that ship interior designers would benefit from, to find unique shapes and add extra functionality. How is your company adopting any of these technologies?

It is hard to determine what kind of technology or machine is going to be adopted. 3D printing is something that we have in mind and we might be using this in the future, currently we are using the CAD/CAM system. 

You have two types of businesses, Marine and Overland, which is your main focus? What are the synergies that you have been able to create with these distinct yet similar lines of business?

Both the marine and overland businesses are our focus. 90% of our sales comes from marine business and our current domestic share is about 65%. To expand our sales, we consider that we need to challenge surrounding works besides accommodation interior of vessels as well as to explore our overseas business. On the other hand, there are similarities in the design and construction of both marine and overland businesses, and we are creating synergies in terms of internal personnel exchange and utilization of partner companies.

You have done numerous projects, which one is your favorite among them?

It is hard to choose one as my favorite, but Aida, a cruise ship which was built here in Nagasaki was one of the most impressive projects in my career. It was a huge achievement for our company. Here in Japan we do have a good track record of dealing with different kinds of ships from smaller ones such as fishing boats up to large passenger ships. Currently we are expanding to Shanghai where we are working with a Chinese business partner to create interiors of the cruise ships that are undergoing construction. Lastly, we are also going to introduce our best features to the European market.

The ship interiors are always subject to wear and tear and over time it would need repairs and maintenance. How are you helping the ship companies with repairs and follow up services?

We have been trusted with keeping the delivery time and with ensuring the proper quality in all projects including repair and maintenance projects which have limited time.

You have done various projects with ships as well as inland projects such as railways, housing and commercial facilities; all of these have different specs and demands. What allowed you to cater your services to each demand?

We are able to produce good synergy among these projects and between our two main business divisions. We are able to combine different aspects of our business as well as maintaining the balance. Having a track record for nearly 80 years now in shipbuilding we are capable of providing a steady supply of products for the ships that are catered to the needs of our customers. Currently we are dealing with the construction of condominiums where we could utilize our accumulated know-how and expertise. We are trying to increase our market share on projects related to our overland business.

It takes collaborative efforts to do ship interior projects. Your company needs to work together with other companies in order to realize a goal of building high quality interiors. You launched your overseas office in Taiwan and you have been involved in collaborative efforts as you expand overseas. Can you tell us how you were realizing this goal and what efforts you made to achieve this?

It is indeed very important for different companies to collaborate especially that there is a tendency for the owners to want sophisticated outputs or interiors that are appealing. The different divisions have to work closely with other companies and suppliers such as for the procurement of the materials that can be obtained from different parts of the globe. Recently in addition to selling, we are applying ourselves to procurement from other countries. Including language skills, we are confident with our ability to procure interior materials from overseas including Europe.

In order to further expand and move from the suppliers that are actively involved in the overseas market, what strategies will you be implementing? Will you open up another factory, look for an M&A, joint ventures, or establish another sales office?

Currently we are carefully studying how this should be done. With regards to strategy, most likely we will look for business partners or work with an association that acts as a mediator.

You are looking forward to the 100th anniversary of your company. When that happens, what are your dreams for the company and what would you like to have accomplished by then?

Our current sales amount is about 25 billion Japanese yen per year, but I would like to increase it to over 40 billion. To achieve this goal, following three conditions are essential. First, we expand ships' interior business including those surrounding works in Japan. Second, we expand our business to overseas shipyards. Third, we expand our overland interior business.