Waquo Industry Co., Ltd.: Redefining Infrastructure Maintenance with Advanced Valve Solutions and Global Expertise

To start, could you provide us with an overview of the current macroeconomic landscape of the Japanese construction industry? Additionally, what role do SMEs like Waquo Industry play within this evolving sector?

The overall macroeconomic situation in Japan’s construction industry is heavily influenced by the country’s declining population, which has led to severe labor shortages across various sectors, including construction. While large listed companies dominate the industry, SMEs like ours play a crucial role, particularly in infrastructure maintenance.

The Japanese construction sector operates under a system where major contractors lead projects, while SMEs depend on how these larger firms perform. In the past, during Japan’s construction boom, business was strong, but as infrastructure ages, the need for maintenance has increased significantly. Today, issues such as water leakage and structural deterioration require far more repair work than in previous decades, making maintenance a growing area of demand.

Historically, the industry was structured under a rigid hierarchy, with large companies controlling most opportunities. However, this system is shifting. Today, contract distribution is largely a matter of chance, as large firms prioritize cost-cutting measures. Some SMEs are fortunate enough to secure key contracts, while others struggle due to the increasing competition and unpredictability in the market.

Another major issue facing SMEs is succession planning. Many Japanese SMEs, particularly in construction, lack successors to take over when the current leadership retires. In our case, my son and daughter have joined the company, and I hope they will continue the business in the future. However, approximately 60% of Japanese SMEs do not have a clear successor, creating uncertainty for the industry's future. Unlike large corporations that have a pool of managers to choose from, SMEs often rely on a single CEO, and if that leader overestimates their ability without preparing for succession, the company may struggle to survive.

A key distinction between large firms and SMEs is risk management and specialization. Large companies often avoid risk and instead subcontract specialized work to SMEs like ours, which possess deep expertise in infrastructure maintenance. This provides companies like ours with valuable opportunities to apply our knowledge and skills in aging infrastructure repair.

Another difference lies in the workforce and operational structure. Large construction firms are filled with white-collar workers who primarily handle administrative tasks and compliance paperwork, often without ever setting foot on a construction site. In contrast, our employees have extensive hands-on experience in the genba (field), giving us a much deeper understanding of the realities of on-site work.

There has also been a major shift in industry dynamics compared to the past. Previously, general contractors and subcontractors collaborated closely, working together on all aspects of a project—from electrical work to ironwork—through daily communication. Today, however, this level of interaction has diminished, creating gaps between different sectors of a project. As a result, responsibilities can sometimes become unclear, leading to inefficiencies and miscommunication.

Despite these challenges, the evolving industry landscape also presents opportunities. As large companies focus on cost-cutting and risk avoidance, they increasingly rely on SMEs with specialized skills. This allows companies like ours to carve out a vital role in infrastructure maintenance and continue providing essential services to the construction sector.

You highlighted how the evolving relationship between large companies and SMEs is creating new business opportunities. Given this shift, what are some of the key sectors where you see potential growth for your business? Additionally, are there any emerging industries or new fields that you are looking to expand into in the future?

I see significant potential in the domestic market, particularly in infrastructure maintenance. While there are also opportunities abroad, I believe that our expertise is more urgently needed here in Japan. Many of the buildings and infrastructure projects constructed during Japan’s economic boom were built to last, and as a result, maintenance was not a major concern at the time. However, today, as these structures age, demand for maintenance is rapidly increasing. The industry is shifting its focus to ensure that buildings and infrastructure can be repaired and remain in use for longer.

The approach to maintenance varies greatly between Japan and overseas markets. In countries like the Philippines, for example, maintenance is often limited to simply replacing parts rather than conducting comprehensive structural repairs. This is because the quality of Japanese-led overseas construction projects tends to be very high, reducing the need for extensive maintenance. However, in Japan, maintenance involves reverse-engineering, applying new materials, and integrating advanced repair techniques.

As part of our civil engineering services, we introduce new valves, pumps, and other modern materials that extend the lifespan of infrastructure. We also share our expertise with local partners in overseas markets, including the Philippines, where we have conducted training sessions for Filipino employees. By equipping them with Japanese maintenance techniques, we have been able to expand our service offerings beyond simple part replacement, providing full-scale maintenance solutions in international markets.

The changing dynamics of Japan’s construction industry are also creating new opportunities. In the past, a rigid hierarchy existed, where only companies with close ties to major contractors had access to the best projects. Today, that is shifting, with more emphasis on maintenance and specialized techniques—areas where SMEs like us excel. This has enabled us to expand beyond Hokkaido into Kanto and other regions of Japan. However, despite our capabilities, project distribution in the industry remains uneven, with some companies securing the best contracts while others struggle to compete.

There is also an uneven dispersal of human capital in the construction sector. Graduates from top universities like Tokyo University are typically recruited by large construction firms, while SMEs often hire from industrial colleges. However, we have seen instances where graduates with big-company experience later join SMEs like ours, bringing valuable expertise.

One of the biggest challenges for the construction industry today is attracting young talent. Many young people do not view construction as an attractive career path, leading to labor shortages. Additionally, even when companies successfully recruit workers, on-the-job training (OJT) and re-education are often necessary to ensure they develop the hands-on experience required for maintenance and production work. This challenge is not unique to our company—it is an issue across the entire Japanese construction sector.

Stellite is a major advantage for us because many of our clients request its use in traditional stainless steel or iron-based alloys. One of its greatest strengths is high thermostability, allowing it to withstand extreme pressure and aggressive chemical exposure at high temperatures. This makes it an excellent choice for industrial applications where durability is critical.

Beyond its material properties, Stellite also provides significant advantages in lifespan and maintenance efficiency. For example, a valve manufacturing company might typically require six months to resolve a major issue. However, in many cases, contractors and building tenants cannot afford to wait that long. This is where our expertise becomes invaluable—we can complete the necessary maintenance in a much shorter timeframe, sometimes reducing the repair period to as little as two weeks. Our ability to deliver rapid, high-quality repairs gives us a competitive edge, helping us secure more contracts.

That being said, while Stellite is an exceptional material, we also recognize the importance of proving its effectiveness scientifically. This is why we collaborate closely with Hokkaido University and other academic institutions for R&D and data validation. By backing up our work with academic research and verification, we ensure that our Stellite-based solutions are not just practical but also scientifically approved, reinforcing the credibility and reliability of our techniques.

You just highlighted the importance of partnerships for knowledge exchange, particularly in industrial maintenance, where complex systems such as HVAC, automation, and machinery repair require specialized expertise. Given the difficulty of mastering every field, collaboration is essential for staying at the forefront of the industry. Beyond your partnerships with universities, what other collaborations do you pursue to exchange knowledge and stay up to date with global trends in industrial maintenance? Are there specific industries, organizations, or companies you work with to ensure you remain at the cutting edge of technology and innovation?

We are always looking to form more partnerships within our field, though in most cases, potential partners tend to approach us rather than the other way around. One of the key reasons companies seek to work with us is our strict adherence to Japanese Industrial Standards (JIS), particularly for valves and piping systems operating under high gas pressure. By maintaining JIS certification, we are able to demonstrate our technical credibility and build a strong track record, making us a trusted partner in the industry.

Valve maintenance is an extremely specialized field. The professionals working in this sector possess deep technical knowledge, as valve systems operate under extreme pressure levels that can only be managed using the correct techniques and safety protocols. This level of expertise is why industrial partners recognize the value of working with us.

Currently, we are working on applying a new technique for valve maintenance and overhauling. While I cannot disclose details at this stage, we are in the process of securing JIS certification for this method. Once approved, I am confident that it will attract more customers and new partnership opportunities, further expanding our capabilities in the industrial maintenance sector.

If we can leverage the knowledge within our company to develop technology that is recognized by society through patents and other means, there is no greater satisfaction.

There are various aspects of valves in terms of patents, so we want to consider what we can do in-house and acquire patents where necessary.

This is why technical expertise and experience in valve maintenance are so valuable. Certified valve maintenance technicians are exceptionally rare in Japan, with only around 500 people holding the necessary certifications to conduct official safety valve maintenance. While many maintenance workers can make adjustments using simple tools like a spanner, true maintenance requires the skills and certifications of trained professionals to ensure safety and regulatory compliance.

Another major concern is the aging workforce in this specialized field. Out of the total number of certified technicians in Japan, nearly 60% are over the age of 60. This presents a significant succession challenge, as fewer young professionals are entering the field. Without proactive efforts to train and certify new technicians, the industry could face a serious shortage of skilled workers in the near future.

Your company has expanded across different regions in Japan and, since 2011, has also established a subsidiary in the Philippines. How has this subsidiary contributed to your business operations, and how has it helped facilitate further expansion into Asia? Additionally, what are your future plans for this subsidiary and its role in your company’s international growth strategy?

First and foremost, we aim to increase our presence in the Philippines, as doing business there has been quite challenging. One of the biggest hurdles we faced was that local valve manufacturers became our direct competitors. This was primarily because, in Southeast Asia, maintenance traditionally meant simply replacing old or damaged parts with new ones, rather than conducting full-scale repairs and overhauls.

However, this mindset is changing, and companies are beginning to recognize the value of proper maintenance. It is far more cost-effective to extend the life cycle of existing valves rather than purchase new ones. For example, the cost of purchasing two new valves is equivalent to fully maintaining five existing valves. As this understanding spreads, we believe it will create more opportunities for us to expand our business in the region.

Another factor driving our international expansion is the increasing demand from overseas customers. One key reason is our ability to provide maintenance for all types of valves. In the past, customers would buy large quantities of valves, but the problem was that maintenance companies specialized in only one type. This meant that companies had to work with multiple maintenance providers, which was inefficient and costly. Our unique strength lies in offering an integrated service package that allows us to handle maintenance for all types of valves, making us an attractive choice for global clients.

A great example of this was our participation in the Sakhalin oil and gas project. After completing the project, we received inquiries from manufacturing companies worldwide. The project used valves from the US, Italy, France, Germany, and other countries, meaning there was no single manufacturer that could oversee all the maintenance requirements. When safety guarantees expire, appealing to the original manufacturer is extremely costly and time-consuming, as it often requires sending specialists from their home country.

When these companies saw that we were involved in Sakhalin, they were surprised by our versatility—we could repair and maintain all types of valves, regardless of their country of origin. This global expertise set us apart, leading to greater recognition and more international customers.

Moving forward, we will continue to leverage our experience in diverse valve systems, further strengthening our presence in the Philippines and the broader Asian market.

We see significant potential for our company in the coming years, as new types of valves are being introduced to Japan alongside advancements in technology and the construction of new industrial plants. For example, with the development of ammonia plants and facilities for emerging energy sources, valves from various international manufacturers are being incorporated into these projects. However, many Japanese companies lack the expertise to properly maintain these foreign-made valves. This is where we stand out—we have the technical capabilities and experience to provide the necessary maintenance for a wide range of valve types, giving us a strong competitive edge in this growing field.

Recently, our employees attended the Valve World Expo in Düsseldorf, Germany, where he encountered many valve manufacturing companies that are still relatively unknown in Japan. We see this as a major opportunity for technological exchange. These companies could benefit from our manufacturing guarantees and specialized maintenance services, allowing them to expand their presence in Japan, while we gain access to new technology and expertise.

Recently, we have been asked to become an agent or a certified repair shop for a number of companies, regardless of their country of origin. In fact, in the past few years, we have become an agent or a licensed factory for several overseas companies.

Moving forward, we expect more of these opportunities to arise, and we are eager to expand our international collaborations. Our goal is to participate in projects not only in Japan but also overseas, strengthening our global presence and contributing to high-quality valve maintenance worldwide.

We are also seeing new alternative fuels for shipping such as ammonia or hydrogen. For example, EBARA is involved with Kawasaki on a hydrogen pilot project. Do you see business opportunities in that area going forward?

There is a lot of research going on around the world into power generation using ammonia and hydrogen. We also think that the day will come when we will be maintaining these plants, so we are preparing for that every day.

Another critical area we are focusing on is natural disaster prevention. Given Japan’s vulnerability to earthquakes and other natural disasters, preventative measures are becoming increasingly important. This presents significant business opportunities, as more companies and industries recognize the necessity of disaster-proofing infrastructure. Recently, we have also been receiving orders for maintenance work in the rocket industry.

If we were to return in 2030 for your company’s 60th anniversary, what ambitions or goals would you like to have achieved by then?

This year, I will turn 70, but I still have many plans for the company’s future. We have established a long-term strategic roadmap covering the next five, ten, and fifteen years to ensure sustainable growth. From a financial perspective, one of our key objectives is to reach JPY 13 billion in sales, strengthening our market position for the long term.

However, beyond the numbers, I want to emphasize a far more important goal—becoming Japan’s number-one total maintenance provider. In any competition, people remember the winner, not the ones who come in second or third. Our ambition is to consistently exceed customer expectations so that our name becomes synonymous with excellence in maintenance services.

For a company to survive and thrive, it must be bold and forward-thinking. That is the mindset I want to instill in our team and the message I want to convey to your readers. Achieving the number-one position will bring both recognition and responsibility, but that is my vision for the company. I am confident that with ambition, innovation, and a commitment to quality, we will reach this goal in the years ahead.

For more information, please visit their website at: http://www.waquo.co.jp/