nikkei, reconstruction

Quake Demand Alone Won’t Solve Builders’ Problems, nikkei, 3/29/12

TOKYO (Nikkei)–Japan’s general contractors, longtime supporters of the country’s building and civil engineering markets, faced a stern test of their management after last year’s Great East Japan Earthquake, which set off a tsunami that inflicted tremendous damage and paralyzed city functions along a large slice of the country’s northeastern coast.

The latest challenge for the builders is how to take advantage of high technology in their reconstruction of disaster-hit areas.

On Monday, Takashi Yamauchi, president and CEO of Taisei Corp. (1801), was discussing an upcoming construction technology exhibition with executives at the company’s Shinjuku Center Building 52nd-floor headquarters.

“This model moves, right?” Yamauchi asked as he scrutinized the model to be used to explain the company’s newest quake-resistance engineering. His attention to detail is not surprising: He plans to invite clients to Taisei’s headquarters and explain the latest technologies himself.

Good on paper

Last year’s March 11 temblor brutally exposed the inadequacy of the seismic disaster predictions by the central government, municipalities and industry experts.

After the disaster, general contractors set about commercializing new technologies based on larger earthquake scenarios, anticipating stricter quake-resistance standards from the government and others. One example is seismic isolation and control technologies designed to withstand a magnitude-9 class earthquake. Amid heightened attention to disaster preparedness in greater Tokyo, Taisei hopes to pitch its technologies, one of which dampens long-period ground motion in skyscrapers during a quake.

Temporary fix

Rebuilding from the quake has given a sudden boost to Japan’s construction investment, which had been falling since the 1990s. Measures to improve the quake resistance of major structures and coastal defenses, along with general reconstruction work, boosted construction spending in fiscal 2011 compared with the previous year.

But reconstruction demand alone will not solve the biggest weakness in the industry: overreliance on public works spending. “General contractors taking on reconstruction work need to determine its cost-effectiveness,” said Yamauchi.

With the fiscal year ending this month, money from supplementary budgets for reconstruction has finally started flowing, setting off a flurry of breakwater construction in coastal areas. Offshore engineering companies such as Penta-Ocean Construction Co. (1893) have benefitted.

General contractors will see the money really start to roll in when trillion-yen road construction projects get under way in the next fiscal year. How they respond to the surge in demand and deal with their long term challenges will determine the health of the industry.

(The Nikkei Business Daily March 28 edition)

About liz

from the u.s., recently moved from kobe to sendai, japan, researching community-based housing recovery after disaster.

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