Post-Disaster Reconstruction Resource Investment by Japanese Construction Companies

Osaka - Monday, January 9, 2012




Nikkei, Japanese leading newspaper specialized in business and economy, reported on January 8 that Japanese general construction companies are to heavily invest resources (human resources, leading-edge technologies) in Tohoku region to meet the needs of post-disaster reconstruction from the Japan disaster of earthquake and tsunami that occurred on March 11, 2011.



This is because in the next 3 years, it is estimated that 1.7 trillion yen equivalent post-disaster reconstruction demand is to be created in Tohoku, when Japan construction market is currently just above 40 trillion yen, which is half of its peak in the middle of the bubble economy (around 1990).



1. How much demand and jobs are estimated to be created from post-disaster reconstruction?



A leading human resource company in Japan estimated that post-disaster-related construction demand for the 3 fiscal years of 2011 - 2013 (ending in March 2014) is to be approximately 1.67 trillion yen.



Ministry of Land, Infrastructure, Transport and Tourism (MLIT) estimates that in fiscal year of 2011 (ending in March 2012), 500,000 jobs will be created. This is equivalent to approximately 10% of nationwide jobs in construction industry in Japan.



Thus, in the budgeting plan for 2012, the Japanese government has allocated 3.9 billion yen as the newly created “special budget for post-disaster reconstruction of Japan”.



And the industry association created a committee collaborating with MLIT, local government etc. in the devastated area and associations of small and mid-sized companies with the objective of smoothly acquiring human resource.



2. Why such demand and jobs are estimated to be created?



It is because from fiscal year 2012 (starting April 2012), many of the construction in the Tohoku region is to start in earnest.



Some of the (re-)constructions include motorway and other main roads, railways, and levees for shore protection.



3. How are leading Japanese construction companies to take actions to meet such demand increase?



They are to focus their resources including human resources and leading-edge technologies in the Tohoku region to avoid their projects getting behind schedule and/or increase in cost attributing to insufficient materials and human resources.



Currently, the top 4 Japanese general construction companies (Kashima, Shimizu, Taisei and Obayashi) have allocated 300 – 600 human resources in the region but plan to increase by 10 – 20% when they win the order of project(s) related to post-disaster (re)construction.



Regarding technologies, Obayashi plans to utilize cement whose strengths do not deteriorate even exposed to sea water in constructions in coastal area. Applying technologies of waste segregation and recycling, Kashima developed a technology that increases recycling by 80% in handling disaster wastes, which they would like to leverage in post-disaster (re)construction.



4. How would large general construction companies to work with local small and mid-sized construction companies?



Small and mid-sized local construction companies have been preferentially winning orders (projects) that are related to post-disaster reconstruction from the perspective of providing jobs to local people.



The large, general construction companies operating nationwide (and also overseas) will be responsible of (re)constructions of roads, railways and levees for seashore protection, mostly of large scale projects that local companies cannot handle.



General construction companies will take consideration of providing jobs to local people in planning and executing such (re)construction projects. For example, they are thinking of making local construction companies to join their Joint Venture companies or to work for them as subcontractors.



5. What are the author’s final thoughts?



1) Jobs/employment and social infrastructure issues in Tohoku must be solved



This is a critical issue. The author recently saw a TV programme in which they reported that almost 50% of the respondents of their survey answered victims of the disaster lost their jobs. Even those who still have jobs say that their income has drastically decreased.



It is quite true that many victims still live in temporary housing and housing is also a critical issue, the victims cannot lead the lives they used to lead unless they have jobs to make ends meet.



Another critical issue for victims to lead normal lives is reconstruction of social infrastructure such as roads and railways, and ultimately cities/villages accompanied with such facilities as shops, hospitals and schools, and housing.



The above Nikkei article is the first step for such a social infrastructure reconstruction.



2) All organizations (public, private, academia) and all individuals need to take responsibility in post-disaster reconstruction



The above article is about the case in construction sector. It is true that at this stage construction sector is one of the sectors to take the lead but it is not the only one and there should be something that all sectors of all organizations/individuals can help and/or are responsible in the post-disaster reconstruction.



The previous article Sendai Girls Lead Post-Disaster Reconstruction Initiative – Japan Disaster, initiated by Muratac Co. Ltd., a company based in Sendai (one of the hard-hit cities by the disaster) is something that they came up with as what they can help and be responsible for the post-disaster reconstruction.



If there should be any sector, organization or individual that cannot help and/or be responsible in the post-disaster even it is may be something small, it means they do not contribute to the society and economy and their raison d’etre as a member of the society needs to be reconsidered. This is because post-disaster reconstruction is reconstruction of the total area covering all aspects of economy, society and people’s lives.





Resources:-

With estimated 1.7 trillion yen post-disaster reconstruction demand to be created in the next 3 years, Japanese general construction companies are to heavily invest resources (HR, leading-edge technologies) in Tohoku region to meet the needs of the new demand. This is the first step of reconstruction of the region (reconstruction of social infrastructure including facilities such as shops, hospitals and schools) to help victims to once again lead normal lives. Other critical issues for reconstruction include job creation. This is the reconstruction of construction sector and all sectors of all organizations and individuals are responsible for the reconstruction.