With its know-how and experience of imported Canadian lumber and wooden building construction, SELCO HOME is quietly helping to change the image of wooden houses in Japan.
Selco Home has been providing imported Canadian homes domestically for more than a few decades, building more than 20,000 homes in that time frame. With many different housing styles across the world, why did you decide to focus on Canadian homes?
It was actually MITI that promoted this in order to avoid potential friction that the importation of homes from overseas could cause. They requested construction companies to start, and it became the starting point of our imported house business. We were one of the few construction companies who were requested to do this. (Note: MITI, Ministry of International Trade and Industry. MITI became METI, Ministry of Economy, Trade and Industry.)
Selco Home began supplying imported homes in 1995 and has been in business for more than quarter of a century now, about 30 years. Throughout this time, we have continued supplying Canadian homes to the Japanese market. We have been recognized as the number one importer of Canadian houses in Japan by an independent market research firm. As a result of this, we have been officially congratulated by the Canadian Embassy in Tokyo for this achievement.
Selco Home chose three potential regions that we could import the houses from. These were Canada, the USA, and Europe. We believe that Canada was the best choice because Canadian companies were the most flexible and adjusted the size of the windows and kitchen cabinets according to our requests. The chairman of Selco Home thought Canadians have a similar sense of moral obligation and humane feelings to Japanese. Of course, there were also business-oriented reasons for choosing Canada.
First of all, Canada is an economically advanced country, and they have a lot of building related bylaws and regulations when it comes to how houses should be properly constructed regarding energy efficiency. These regulations go beyond simply insulation and are more precise when it comes to windows. For example, we know that in Japan, aluminum windows are widely used for newly constructed homes. In Canada, it is very precise and strict and as such, aluminum windows are not allowed to be used for new residential buildings because its performance does not meet regulation standards. All of this combined, we believed it was worthwhile to sell Canadian standard homes in Japan.
Another regulation that we liked related to the circulation of the economy. If Canadian households made from wood require one tree to be cut, then you must plant three more to replace each one that is cut down at that time. This contribution to protecting the environment also appealed to us and resembled our own policies. For these reasons, we thought it was a sustainable business and started importing houses from Canada.
We know that Sendai was hit hard by the Great East Japan Earthquake and many local communities were destroyed as a result of the catastrophe. In 2017, you won the Good Design Award in the disaster recovery category for your work at the Yuriage Wharf Morning Market, where you were able to rebuild the entire structure. Can you tell us a little more about this project? How has it helped to revive the local community there?
Miyagi was the most devastated area, with the most casualties, as well as the most households destroyed. For that reason, and due to the fact that we are a local company related to household construction, it was very important for us to help in the rebuilding and to engage in charity activities to aid the local populace. The Yuriage Wharf Morning Market was one project related to the rebuilding of the area and work was done with the Canadian government and Natori City. We used our know-how and experience of imported Canadian lumber and wooden construction, to build a wooden building that was funded by the Canadian government and Canadian forest products industry. We greatly contributed to the revival of the local area alongside the Canadians.
Selco Home also constructed temporary houses for people whose homes were damaged or destroyed as a result of the earthquake. Among the companies based in Miyagi Prefecture, we have built the most amount of temporary housing in the prefecture. We were able to procure building materials from Canada at a time when others were having difficulties. We used good building materials imported from Canada (e.g. PVC windows filled with argon gas and Low-E coated double glazing units), and built temporary housing with insulation performance in line with Canadian standards. They were like brand new houses where people could live comfortably, even in the harsh winter conditions of the Tohoku area.
The temporary homes that some other companies built were all prefabs and were not designed with regards to the harsh winters in Sendai or the rest of Miyagi Prefecture. As a result of this, many people did not have a good experience when living in the temporary houses that were constructed by some other companies. It was cold and people were suffering.
When the local municipality asked construction companies to improve the conditions of these temporary houses, we did not have to improve ours at all. Many people wanted to move to our temporary houses instead.
This project was different from any other business and was not for making money. It was a project provided by the government to contribute to the people that were in need after the devastation of the earthquake. We normally use Sendai port to import building materials, but some of the vessel companies were reluctant to send their ships to Sendai and even to Tokyo, because they were too close to Fukushima where the nuclear power plants were damaged by the Tsunami. Their first choice was Hakata Port, which they thought was far enough away, but we negotiated and ended up with Kobe Port. Although it cost us twice as much as using Sendai Port, we believed we had an obligation to help people in trouble.
Selco Home has been utilizing its own platform to share information since before the advent of Google Drive. Furthermore, you have been mounting web cameras so that construction managers can monitor sites through smartphones. What other digital tools are you looking to implement at Selco Home?
Selco Home has tried many new technologies that have been made available. It is getting popular in Japan to mount web cameras at a site to monitor the stages of construction. We also tried to install live cameras with wheels which can be moved into the building via remote control. It has proven useful to monitor the stages of construction through remote controlled devices, especially for a large size building which requires a longer construction time. However, for the housing construction conducted by our company, the period during which the live camera could be placed inside the building was short, and it was difficult for it to run on its own inside the building. We are currently considering how to install a 360 degree camera. No matter how much technology advances, we will still need to rely on human eyes and need to check some aspects manually, especially for customers who are looking for more sophistication and want to make changes.
Japan’s construction boom occurred more than 50 years ago, prior to the 1964 Tokyo Olympics. As such, today there is an increased need for maintenance, renovation and upkeep for such projects. While on the other hand, new builds continue to grow in cities such as Osaka and Tokyo but are expected to level off by 2040 as the full extent of Japan’s declining population is realized. What is your take on the current state of the Japanese construction market?
It is a fact that we are seeing a declining population in Japan, and this is obviously negative for the construction market. The construction of new condominiums and residential areas are decreasing due to this population decline. This has been a serious situation for the past several years. About 10 years ago, the overall number of homes built by SMEs or large residential homebuilders represented only 10-20% of the housebuilding market. Most of the rest was done by small local homebuilders. The percentage of detached houses built by SMEs or large homebuilders has increased rapidly over recent years, so the picture is more optimistic. Also, more people want to settle down and make a living in rural areas of Japan. Therefore, the situation is not as negative as it may seem for our company. That being said, the decrease of the population is certainly a negative factor for our industry.
Another important aspect is a rapidly growing renovation market, as retrofitting and renovation are increasing. Today, remodeling older buildings is good for the environment, and also beneficial for a company like ours because we can have many potential customers who build their homes with us. Six or seven years ago, we analyzed the market and saw a drop in residential construction. Shrinking our company would not work for us, so we decided to put more emphasis on renovation, rather than solely building new structures.
In Japan, the renovation market is estimated to be worth JPY 7 trillion this year. Globally, it is expected that it will grow to be worth USD 500 billion by the year 2028. We know that Selco Home proposes renovation solutions using original imported materials. How do you plan to take advantage of this growth in the renovation market?
The big business when it comes to renovation is not of the households, but for condominiums. That is more feasible and profitable. We started these activities 10 years ago, as our company already possessed assets including condominiums. We began to remodel and renovate them due to necessity. We also realized that this was a good business, so we started to purchase used condominiums and then began to remodel them, as demolishing the buildings would be more costly. Remodeling, refurbishing and retrofitting these existing buildings in Sendai is currently an important business for us. I think this is more sustainable and good for the environment anyway.
The Covid pandemic has severely disrupted businesses worldwide for the past two years, perhaps most notably in the logistics sector where oil prices tripled, resulting in 75% of international ports experiencing delays last year. This has been further exacerbated by China’s zero-COVID policy, as well as the war in Ukraine. As a firm that imports materials from Canada, Australia, and the United States, how have these disruptions in global shipping and logistics affected your business?
We fulfilled all the requested commitments that we made during that period. We were not late in completing our projects, so we were able to keep the promises that we gave to our customers. That side of our business was not affected much, minimizing any negative impacts. However, one effect of this disruption was that prices started to increase. Ordering on time and ordering before actual project implementation was an important measure that we adopted at an early stage to avoid further problems when it came to logistics. Therefore, we were able to minimize the effect these disruptions had on our business.
Dealing directly with our suppliers and not having intermediate parties simplified our logistics chain and made it more efficient and convenient. We also keep material costs reasonably stable.
Some companies may have struggled in this respect due to having multiple intermediate margins. However, we directly deal with the companies overseas and we are very good at communicating with them. This approach allowed us to deliver everything on time. We know that some companies purchasing products overseas through intermediate companies had delays. For example, they import wooden furniture and other housing materials from different overseas suppliers through intermediate companies. Dealing with multiple suppliers and intermediate companies can disrupt your business and we were able to avoid this due to our approach.
What has been the effect of the pandemic on your business?
It did not have a big effect on our business. We did have some examples of people who used to live in Tokyo, Kanagawa and Chiba in the Kanto area that wanted to relocate to more rural areas such as Yamanashi. However, we did not see the same trend in the Tohoku area. We saw more people begin to work remotely and there is high demand for houses having more comfortable working stations. This trend is the same in both the Kanto and Tohoku areas. We are aware that more people began to work remotely, and they want to make their working space more comfortable.
Some people say wood is not a reliable building material, as during seismic activity it loses its structural integrity is easily compromised. We know that many of your homes are made from wood, what are your thoughts on wood has as a construction material?
It depends on how you treat wood. There are very good houses that are made from wood and long-lasting. The treatment of the construction material and the method of building houses are key. For example, Japan and Canada apply different techniques. If the construction method is good and you apply the best material possible, the results can be great. When Japan was experiencing its economic boom, a lot of wooden houses were built. These deteriorated over the years, with many that were built 30 or 40 years ago in poor shape today. This may have painted a bad image of wooden homes in Japan. However, today, choosing a proper construction method and choosing the right materials means that wooden houses last longer.
The life cycle of houses is different depending on each country. In Japan, on average, the life cycle of a wooden house is around 30 years. In America, it is 55 years. In Canada, it is 60 and in the UK it is 70 years. The life cycle of wooden homes in the UK is longer than all the others due to the antique houses, as well as the sensitivity of treating wooden homes being much greater than anywhere else. Therefore, they are able to preserve the antiqueness. With regards to America, the life cycle is quite long as people tend to do the paintwork and woodwork by themselves when it comes to making repairs. It is a part of American culture. In Japan however, people buy houses and tend to leave them for a very long time without making repairs or necessary maintenance. That is why the life cycle in Japan is not that long.
Also, there are poorer regulations compared to Canada, and poor-quality houses are built as a result. We, on the other hand, offer guarantees to our customers who buy Selco homes. We can guarantee that our homes will have a life cycle of at least 50 or 60 years as long as these are properly maintained.
The extended life cycle and durability of our houses imported from Canada was proven when they were able to withstand the Hanshin-Awaji Earthquake, the Niigata Earthquake, the recent earthquakes in Kumamoto, and even the Great East Japan Earthquake that happened in 2011. Our houses were still standing no matter the magnitude or devastation of the quakes. It proved that our homes are strong enough to withstand even the harshest seismic activity.
With that being said, we did have some houses that were damaged by the tsunami, as it destroyed the land where the house stood. Unfortunately, there is not much that we can do about that. It was not just our houses that were affected. The tsunami also destroyed many houses that were constructed by other companies too. However, we still had some that stood even though the tsunami hit them directly. When it comes to earthquakes and other natural disasters, our houses are proven to be robust and able to stand for a long time.
What role do partnerships play in your business model and are you looking for any overseas partnerships?
Selco Home has been engaged in partnerships with Canadian suppliers as well as US and Australian ones too. Also, we work with many Japanese companies. Our business cannot survive without good partnerships and mutual understanding
In the process of developing the Canadian imported house business in Japan, we have had to customize the houses to fit the Japanese characteristics and culture. We could not achieve this without the cooperation of our Canadian suppliers. This actually became our business concept. “Born in Canada. Raised in Japan.”
We have the ability to tailor products from overseas to the Japanese market. We had some inquiries in the past outside which we are currently dealing with and unfortunately, have not succeeded as of yet. Of course, we welcome new business partners from all over the world as long as they are ready to work closely with us and accommodate Japanese culture.
Imagine that we come back to have an interview with you again on the last day of your presidency. Is there a particular goal or objective that you would like to have achieved during your time as president?
April of last year marked the beginning of our company’s new policy. It was I who initiated that. A new slogan was developed, and I introduced the concept of our company being a “wooden producer”. I wanted our company to be known as a company that can do anything with wooden architecture. I would like to continue this concept until the end of not only my time as president, but until the end of my life. I want to be remembered as somebody that was a “Wood Solutions Producer”.
This year marks the 64th year since our company’s establishment. Throughout our company’s existence, many needs changed. During the economic boom, we started as a real estate industry operator. Later, we transformed ourselves to be a condominium developer. We then entered the household importing business, which was regarded as a very complex industry to operate in. However, we managed to be successful. Times change and every 20 years, there are new trends, as there are new market needs.
We want to listen to what our customers desire and fulfill their wishes and expectations. We also want to go beyond wooden condominium construction and expand to industrial buildings, as well as constructing commercial buildings too. We already have the structures, materials and construction know-how imported from Canada which will allow us a great deal of flexibility when it comes to different kinds of construction. They are my goals for the future.