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CHC System: Shaping the future of construction and engineering in Japan

Interview - December 12, 2023

A visionary approach to elevating engineers, revolutionizing construction hierarchy, and ensuring sustainability

TOSHIHIKO SHIBUYA, CHC SYSTEM CO., LTD.
TOSHIHIKO SHIBUYA | PRESIDENT AND CEO OF CHC SYSTEM CO., LTD.

The last Japanese construction boom occurred more than 50 years ago, prior to the 1964 Olympics, and since then due to the demographic shift, there is an increased need for maintenance and upkeep while there is less of a need for new construction projects. What is your take on the current state of the Japanese construction market?

Our company places the utmost importance on our engineers. In Japan, the construction sector operates with a unique hierarchy, differing from other countries. Typically, architects occupy the top position in this hierarchy, followed by contractors, and engineers find themselves at the bottom. This hierarchy begins at the university level when students choose their majors. The most highly regarded individuals opt for architecture, the next tier chooses construction, and those with fewer options end up in engineering. As a result, there is a shortage of engineers in Japan. Given the future landscape of construction in Japan, the role of engineers is becoming increasingly vital.

The future of construction in Japan leans more towards renovation than new construction. However, due to this hierarchical structure, engineers often have a lower profile and are perceived as merely following orders without much room for innovation. We firmly believe that engineering is inherently a creative role. To demonstrate this to society and the younger generation, we must create an environment where engineers can express their creativity. Our company offers engineers the opportunity to shine, allowing them to take a prominent role. Within our organization, all roles are of equal importance, but when we engage in external projects, we make it clear that our company is a place where engineers can realize their full potential. This approach not only elevates the role of engineers within our organization but also encourages others to pursue careers in engineering.

In contrast, countries like the UK and Ireland have a different construction hierarchy. Typically, they have a project manager at the top, followed by a construction manager, with contractors and engineers further down the hierarchy. In Japan, the role of project manager is often assumed by the architect, who wields significant authority. However, architects typically lack in-depth engineering knowledge. Consequently, this hierarchical structure can lead to high air-conditioning expenses and elevated CO2 emissions. We established our company with the goal of changing this dynamic and ensuring more sustainable and efficient construction practices.

 

The establishment of System Housing Construction in 2007 and T2P Architects Office in 2017, marked a significant expansion in your company's capabilities, enabling you to operate as a comprehensive construction company, handling everything from planning to construction to after-sales maintenance. Additionally, you have ventured into Korea and participated in exhibitions in the United States, United Kingdom, Taiwan, and China. Could you outline your strategies for further expanding your business on an international scale?

One of our primary missions is to manufacture our own products. The driving force behind the development of this equipment was the realization that traditional production methods resulted in costs that were up to around ten times. Such high costs would deter people from adopting these solutions. Our equipment, on the other hand, is cost-effective, representing just a tenth of the expense of conventional methods. This affordability makes it a highly attractive option. Furthermore, our equipment boasts structural integrity and aligns with principles of eco-friendliness and energy efficiency. By providing this equipment, we aim to elevate the status of engineers and enable them to take pride in their work, knowing it is both impactful and worthwhile.

I am also involved in teaching at universities, and it is becoming increasingly evident that more students are inclined to pursue engineering careers. This emerging trend is quite promising. Japan, with its four distinct seasons, provides our engineers with unique expertise in developing systems suitable for diverse weather conditions and environments. This valuable experience can benefit projects worldwide, particularly in the face of the significant challenges posed by global warming.

 

Considering Japan's demographic situation, the transfer of engineering expertise to the next generation poses challenges. The smaller pool of younger talent and a contracting domestic market amplify these difficulties. Many firms are exploring recruitment strategies abroad, with Vietnamese, Thai, and Chinese professionals being brought to Japan to strengthen the workforce. Is this an approach your company is considering?

The world is undergoing significant changes, and it is becoming increasingly crucial to prioritize collaboration over competition. The landscape of talent is diversifying as well. In the past, in Japan, one's career path was typically determined by their major in university, and that trajectory would continue until retirement. However, we now live in an era of centenarians, and this has shifted the common trend. It typically takes about three years of dedicated learning to become an expert in a new field. So, even at the age of 40 or beyond, individuals can change course, spend three years acquiring new expertise, and embark on a fresh career. It does not matter if you are a man or woman, young or old, or have physical challenges; there is always an opportunity to acquire new skills and pursue a different career path that can extend well into your centenary years. My aspiration is for individuals from all backgrounds to become experts in their chosen fields.

 

The IT field has exerted a considerable influence on ventilation and air conditioning systems, with applications spanning from smart centers to remote control monitoring. In 2021, your company introduced the IoT Service, enabling remote central monitoring and cloud services for indoor environments. Could you provide more insights into the IoT service and how it has been seamlessly integrated into your products and services? Furthermore, what impact has it had on customers who have adopted this service?

In 2022, we introduced a system known as the Ultimate IAQ (Indoor Air Quality). This system is designed to collect comprehensive data about indoor environments, including factors like temperature, relative humidity, odor, and CO2 levels. To put it simply, this system generates a unique dataset that does not exist anywhere else globally. This data serves a critical purpose: it enables us to assess whether the current indoor environment is ideal or requires adjustments. Moreover, it allows us to monitor real-time changes in the indoor environment. Consider a scenario where an office initially accommodated just 10 employees but later expanded to 100 employees. In such cases, the indoor conditions would undergo significant changes, and the existing air conditioning settings might prove inadequate. Alternatively, a building initially designed as an office could have been transformed into a restaurant. With our system, we can continuously monitor these environmental shifts and make remote adjustments. Additionally, this system empowers users to control their indoor air conditioning systems via smartphones, even from remote locations or different countries. For instance, if your elderly father, living in another city, accidentally turns on the heating instead of cooling and faces difficulty in communication, you can manage the room temperature remotely using your smartphone. You can also receive alerts on your smartphone if someone has broken into or intruded into your home, thanks to our monitoring system. This makes it a comprehensive solution for home safety and security.

From an engineer's perspective, there exists a substantial gap between the design phase and the operational phase, which demands high-level expertise. The reason is that numerous changes can occur during this gap. Our goal is to share the expertise of our engineers with the world, making it accessible globally. By doing so, we aim to bridge this gap and prepare the next generation for success. This is our international strategy for our engineers.



In the past three years, indoor environmental conditions have gained prominence due to the COVID-19 pandemic, where the virus was transmissible through airborne particles. Effective ventilation and air conditioning played a critical role in preventing transmission, highlighting the necessity of HVAC upgrades for various settings. As a company specializing in air conditioning and ventilation, could you share the impact this had on your business? How did you adapt your products and services to address the potential virus transmission concerns?

COVID-19 exposed issues that were, in fact, not new but had been taken for granted. As a university instructor, I have had the chance to visit various facilities affected by epidemics, including schools, hospitals, live houses, restaurants, and nightclubs. What became evident was that none of these facilities had proper ventilation systems in place. In some instances, the indoor environment was so poor and lacking in ventilation that prolonged exposure could lead to fainting. This highlighted the significant responsibility of architectural engineers because the individuals using these facilities often lack the knowledge and expertise to manage indoor environments. Their primary concerns are usually related to rent and attracting customers. Architectural engineers need to provide guidance to these individuals, or the knowledge about creating suitable indoor environments must be conveyed to designers by the engineers during the construction phase.

In the case of large commercial facilities, they typically have access to competent engineers. However, small or medium-sized buildings often lack engineers to consult or inform them about the importance of proper indoor environments. It was observed that COVID-19 transmission often occurred in these smaller facilities. As a result, facility managers and owners are now recognizing the need to consult with system engineers. This shift has presented a significant opportunity for our company and our engineers, leading to the successful sale of many of our systems.

 

In addition to air conditioning and ventilation, you also established the System Housing Construction which specializes in building over 300 new buildings and houses to date. Your projects range from single-family houses to apartment complexes, with construction made based on made-to-order specifications and the latest construction trends. Why should potential prospects look into buildings built by System Housing Construction? What advantages do your projects bring to your clients?

Our core strength lies in creating highly comfortable, safe, and energy-efficient environments. We aim to harness our engineers' expertise and insights in this field, which is why we have both a construction and architecture company as integral components of our organization.

 

Is your company actively seeking partnerships with industry players who can assist in integrating the latest AI technologies into your software and hardware offerings?

Our company recognizes that we cannot provide all resources due to our limited expertise. Our specialization lies in architectural structure and mechanical engineering. In Japan, the principle of harmony is highly regarded. Just like in an orchestra, where the conductor does not need to master every instrument but knows how to orchestrate each player's strengths, we aim to identify the right partners at the right time. Instead of competing, we prioritize collaboration. We appreciate and accept differences and aim to create something exceptional by working together. We seek partnerships with individuals and entities outside our area of expertise, particularly those skilled in AI, big data, and IT. This helps us expand our network and capabilities.

 

In August 2023, your company participated in the ASEAN Sustainability Energy Week in Bangkok, one of the largest exhibitions in the region. Can you share whether this exhibition was a success for your firm, and do you have plans to participate in more international events in the future?

Our company intends to actively participate in major events within the region or country. We have already been engaged in events in London, the United States, and China. We plan to maintain our involvement in these exhibitions. In our niche market, we have not encountered another company with expertise similar to ours, so we are looking to enter the competitive market.

 

In April 2017, your company expanded the CHC Group to include T2P Architects, a firm that specializes in planning and overseeing the architectural designs of houses, stores, hospitals, and offices. Do you have plans to continue expanding the CHC Group in the future?

Our primary focus is on environmental sustainability and safety. We aim to grow by leveraging these core strengths. Rather than expanding our staff numbers significantly, our emphasis is on cultivating more engineers with the ability to compete on a global scale. We believe that our engineers are pivotal to our success, so we want to strike a balance in our growth that allows them to maintain a prominent role.

 

Looking ahead, which countries or regions do you believe are crucial for the growth of CHC System? What is your plan for achieving these growth goals in those regions?

Our current approach does not involve setting up local offices in other countries. The advancement of IT and reduced transportation costs have made it more cost-effective to consult remotely than to set up physical offices in those locations. We are utilizing tools like Zoom and Webex for communication. We find Japan to be a conducive environment for training our engineers. Our strategy involves maintaining our base in Japan while being ready to provide assistance for international projects when they arise.

 

As your company approaches its 50th anniversary, do you have any personal goals that you would like the company to have achieved by then?

My goal is to see engineering become one of the top ten most desired professions. As a company, I hope to foster the development of leaders. Leadership is not defined by a title but by one's actions. The president may not always have the right answers but should possess the ability to recognize when a staff member provides a correct solution. Even though there may be department heads, we encourage a culture where a team member within that department, if they have a better idea, feels comfortable expressing it, and we want department heads to embrace this kind of leadership and promote it within our company structure.


Interview conducted by Karune Walker & Paul Mannion

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