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Leader in construction maintenance meeting the challenge of aging infrastructure

Interview - February 15, 2024

SHO-BOND MATERIAL boasts a portfolio of some 500 products for civil construction projects, including pipe couplings, resins, expansion devices and adhesives.

SHIGERU NARAOKA, PRESIDENT OF SHO-BOND MATERIAL CO., LTD
SHIGERU NARAOKA | PRESIDENT OF SHO-BOND MATERIAL CO., LTD

Japan's last construction boom occurred more than 50 years ago, prior to the 1964 Olympics. Since then, demographic changes in Japan have increased the need for maintenance and upkeep while decreasing the need for new construction projects. What do you think about the current state of the Japanese construction market?

We are a member of the SHO-BOND HOLDINGS CO., LTD.  and a derivative of Showa Kogyo Corporation, the adhesive manufacturing company that also gave birth to SHO-BOND CORPORATION. Essentially, the core of the company is SHO-BOND CORPORATION, which functions primarily as a repair contractor, bidding on a variety of projects from the Ministry of Land, Infrastructure, Transport and Tourism; local governments; and highway companies. With respect to current construction contracts, a larger percentage of maintenance has recently been performed on expressways undergoing major rehabilitation, and this expressway maintenance is being performed throughout Japan, not only around the Tokyo metropolitan area but also on the structures of the main expressway operators in the country. Since the discussion on the long-term maintenance and renewal of highway assets in 2014, the budget for this type of rehabilitation work has reached 2.2 trillion yen, and overall highway maintenance is planned at 5.4 trillion yen.

Each highway administrator that manages, oversees, and funds this project added another 1.5 trillion yen in January 2023, stating that the funds were not sufficient. The methods of repairing existing structures, which are diverse, are also diverse, and the associated labor, costs, and maintenance periods are assumed to have deviated from the time of planning. I believe that this incident represents the difficulties we have experienced in structural repair since our founding. This is an important position for the Japanese nation, as it maintains Japan's main arteries, and we intend to continue our efforts in this field over the long term. This field of civil engineering and maintenance will continue to be a growing market, not only for the public but also for the private sector. This is a huge market.

To help drive the success of this project, it is also important that we continue to work on improving the technology, materials, and equipment used in these efforts. We have been vigorously engaged in joint R&D projects with other players in the market to enhance the overall market. We focus on research and development on a daily basis, mainly at the "SHO-BOND Technical Research Institute," a research and development facility owned by SHO-BOND CORPORATION. Our strength is that we manufacture and actually provide them repair equipment such as resin materials, expansion devices, and earthquake-resistant related products developed at this research facility for their repair work.

Let me explain a little about our  pipe coupling business here. It started in 1980 with the domestic production of couplings based on the technology developed by STRAUB Werke AG. We have been engaged in domestic production of these couplings since then and have 42 years of experience. In our most recent fiscal year, we produced and supplied 350,000 units of such products annually to the Japanese domestic market.

Approximately 60% of these coupling products are used for plumbing maintenance in various residential structures throughout Japan. In particular, these couplings make a significant contribution to the repair of piping in housing complexes, where more than 10% of Japan's population lives. In many cases, these aging pipes in apartment complexes are repaired and replaced when defects are revealed during inspections that are conducted approximately every 20 years. Repairing piping in apartment complexes is a complex task because the pipes were originally installed in a flanged configuration, and replacing the same structure in a small and confined place is a complicated job. In many cases, these pipes are concentrated in a specific part of the housing complex called a pipe space. Our products are extremely efficient in these situations. The need to use flange structures secured with numerous bolts is eliminated, and pipes can be connected with only two bolts, which makes pipe replacement much easier. This is a good example of how our products are making a difference.

 

You mentioned that you are cooperating with major companies in the market as a way to develop new products. Is this cooperation limited to the domestic market only, or do you also partner with overseas companies to utilize their unique overseas technologies?

As for overseas alliances within our group, we have a company called SHO-BOND & MIT Infrastructure Maintenance Corporation (“SB&M”), the joint venture between SHO-BOND Holdings and Mitsui & Co., Ltd. (“Mitsui”), and actually within this joint venture SHO-BOND invested the majority at 51% with Mitsui at 49%. We are taking advantage of Mitsui's international network of 126 offices around the world to expand the range of our products to other countries around the world.

The first country where we stepped up our efforts was Thailand, where we met with The Concrete Products and Aggregate Co., Ltd. (“CPAC”), a distributor of mainly ready-mixed concrete under Siam Cement Group (SCG). CPAC has a concrete-related maintenance department, and we felt it was a great time to support their maintenance operations. Our business and values aligned, and we decided to form a company together called CPAC SB&M Lifetime Solution Co., Ltd. (“CPAC SB&M”).

We have approximately 500 different products in our portfolio, which we supply to various civil construction repair projects. Currently in Thailand, we have started local manufacturing of four different resin products and have begun to market these materials through CPAC SB&M, from which we aim to expand our repair business. CPAC SB&M is now looking to expand and penetrate the entire ASEAN market, and in collaboration with us, is aiming to fully expand its business into countries such as Myanmar, Laos, the Philippines, and Indonesia. In fact, our engineers visited Laos in early 2023 to address bridge repair projects and see on the ground what materials and applications are needed. Through our experience in the ASEAN countries mentioned above, we have been able to sense the growing potential demand for our materials. We intend to gradually expand and strengthen this business by increasing the number of materials we can provide through local manufacturing.

At the end of July 2023, SB&M launched a new partnership with a U.S. company called Structural Technologies, LLC (“ST”), a maintenance company with a large market share in the United States. This partnership aims to contribute the technology and know-how cultivated in Japan to the U.S. in the maintenance of structures that deteriorate over time and in the development of infrastructure to mitigate damage from various disasters. We are committed to the success of this project. As an extension of this partnership, we hope to be able to collaborate on new material development and products.

ST has a very strong track record in sewer-related business and we look forward to partnering with them in the export of our pipe coupling products as well. We feel that coupling products will be in demand in the U.S. in the future, as there is tremendous growth potential in this business area.



Laos is an interesting country on account of its geographical position sandwiched between China and Thailand.  China's influence is very strong on this nation and they are trying to build a high-speed rail network that connects the South of China all the way through Laos to Bangkok, Thailand.  You talked about how your products are valued in ASEAN countries, including Laos, and how they’re being used on a day-to-day basis. How does your business dovetail with construction projects by other nations such as China?

We know that Japanese materials are naturally more expensive than materials from other countries because of their higher quality and performance standards. However, Japanese materials also have a longer lifespan, so from that perspective, life cycle costs are much more affordable. Obviously, in developing countries, Japanese materials are often considered too expensive, and thus there is a tendency to ultimately opt for less expensive products.

The bridges we have worked on in Laos were built not by Japanese companies but by companies from other countries, many of which are now dilapidated and in need of repair. This is where we come in and can help repair and reinforce this type of infrastructure. Since our business is in the area of repair, not new construction, our interests do not necessarily overlap with those of companies in other countries. We also participate in projects for the Japanese government and the Japan International Cooperation Agency (JICA), dispatching our employees to overseas consultants and conducting solid local surveys and research in order to create and procure the most effective projects. From this perspective, we believe that our field can remain stable and viable over the long term.

 

One product that you’ve recently developed that we found interesting is your SHO-BOND RAC Touch, a highly durable and functional adhesive sheet that uses a weather-resistant fluorescent film. Furthermore, we know that it is also used as a paint replacement to replace scratches on steel structures. Can you explain further into the motivation you had to develop RAC Touch?

Actually, RAC Touch is an offshoot of RAC Sheet, with the RAC Touch variety being divided into smaller pieces for greater versatility. 15 years ago, RAC Sheet was developed as a repair material for concrete bridges at the request of JR-EAST, a Japanese railroad company. There was a high demand for the waterproofing capabilities of this product, as rainwater and other moisture can have a significant impact on the deterioration of concrete structures. The largest use case of this product was in the superstructure of a concrete bridge, where its quality and waterproofing properties were highly evaluated. We deployed approximately 10,000 m2 of product on this project.

The cut-up version of the RAC Sheet is RAC Touch. The RAC Touch has specific use values in repainting suspended scaffold clamp installations that are happening on steel bridges whereby by sticking the seal on those elements you are able to cut down the repainting process that requires multiple steps. This product is economically beneficial because it reduces on-site processes and also reduces traffic restrictions associated with scaffolding work.

 

Clearly, R&D plays an important role in your company, and there are countless other products in your catalog besides RAC Touch and RAC Sheet. Are there any products or methods that you would like to further promote in the future?

In the U.S. we would like to consider collaborations between our technology and the challenges and future needs of administrators. We aim to offer new products that take into account standards, criteria, and historical background.

Second, in terms of the various products and applications we are developing, the demand for adhesive repair work is very high. In Japan, there is a high demand for epoxy resin-based materials, and this type of material involves the use of this product in a mixture of two types: a base agent and a hardener. In the future, we are conducting research and development of one-component curing type materials instead of this two-component mixed type. The development of such materials will support the trend of aging workers and the decreasing labor force that repair work is facing.

Another area of our R&D is currently looking into the development of transparent adhesive materials to increase visibility and optimize inspection of repair work. The overall inspection process of repaired structures can be optimized through the use of transparent adhesives.

Our R&D efforts are also focused on enabling us to produce materials that are more environmentally friendly and in line with the SDGs. While our products have been made from raw materials extracted from fossil fuels, we aim to create materials that contribute to the reduction of CO2 emissions by using biomass materials.

 

Imagine we returned in 2026 for your company's 10th anniversary and conducted this interview again. What goals and ambitions do you hope to have achieved by then?

Originally, our company was a merger of SHO-BOND Chemical and SHO-BOND Coupling, and our mission was to provide materials used in the construction work by SHO-BOND CORPORATION. In particular, SHO-BOND Chemical focused on repairing with adhesives, which have become widely used in the construction industry as repair materials, and these are now considered a common method of repair work. We, therefore, decided that rather than simply offering these products for use within the SHO-BOND group, we could also be involved in deploying this material and offering it to other companies and this was a viable option and would allow us to expand the sales and export destinations for these materials.

As far as the other company, SHO-BOND Coupling, was concerned, it was literally focused solely on the manufacture and sale of its flagship pipe couplings. It boasts a huge marketing and sales network to distribute these products throughout Japan. We felt that it was only natural that this merger would give its sales staff a thorough knowledge of chemical materials, and that we would leverage that sales network to market all of our products including chemical materials. That was the idea behind the merger of the two companies.

We aim to expand our business overseas in the next three years. Currently, we have distributors in Canada, Germany, the Netherlands, and China, and we are considering full-scale expansion into Australia, New Zealand, and Taiwan in the future. We will conduct marketing in these countries, confirm their needs, and supply the right materials. We also aim to further expand our network, as the demand for earthquake-resistant products is very high in response to sudden earthquakes. We expect our joint venture in Thailand to expand over the next three years, taking steps to ensure steady growth. Although the scale of the business is small at this time, we expect further growth in the future. We also expect the partnership with Structural Technologies in the U.S. to begin in earnest.

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