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Feature|The Kanamoto Way -3

Committed to ensuring Japan's safety and peace of mind.
Fulfilling our construction equipment rental obligations.

Repair and replacement of Japan's infrastructure is a pressing need

Redevelopment of bridges and other infrastructure has become an urgent topic. This photograph shows Kanamoto’s “Bridge Dragon” bridge inspection vehicle. The momentum behind "disaster prevention measures" has increased since the Great East Japan Earthquake. The acute state of infrastructure throughout Japan was further thrown into sharp relief following an accident in which the ceiling of the Chuo Expressway's Sasago Tunnel collapsed suddenly in December 2012. To take just one example, it has been 50 years since the Tokyo Metropolitan Expressway opened to traffic. Intervals that were completed 40 or more years ago now account for 30% of the network, producing a serious situation that is evident from the deterioration visible here and there of components such as bridge girders and piers.
According to the Ministry of Land, Infrastructure, Transport and Tourism, the proportion of infrastructure that has been in use for 50 years or longer since being constructed will climb rapidly in the future. Despite the fact superannuation is progressing and affects not only roads but a broad range of infrastructure including bridges, flood works and port quays as well, the rate of progress on countermeasures remains low, and the repair or replacement of infrastructure has become a pressing need.

Responding to the expected growth in infrastructure construction demand

Based on such current conditions, the present government has produced a Plan to Create a Strong Nation that includes thorough disaster prevention measures. Specifically the plan calls for investing a total of \200 trillion over ten years to build and maintain national projects, including the construction of social infrastructure and creation of nationwide high-speed transport links. The plan, which will be synchronized with the Great East Japan Earthquake restoration effort, is expected to become a stepping stone for overcoming Japan's unprecedented national crisis.
The Kanamoto Group will work to maintain safety in Japan by continuing to focus its capabilities on infrastructure construction activities aimed at disaster prevention and mitigation, and by assisting maintenance works, including the transportation network, beginning with the more than 670,000 bridges located throughout Japan and the Tokyo Metropolitan Expressway. Kanamoto is well positioned to respond to the demand for maintenance works, which is expected to grow in the future as well, with every company in the Kanamoto Group.

Percentage of infrastructure constructed 50 or more years ago
FY2009 FY2019 FY2029
Road bridges About 8% About 25% About 51%
River management facilities (sluices, etc.) About 11% About 25% About 51%
Sewerage conduits About 3% About 7% About 22%
Port quays About 5% About 19% About 48%

Source: Ministry of Land, Infrastructure, Transport and Tourism, White Paper on Land, Infrastructure, Transport and Tourism in Japan, 2009

Wave of industry reorganization promotes trend toward consolidation among major firms

Even as the impact that the Plan to Create a Strong Nation will have on Japan's construction investment remains uncertain, there is a heightened sense of anticipation within the construction industry concerning the introduction of a budget that emphasizes disaster prevention and mitigation measures.
While there is a similar expectation in the construction equipment rental industry that outfits the construction industry, the equipment rental industry continues to reorganize and with each passing year the management environment grows increasingly severe, a situation best exemplified by the growing tendency toward concentration into a small number of large multiregional operators, such as Kanamoto. Although the domestic and overseas markets boast total revenues of approximately one trillion yen and is comprised of roughly 2,000 companies engaged in the construction equipment rental business, the ability to always offer high-quality equipment rental assets requires intensive capital investment, and a sharp distinction among firms has begun to emerge based on funding ability and creditworthiness.
Consequently Kanamoto is seeking to expand its domestic market share by pursuing a strategy of friendly business alliances and M&A with regional companies that have already forged a solid base of operations.

Equipment procurement standard and the major role played by construction equipment rentals

A substantial majority of Japan's construction companies utilize rentals as the optimal means to arrange for "the right equipment" at "the right time" and in "the right quantity". Rentals not only enable firms to ease the capital burden related to construction equipment purchases, and reduce their running costs for securing, maintaining, operating and insuring their inventory storage yard, for example, they also help prevent expenditures from becoming fixed costs. So it's no wonder rentals have already become the "standard" for procuring equipment and parts. This can be clearly seen in statistics from the Japan Civil Engineering Contractors' Association, Inc., which show the construction equipment rental utilization rate had reached approximately 50% in 2007, the most recent year for which survey results are available. Because many models with a high rental utilization rate are excluded from this figure, however, the true construction equipment rental utilization rate is much higher. The prominent role played by the construction equipment rental industry in Japan's construction business today is further highlighted by the fact rental equipment accounts for over half of all construction equipment used at construction sites.

Change in construction investment in Japan and reliance on construction equipment rentals Change in construction investment in Japan and reliance on construction equipment rentals

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