Over the past two weeks I was able to visit
members all around BC, from Vancouver to Revelstoke with many stops in-between.
The point of this annual trip is to find out how members are doing and how we
can help them in Japan. However, with the global recession deepening, I was
worried that my visits would be rather sombre this year.

While the pain came through loud and clear,
I was pleasantly surprised by the amount of good news that I also heard from
many Japan Program participants. Despite the fact that the process of going
from introduction to orders usually takes quite a bit of time in Japan, some
participants of last month’s Nikkei Show have already shipped containers and/or
are in the process of booking shipments. Even a company that took part with us
for the first time has already landed several projects!

Another member who has been pursuing opportunities
in Japan with us for a few years finally scored the big client they were after
just after I arrived in Vancouver. Miho gave the client one more presentation
on behalf of the member at our Tokyo office (someone has to stay behind and
work!) and within days they committed to a big project. Enjoying a celebratory
beer after we got this news was definitely one of the highlights of my trip.

I hope that I can enjoy many such celebratory
drinks this year with both new and old Japan Program members. 

The meaning of being "environmentally friendly" or "eco" as it is referred to in Japan is quite different than in North America. In Japan the focus of the eco movement is primarily just reducing energy consumption and thus both saving money and lowering CO2 emissions. However, maybe just maybe, things are changing.

Every year I make a trip to BC in April to visit members. It is the best time of the year to do such a trip since this is the time we are planning our activities for the year and it is essential to get members' input for this. 

The annual Total Living Show in Kita-Kyushu has been one of the three main regional shows BC Wood participates in. Being the largest show in Kyushu it used to attract a large number of the island's imported housing builders and importers. However, as the show has seen less and less industry traffic over the years, we have scaled back our presence there to just sharing some free space with the Embassy's local trade office. This year's show unfortunately continued this trend and even free is starting to look expensive.

First he had a large carport-deck made from sugi (Japanese cedar). As sugi is not as rot resistant as WRC, he designed the carport using modular panels so that all of the fence and floor panels could be interchanged. The president said it was like rotating tires on a car to keep the wear more even and make them last longer. 

The president showed two concepts for dealing with this problem: one was to use gaskets to try to make the joints completely watertight and another that is as tight as possible but also gives the water that does get in channels to escape through. The later is seen as a preferred method so far as the heavy-duty gasket concept failed during high pressure testing simulating typhoon force winds and rain. 

I have been a bad blogger. With all of the year-end report writing I haven't been keeping up with my blogging duties. I guess there is only so much "creative" writing my mind can take!

Before and after big shows, we try to spend
as much time as possible taking around members to visit clients and see job
sites. We again did this for Nikkei 2009 and I feel as if I did an all Japan
tour!

Of the places I went to, the most
interesting was Naha in Okinawa. While I was only there for 8 hours before I
had to fly off to Fukuoka to set-up for another show, I was able to learn a lot
from talking to builders and looking around the city.

The typical home in Okinawa is built out of
concrete which I knew, but I was surprised to learn that traditionally homes
were built from wood and not brick or stone. The switch occurred after the war
as a result of the American fire-bombing of the island that burnt down all of
the forests. Without a local timber supply, concrete became the only option.

Unfortunately as concrete became the norm,
consumers developed an image that wooden homes were not suitable for Okinawa.
Now the 3 main wood frame builders in Naha are joining forces to raise the
profile of wood construction amongst consumers. This new association is also
looking to Canada Wood to help them in this effort.

Going around Naha I got to see many
examples of the concrete homes as well as the traditional tile roofs. Tile
roofing is common throughout Japan, but in Okinawa they are a lot more
colourful. The use of bright colours extended to even mid-rise condominiums.
Bright orange condos are almost unthinkable in Tokyo these days, but fit
perfectly with Okinawa’s tropical image.

While it is my job to pump up the Canadian
presence at shows in Japan, I also have to give credit to other exhibitors when
they do a good job. 

Japanese companies typically put a lot
effort and money into their booths at major shows like Nikkei. The sheer size
of an exhibit is usually the most apparent indicator of a company’s strength
and commitment. However, as one exhibitor showed us this year, great things can
come in small packages too.

A Japanese tile manufacturer/distributor
took only two booths at this year’s show, but used a cake shop theme to make
themselves standout from all of the other tile companies at the show. At first
glance, their booth looks like a chocolate display which stopped most
passers-by. Curiosity then leads most into the booth to find out what the cake
shop is all about. 

Looking
at all of the “delicious cakes” really piques your curiosity about what this
exhibitor is trying to sell. An overwhelming “wow” then hits you when told that
all of those “cakes” are actually made of their tile products. That is why this
booth gets my vote as the best exhibit at Nikkei 2009.

The positive mood I reported after day 1 of
the Nikkei Show luckily held for the entire show. Both our exhibitors and the
show visitors were surprised by the amount of people coming through. The
combined Nikkei Show attracted 236,740 visitors. Of that, 142,467 people were
there specifically for the Architecture and Construction Materials exhibition. Despite
all of the doom and gloom about the economy, these numbers are only down 9% and
7.8% respectively from last year.

However, even with the drop in attendance,
the show actually felt busier. How can this be? Some people postulated that attendees
were spending more time on the show floor looking carefully at the exhibits. With
the economy slowing down industry professionals had more time to not only visit
but to also stop and talk to exhibitors. Also, the even more competitive nature
of the industry these days is really pushing people, especially architects, to
search out new ideas and products. This again probably led attendees to spend
more time at the show.

Many people were also surprised to see so
many companies exhibiting this year considering that a lot of businesses have
been cutting back on expenses. The Nikkei Show has sold-out year-after-year,
but the fact that it was sold out again this year is really impressive.
However, if you take into consideration how successful this show has been for
exhibitors over the years, it is not surprising that this would be the last
marketing activity that companies would want to cut. The combination of this
year’s strong attendance figures and exhibitor numbers also shows how important
trade shows still are to the Japanese construction industry.

As for the Canada Wood pavilion, throughout
the entire four days of the show we had a constant stream of clients invited by
BC Wood coming by to meet with members. This opportunity to meet with key
industry players was appreciated by both new participants as well as our
regulars. Many new business relationships were born out of this while others
were cemented.

However, one of the most appealing aspects
of the Nikkei Show for all exhibitors is that fact that it attracts so many
architects. Even for our regular exhibitors this guarantees meeting a lot of new
faces at the show. These architects tend to be involved with higher-end custom
homes and commercial projects which are a perfect fit for high-quality Canadian
building products. Hopefully these new contacts will lead to many new
opportunities for our members.

With all of the bad economic news flying
around these days, it was natural to come into the 2009 Nikkei Architecture and
Construction Materials Show a bit worried. The unseasonably bitter cold weather
we had for set-up also helped create fears of a “big chill” around the show.

Luckily Day 1 turned out to be a lot better
than we could have hoped for. The official attendance for the days was just
over 40,000 compared to 46,000 last year. This is very good considering the
terrible weather and threat of snow. If the numbers hold for the rest of the
week, then we should be able to match last year’s attendance of 260,000.

More importantly, there was a steady stream
of the clients coming by that BC Wood invited to meet with members at the show.
Many had serious discussions with members and new business partnerships have
already been formed. Hearing that kind of positive feedback from members is
best news I have had in a long time. Let’s hope we can keep up this momentum
for the rest of the week!

With all of the dismal talk about the economy and population decline, it is nice to know that some things are still growing in Japan. To be precise, Japan's land area is still growing.

Thanks to projects that fill-in bay areas to create new usable land, Japan's land area grew by 13 km2 in 2008. Such projects have been carried out since the 1800s and central parts of many cities such as Nagasaki, Yokohama, and even Tokyo are a result of them. Unfortunately the current landfill projects are to create more farmland for rice cultivation. Too bad no one is building houses on this new real estate!

As BC Wood Japan is a founding/supporting member of the Imported Building Materials Forum, last week I attended a board meeting. This association was formed 2 years ago to give importers a stronger voice in dealing with government agencies over regulatory issues. The F**** debacle of several years ago still haunts most people handling imported materials.

As US housing starts plummeted to the 600,000 unit level in 2008 from over 2.2 million just 3 years ago, everyone in Japan has been worried what the final numbers would be for this market. The numbers are now in and the results are mixed.

Today I met with one of the large import housing builders in Japan. As is it seems to be the custom these days, at the beginning of our meeting I asked how the global downturn was affecting their business. Not surprisingly they see their new home sales decreasing this year. However, despite this their renovation business, or "reform" as it is called in Japan, is up and they expect it to keep growing through the year. As a result, they are putting more energy into that side of the business. 

Yesterday
I observed some FII organized focus groups on Japanese architects. The
research is meant to uncover trends and opinions about green building and how
Japanese specifiers view Canadian wood.

While
more research and analysis needs to be done to draw any scientific conclusions,
I was struck by two common themes expressed in each session: 1) the meaning of
environmentally friendly housing is very different in Japan than in North
America, and 2) “Canada” does not mean very much to these architects.

Through
casual conversations with industry people over the years, I already knew that
North American green building concepts which espouse being “green” for the sake
of being green were non-existent in Japan. Yesterday’s focus groups proved this
to me. Here, being “eco” as they call it means building homes that use as
little energy as possible while also offering the healthiest possible environment
to the inhabitants. By having homes face south with big windows means that the
sun can heat homes naturally thus requiring little energy for heating even in
winter. Conversely, allowing for good air circulation with the outside reduces
the need to use AC in warmer seasons. As for the healthy environments,
sick-house syndrome caused by poor quality adhesives, carpeting, and wall
coverings has led most home buyers to seek out natural wood products to finish
homes or at least materials certified as having low VOC emissions.

Therefore,
being green is really about “me” in that it helps save money on energy while
offering healthier living. It is much more practical to the individual buyer
and actually follows building concepts that date back centuries in Japan. As a
side benefit, you can claim to be doing your part to reduce CO2 emissions as
your home doesn’t require as much energy to be produced.

While
the definition of “green” in Japan was not a surprise, I was taken aback by
hearing that Canadian wood products did not have any warm and fuzzy feeling for
these architects. We always assume that everyone respects our forestry
management practices and that this is a natural advantage for our products.
However, yesterday’s respondents showed that even in this regard the Japanese
are a lot more pragmatic.

Their
biggest concern was the value (performance and quality versus price) that
products offered. Next was how much they trusted the distributor carrying the
product. They didn’t seem to care if the materials used in the products were
imported or where they came from. To me this reinforced the BC Wood product
focused strategy for marketing in Japan. You can use all sorts of great images
of Canada, but in the end it is the product that makes people buy or walk. That
is why it is crucial that we bring members and their products into the market. The
fact that the architects placed great emphasis on the role of distributors
means that we are also correct in building and strengthening our position in
Japanese distribution networks. After all, these are the companies that really
sell our products to the Japanese construction industry.

By Jim Ivanoff

BC Wood Japan Office

For this reason I recently made a trip to Nagoya to attend the Architect’s Association’s New Year’s reception and to meet with other companies. The most stunning thing on this trip for me was to learn how fast the times have changed in this region. As Toyota surged to become the world’s #1 car maker, so did Aichi Prefecture. However, now that Toyota is feeling the pinch of the downturn in European and North American markets, the once mighty area surrounding Nagoya is for the first time in a long-time experiencing large scale layoffs and economic uncertainty.

These problems have already spilled over into our industry. Many people told me about large spec house developments being put on hold in this area. The situation was punctuated by the fact that Toshin Jutaku, a large 2×4 apartment builder in the region, went bankrupt on the day of the reception.

However, I also received some very positive news from talking to clients. One client who came to the GBM in 2008 told me that they are now getting ready to place their first order with a BC Wood member. This client had been importing building products from the US for many years, but after taking part in the GBM and then following-up by meeting members at the Japan Home Show they are now Canada fans. Yeah team!

I was also pleased to hear that a major lumber importer in the area is planning to look at Canada again for remanufactured lumber products after moving on to Europe and Asia a number of years ago. The section chief of the importing division told me that the weak Canadian dollar has made BC products competitive again. He also expects that with the slow US market many producers will be more willing to look at metric and special sizes for the Japanese market. While he sees weakness in the Japanese housing market, he is eager to find new suppliers and is excited about going to the GBM this year.

As with anything, you have to take the good with the bad. We are definitely in for a tougher year in 2009, but there are still many success stories to be created by matching up BC Wood members with new Japanese clients. Maybe our members will buy a few more Toyota’s this year and help out Nagoya as well!

By Jim Ivanoff

BC Wood Japan Office

2008 was BC Wood's second year at 100% Design Tokyo. While the show itself ended in early November, through our partnership with the Canadian Embassy our members were able to keep product on display for another 2 months in the Embassy's gallery. Sadly this gallery exhibition came to an end and we had to pick-up the pieces this week.

I am happy to report though that the exhibition was very well received with 1,720 people visiting. This result greatly exceeded the Embassy's expectations and as a result they have expressed an interest in working with us again for 100% Design Tokyo 2009.

Also, even though we had to take-down the Embassy exhibit, we took several of the pieces directly to a high-profile showroom down the road where they will be on permanent display. When we began this design project we dreamed of getting BC product into such a showroom. Now that this has been accomplished I think we can be rightfully proud of our progress in breaking into this market and more importantly the caliber of our members ' products for being able to win over the demanding Japanese design community.

By Jim Ivanoff

BC Wood Japan Office

While most Japanese make the most of the New Year's holidays by traveling or going back to their hometowns, I enjoy staying in Tokyo because it is the one time of year the city is quite. Really quite. It is amazing that a city of 34 million people can feel almost deserted.

For example, I came in to the office last week while the country was off on holidays and our normally bustling street  was so quite I could have taken a nap in the middle of it. Even the Starbucks was closed! What's wrong with these people???

Well, today it was back to work and the pusing and shoving on the train was like a big Happy New Year from all of the people coming back to the city. Except for the Starbucks being closed, I liked it better last week.

By Jim Ivanoff

BC Wood Japan Office

For fiscal 2008/09 BC Wood has been conducting research on the Japanese resort market as foreign investment funds had been buying up properties for several years. Unfortunately the credit crunch hit just as we began conducting our research. We are still trying to evaluate how big of an impact the financial crisis is going to have, but recently some positive news has been coming out of Japan's most talked about ski resort.

As the whole country is on holidays celebrating the start of 2009 with their families, all of the traditional hope for the new year is being tempered by worries about which way the economy will go. There are many big questions that are being discussed with the help of a lot of sake these days.

The one thing that seems to be certain is that the plight of Japan's temporary workers (hakken) is going to get worse. In fact, commentators are now starting to talk about this being the "2009 Problem."

While the recent weakness in exports has forced many Japanese manufacturers to not renew temporary workers' contracts, unemployment among hakken is expected to greatly increase in 2009 as a result of labour law changes made in 2006. The change basically extended the term a manufacturer could employ hakken from 1 year to 3 before having to decide whether or not to make them lifetime employees or let them go. The longer-term commitment and booming exports at the time encouraged many companies to greatly expand their use of hakken. 

With export markets in the US and Europe in the dumps, there is little incentive for manufacturers to turn these temporary workers into full-fledged employees. Undoubtedly many of them probably expected that they would be able to make the transition in 2009 but are now fearing for their futures. 

What does this mean? For one, it might be the beginning of the end for the hakken system. Younger workers who were open to non-lifetime employment positions in the past are already saying that they will not accept any hakken position now. The fallout from mass unemployment among hakken workers will also pressure the Japanese government to bring in new measures to encourage companies to hire people as full employees (as it was thought that employees with 3 years of experience and training would become to valuable to let go, the extension from 1 year to 3 years was actually also aimed at encouraging more lifetime employees).

Due to all of the volatility expected in the hakken labour market, increasing weakness can also be expected in the apartment markets that serve these workers. I have already mentioned that the termination of temporary workers' contracts will have an adverse effect on the construction of new 2×4 apartments. However, if this "2009 Problem" does result in the mass layoffs that some are now predicting, then the 2×4 apartment business model itself could be in for a very unhappy 2009.

By Jim Ivanoff

BC Wood Japan Office

For almost a year now rumours have been flying around about the 2×4 apartment market in Japan as the founder of Daito Trust began actively trying to sell his stake in the company. Did the pioneer of this market know something that made him want to get out or was he just planning his retirement? As apartments have come to make up almost 70% of the the 2×4 starts in Japan, this is a very serious question for Canadian suppliers. Recently another dark cloud has appeared over this market.