Feature｜ Kanamoto's Construction Equipment Rental Commitment

A major role to play in efforts to keep Japan safe,
and serve as a standard for equipment procurement.

Ageing infrastructure means appropriate maintenance and upgrade measures are essential

Since the Great East Japan Earthquake, the momentum behind "disaster prevention measures" has increased, and Japan's ageing infrastructure has come to be viewed as a problem that is national in scope. Within just a few years, much of the infrastructure that was built during the concentrated wave of construction from the 1960s to the 1980s, including roads, railways, bridges, tunnels, dams, harbors and airports, will be 50 years old. This means Japan is facing a period of intensive renewal from 2010 through 2030. The Tokyo Metropolitan Expressway, which in December 2012 celebrated 50 years of operations since opening to traffic, is one prime example - its bridge piers, road joints and other components exhibit significant deterioration, making a large-scale renewal effort imperative. The rate of progress on these infrastructure maintenance projects remains slow, however, and the danger of a serious accident occurring if maintenance, repairs and upgrades are not undertaken appropriately in the future has been highlighted.

Responding to the anticipated growth in maintenance works demand

Based on these circumstances, in 2013 the present Government formulated a National Resilience Plan aimed at promoting thorough disaster prevention measures. Given the recognition that infrastructure investment on a scale of ¥200 trillion over ten years will be needed, public-works programs concerning disaster prevention and disaster mitigation countermeasure works are already moving ahead in various regions.
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.

Wave of industry reorganization promotes trend toward
consolidation among major firms

The sense of anticipation in the construction industry has been heightened by the National Resilience Plan, which was formed ahead of the introduction of a budget that is oriented strongly toward disaster prevention and disaster mitigation countermeasures.
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. This situation is best exemplified by the growing tendency toward concentration into a small number of large multi-regional operators such as Kanamoto. Although the domestic and overseas markets boast total revenues of approximately one trillion yen and are 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