Japan's Construction Industry: From Scrap & Build to Revitalization Focus 2011.12 (207)

Japan's construction industry, like those in Europe and the United States, has shifted from a scrap-and-build approach to an emphasis on revitalization.

The market is shifting from new construction and renewal, in which old buildings are torn down and replaced, to renovation and repair to extend the service life of buildings. From single-family homes and multi-family dwellings built over 40 years ago to public buildings, society as a whole is gradually coming to understand the long-term use of stock buildings.

In the case of housing complexes, the number of buildings that will require renovation and repair in the future is as many as 40,000. In particular, many of the bridges, dams, ports, and other social infrastructures that were intensively constructed during the high-growth period have become obsolete, and the rapid increase in renewal and maintenance costs means that it is time for a drastic review of public works projects.

According to the draft of the Ministry of Land, Infrastructure, Transport and Tourism's white paper for FY12, the total public works expenditure for FY10 for the national and local governments combined was 8.3 trillion yen. Currently, renewal costs (0.9 trillion yen) and maintenance costs (3.3 trillion yen) account for 50% of the total. If social infrastructure that will exceed its service life is uniformly renewed with the same functions, the cost will increase by 4.4 trillion yen in FY37. If public works expenditures remain unchanged at 1 trillion yen, the necessary renewal costs will amount to approximately 70 trillion yen over the 50 years to FY60, making it impossible to raise the renewal costs.

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) says that if, as a workaround, the frequency of inspections is increased and aging countermeasures focused on repair and maintenance are introduced, maintenance costs will increase, but the financial burden will be kept within a wide range. For example, there are 150,000 road bridges in Japan, and if the number of aging bridges increases rapidly, the cost of replacing them will be enormous.

The Ministry of Land, Infrastructure, Transport, and Tourism is urging local governments to adopt “longevity repair plans” that promote systematic maintenance and preservation of bridges, rather than conventional repair and replacement. In the midst of these changes, new commercial opportunities are emerging, and changes in the business conditions of the construction industry are attracting attention.