JAPANESE



Font size:  
 
August, 2007

BUSINESS

Rebuilt to Last:
Kongo Gumi

Founded in 578, Osaka's Kongo Gumi is Japan's oldest company, with a history going back over 1,400 years. Despite recently facing a financial crisis, the company has returned to a solid footing and continues to build on its traditions. Katayama Osamu reports.

Japanese temple and shrine buildings exude the wisdom and craftsmanship of the nation's ancients. The gracefully curving roofs and eaves so characteristic of Japanese temples and shrines evidence the skills of miyadaiku, or temple carpenters. It is their cunning eye for wood which yields those majestic contours projected against the sky. The peculiarities and character of wood differ dramatically depending on the environment in which the timber is grown. Knowing the character of a piece of wood and using it as effectively as possible means using straight and curved pieces precisely where they can bring straightness or curvature to life. From this art is born the beauty of shrine and temple buildings. It also results in buildings which remain stalwart despite centuries of wind and snow.

Kongo Gumi is a time-honored builder of temples and shrines. Founded in 578, it is Japan's oldest company. The first-generation patriarch of Kongo Gumi was Kongo Shigemitsu, one of three craftsmen invited to Japan from the Korean kingdom of Baekje by Prince Shotoku (574-622), generally regarded as the founding father of Japanese Buddhism, and who oversaw the construction of Shitenno-ji temple in Osaka.

Kongo Gumi served as the temple carpenters for Shitenno-ji until the end of the Edo period, and was rewarded annually. However, the new Meiji government, founded after the restoration of Imperial power in 1868, initiated a suppression of Buddhism known as haibutsu kishaku, literally "expel the Dharma and destroy Buddhas." Shitenno-ji lost its lands, and Kongo Gumi fell on hard times finding itself with little work. Nevertheless, the group continued to engage in construction and maintenance of temples and shrines as well as general construction after the Second World War.

The construction market began to shrink when the bubble economy burst in the early 1990s, but still the group maintained its way of doing business. The group's craftsmen continued to use only the finest wood with little concern for business promotion. Nor did they hesitate to postpone a construction deadline if doing the best job possible so required. The company continued to accept orders even if doing so meant incurring a loss. Consequently, its financial situation deteriorated. Ultimately, the recession hit the firm hard, and in the fall of 2005, Kongo Gumi was faced with bankruptcy with debts of up to 4 billion yen (33 million dollars).

Describing Kongo Gumi as a "1,400 year-old historical legacy," the mid-tier Osaka-based contractor Takamatsu Corporation moved to support the company, saying its sudden disappearance would be a huge loss for Japan. Resolved not to allow the name of Kongo Gumi to vanish and its technology and traditions be lost, Takamatsu in January of 2006 came to Kongo Gumi's aid, allowing it to make a new start as a Takamatsu subsidiary.

Reconstruction

Protecting its tradition, handing down its technology and enabling Kongo Gumi to continue building temples and shrines above all required that the company be made profitable. As the reorganization process began, Kongo Gumi president Ogawa Kanji, also vice president of Takamatsu Corporation, addressed employees in the following way.

"Our business is to build temples and shrines which remain stalwart despite centuries of wind and snow. If the company should disappear fifty years from now," he said, "it might then be impossible to repair temples and shrines. We're going to satisfy our customers, steadfastly increase our profit, make our company financially sound, and continue maintenance work fifty years from now with responsibility. Asking a fair price and increasing our profit is critical. Nor is it something to be ashamed of. We'll guard our traditions, but we'll do it sensibly and make effort to get our costs down.

"I want you to use this sense of crisis as a springboard. If we do our best and harness that energy in a positive way, we can become a better company."

Making a clear decision to return to its core business of temple and shrine construction, the newly revived Kongo Gumi has set a target of doubling its present annual net revenue of five billion yen to ten billion yen (82.6 million dollars).

The market for temple and shrine construction is not small. Throughout Japan, there are at least 75,000 temples and near 80,000 shrines. Thus, Kongo Gumi is trying to move beyond their passive attitude.

Kongo Gumi has actively engaged in business promotion efforts and garnered new customers, proposing high value-added projects for temples and shrines. The company's strategy has been to compete by stressing quality and exploiting its own strengths, though it faces stiff price competition from major companies.

"For example, we can propose that a temple or shrine consolidate its operations, we can build nurseries or facilities for the elderly on unused land within shrine and temple grounds, or we can propose a more effective use of properties," says Ogawa. "We believe that such proposals are critical if temples and shrines are to be protected over the long period of several centuries."

Since January of 2006, Kongo Gumi has made the company's monthly business performance known to employees, making them aware of problems and enabling them to help lower costs and enhance production efficiency on their own initiative. Cost cutting efforts being pursued within each division were also described at a company policy presentation in April of 2007.

Tradition and Modernization

Kongo Gumi is also working to improve conditions for staff. The company presently has 105 employees but also maintains eight teams with over one hundred temple carpenters under special contract. The temple carpenters are not employees. Rather, the company subcontracts eight self-employed master craftsmen with teams of temple carpenters working under them.

Kongo Gumi's strength lies in the work carried out by temple carpenters, who process wooden materials by hand. There are times when roof beams and pillars are made and carved at the workplace according to the blueprints. The degree to which costs can be lowered without sacrificing high quality depends on the master craftsman's management of work at the site.

Kongo Gumi is pursuing a plan under which its groups of temple carpenters would be turned into corporations with the master carpenters as "presidents," who would then carry out work at the worksite taking full responsibility as an enterprise. If they incorporate, they would be able to join a health insurance cooperative and have greater stability in their lives.

The company is also trying to improve working conditions for employees. In addition to keeping the temple carpenters' workplace in good order, the company has installed heating and air conditioning, creating a safe workplace that is easy to work in.

"Even though we maintain good old traditions," says Ogawa, "we're modernizing where modernizing is called for. That said, we mustn't go too far. We proposed having workers wear uniform work clothes, offering to cover the costs. But the workers opposed the idea, saying they wanted to decide themselves what to wear.

"Employees take a lot of pride in doing a good job with appropriate respect for tradition. In the past, the practice of going ahead on unprofitable orders backfired, but with our organization now on a solid footing, I want to be able to reflect that kind of employee pride in our management."

In the 2006 fiscal year, the company received 6.5 billion yen (53.7 million dollars) in orders, with job completions of 5.7 billion yen. Excluding goodwill write-offs, Kongo Gumi was able to earn about 200 million yen (1.7 million dollars) in profit. In April of 2007, fourteen new employees joined the firm, with another seven persons hired throughout the year as sales staff.

"As new employees enter the firm, I want them to carry on the tradition and technology of Kongo Gumi," says Ogawa. "We've got a long road ahead of us. We mustn't lose our sense of humility, but we've been able to earn a profit in our first year and have achieved the great majority of our targets. In the past, the company was unable to hand out bonuses for several years, but we were able to do so last year. Our next goal is listing on the stock exchange," says Ogawa with confidence.

Upon achieving that target, the next immediate issue will be boosting the order volume.

Kongo Gumi has guarded the traditions of Japanese temple and shrine construction, and relying on that traditional technology, has played the leading role in the temple and shrine building industry. In regard to that role, Ogawa has the following to say.

"I don't believe it would be acceptable if only Kongo Gumi survived. Japan's shrine and temple construction industry must survive into the future as a collective which protects Japan's Buddhist temples and Shinto shrines while maintaining this technology. Toward that end, there should be appropriate competition and an appropriate level of profit. At the same time, we have to build an industry that can continue temple and shrine maintenance into the succeeding generations. We intend to complete our reorganization quickly and play a leading role in this process."

It is just this kind of determination that underlies the foundations of Japan's traditional wooden architecture. In addition to passing on the wonder of that architecture, the reborn Kongo Gumi will doubtless continue to hand down Japanese wisdom to succeeding generations.

KATAYAMA Osamu is a freelance journalist and writer on economic issues. He heads K-Office, an editorial production company.