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Summary of Market Report

Imported moulding and millwork has gained market share in Japan.  One reason is the the increased acceptance of these products by Japan's pre-cut mills.  Pre-cut building systems in Japan dates back to 1976 and was started by a housing manufacturer located in Ishikawa prefecture. Pre-cut lumber has skyrocketed in the he 1990?fs to reaching almost half of all wooden housing starts (Figure 3). On the supply side, precutting has allowed mills to move up the value added product chain. Precutters have added precision crafting of holes and pegs to a mills traditional role of simply cutting. This provides their customers with a product that translates into increased quality and ease of job site assembly. On the demand side, the popularity of precut systems has been driven by increased profit potential for builders. This potential comes from increased job site productivity and house quality.  

Another advantage of precut components is their quality and precision. The machining done in pre-cut factories is of higher quality than components crafted by hand on the job site. The components fit snuggly together improving the structural quality of the house and reducing drafts that arise from loose fitting components. Furthermore, a majority of pre-cut components are kiln dried reducing the warping and twisting that occurs with green products. Other advantages include reduced job site noise, reduced construction times, and reduced claims. Precut systems have taken advantage of the total cost concept. That is, even though the cost of each piece is more expensive than a comparable non-precut piece, the total cost, including job site labor and reduced claims, is cheaper.

There are various materials being used by precut factories. Originally, green hinoki and sugi were used for precutting. However, there were two major problems with green product. First, a high percentage of waste occurred because some pieces were not straight and could not be machined properly. Second, even if the pieces were straight and cut to precision at the factory so that the pegs fit perfectly into the machined holes, by the time these components were ready to assemble on the job site warping and twisting had often occurred. Shrinking and swelling was the Achilles heal of the precut industry in the early 1990s.  
Economic theory states that capital is a substitute for labor and the Japanese housing market is an excellent example of principal. Capital, in the form of pre-cutting machines, is replacing job site labor.  Click here to download the full report.