Final Destination: The Kansai International Airport [part 2]

The Bidding Process: Interview with Gregory Johnson

Gregory L. Johnson, a longtime diplomat and now the United States consul general in Osaka, has perhaps the highest responsibility within the Kansai foreign community for monitoring the Kansai International Airport project. Brian Covert spoke with Johnson recently about the airport, an interview that took place during an anonymous post-Gulf War bomb threat to the Osaka consulate...

I’d like to start off by asking what contact you have right now with the airport company. Do you deal with them directly these days?

Right now I’m dealing mostly with the president, Mr. Takeuchi, who is supposed to be stepping down very soon. I try not to go below him, at my level. We have working contacts with other people at KIAC, and for our side it’s mostly the Department of Commerce representative who has the day-to-day contact.

What is the feeling you have in dealing with the airport company? Do they seem to be more accessible or more open than they used to be, or do you detect no change?

They are very defensive, very defensive. I think they are trying to explain themselves to us but they have been under a lot of pressure, not only from the United States and other western governments and American firms, but I think from Japanese companies as well as the Japanese government. There seem to be so many entities involved with the airport project that I think working for KIAC is probably not very much fun...

Speaking for yourself, are you satisfied with the access that American companies have been given so far, at least in the bidding process?

Totally unsatisfied. I think the biggest point of frustration and disappointment is that American firms have not actually been awarded (enough) contracts...and there are a number of reputable American firms with international experience now participating in the bidding process for various contracts all along the way. I think up to the present time, the percentage of the total amount that American companies have been awarded is probably around 1 percent of the contracts. Certainly less than 2 percent. So it’s not even a slice of the pie; it’s barely a crumb.

One of the sticking points was the process of the bid-rigging (dango) system. Do you see that as having changed at all?

Without some specific evidence, it’s very difficult to pin that label on it. But we see very little change between what is happening today and what has happened in the past. In other words, even though KIAC may be making some cosmetic changes in its procedures, the process still isn’t transparent enough to satisfy us that things like bid-rigging are not occurring. We can’t point the finger at them and say it is occurring, but then the Japanese side can’t respond adequately to our satisfaction to say it’s not.

What would be your suggestions to the Kansai Airport company as well as to the (Japanese) construction industry in general? What concrete advice could you offer them a far as foreign firms are concerned?

I think if a KIAC representative were with me here today, I would give them this advice: try not to be so defensive and so afraid of criticism but rather be up-front, invite the United States and other foreign business representatives to come in and explain the process to them. I think if all of us could participate with KIAC as they lead up to contract awards in each instance, this relationship we would be developing would create an atmosphere where there’s less tension and less suspicion.

Has the U.S. been pushing too hard as some have criticized or, taken to the other extreme, not hard enough?

We have been sitting on KIAC’s doorstep daily, so they know that we’re monitoring everything they do. I suppose from their point of view we’ve been pushing too hard, but I don’t think so. I would have to say that until we get more positive results, until this translates into actual contracts for American companies, I can’t say we’re pushing too hard. The system needs to catch up, come into the 20th century. Japan needs to participate as an international partner with Western Europe, the United States and North America. And in order to do that, they just have to open up. Their system is not open at present, and the only way they’ll be able to shed some of this criticism is to give more foreign companies contracts. That’s all there is to it. Until then, we’ll continue to put pressure on them.

You have offered some advice to the Kansai Airport and the construction industry in Japan. What advice would you offer to American and other foreign firms trying to get in here?

If they want to come to Japan and participate in this ‘bonanza’ of construction projects — and that’s really what it is since they’re going to be spending billions of dollars over the next eight, 10, 15 years — they’re going to have to be prepared to tough it out in Japan. No one will hand them anything on a silver platter in this market. It takes physically coming to Japan, setting up, spending time establishing contacts, learning the way to do business. It will take time for them to actually win a couple of contracts, but the best recipe for success is to do it this way. They’ll get their foot in the door and learn about the market, gain some confidence. But the biggest advantage to doing it that way is building up the contacts. Nothing is achieved in Japan without knowing people. It’s much different than the United States.

Do we have something to learn from the Japanese as far as the construction market is concerned in Japan?

Yes, they also have some advanced techniques far beyond us in terms of strength of construction and resistance to natural disaster. I think both sides can learn from each other. On the one side, I welcome the Japanese to teach us what they know. I just wish I had the confidence that the Japanese were saying it on their side also.

[continue on to part 3]