Combining six power builders into one holding company (2013)

Six companies out of one carpentry firm, back under one holding company

Companies that had branched off from a single carpentry firm in 1967, each gone public independently, and competed against one another in auctions for the same land, came back forty-six years later under a single holding company. The logic of the merger was plain: cut the number of buyers of land and materials from six to one and the terms improve for the same number of houses. Revenue and operating profit crossed the target line within three years, and unit supply and market share rose to a level none of the six could have reached alone. Yet the character of this merger shows most clearly in the fact that the six never gave up standing side by side, each keeping its own trade name and brand.

Melting the six into one company would have cut the overlapping sales networks and the duplicated channels for land information. That it was not done is because a fast-turnover volume model rests on the speed of judgment at each site, so the merger’s effect was confined to bargaining power on the buying side. Meanwhile the practice of marking down unsold stock at the fiscal year-end and clearing it survived the merger, and in the spring of 2015, with the accounting periods now aligned, new detached houses in the ¥10-million range lined the suburbs. Having pooled the machinery for building cheap and in volume across six companies, the downward pressure on prices reached the market at six companies’ scale as well.