RTKL's FUTURE IN ASIA Architecture firm's huge Tokyo project gives it a foothold

THE BALTIMORE SUN

Tokyo -- Michitaka Yamaguchi, Tokyo branch manager for the Baltimore-based RTKL Associates Inc. architects, was sipping coffee and leafing through the Japanese-language construction-trade newspapers one July morning when he spotted the ad.

He read only the address before rushing downtown to place RTKL's name atop a list that Ministry of Construction officials were just posting. That fast response, the symbolism of getting RTKL's name down first, a documented history of intense effort and perhaps a hundred other small factors stretched over six years -- all paid off for RTKL last week.

The firm won a piece of one of the world's largest public construction projects -- a $1.5 billion government office complex with as much space as the World Trade Center in New York. The project -- the largest Japanese government office building an American firm has ever been hired to help create -- could be pivotal for RTKL.

The high-profile complex in Saitama, a Tokyo suburb, could lead to more business in Japan and fast-growing Asian countries. RTKL says annual revenue from Japanese clients, which remained at about $1.5 million over the past three years, could jump to $3 million in the next 12 months.

And RTKL's victory carries even greater importance. The 2.7-million-square-foot project -- roughly the size of three average suburban malls -- is a milepost reflecting trade pressures that are slowly opening Japan's markets to foreign competition. The firm's experience illustrates the difficulty in breaking into the Japanese market -- and the value of persistence.

At a time when many architecture firms are dissolving and construction markets are slow, the Saitama commission is a textbook example of how to survive. RTKL came to Japan in 1987, when construction was booming. It designed the Manhattan, a 131-room Tokyo hotel that was completed in 1991, and won several other commissions for shopping centers, train stations and resorts.

From the beginning, the company's chairman, Harold L. Adams, visited Japan about every three months for the exhausting relationship-building needed for success here. Reflecting local customs, he brought small gifts, including Stieff silver cups embossed with RTKL's name on one side, and an image of Thomas Jefferson, an architect and father of democracy, on the other.

RTKL was careful to respect the Japanese corporate hierarchy. Middle managers dealt with middle managers, and senior partners were available to meet the top executives of clients. When a project is awarded in the United States, an RTKL project manager might meet with the client; for awards in Japan, RTKL sent a senior executive.

Unlike most other American firms that sought only private work, RTKL pursued government commissions. And Mr. Adams took the unusual step of qualifying for a Japanese first-class architect's certification, which is required for large government projects.

The process was onerous. Mr. Adams is registered in 35 U.S. states. Each of those registration statements was translated into Japanese and was forwarded here, as were registration statements from the United Kingdom. "We met every hurdle that was put in front of us," said Mr. Adams, who was recently granted the coveted certification.

RTKL established a small Tokyo office in 1990, in space abandoned by the state of Maryland. To head the branch, Mr. Yamaguchi was brought in from RTKL's Dallas office. An American, Mr. Yamaguchi had been raised in both the United States and Japan. He hired two Japanese architects and began perhaps the most arduous task -- accrediting RTKL to qualify for work with Japan's many government agencies.

Every prefecture, every agency, required voluminous information. "It took a lots of paper; it was a pain, but not impossible," Mr. Yamaguchi said.

At first, those efforts achieved nothing. For nearly two years, RTKL's submissions for airports, post offices and other projects were rejected.

"We have gone after half a dozen other projects unsuccessfully but have continued to hang in there," Mr. Adams said. "You need to go after and lose a few to build name recognition, and I think we have built name recognition. The Japanese government started recognizing us."

Global events began working in RTKL's favor. Japan was coming under intense pressure to open its markets to foreigners. Construction, in particular, was said to be among the most protected industries. American officials threatened to exclude Japanese companies from U.S. construction projects.

Bilateral negotiations created a small opening for those adroit enough to exploit it. In a deal reached in 1988 and strengthened in 1991, Japan agreed to create a set-aside program for American firms. The Saitama office complex was one of the program's approximately three dozen projects, most of which offered construction rather than design work.

When the formal announcement for the Saitama project would be made was a mystery. But RTKL knew it was coming, and Mr. Yamaguchi was looking for it. The tiny advertisement, buried inside the trade paper, ran only once. RTKL didn't waste the opportunity.

The guessing game

Still, the guessing game didn't end when RTKL received its application. Design, the essence of most architectural competitions, was explicitly excluded. Drawings were not permitted. Indeed, when asked last week why RTKL's team had won, Nobuharu Saito of the Ministry of Construction cited the firm's sensitivity to atmosphere and environmental issues, as well as other issues.

Clear? Hardly. "The key points were nebulous, but we still tried to address them rather than blow them off," Mr. Yamaguchi said. RTKL was asked about its philosophy and approach. In response, it provided information about its having designed major projects for government agencies in America.

The information packet that Mr. Yamaguchi picked up the day the project was announced was specific on one point: It stated that applicants must be made up of three-firm teams. How the teams should be made up -- a critical issue in who would receive the commission -- was left undefined. RTKL enlisted Nikken Sekkei, Japan's largest architectural firm, which had extensive experience with large office complexes, and Tohata Architectural Office, another large firm with government experience. For its part, RTKL stressed its experience with creating large urban complexes -- as it had done in designing a government center in Fairfax, Va., as well as commercial developments in Missouri, Virginia and Florida.

The short list

Five teams -- each with an American partner -- made the short list. That list included several U.S. firms, notably Hellmuth Obata & Kassabaum of St. Louis and Leo A. Daly of Omaha, Neb., that had established Japan offices at great expense.

When RTKL's team was chosen last week, its American competitors accepted defeat stoicly, aware that gains in this country are measured in years.

"It takes a tremendous amount of time to establish a presence, but it's worth the effort," said Michael Riordan, an associate at Leo A. Daly. "We're not there for this year's projects. When you go in for a venture like that [opening an office], you go in for the long term, because it's a major investment, and it's going to take a long time to see dividends."

In Japan, American architects are sought after for their expertise in designing waterfront developments, retirement communities vTC and multifamily housing. Some companies seek out architects with a well-known style, like Michael Graves, for the cachet it gives their projects.

Effects of recession

But the recession has slowed the building industry, resulting in fewer commissions. Commercial construction has declined, although infrastructure development continues. Some in the industry, however, predict a strong recovery, with a new building boom emerging by 1995.

RTKL, whose worldwide revenue slipped to $45 million last year, from a prerecession peak of $72 million, plans to cash in on that boom. The set-aside program established by the governments of the United States and Japan was a recognition that it was impossible to get Japanese public commissions without experience in government work here, Mr. Yamaguchi said. So, the Saitama job could provide a critical entree.

And not just in Japan. Because the difficulty of breaking into the Japanese market is legendary, Mr. Adams said, the commission could boost the firm's reputation in the rest of Asia, where it has already established a practice. RTKL has projects in South Korea, Taiwan, China and Hong Kong. At its Wednesday board meeting, it decided to open a full-time office in HongKong as its second Asian outlet.

RTKL's Tokyo office, with its tiny staff, hasn't bid on anything since applying for the Saitama project. But Mr. Yamaguchi, who has been crisscrossing the nation by plane, is eager to add clients. "We have pretty much infinite capacity," he said.

Meanwhile, the time frame for construction on the Saitama project is tight -- work will begin next month. Some work will be parceled out to RTKL's headquarters in Commerce Place in downtown Baltimore, or a few architects could be brought in from Baltimore.

But anyone who is temporarily transplanted from Maryland won't have to worry about Tokyo's maze-like streets and its high costs, Mr. Yamaguchi said. "They won't have time to do much else other than work," he said. "I will chain them to their desks."

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