Gunma Electrical Contractor Escapes Red Ink, Nears Bankruptcy, and Bank Loan Recalls to Project Over 700 Million Yen in Sales This Term, Nearly Doubling Revenue in Three Years
Katsuyama Electric Works Co., Ltd., an electrical construction company in Gunma Prefecture, announced its journey of escaping red ink and near-bankruptcy to project over 700 million yen in sales this term, nearly doubling its revenue in three years. The key to its success was transforming from a subcontracting model to a prime contractor system where craftsmen directly propose to clients, along with fostering young talent.
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- 📰 Published: May 6, 2026 at 00:11
- 🔍 Collected: May 5, 2026 at 15:32
- 🤖 AI Analyzed: May 5, 2026 at 15:39 (7 min after Collected)
Atsushi Katsuyama, Representative Director and President of Katsuyama Electric Works Co., Ltd.
Katsuyama Electric Works Co., Ltd., an electrical construction company in Takasaki City, Gunma Prefecture, which is about to celebrate its 40th anniversary, is a company with 15 construction staff members. Despite its size, 95% of its sales come from direct prime contracts, and it expects to nearly double its sales this term compared to three years ago. This press release candidly reveals how this unusual structure in the construction industry came about, detailing the management decisions and growth record from the perspective of current president Katsuyama.
■ At the time of joining, the company was "100% subcontracting"
When the current president joined Katsuyama Electric Works in 1995, the company was entirely a subcontractor. It was at the bottom of a multi-layered structure: client → major construction company → major sub-contractor → local prime contractor → Katsuyama Electric Works, undertaking only construction work day after day. At one point, 75% of its sales depended on a single prime contractor.
President Katsuyama recalls the situation at the time:
"I wanted to break free, but I couldn't."
Work was available, but the company was stuck in a negative spiral.
■ The turning point was the "bankruptcy of the main prime contractor"
In the early 2000s, a review of public works projects accompanying the transition from the Obuchi cabinet to the Koizumi cabinet provided a tailwind, but the prime contractor on which the company largely depended for sales went bankrupt.
Year 1: Work from that company drastically decreased, resulting in a 15 million yen deficit.
Year 2: Sales further plummeted due to the company's bankruptcy, leading to a 24 million yen deficit.
Overall sales halved to 60 million yen. Borrowings swelled to 60 million yen, equivalent to sales. In this desperate situation, one morning Katsuyama arrived at work to be told by his father (the previous president) to "go get the real estate registration certificate for your house." This meant putting their home up as collateral.
■ "Why are we doing the same thing as other companies?"
During this crisis, Katsuyama gained a realization through an encounter with the business community (a learning community for business owners).
A tofu shop in Tokyo selling tofu for 500 yen per block. An old woman would specifically buy two blocks of that tofu, even though there were many types of tofu in the supermarket.
"We are compared because we compete with everyone. We should work with people who are happy with our proposals."
This realization became the turning point for everything.
■ From "Don't talk to the client" to "Proposing ourselves"
During the subcontracting era, "Don't say anything unnecessary" was common practice on site. Talking directly to the client (customer) was taboo. If anything was noticed on site, it was reported to the prime contractor, not the client. And only the instructed work was done.
They changed this 180 degrees.
Craftsmen themselves learned to estimate, how to create documents, and how to draw blueprints. With the conviction that the craftsmen actually doing the work are best able to understand the customer's needs on site, the company transitioned to a "prime contractor system" where craftsmen also handle sales.
Customers are pleased with their proposals. By accumulating these experiences, the craftsmen learned the "joy of being needed."
■ Why does becoming a prime contractor change profitability?
To briefly illustrate the contracting structure in the construction industry, in a multi-layered subcontracting structure, each layer incurs 20-25% in expenses for the same work.
If a 10 million yen project is ordered by a client, expenses are inevitably incurred as it passes through major (large electrical), medium (medium electrical), and local (small electrical) contractors, resulting in a structure where only a small profit remains as the layers decrease.
On the other hand, by becoming a prime contractor and dealing directly with clients, Katsuyama Electric Works can retain that entire difference as its own profit. This is the structure of "prime contractor transformation = significant profit improvement."
The company, which had been operating at a deficit, fundamentally changed its profit structure by becoming a prime contractor.
■ Current Figures
- 37th fiscal year (September 2023 - August 2024) Sales: 390 million yen
- 38th fiscal year (September 2024 - August 2025) Sales: 615 million yen (1.6 times the previous year)
- 39th fiscal year (September 2025 - August 2026) Projected sales: 740 million yen (1.2 times the previous year)
What is noteworthy is the speed of its growth. Sales have nearly doubled in just two years. Moreover, during this period, the company only hired inexperienced staff in their teens and twenties. They did not bring in immediate talent from outside, nor did they make large-scale capital investments.
This growth was achieved solely through two pillars: "the position of a prime contractor who can directly please customers" and "human resources developed in-house."
■ "It's just how the construction industry is" was an excuse
The most difficult aspect of transitioning to a prime contractor was not about the profit structure or developing new sales channels. It was changing the mindset of the craftsmen.
As mentioned earlier, in the subcontracting era, it was common practice on site to "hide if there are customers" and "don't say anything unnecessary, don't even greet them." The craftsman's job was simply to perform the instructed work, nothing more, nothing less. Katsuyama told the craftsmen, who had been taught this for many years:
"From today, if there are customers, take the initiative to greet them with a smile."
The confusion on site was understandable. But Katsuyama did not give up. Craftsmen
Katsuyama Electric Works Co., Ltd., an electrical construction company in Takasaki City, Gunma Prefecture, which is about to celebrate its 40th anniversary, is a company with 15 construction staff members. Despite its size, 95% of its sales come from direct prime contracts, and it expects to nearly double its sales this term compared to three years ago. This press release candidly reveals how this unusual structure in the construction industry came about, detailing the management decisions and growth record from the perspective of current president Katsuyama.
■ At the time of joining, the company was "100% subcontracting"
When the current president joined Katsuyama Electric Works in 1995, the company was entirely a subcontractor. It was at the bottom of a multi-layered structure: client → major construction company → major sub-contractor → local prime contractor → Katsuyama Electric Works, undertaking only construction work day after day. At one point, 75% of its sales depended on a single prime contractor.
President Katsuyama recalls the situation at the time:
"I wanted to break free, but I couldn't."
Work was available, but the company was stuck in a negative spiral.
■ The turning point was the "bankruptcy of the main prime contractor"
In the early 2000s, a review of public works projects accompanying the transition from the Obuchi cabinet to the Koizumi cabinet provided a tailwind, but the prime contractor on which the company largely depended for sales went bankrupt.
Year 1: Work from that company drastically decreased, resulting in a 15 million yen deficit.
Year 2: Sales further plummeted due to the company's bankruptcy, leading to a 24 million yen deficit.
Overall sales halved to 60 million yen. Borrowings swelled to 60 million yen, equivalent to sales. In this desperate situation, one morning Katsuyama arrived at work to be told by his father (the previous president) to "go get the real estate registration certificate for your house." This meant putting their home up as collateral.
■ "Why are we doing the same thing as other companies?"
During this crisis, Katsuyama gained a realization through an encounter with the business community (a learning community for business owners).
A tofu shop in Tokyo selling tofu for 500 yen per block. An old woman would specifically buy two blocks of that tofu, even though there were many types of tofu in the supermarket.
"We are compared because we compete with everyone. We should work with people who are happy with our proposals."
This realization became the turning point for everything.
■ From "Don't talk to the client" to "Proposing ourselves"
During the subcontracting era, "Don't say anything unnecessary" was common practice on site. Talking directly to the client (customer) was taboo. If anything was noticed on site, it was reported to the prime contractor, not the client. And only the instructed work was done.
They changed this 180 degrees.
Craftsmen themselves learned to estimate, how to create documents, and how to draw blueprints. With the conviction that the craftsmen actually doing the work are best able to understand the customer's needs on site, the company transitioned to a "prime contractor system" where craftsmen also handle sales.
Customers are pleased with their proposals. By accumulating these experiences, the craftsmen learned the "joy of being needed."
■ Why does becoming a prime contractor change profitability?
To briefly illustrate the contracting structure in the construction industry, in a multi-layered subcontracting structure, each layer incurs 20-25% in expenses for the same work.
If a 10 million yen project is ordered by a client, expenses are inevitably incurred as it passes through major (large electrical), medium (medium electrical), and local (small electrical) contractors, resulting in a structure where only a small profit remains as the layers decrease.
On the other hand, by becoming a prime contractor and dealing directly with clients, Katsuyama Electric Works can retain that entire difference as its own profit. This is the structure of "prime contractor transformation = significant profit improvement."
The company, which had been operating at a deficit, fundamentally changed its profit structure by becoming a prime contractor.
■ Current Figures
- 37th fiscal year (September 2023 - August 2024) Sales: 390 million yen
- 38th fiscal year (September 2024 - August 2025) Sales: 615 million yen (1.6 times the previous year)
- 39th fiscal year (September 2025 - August 2026) Projected sales: 740 million yen (1.2 times the previous year)
What is noteworthy is the speed of its growth. Sales have nearly doubled in just two years. Moreover, during this period, the company only hired inexperienced staff in their teens and twenties. They did not bring in immediate talent from outside, nor did they make large-scale capital investments.
This growth was achieved solely through two pillars: "the position of a prime contractor who can directly please customers" and "human resources developed in-house."
■ "It's just how the construction industry is" was an excuse
The most difficult aspect of transitioning to a prime contractor was not about the profit structure or developing new sales channels. It was changing the mindset of the craftsmen.
As mentioned earlier, in the subcontracting era, it was common practice on site to "hide if there are customers" and "don't say anything unnecessary, don't even greet them." The craftsman's job was simply to perform the instructed work, nothing more, nothing less. Katsuyama told the craftsmen, who had been taught this for many years:
"From today, if there are customers, take the initiative to greet them with a smile."
The confusion on site was understandable. But Katsuyama did not give up. Craftsmen