Having grown into the world leader in wiper blade rubber production over the last 68 years, Fukoku’s dedication to constant innovation enables the company to produce custom-made solutions for the automotive industry and beyond. We speak with president Takashi Ogawa to learn more about the company’s essential products, its plans for the future and mostly importantly, about the ‘Fukoku Way’.
In the last twenty-five years we have seen the rise of regional competitors such as those in China, South Korea and Taiwan that have replicated the Japanese manufacturing processes, but at a cheaper cost, providing the world cheaper products in direct competition to Japan. Now, as the president of a company that focuses on high quality and high reliability products through your monozukuri based processes, could you please tell us what is the essence of the Japanese monozukuri and how are you able to compete with these regional competitors?
In Japanese, monozukuri, is a compound word of many things together including not just the high quality. The initial attention to the Japanese monozukuri originated actually about thirty or forty years ago. The reason why Japanese products gained so much fame and focus from many people was not only because of their high reliability and high quality but because of many other additional factors too. For example, our R&D actually fuels us from the design point of view, later on we switch to the manufacturing site to actually implement those ideas that are coming out from the R&D offices. Timing is also very important, being capable of producing and delivering the products on time is also something that is a feature of Japanese monozukuri.
Later on, as you pointed out, with the course of time these similar technologies which were appearing in Japan were starting to be copied, using the same patterns, and produced elsewhere with a cheaper price and that resulted in price competitiveness. It’s very easy to copy similar technology and similar products which already existed in the market. That’s what the other companies probably do. Some countries’ products themselves are losing a big part of the added value price. That’s a natural flow of what you would call evolution, if you would say it so. Again, it’s natural flow of history, some countries are adopting similar technologies from more advanced countries that have existed in the market. That’s already a step down from the original products. These are the kinds of products that are not so much protected by the law and are easily remanufactured or copied. This, however, is causing an avalanche effect whereby adjusting to cheaper prices leads to loss of potential sales volume and profit from the company itself. In a way companies are leaving those markets that are targeting particular sales price because they don’t have the availability to introduce this price to the market, eventually making those companies step back and readjust or come up with a better price point.
This is an important point of transformation when the company has to realize that it would be impossible to step furthermore with the price that they’ve set up a long time ago, so they have to get back to their production sites to come up with a better solutions to fit the price and quality in order to meet the expectations of the customers. This is a long-term process; you have to continue adjusting your best practices and you have to look from a wider perspective.
When we talk about what Japanese monozukuri is resembling, what can be highlighted, which pretty much everyone in the world now knows, is that the word describes an improvement. Improvement is not just to one side of the business but to daily life applications. Even though the product looks the same, small parts inside are being improved every day. Companies that imitated products a year ago are unaware of this, but the accumulation of these small improvements is the strength of Japanese monozukuri. Improvement on everything will give better results in the future and fulfill expectations after the passing of some time, or after several years, adjusting your current situation towards future generations.
How do you ensure the quality of your products remain high when you produce overseas?
By applying the same standards of production and methods that we have here in Japan, whether in South Korea, China, Indonesia we always maintain those same standards – it has to be the same standards. This eventually leads to adjusting the market expectations, of course there’s quality in deliverance which has to be taken into consideration. Last but not the least, the human resource development is also crucial in order to sustain and fulfill the standardization in the patents that we create here. You have to have knowledgeable personnel that implements those rules.
With the bubble economy popping and the start of the so called ‘lost decades’, we have seen that since the 1990s Japanese companies began to focus domestically and forget about overseas. Now, they are trying to go overseas, but facing what we call the Galapagos Syndrome whereby Japanese companies such as yours are able to produce high quality and highly reliable products but are unable to market them overseas. In your specific case, what are you doing to overcome these challenges, and what should Japanese companies in general do to address this issue?
The international customer is the same as what we have here in Japan in the domestic market. It’s just a matter of our customs being expanded to those countries that we basically follow up and mutually expand to those countries. First of all, if you look at our product line up, there are the products which cannot be called a commodity and cannot be readily distributed to local people that would like to buy them. Our products are custom-made products which produced by responding to customer requests and working together with them. It works in a way whereby we approach existing customers or people who are thinking of expanding their business to this particular area. We look forward to these customers from inside Japan, how we can be helpful, localizing their production alongside these customers and it’s going to be produced with the same quality we have here in Japan. It does not really matter whether or not it’s going to be a Japanese person working on the products because they follow the same product basis.
Speaking of expanding to further business, they were saying that the seal industry is expected to grow in the upcoming years. This is because the automotive industry relies on safeness in which it is important to prevent leakage of liquid and gases. Now the major markets that will experience this growth will be the Asia Pacific region and North American market. Being present in these markets, what strategies are you implementing to take advantage of this growth?
That’s true. Many changes have been happening rapidly in the automobile industry with the electrification of cars and replacement of conventional combustion engines, but it isn’t in the full swing right now. Most countries are now obliged to have a 100% electrification of cars by about 2035 and that’s the countries’ policies. In many ways although the numbers might be promising in that field, we don’t see that as it is because of that aspect. Imagine a seal, a seal is something that works against gas or liquid leaks in conventional hydraulic systems in the automobile. But now with the electrification obviously we don’t have so much hydraulics in the car and we see that they are being replaced by electrical systems, for example, with the hydraulics in the brakes. We see that it’s actually some kind of a dangerous aspect for us because we might come to the end of this industry. But still, we see that from another perspective, of course having forecasted that, we are adjusting our R&D capabilities to come up with new solutions even applicable for electric cars. Right now, we are working on that and soon we will be coming up with a solution in that field.
Automotive manufacturers rely heavily on the quality and performance of rubber materials and, with increasing heat present in new vehicles, silicone rubber comes into its own, offering the perfect solution. Due to the temperature rise, there has been an increase in silicone usage being used in new vehicles as EPDM gets replaced, due to its inferior temperature performance. With extreme temperature resistance from -60°C to 230°C and outstanding weathering properties, silicone rubber can extend the service life of automotive assemblies. What has been the impact of this shift towards silicone? What solution are you offering to your customers?
The big point here is the everlasting changes in the markets, the form and shape of the materials is always very rapidly changing in that matter. Our company has been widely known, since we first emerged, as a company with splendid solutions for the automotive industry in rubber, but the current situation here is that these kinds of needs of the market have been changing and the composite technologies perhaps emerging are something that the companies have outlined. The company has its strong points in that matter. With rubber, there’s a lot of compounds that have to be injected. It’s something that the company has developed over the course of time, these composite materials and being able to introduce technology capable of blending rubber with other products coming up with better recipes if you will. It’s similar to bringing food to the table of your customers, you have to have better recipes in the beginning. The company obviously lists the top products and currently boasts about one thousand different kinds of composite materials coming originally from rubber. If you put other products which are off the market right now not being sold already but we’re selling back in the days, you would count more than ten thousand. You can imagine the company is working in the best expectations of the customers’ needs and trying to implement the best recipe with the rubber and some other products that we blend with the rubber. And that material is just limitless, thinking about the potential rubber it is beyond its kind. It’s something that the company has always been working since its establishment up until now.
R&D is also an unstoppable entity of the company and they’re constantly working on some kind of new solutions. Rubber, as I mentioned, its composition is one of the measured products but not eliminating another product such as coming out from the silica, or the plastic products. Obviously, the company has a product portfolio but just making these corrections not only focusing on rubber.
Before going to your R&D capability, kindly share to our international readers what are your main competitive advantages and what makes you the go-to partner when it comes to your specific industry.
One big advantage that my company has over other companies in the similar industry is bidding, starting off as soon as possible, and that becomes your advantage. It is very crucial to be winning the market and the customers’ trust. Be always ready, be always ahead of time and that results in steady progress.
I share the same ideals with Eichi Kawamoto, the one who founded the Fukoku rubber industry in 1953. This philosophy was adopted by Mr. Kawamoto and I still follow his ideals, now we call it the Fukoku way. It’s kind of being responsive to the needs of the wider community, not just talking about our company but also beyond that, our stakeholders and the company’s contact parts around the globe. It is not “Yes we can” but “Yes, we do” because we put up a lot of effort in what we do that eventually would end up to be a success.
With “Yes, we do!” you are attempting to be able to meet the needs of the customers. Now if we look at 2019 Japanese SMEs expenditures in R&D stood at over ¥19 trillion which implies that Japanese companies are investing massively in order to be competitive not only domestically but also globally. In your specific case and with the everlasting changes in this market, could you please highlight the competitive advantages of your R&D strategy and is there any specific technology that you would like to share with us?
R&D plays a crucial role in anything that results in a line up product here. We’re a few steps ahead of other companies, we have a technology for surface treatment, for example. Developing the rubber surface treatment for wiper blades rubber to reduce friction results in improved efficiency and is something that we have been working on since the establishment of the company. The wiper itself would undo so you have to have rubber blades that would fit the expectations of the surface treatment. We’re talking about the glass treatment, something that the wiper blade rubber would function better with this technology.
The bonding of rubber and metal, for example, have already been mentioned as something that our company is possessing in our capabilities. These are some of the weapons that allow our company to come up with better solutions and a better understanding on how we should develop better products. We also anticipate what could be the market expectations in 5 or 10 years afterwards.
Do you have any upcoming products that you are going to introduce to the market? Being present in so many different sectors, are you going to tackle any new market with your technologies?
Obviously, the company is working on something but we have to observe confidentiality here and we cannot reveal the product names or something that we are working on right now. But speaking about the necessity and the expectations of the market, it’s something that we can talk about. For example, the seal is an expanding market, it has a wide usage in cars. It protects from gas and liquid leaks and also prevents dust contamination. Another feature with rubber seals are the anti-vibration processes. It also protects the environment inside the car from surrounding sounds that may distract you while driving.
Another thing is the rigidness of many countries in terms of the environmental policies and which will eventually result in product cost performance and product line up in the end. We are working on that as well trying to comply with the best practices towards meeting the diversified needs in the industry right now and in the years to come.
Answering your question about the possible markets that we’re about to tackle, again it’s hard to mention because we have many things on the table right now. Currently the company is already in nine countries besides Japan, and we have twenty-five production sites in these nine countries. We have approximately 8,000 people working for us. With this capacity that we have right now, it’s hard to mention which exactly the next place to go, no definite plan.
Is there a new industry that you’re looking to tackle?
Currently, 80% of our sales are derived from the automobile / automotive industry. The remaining 20% is beyond the automotive industry. The automotive industry has been experiencing a lot of changes, especially the electrification of the cars which has resulted in the huge expenditure line from our side. But thinking about the 20% which is non-automotive it is something we’re currently working at. It’s a new kind of approach from our company.
Some time ago the company introduced this bio-related part, our health care department developed cell culture bags. First of all, the major product that we call here is the culture bag itself. The bag is made from our in-house developed technologies emerging from rubber technologies and later on we came up with an understanding that it’s not just the infusion bags, but also cultivating the cells inside the culture bags. It is something that might help in the medical field. The customers also have been satisfied in that matter. The company is also creating bags for growing cells. It is called the cultivated lymphocytes in cultured bags. For our product portfolio that segment is growing and the interest is also in a good upscale right now, it’s a new attempt by the company.
We have interviewed many companies such as yourselves that are experts in one specific industry and trying to diversify their line of business. Now when we interviewed the president of Honda, he mentioned that it is very important for Japanese companies to shift overseas and find partners. In your specific case, are you looking to have co-creation partners and in which area would it be?
Obviously, it’s very important to have some reliable, knowledgeable partners located locally in some other countries. Maybe we don’t have so much knowledge about that county. We are not a newcomer in the industry but back in the days we used to be doing similar activities with a Canadian company. We used to engage in the mutual co-creation of the products in North America. We are currently talking to a company located in Europe to come up with some products being produced in Czech Republic.
You talk about the major changes in your industry, you also talk about your philosophy, and your R&D capabilities. Now I’d like to focus on the future of your company, specifically, your midterm strategy and management strategy for 2023. Could you tell us the strategy that you’ll continue to implement to ensure your corporate growth?
It’s going to be a Medium-term management plan briefing session for investors. We will define major issues or obstacles in which the company will be facing in the next three years either here in Japan or outside. With all the parties involved we are going to come up with sales projections for what kind of fiscal results the company is aiming for. We’re going to be building all phases combined including the expansion to foreign markets and what are the products we’re currently working at. It will be revealed in the company’s newsletter. If you could come back again you could know more about it.
I have one last topic that I’d like us to talk about: globalization. While your company is leading in the domestic market, it is more challenging for a company to be a global leader. You are present in many countries as you have mentioned earlier. With a company such as yours that already has a strong overseas presence, what they usually tend to do is to strengthen themselves in the countries in which they’re operating. In your specific case, please tell us how you are able to strengthen yourself in our overseas market. Could you tell us your strategy for the international market?
When we talk about expansion overseas it’s thought to be the partial point from Japan because it is happening here, and the sales activities are triggered from Japan. We have to put up a new scale or a new efficiency level. Covid-19 has hit the automobile industry hard, and we’ve had devastating drops in sales. Overall, we have lost 20% in sales, it’s therefore a matter of how to survive in this situation and we are successful in that matter because we have restructured the company and come up with better initiatives and better solutions. Imagine squeezing a body into a slim body shape to make it even slimmer. This year’s fiscal results will be revealed, and we might say “Okay.” The plan for the next three years to come is to be grow muscles and strength from that slim body. That would be the time to develop strategies for the expansion of the company. That’s our goal that we want to reach.
I have one more question for you, it’s a bit more personal to get to know your professional ambitions. If we were to come back in 2023 to interview you all over again what would you like to tell us? What are your dreams for the company and what would you like to have accomplished as the president of this company?
The dream is very ambitious. It is to fill our company with attractive employees. And it is to create the “atmosphere” not only within the company’s employees but also for our customers and everybody who relates to the company. It is to create an atmosphere of overwhelming love, overwhelming miracles, to exhale, and to deliver this extraction of love and understanding to our employees. To be an institution that no words needed, to understand each other perfectly, on what goals we’re aiming for. This is something that I, as the president of this company, would like to achieve.
It’s kind of a philosophical attitude, but part of that is actually true facts because it’s a combination of four major things that a human being would like to be receiving. First of all we all want to be loved. Second, we all want to be praised, for our activities and everything that we do. Third, we’d like to be applicable, meaning that the work that we do is going to be used. Fourth, we want to be an environment that fosters compassion. Of all these four things we prioritize the love in everything that we do and in everything that we relate to, it could be managerial approaches or in production sites or just relationships between people. If you exhibit love throughout your daily life obviously you will grow as a company and as a business entity, and eventually will lead to good fiscal results. That’s all things combined but in the base foundation, it’s always LOVE.
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