Innovative materials to lead transformative trends in automotive, civil engineering and semiconductor industries

What are the main competitive advantages of Japanese manufactures over its competitors?

Japanese manufacturers have everything needed to satisfy customers. To use an analogy, imagine a customer that goes to a sushi restaurant. You can sit in front of the chef and see how everything is prepared and done, very transparently. In the same way, clients come to Japanese manufacturers and see with their own eyes how we develop our products. And similar to a chef that can explain the different kinds of fish, Japanese manufacturers provide all details about the different processes and the origin of the materials.  

Sushi chefs are renowned to be able to meet customers’ tastes. In the same way, Japanese manufacturers are well known for their collaborative approach with clients; it’s thanks to our continuous communications with clients that we ensure the highest quality of our products and we are able to customize every detail to match the clients’ requirements. This is what represents for me the Japanese seal of quality and what I think puts Japanese monozukuri a step ahead of other global competitors.

At Elastomix, we have over 50 years of experience in rubber compounds. Our expertise is what distinguishes us from other competing companies. Our competitive advantage lies also in the size of the company. Unlike many other very large companies in other countries which tend to increase the output by lowering down costs, we are a smaller-sized enterprise that is able to oversee every detail in the manufacturing process, thereby yielding higher quality products.

With regards to the United States, the “America First” policies of President Donald J. Trump, wanting to bring back manufacturing to the USA, have thrown a wave of skepticism on the world’s manufacturers. For Elastomix, do you see this as a challenge or as an opportunity?

In the automotive sector, the Chinese market is now the largest in the world, while the US is number two. So, of course, the American market is still a strategic one for us and all other automotive parts manufacturers. It is important to note that producing car parts in the US is very expensive in terms of labor cost compared with its neighboring countries. For this reason, we started operations in Mexico very recently from where approximately 80% of the production targets the US market.

Besides the rhetoric about “America First” and the announcement about the increase in trade duties from Mexico, we still haven’t seen any consequences in terms of policy change. I believe that American people realize that if tariffs go up, the price of cars in the US will be much higher.

The global masterbatch market was valued at USD 10.45 billion in 2017 and is projected to reach USD 13.41 billion by 2022, at a CAGR of 5.1% from 2017 to 2022. Could you explain to our readers how your company is a “hidden maker” and how you are adapting to the emerging trends in the automotive sector?

Rubber is needed for several car parts and there is no substitution. The trend now is shifting with the rise of EVs and consequently the requirements are changing. EVs heat up much more than conventional cars and therefore rubber compound must be more heat-resistant. This new trend is affecting not only Elastomix but the whole industry.

Unlike other players, however, we are pioneering solutions for electric vehicles. With our know-how and dedicated R&D center, we are developing new and better performing materials that can be customized to the new requirements in the industry.

Besides automotive, what are the other applications of your products?

Besides the automotive sector which stands for more than half of our business, our applications span from civil engineering joints, anti-vibration systems for buildings against earthquakes; railways, but also consumer products such as gaskets, seals, and semiconductor sealing.

Could you please walk us through the history of Elastomix?

Our parent company, JSR, was founded in 1957. Elastomix, as part of JSR producing rubber compound was founded in 1964. Initially, Elastomix was only a functional unit of JSR, meaning that the company only produced rubber compounds for JSR. It wasn’t a profit-oriented business. However, recently there has been a policy change.

Elastomix now needs to focus on profit and be more customer-oriented. We are no longer supplying products only to JSR. We are now producing rubber compounds based on the polymers not only from JSR but also from other polymer suppliers with the objective of widening our clients’ portfolio and achieve profits and dividends.

What are your main mid-term goals?

I am looking to implement a strategy to ensure profit growth. Japan’s domestic market is no longer sufficient to achieve higher growth. The only options we have is to expand overseas. In addition to our factory in Mexico, we already have three factories in China, one in Thailand, and one in Indonesia.

2017 is the first of the 3-year mid-management plan. By 2020, the objective is to achieve 20% profit growth. Our expansion has to be gradual. Setting up a factory abroad is very expensive, so we have to start with a small investment and then build up from there. We are a supporting manufacturer, not an independent one. We depend on our clients, namely auto parts manufacturers; so, we also need to follow them in their expansion strategy, otherwise we would be building and acquiring very sophisticated and expensive machines without having anything to compound.

Our main clients remain Japanese auto parts manufacturers. In China we are approaching some new local clients too and we are also talking to some European corporations. Non-Japanese customers are requesting us rubber compounds especially for their operations in Southeast Asia or China.

We have capabilities to match requirements in different markets. ASEAN markets and the American ones are of course very different in terms of specifications. Americans use very big and robust cars, whereas Asians prefer smaller and more efficient automobiles.

Environmental sustainability is no longer a buzz phrase. Companies in all sectors have to implement more environmentally-friendly business practices due to the more stringent regulations. Do you see this trend as a challenge or an opportunity for the future growth of Elastomix?

I see the rising importance of environmental sustainability as a business opportunity. China is undergoing a deep industrial transformation to become more environmentally friendly. Because of the challenges due to the high levels of pollution, sometimes factories have to halt their operations, which have a huge cost.

Clients, of course, are negatively affected as there are significant delays in production sites. In this context, Japan is at the forefront of technological innovation. Japan overcame the issue of industrial pollution a long time ago. Therefore, we can now export our technology to other countries that are following the same policies.