Furuya: Metal innovators pushing science forward

In the last 25 years, we have seen the rise of cheaper competitors such as China, South Korea, or Taiwan replicating the Japanese monozukuri but doing so at a cheaper cost, providing the world with cheaper products at a lower quality and becoming leaders in the B2C (Business-to-Consumer) field. Japan has become an expert when it comes to highly innovative material technologies. As a president that is related to functional materials such as iridium and ruthenium, could you please tell us how your company maintained its competitive edge when it comes to high technological fields?

Our company is involved in the PGM (platinum-group metals) business. Particularly our focus is on iridium and ruthenium. About 40 years ago, there was not much use for metals like iridium and ruthenium.  Palladium and rhodium were used at that time as car catalysts and anti-corrosive elements for jewelry and accessories.

There are plenty of metal-related companies within Japan and overseas. Some have a long-standing history of more than 100 years, whereas our company has only been established as a stock company for 53 years. It is quite difficult for us to directly compete with such long-established companies because they already have cutting-edge technologies in this field.  That is why we needed to change our corporate strategy and decided to focus on iridium and ruthenium. For a long time, mining companies have viewed these metals as residual materials and have had difficulty dealing with them due to their lack of utilization. Exploitation of new applications for iridium and ruthenium have led us to find ways to benefit us.

I first wondered why there are not many businesses utilizing iridium and ruthenium. Later, I found out that handling these metals is quite difficult. I spent a lot of time thinking about how to deal with these materials. Iridium and ruthenium have an extremely high melting point of around 2500ºC and they are highly resistant to acid and alkaline solutions. We needed innovative and unique technologies to refine these metals. There is no reliable source that can tell us about these metals, so we had to come up with original technologies including plasma melting and special refinement methods to process them. Although we had difficulties handling and processing these metals, we believed that they can be utilized for high technology and environmental-related fields. We believe that these metals will be a necessity in the future.

The competitors you mentioned earlier such as Korea, Taiwan, and China, and probably even the United States and other European countries have recently started to actively pay attention to iridium and ruthenium due to environmental conservation considerations. This newly generated interest in these materials also drew attention of  the mining companies and they started to give support to our company.

The major source of iridium and ruthenium is only in South Africa, so we have developed a direct relationship with three major mining companies there and have established good relationships with the South African government.

Every time the minister in charge of the mineral resources of South Africa changes, they always come and visit our factory. METI (Ministry of Economy, Trade, and Industry) always wonder why Furuya Metal is preferred by the South African government. It is because we have been dedicated to PGM materials and products for a long time until now and we have already established good relationships with these mining companies and the government there. They trust us.

Furuya Metal is one of the very few companies that have a long-term contract or annual contract to have a supply for iridium and ruthenium. These contracts allow us to receive a certain volume of iridium and ruthenium every month.

Our first competitive edge over our overseas competitors is that we have a continuous supply of raw materials. The second advantage is that we have developed unique processing equipment and technology for different materials including plasma melting. We also have purification technology, which is the third advantage. The materials coming from the mines are about 99.95% pure but after our purification process, we can achieve around 99.999% purity. There are no other companies that can achieve that same level of high-purity material. The fourth advantage is our recycling capacity. We can recycle iridium and ruthenium to the original annual production quantity and on the same level or even better quality than it was. The fifth advantage is our long-standing relationship with our customers including major companies in Japan and overseas. We use these five advantages to protect ourselves when other competitors try to enter this field of business.

We did not obtain patents for our technologies as we did not want to disclose any information regarding our core technologies. Even though we are not planning on patenting, as a matter of course, we have already had our technical documents and drawings duly notarized so that others cannot apply for patents on our technologies. This is for us to protect our four core technologies that only a limited number of employees have been given access to.

You mentioned that because of the characteristics of iridium and ruthenium there is an increased demand for this material in new fields. We have seen the demand in 5G, IoT, and automotive toolsets and jewelry as you mentioned.  But when it comes to ruthenium, we are seeing that ruthenium is increasing in demand especially when it comes to the next generation of semiconductors (MRAM). Can you please tell us how your company was able to diversify in such a unique industry? And looking toward the future, is there a specific field that you would like to introduce your products to?

Diversifying was a result of our relationship with R&D (research & development) companies and our customers’ needs. To deal with the unique properties of iridium and ruthenium, we had our safety team and marketing team closely communicating with our customers and the R&D companies to develop new usage for these materials.

Our R&D team is also engaged in advanced technology development. Right now, we are focusing on electronic materials and components. In the past, our business skyrocketed with the VHS or videotape decks and heads. This was the start of our dealings with the electronic components industry. I used to do sales myself and I visited labs, research institutes, and university professors to collaborate and find ways to utilize our materials. This has helped our company to grow to what you see now.

Furuya Metal was established by my father 70 years ago. And in 1968, my father, my brother, my sister and her husband and I established the stock company together. My father’s original business was in jewelry.  When I joined the family business, I felt that the jewelry business would not last long because there is so much competition in the industry. We tried to do things differently from other companies, but only with a few family members, we struggled a lot. We then tried to shift our business towards the industrial field. As my father started the company, we had a lot of arguments when it came to shifting the focus of the business towards industrial purposes. I tried to convince him that our company would have no future if we keep the jewelry business.

At first, we started our business in the industrial field as a trading house. We bought industrial goods from overseas companies and sold them. We used to buy our products from our competitors or other metal manufacturers. But since we were able to increase our sales, our competitors were very reluctant to offer better deals to us. I realized that we needed to become a manufacturer and make these products ourselves. We utilized our network systems and employed engineers. But we did not have a manufacturing plant, so when I saw my father's garage, I asked if he could sell his big car and allow us to use his garage as a manufacturing factory. He was not happy about the idea, but eventually, we succeeded in using his garage as our factory. We removed his expensive car out of the garage and installed machinery and equipment there. This is the origin of our monozukuri.

I am not that good as a manager, but I was blessed with having capable people and having good relationships with them.  One of those relationships was with the head researcher of Matsushita Panasonic. He helped me and offered suggestions as to how I can use my materials on products such as making platinum crucible for the videotape head. That suggestion introduced us to the electronics domain, and we got involved in that business. The videotape business grew in Japan, which kept us busy and helped our company grow. To deal with the increased demand, we shifted the factory from Mitaka to Takadanobaba for mass production.

At the time, the videotape crucibles made up about 80% of our profit. Even though our business was doing quite well, we realized that we could not rely on one product alone and we needed to look for other business opportunities that no other companies were pursuing. We saw the potential in iridium and ruthenium.

Our factory floor was about 300 m2 but we needed more space, so we tried to rent two to three more other factories to deal with the situation.  But we still needed more space, so we bought approx. 23,000 m2 of land in Tsukuba, which allowed us the floor space 20 times larger than what we had at Takadanobaba. The plant floor area is massive, so we started to do things ourselves that we used to outsource. There were some quality issues in the past, so we tried to switch to in-house manufacturing. That included platinum recycling with our own technology. We also did our own iridium melting. With the help of the equipment manufacturer, we developed our plasma melting technology and equipment. We are grateful to the factory managers who operated these technologies and overcame challenges. We now have developed our own unique technological capability in this field.

However, we also suffered during the collapse of the bubble economy. So, we decided to build and establish several other pillars that can help support our company. One example is the sensor business. We tried to develop uses for sensors that other companies cannot do. We geared our sensors towards leading semiconductor-related companies in Japan so that we can offer our unique technology in that field as well. We have a large market share of semiconductor-related goods, sensor equipment and processing services in the domestic market.

Another example is the thin film business which was a perfect fit for our metal-related business. It started 25 years ago and came about from a proposal of a 27-year-old employee. He asked me to give him ¥1 billion as an R&D fee. That amounted to about two years' profit of our company at that time. When I asked the board for it, all the directors disagreed and thought it was not possible. But I believed that the young employee had excellent capabilities and I also believed in the potential of the thin-film business, so I financed the thin film R&D. That bore fruit and now the thin film is one of the big pillars of our business. It included semiconductor products such as RAM, DRAM, SDRAM, and the retaining sputtering target for semiconductor-related products. We have seen the growth of our thin-film business and I believe that it will support us in the future as well.

We manufacture iridium crucibles and sputtering targets ourselves using our thin-film technologies. We do not outsource it to other companies. We developed our own recycling technology about 13 years ago. At that time, I saw that we would need another business in 20 or 30 years. So, we initiated the fourth pillar for our business which was the chemical business. We bought land and built a factory in Tsuchiura. It was about 46,000 m2, which was twice as large as what we had in Tsukuba.

In connection with the chemical business, last year we built the fifth pillar of our company which was the recycling business. We invested a lot in the Tsuchiura factory with that recycling technology. Because of all five pillars, we were able to build relationships with different industries and firmly establish our business. Although we are a niche industry, these products and technologies are not something other companies can imitate.

We have been selected twice as one of the Global 100 Niche Top Companies by METI. The first time was five years ago for our thin-film hard disk ruthenium target. And we were selected again for our iridium chemical compound used as a primary material for organic EL phosphorescent material for OLEDs (organic LEDs). It is quite rare for companies to be selected twice.

Regarding OLEDs, we are seeing a shift from smartphone usage to TVs. Our market share for the material used for OLED is 90%. For the ruthenium sputtering target, our global market share is 50%. For the RAM and DRAM devices, companies are now shifting from prototype to mass production. In that field, we have almost 100% of the market share globally.

You might be wondering how we were able to accomplish that. We took the risks.  We used our stable supply from our mining companies and our high purification technology and production capacity to collaborate with our customers and satisfy their needs. All of these led to where we are right now.

As a company with so many market shares globally and an interesting history of growing your company pillars, looking towards the future, what is your midterm strategy to continue corporate growth, and how are you looking to expand overseas?

Ten years ago, our sales were mainly in Japan, but we have materials that only Furuya can supply so we started doing business in the US and South Korea. Thankfully, we also drew customers from China, Europe, and the US. This increased our sales overseas and now more than 50% of our sales come from our overseas customers.

In terms of our strategy, we have no plans as of now to build factories overseas. We are still able to utilize our factories in Japan and ship overseas. As you are aware, there is a trade war going on between the US and China, so it is somewhat difficult for us to ship US technology to China. The unique technologies still belong to Furuya Metals, but we do want to tread carefully in our dealings with China and the US, even though our company’s focus is on our business relationship with the US.

Our strategy also is to offer only one product to other companies. Although we only have 350 employees, we have direct relationships with top-tier semiconductor-related companies in the US and Korea. We are now entering the third stage of our business and are looking at how to grow it for the next 10-20 years.

To prepare for the future, we started heavily investing in R&D about 15 years ago. We can see the results last year with the joint venture between the mining company Anglo Platinum Marketing Ltd. and Furuya regarding the FT-eco catalyst technology. Usually, catalysts function at a temperature above 150ºC but the FT-eco catalyst can work at lower or even at negative temperatures. There is also our project with Professor Kitagawa of Kyoto University which started about six years ago regarding the nano alloy. We are now trying to use it as an automobile main catalyst. We are cooperating with our partners to speed up our growth. We consult with major chemical companies as well who present us with problems they are facing, and we offer our technology to help them find solutions. We currently have about three projects like this, and we would like to enter that business in the future.

In 10 years, we would like to continue to contribute to our employees and their families. We would like to make Furuya Metal a company that every employee can be proud of. Most of our employees now including us are excited to come to work in our company. We have been blessed with a lot of good employees. As a listed company though, we also need to consider our shareholders. We would like to contribute to them as well by having sustainable development goals. We need to take environmentally related initiatives especially because our materials are very critical for environmental preservation. With possibilities, we see a bright future ahead of us for the next 30 years.

I have one last question for you, and it is a little bit personal to get to know your professional ambitions. You are a risk-taker starting your idea in a garage, and 25 years ago you put your belief in the research of a 27-year-old employee which today represents a big part of your business. For the next two to three years, what are your dreams for the company and what would you like to have accomplished by then? And what legacy would you like to leave for the next president?

The next two to three years are going to be very critical for us. We need to create new businesses and products to market. We want to focus on the new nano alloy. We also want to see five different projects we are currently engaged in with other companies come to fruition. These are the things which will keep us busy for the next couple of years.