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Showa Denki: A Magakoro Company

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Interview - July 3, 2020

Showa Denki has successfully fused the philosophies of monozukuri and Magokoro to become a fully-integrated service provider improving workplace environments across the world. We speak with CEO, Kensaku Kashiwagi, to learn more about the company’s offerings, as well as how Showa has grown from a manufacturing company to a Magakoro company with a manufacturing department. Mr. Kashiwagi also discusses Showa’s plans to expand internationally as well as the company’s diversification with its move into the domestic sports boating market.

 

KENSAKU KASHIWAGI CEO OF SHOWA DENKI GROUP
KENSAKU KASHIWAGI | CEO OF SHOWA DENKI GROUP

Japanese products are highly respected in the world due to the Monozukuri process. Going beyond that, Showa Denki is a Magokoro company, which means a true heart. What is the essence of Monozukuri and Magokoro for Showa Denki?

When I started our overseas business, I did not use the word “Made in Japan” but used “Made with Japan”. This means we make the product with the spirit of Japanese Monozukuri wherever we are. For example, TOYOTA has a lot of factories overseas and in Japan but the product quality at all plants is the same. I think it is because they are maintaining their spirit of Japanese Monozukuri. My target is to ensure each overseas office supplies products and service with the same spirit of Japanese Monozukuri. 

Magokoro cannot be seen or touched. But we believe that our customers can feel it in our machines, services, and hospitality. Through Magokoro, we believe that we can have the trust of our customers. Trust is definitely not something you can buy with money. 

The fusion of Monozukuri and Magokoro led Showa Denki to customize each product for each customer with flexible ideas, which becomes our strength all over the world. For example, over half of our blowers are special-order products. As another example, our Windracer, the fan which can improve air conditions in factories: we made the concept in Thailand, but now it has sold well in Japan and other countries.

 

Your company was founded in 1950 and now you are celebrating the 70th year of history. Could you please highlight the key milestones of your company?

It was my grandfather that started the company after World War II. He left and then returned to Japan. Then, he began manufacturing and selling small motors. Later, the business expanded, and we diversified our products by producing electric equipment and blowers. Furthermore, we built our first factory in 1963. In 10 years, we completed two more factories’ construction. 

In 2012, we started our overseas business in Thailand and we aggressively expanded to other countries such as Taiwan, Korea, the USA, and Mexico between 2017 and 2019. Hence, we are looking forward to establishing a strong root in these countries, especially to anticipate the growth of the value of the global machinery equipment market.

 

Currently, Showa Denki is present in 5 overseas countries and has distributed products on an international scale. How was your first overseas expansion?

In 2010, I went to Thailand for a holiday and was very surprised because 80% of the population had used Blackberry, which was the first booming smartphone at that time. Then, I went back to Japan and directly looked at my overseas sales, particularly in Thailand. It was only 12 units! 

How could it be possible? I was startled because Thailand has a huge automobile industry operation and many of our customer bases are coming from the automobile industry. At that moment, I decided to strengthen our overseas operations. I went to various countries and engaged with the trading companies there. Hence, our overseas sales started to escalate.

 

Recently, you changed your business model to a service company with a manufacturing department. Could you tell us more about your business lines and product?

As a CEO, my main duty is to think about the future of the company. The best fit for our business model is an integrated service model, which means that we will do everything from machine and installation design, ductwork, and other small bits of engineering along with the selling of the machines. Hence, we call ourselves a service company with a manufacturing department, and are no longer just a manufacturing company.

If we see from the sales structure, our electric blowers account for 52% of our sales, while our large blowers account for 23%. However, our core business is engineering, as we offer solutions to our customers. We combine various products and accessory equipment for customers who would like to improve the environment in their production facilities. We also maintain customers' equipment by performing regular inspections.

 

In 2019, Showa Denki Group established SDG-Marine as a sales base for bass fishing boats and related equipment. Could you tell us more about your marine business?

I personally love fishing and used to say my business is bass fishing and Showa Denki is my hobby. But the reason why I launched our marine business is to make our company name more famous.

When I visited our overseas customers, I was really surprised that they knew well our product names but know nothing about our company name, Showa Denki. From then, I started some brand promotion by sponsoring a motorcycle racing team and recently launched a marine business to make us more famous. In the process of developing our marine business, I visited several boat manufacturer headquarters in the USA. Hence, SDG-Marine is dedicated to selling boats from the USA, from Charger, Vexus, and Basscat. For this business line, we have facilities for boat assembly, and also to perform after-sales maintenance. We also co-sponsor bass fishing tournaments, such as the World Bass Society Pro-Team Tournament in Japan.  

 

Last year you hit 8.4billion JPY in terms of turnover. What are your midterm strategy and the challenges that you are looking to overcome in order to continue your corporate growth?

Whether they are domestic or overseas, I believe understanding the customer is key. We will find distributors for our products in several industries around the world.

In terms of a company, we would like to become a 100th-year company. We would like to enhance our corporate image and become a brand that has a strong presence. However, we don’t have any target for revenue. We would like to maintain our performance and ensure Showa Denki Group, as a whole, becomes prosperous. This is our own challenge. To support this, we have a policy in child rearing allowance, in which each child is eligible for 30,000 JPY (approximately $300) allowance every month until they turn 22. 

We don’t want to be a company that hit 10 billion, but we want to be able to retain management and employees and pay their salary, without performing cheap labor. We would like to take care of our employees, by paying for their cancer insurance and paid leave. We also have fewer working hours on Friday because we believe employees belong with their families. Hence, I don’t have an interest in growing in terms of revenue, but I have the interest to build a prosperous and wealthy community instead.

 

If we come back to visit Showa Denki Group in the next 10 years, what message would you like to convey to Showa Denki Group?

I would like to give the opportunity for every staff to become the president, by today or tomorrow. I believe that at Showa Denki, they have cultivated the capabilities and know-how to lead this company. I believe that everyone is a leader. 

I don’t believe that you are not capable of doing something. There will be a first time for everything. Just like me: have I ever become a CEO before? The answer is no, I have never been one. The same goes for our production manager or sales manager. Most of them have never been in those positions before. But, what do I do as a CEO to convince them? I believe in them, that they can. It is the smallest thing that matters the most.

 

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