Building a Sustainable Tomorrow: Terabo’s Vision for Global Growth

Right now is a pivotal time for Japanese manufacturers. Policies like the US Inflation Reduction Act are forcing corporations to diversify their supply chains for reliability and to reduce country risks, with nations such as China. Japan is known for its reliability and advanced technology which places its products favorably internationally. Currently with the weak JPY against the US Dollar buying Japanese has never been a more cost-effective option. This means that Japanese firms have an opportunity to expand their existing global market shares. Do you agree with this sentiment, and in your opinion, what do you believe to be the advantages of Japanese companies in this current macroeconomic environment?  

While it is an issue for some, for companies specifically focusing on export I think that it can be an advantage. Inflation in the US is rapidly expanding, while Japanese inflation is ongoing but at a slower rate. Companies that are exporting continue to make capital investments, and thus I believe that we are able to enhance the global competitiveness of Japan as a whole. The key is making sure that SMEs can benefit from this advantage, and realistically I think this is a challenge. Global companies are the ones exporting, therefore benefiting from the macroeconomic environment, but SMEs like ourselves are the ones supporting those global companies. The materials that we procure today cost more and are the most important aspect for those global companies to benefit from the economic environment. The weak JPY is therefore having a negative impact on companies like ourselves. Costs are passed onto customers, and the reality is that customers don't appreciate this. Sustainable growth in my opinion can only come from an acceptance of these price hikes.  

Another challenge that is getting international attention is the Japanese demographic decline. Japan has the oldest population in the world, one that is declining every year thanks to low birth rates. It is estimated that by 2040 Japan will face a shortage of 10 million workers. This presents challenges in recruitment and a shrinking domestic market. To what extent do you believe that Japanese companies need to look overseas in order to secure new markets and attract foreign talent to their companies? 

Of course, the labor shortage is a challenge for us. To address this issue we started hiring foreign employees last year. This year we will continue to hire more foreign employees to counter the labor shortage as well as maintain productivity. I think that other SMEs are applying the same policies as well.  

We are also trying to accelerate the automation of production processes within our company, but considering our type of industry it is difficult to automate the whole process. We are trying to identify any production processes that can be replaced by automated machines.  

Your company is innovatively using eggshells to produce polymers alongside your standard product range. You also offer a custom option where customers can select their base resin, determine the eggshell content, customize their components, and apply additional reinforcing materials. Could you tell us how you handle the variability in the supply and quality of eggshells and how you are then able to apply that consistently in your polymers? 

What we offer is called Caracle, which essentially is a plastic made from eggshells. After cracking eggs, the parts of the shell are powdered and incorporated into this plastic , but the key to maintaining product quality is maintaining the quality of the eggshells themselves.  

The eggshells have a membrane on the inside of the shell and you often have to remove the membrane during the egg cracking process. If any membrane remains it can cause odors and impurities to occur . Currently, the membrane on the inside of the eggshell is removed to less than 1%.  

Are you looking to export this to overseas markets?  

Yes, but little by little. So far we have been shipping mainly to Southeast Asia.  

What are the main environmental benefits of using crushed eggshells versus conventional fillers for polymers? 

As you alluded to, the eggshell is the filler element meaning that the polymer isn't actually made of eggshells, rather the eggshells are an additive. Conventionally carbon calcium is used for stability and strength, but obviously, we have replaced those with eggshells. This has enabled us to enhance the performance of the polymer . We are trying to apply this to polypropylene ether (PP) and nylon (PA) , and other materials so that these materials can have a better environmental performance.  

Which industries do you believe Caracle can support best? 

The way we produce allows us to choose any type of resin and volume of additive, so currently, the implementation and discussions are progressing across a wide variety of industries, from household goods to automotive .  

Another product line that interested us during our research is your MECHA-TREL purging materials. It is designed to address issues of residue and time-consuming changeovers with conventional cleaning pellets. What sort of tests did you conduct to make sure that your MECHA-TREL product didn't cause wear and tear damage that is associated with conventional cleaning materials? 

This is a purging material as you mentioned and normally glass or minerals are used for cleaning pellets since they are quite hard however, they may cause damage to machine parts. We wanted to find a more efficient product for cleaning and that is how we began to develop MECHA-TREL. This product doesn't use hard materials like glass or minerals but is able to achieve the same level of purging without damaging machinery.  

As a company with over 112 years of history, could you share with us some of your main competitive advantages? What sets you apart from your competitors both in Japan and overseas? In terms of the future of your firm, which industries are you looking to penetrate further? 

Since 2002 we have focused on launching products that revolve around recycling, and thus I think our corporate name has become widely known in Japan. Unfortunately, despite this, our name isn't that well known in the global market. It would be great if we could take the opportunity to enhance ourselves within the global market.  

In terms of global expansion, considering the scale of our business, export would be a good way to respond. This led to our decision to operate in Thailand. Going forward we are looking to target other ASEAN countries such as Vietnam or Indonesia as well as India.  

You mentioned the importance of exporting overseas. When you do so are you looking for distribution partners or joint ventures? What is your overseas strategy? 

Our parent company has sales and distribution channels in the countries I've mentioned as well as China, however, they don't have any channels in India just yet. We would like to use these sales channels to expand our presence in the region. If we are able to find any distribution partners in those regions that would benefit our company we would be willing to work together.  

In Thailand, we do have a subsidiary that is operating under a joint venture agreement. Likewise, if we are able to find any good partner companies we would be delighted to engage in a joint venture. If the partner company is small enough, M&As might also be an option too.  

What do you believe are the strengths of Japanese manufacturing companies within the global market? What is it that makes Japanese companies unique? 

I think that within the manufacturing process, many Japanese companies have developed a deep understanding of quality, and this has led many firms to essentially pursue perfection in order to satisfy their clients. There is an element of pride when it comes to these companies, and this has built the foundation of Japanese manufacturing companies that you see today.  

Imagine that we come back in three years and have this interview all over again. What goals or dreams do you hope to achieve by the time we have that new interview? 

In the short term of two years, we are looking to expand our recycling business, and the basis for that business is material and the procurement of that material. We need to address the stable procurement of materials that have good traceability, and this goal is what our sales team is currently focused on. In the upcoming 2-3 years we would like to double the scale of our procurement of materials for recycling, and by doing so I believe that there is potential to unlock in markets that resonate with recycling. For sectors such as the automotive sector, while they are using recycled materials, for high-performing components I believe there is still room for the use of recycled materials. In order to address these areas we really need to double our procurement, therefore this is the key strategy for our company moving forward.