The interview provides insights into the competencies and strengths of Chugoku Kogyo, a company established in 1940 specializing in lubricant oils and fuel additives. They operate from two factories and four sales offices, producing high-quality products such as lubricant oils for automotive and industrial use, lubricant oils for aluminum die casting, and various fuel additives.
What are Chugoku Kogyo’s main competencies and what strengths allow you to stand out amongst your competition?
Our company was founded in 1940, and we currently operate with a two-factory system, consisting of the headquarters factory and the Saiki factory, which is located about 15 kilometers away. Within our company, there are four departments: the Technical Group, the Manufacturing Group, the Sales Group, and the Management Group. Each department closely collaborates with the others to achieve high performance.
The Technical Group is responsible for quality control, product development, and product improvement, always striving to provide the best products. The Manufacturing Group focuses on quality and efficiency, playing a crucial role in the stable supply of high-quality products. The Sales Group has offices in four cities—Tokyo, Osaka, Hiroshima, and Fukuoka—offering prompt and attentive service to our customers. The Management Group supports the smooth operation and sustainable growth of the company.
Our main products include automotive and industrial lubricants, lubricants for aluminum die casting, and various fuel additives.
One of our company's key facilities is a bonded tank with a capacity of approximately 2 million liters. This tank is used to store base oils transported by tanker. The oil stored in this tank is delivered to our factories as needed. Our headquarters factory has an annual production capacity of approximately 15 million liters, while the Saiki factory has a capacity of about 12 million liters, ensuring a stable supply system.
The main feature of the headquarters factory is that it is the only factory in Japan certified under the Japanese Industrial Standards (JIS) for lubricating oils for internal combustion engines, gear oils, and turbine oils. In addition to these oils, all products manufactured at the headquarters factory are subject to strict quality control based on JIS standards, ensuring the maintenance of high-quality standards. We have also obtained ISO 9001 certification and have established an internal system based on this standard to promote continuous improvement.
On the other hand, the main feature of the Saiki factory is that all of its equipment is made of stainless steel. This factory produces water-based products such as water-soluble die-casting release agents and biodegradable cleaning agents. The quality control at the Saiki factory is as stringent as that at the headquarters factory. With specialized production equipment, the factory is capable of manufacturing a wide range of products. Our facilities also include a warehouse that can accommodate marine containers. Additionally, a new warehouse was completed last year, further enhancing our efficient logistics system.
You’ve showcased to us that the quality of your products is very high. Is there a specific application that you are currently focusing on when it comes to your products?
Our company offers a wide range of fully synthetic oils through our three brands: "SEAHORSE," "DAYTONA," and "DAYTONA Pro-Spec." We believe that keeping track of industry trends is crucial in order to meet market needs. In the automotive industry in particular, the impact of engine deposits on engine performance cannot be overlooked. While modern vehicles have advanced technology, they are, on the other hand, more vulnerable to engine deposits, which can increase the risk of failure. For this reason, some car dealers recommend using the right oil and fuel additives to keep engines clean. This helps improve engine efficiency and extend its lifespan. Our company offers products that cater to a variety of vehicle types, striving to provide the ideal solution for any car, from oils to fuel additives.
At our company, we regularly conduct a training program called the "Oil Meister Seminar," inviting our distributors to participate. In this seminar, we provide detailed explanations of our products and their manufacturing processes, ensuring that participants gain a deep understanding. We share the expertise and know-how that we have accumulated since our founding in 1940 with the participants through these seminars. We believe it is crucial to support our distributors in fully understanding the effectiveness of our products, so they can confidently communicate this to their customers.
A variety of Daytona oils offered by Chugoku Kogyo
Right now the automotive sector is seeing a massive shift with the move over to EVs. It is estimated that in 2024 13.3 million EVs will be sold, which is 16.2% of global passenger vehicle sales. Japan is well on its way with this transition, and by 2035 all cars sold are to be either an EV or a hybrid. This is going to result in many components that are traditionally required no longer being needed such as the internal combustion engine (ICE). What are some of the threats that this switch to EVs poses to your firm and how are you reacting and overcoming them?
The shift toward electric vehicles (EVs) poses a significant threat to our company's oil demand, as EVs do not require internal combustion engines (ICE). However, there is a growing sentiment that a full transition to EVs may not be realistic. Some advocate for e-fuel as an alternative option. Compared to last year, the global growth rate of EV sales has slowed, while sales of hybrid electric vehicles (HEVs), produced by companies like Toyota, have increased.
Challenges remain in the widespread adoption of EVs. For example, in colder regions, charging speeds slow down, and the use of heating accelerates battery depletion. Additionally, extreme temperature changes are known to accelerate battery degradation. In Japan, a significant barrier to EV adoption is the lack of home charging infrastructure, as many people live in multi-unit housing.
The Japanese government has set a goal to make all new car sales electric by 2035. This target includes electric vehicles (EVs), plug-in hybrid vehicles (PHEVs), hybrid vehicles (HEVs), and fuel cell electric vehicles (FCEVs). Both PHEVs and HEVs are powered by a combination of internal combustion engines and electric motors. After 2035, new fossil fuel vehicles will no longer be available for purchase, though used car sales will continue.
Given this situation, we anticipate continued demand in the aftermarket and used car markets for the foreseeable future. We are committed to providing our customers with a stable supply of lubricants and fuel additives moving forward.
You mentioned Europeans going back to e-fuel as a middle ground. Do you see a market opportunity for your firm in those kinds of regions around the world that are trying to establish a middle ground for the supply of lubricants?
In Europe, strict emissions regulations have been applied to diesel vehicles, with the introduction of Euro 5 and Euro 6 standards. Meanwhile, in Japan, Diesel Particulate Filters (DPF) are standard equipment. DPFs capture soot produced during the engine’s combustion process and store it internally. The accumulated soot must be burned off to regenerate the DPF during engine operation. However, excessive soot buildup can lead to injector contamination, DPF clogging, or failure.
Our company offers a diesel fuel additive called "Flash Works," designed to clean both the DPF and injectors. This additive uses a metal catalytic reaction to promote the complete combustion of soot trapped in the DPF. It also effectively cleans injectors and combustion chambers, improving overall engine condition. We are advancing the research and development of our products to solve these issues and meet current demands. Additionally, we are considering expansion into various markets.
Around the world, there are different regulations and requirements for each region. With this in mind, are you looking to partner up with local firms in overseas markets to conduct R&D and develop new or innovative products?
As automotive technology continues to advance, the oil industry is also feeling its impact. Our company is keenly aware of these industry changes and is focusing on product development that aligns with the latest trends. We also conduct detailed research on the regulations and requirements of each region, using this information to improve our products. Furthermore, while considering expansion into overseas markets, we are developing products tailored to meet the specific needs of local markets.
Saeki factory
With Japan’s shrinking demographic line there are concerns about Japan’s shrinking domestic market. One way companies are mitigating this is by expanding further overseas, whether that is through exports, sales, or the establishment of overseas production. Moving forward, as a way to combat Japan’s shrinking domestic market are you looking to further expand yourselves overseas?
We believe that the Asian region, particularly those countries close to Japan, is the most suitable option for overseas expansion. Due to its geographical proximity, we can more accurately understand local needs. I have work experience in the United States and Thailand, and I have also traveled to EU and ASEAN countries for business, but I feel that advanced countries like the U.S. and the EU already have well-established technologies. Considering this, expanding into Asian countries seems to be the most seamless route. Currently, we have a track record of exports to several Asian countries and have built strong relationships with existing partners. Moving forward, we aim to further expand our business in this region and explore new markets.
Imagine that we come back in 2040 and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?
Our company is actively promoting efforts to address environmental issues by leveraging our expertise and facilities to focus on the research and development of environmentally friendly products. Recently, as part of our environmental protection efforts, we developed a biodegradable oil-based concrete release agent using petroleum-derived materials. Additionally, we are working to comply with emission regulations. Specifically, using our product "Flash Works" in diesel vehicles equipped with Diesel Particulate Filters (DPF) can provide environmental benefits, such as improved fuel efficiency and extended DPF life.
In Japan, the standardization of ultra-low viscosity oils, such as 0W-8 and 0W-12, based on the JASO: GLV-1 standard, is progressing, which is expected to improve fuel efficiency. In October of this year, the JASO: GLV-2 standard will be established as the next-generation low-viscosity gasoline engine oil standard. These low-viscosity oils are made using the superior performance of fully synthetic base oils, which cannot be achieved with mineral oils, allowing them to maximize and maintain the performance of engines designed by today's automobile manufacturers over an extended period. All of our product lineups use fully synthetic base oils, actively incorporating the latest trends.
We will continue to focus on product development that responds to changing needs, keeping overseas market expansion in view, and offering environmentally conscious products. We are committed to developing products that comply with international regulations and standards, meeting the market demands of various countries. Furthermore, we are dedicating efforts to the development of energy-efficient products aimed at realizing a sustainable society.
In this way, our company will continue to enhance its competitiveness in the global market while contributing to environmental protection and building a sustainable future. Through our products, we strive to meet customer expectations and remain a trusted company.
For more details, explore their website at https://www.chugoku-kogyo.com/
Interview conducted by Karune Walker & Jaime De Andrés Gracia
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