Wednesday, May 22, 2024
logo
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 156,35  ↑+0.23        USD/KRW 1.362,23  ↓-1.05        EUR/JPY 169,69  ↑+0.256        Crude Oil 82,25  ↓-0.63        Asia Dow 3.985,41  ↓-34.92        TSE 1.794,50  ↓-6        Japan: Nikkei 225 38.654,05  ↓-292.88        S. Korea: KOSPI 2.728,33  ↑+4.15        China: Shanghai Composite 3.158,48  ↑+0.5137        Hong Kong: Hang Seng 19.254,80  ↑+34.18        Singapore: Straits Times 3,37  ↓-0.014        DJIA 22,28  ↑+0.052        Nasdaq Composite 16.832,63  ↑+37.75        S&P 500 5.321,41  ↑+13.28        Russell 2000 2.098,36  ↓-4.1443        Stoxx Euro 50 5.046,99  ↓-27.35        Stoxx Europe 600 522,95  ↓-0.94        Germany: DAX 18.726,76  ↓-42.2        UK: FTSE 100 8.416,45  ↓-7.75        Spain: IBEX 35 11.334,90  ↓-4.6        France: CAC 40 8.141,46  ↓-54.5        

A Deep Dive into High-Quality Lubricant Oils and Fuel Additives in Japan

Interview - April 18, 2024

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. 

RYUICHI SAKAI, PRESIDENT OF CHUGOKU KOGYO CO.,LTD.
RYUICHI SAKAI | PRESIDENT OF CHUGOKU KOGYO CO.,LTD.

What are Chugoku Kogyo’s main competencies and what strengths allow you to stand out amongst your competition?

Chugoku Kogyo was established in 1940. We operate from our headquarters factory and Saeki factory, located just 30 minutes apart. Additionally, we have four sales offices in Tokyo, Osaka, Hiroshima, and Fukuoka. Our primary products include lubricant oils for automotive and industrial use, lubricant oils for aluminum die casting, and various fuel additives. We maintain a technical group department responsible for quality assurance, product development, and technical advancements. Furthermore, our production group department oversees operations at both the headquarters and Saeki factories. In total, we have four group departments. Alongside the technical and production groups, we also have a sales and management group.

One essential piece of equipment for us is our bonded tank, which has a capacity of about 2 million liters. When ships arrive in port, they connect to the tanks, and the oil is delivered. Additionally, we conduct the blending of our lubricating oil within our factories. The annual production capacity of the headquarters factory is approximately 15 million liters and the Saeki factory is approximately 12 million liters.

The main feature of our headquarters factory is that it is the only Japanese Industrial Standards (JIS) certified factory in Japan. This JIS certification demonstrates that we maintain high standards and possess expertise in quality control. In addition to the JIS certification, our factory also holds ISO certifications, primarily focusing on production process management. We strive to maintain a good balance between JIS and ISO certifications.

The main feature of the Saeki factory is that all the equipment here is made of stainless steel. Inside the factory, we produce water-based products such as emulsified products and biodegradable cleaning agents. We conduct quality control based on the same strict standards as our headquarters factory. With specialized production equipment, we can manufacture various types of products. Additionally, last year we completed a warehouse within the premises that can now also accommodate marine containers.

 

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 provides a comprehensive range of fully synthetic oils across three brands: "SHAHORSE," "DAYTONA," and "DAYTONA Pro-Spec." With years of experience in lubrication oil manufacturing, staying updated on industry trends is a paramount focus for us. This ensures that we can develop products that meet the latest demands in the market.

If the interior of an engine becomes excessively dirty, it can affect other components such as the valves, potentially leading to decreased engine performance. To be honest, due to differences in the construction of older and modern cars, I feel that modern car engines are more prone to internal dirt accumulation and therefore more likely to experience malfunctions compared to engines in older cars. Some car dealers promote to use of suitable oils and fuel additives to keep the engine interior clean and improve efficiency and also to prevent breakdowns. Fuel additives work best when used in combination with suitable oil. We have developed and commercialized a full lineup of products ranging from oils to fuel additives.

We frequently conduct a training program known as the Oil Meisters seminar, where we extend invitations to sales agents to visit and inspect our factories. During these seminars, we provide detailed explanations about our products and their manufacturing processes. Following the seminar, our sales agents can confidently sell our products without any apprehension.

With a company history dating back to 1940, we have amassed 83 years of expertise. Leveraging this extensive knowledge, we can directly relay the information acquired from our seminars to our sales agents

These are the competitive advantages of our company. In summary, our products are highly reliable and trusted within the industry. Additionally, being the only JIS-certified factory provides a significant advantage over our competitors. Furthermore, our training program at Chugoku Kogyo is exceptional, particularly in fostering collaboration with sales agents. While producing exceptional products is standard for us, we recognize the importance of ensuring that sales agents fully understand the product's effects, enabling them to communicate this information clearly to clients. Finally, with a full line-up of synthetic oils, Chugoku Kogyo possesses a significant competitive edge.


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?

EVs, by definition, do not require Internal Combustion Engines (ICEs), posing a significant threat to our firm as it may render our oil unnecessary. However, in Europe, some perceive the shift towards EVs as overly ambitious. There are proponents of e-fuel as an alternative. Additionally, rumors suggest that EV sales are currently below target. Japan, in particular, isn't well-suited for EV adoption due to its high prevalence of apartment living. Limited home charging infrastructure makes EV ownership challenging for apartment dwellers.

Currently, companies such as Toyota are manufacturing hybrid vehicles, which I believe is a more practical solution. These vehicles allow drivers to use both gasoline and electricity. It's important to consider that EVs require lengthy charging times, and in addition to that, some countries experience cold temperatures that can affect battery performance. I think people are increasingly recognizing the challenges associated with EVs these days.

As an SME, we anticipate changes in the future demand for gasoline. Even if the entire market transitions to EVs overnight, there will still be an aftermarket and secondhand market, which we believe will persist for at least the next 15 years. We will continue to supply the oils and fuel additives we produce to serve those customers.

 

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, there are exhaust gas regulations known as Euro 5 and Euro 6 for diesel automobiles. In Japan, diesel particulate filters (DPF) are standard equipment, Soot generated during engine combustion gradually accumulates in DPF. It is necessary to burn off this accumulated soot during engine operation to regenerate the DPF. If too much soot accumulates in the DPF, it can lead to clogging and malfunctions, as well as dirtying the interior of the injectors. We offer a DPF & Injection Cleaner called 'FlashWorks,' which is a diesel fuel additive that utilizes the catalytic reactions of metals to promote complete combustion of soot in the fuel. By powerfully cleaning the dirt inside the injectors and the soot in the combustion chamber, engine performance is improved. We conduct research and development of such products to mitigate problems and meet the current needs.

 

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 automobiles evolve, advancements in automotive technology progress, thereby influencing the petroleum industry. These advancements are shared industry-wide, and our company actively develops products that incorporate the latest trends in line with this trajectory. We aim to expand our overseas sales while gathering information on regional regulations and requirements.


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?

It seems that countries In the Asian region might be the best choice for expansion, given their proximity to Japan. I find it easier to understand the needs of these countries since they are our geographical neighbors. I have experience working in the US and Thailand, and business trips to the EU, ASEAN countries, and others, and felt developed countries like the US and EU have already strongly established technologies. Considering all of this, expanding in Asian countries appears to be the most straightforward route for us. Currently, we export to some Asian countries and have existing partners there, so we aim to further develop our business in this region.

 

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?

We are also actively investing in the research and development of eco-friendly products, utilizing our specialized knowledge and appropriate facilities.

In our recent development efforts, we have successfully created an oil-based concrete mold release agent derived from petroleum-based materials with biodegradable properties.

We are proactive in addressing global environmental issues. As part of efforts towards environmental conservation, there is exhaust gas regulation. The use of "Flash Works," as mentioned earlier, leads to environmental benefits when used in diesel vehicles equipped with Diesel Particulate Filters (DPF), including improved fuel efficiency and extended lifespan of expensive DPFs.

In Japan, ultra-low viscosity oils such as 0W-8 and 0W-12 have been standardized under the JASO specifications, aiming for further improvements in fuel efficiency. Ultra-low viscosity oils cannot be manufactured using mineral oil; full synthetic oil is required. 

All our product lineups exclusively utilize full synthetic oil. Selecting oil suitable for engines in today's fuel-efficient vehicles ensures that the performance designed by current car manufacturers is fully unleashed and can be maintained over the long term. Fully synthetic oil is the optimal choice for this purpose.  We aim to quickly incorporate the latest trends in our company moving forward.

Currently, these products may not be suitable for the Asian market, but we plan to adjust them to meet changing demand in the future and offer products that address environmental concerns. Despite 95% of our business being domestic, ensuring our longevity beyond 2040 necessitates leveraging our competitive advantages and fostering close collaborations with our customers. We are committed to attracting foreign customers to our products, increasing exports, and fortifying our financial position through partnerships and collaborations with international companies. This strategy will likely involve establishing distribution partnerships in overseas markets.


For more details, explore their website at https://www.chugoku-kogyo.com/


Interview conducted by Karune Walker & Jaime De Andrés Gracia

  0 COMMENTS