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AICELLO’s 3-point CBS strategy: Clean, BOSELON, SOLUBLON

Interview - October 30, 2022

With close to a century of experience, AICELLO Corporation has remained at the forefront of the plastic film and packaging industry, evolving with the times across the subsequent decades.

SATOSHI MORITA, CEO OF AICELLO CORPORATION
SATOSHI MORITA | CEO OF AICELLO CORPORATION

To begin, can you share with us a brief introduction to Aicello and the company’s activities?

We were founded in 1933, and our first business was using the leftover cellophane film from large cellophane producers to create woven string packaging that you conventionally see used for fruits and vegetables in grocery stores. In 1948, we entered the cellophane film business in earnest, producing cellophane products under the name Aichi Cellophane.
However, in 1970 we completely stopped our cellophane business, and lost 50% of sales because of our concern for the environmental impact of cellophane production. At that time, our core business shifted to polyethylene films and bottles. We became an environmentally conscious company, which has remained a priority in our product and business development. While the SDGs are widely known today, Aicello has long since had a similar sense or urgency about the environmental impact of our business.
Around 2008, when I was the director of marketing, I created a company-wide business strategy called CBS (Clean, Boselon, Solublon). The goal behind this strategy was to present a clear way of demonstrating our core technologies, competitive advantages, and how we add value through our manufacturing activities. At that moment we had a very wide range of products, almost all of which were PE related, and I believed we needed to scale down our portfolio. In reviewing our company scale and assets (HR, R&D, etc), I decided we should concentrate on our best and most value added products, these being our Clean technology, our anticorrosion film (Boselon), and our water soluble PVA film (Solublon). These three products became the focus of our marketing strategy, and represented a dramatic downsizing of our product portfolio.
You may be wondering, “why did these three remain?”. For our clean technology, we were the first company to produce clean bottles within a clean room environment itself, and wanted to continue developing this technology. While it was not profitable at that time, we saw it as having great potential as it would be an indispensable product for the manufacture of semiconductors.
Boselon is one of our oldest products, and is widely used by major automotive players like Toyota and Honda. We still maintain a domestic market share of over 90% for this type of product. We wanted to continue to nurture our long standing relationship with the automotive sector.
While Solublon was not profitable at that time, I believed the core technology was very unique, both being a PVA product within our PE dominated portfolio, and within the industry. We saw great signs that the detergent market was growing overseas, and believed Solublon was a great opportunity to expand our international business.
We have seen continued success and profitability through these three core products.
 

Can you give us an introduction to and history of these three products?

BOSELON remains one of the strongest brands in our product portfolio since we  developed it in 1969. Manufacturers back then had to ensure the quality of their products for at least 10 to 15 years, so they kept the repair parts in anti-rust oil and wrapped them in normal PE bags, which was a very labored process. During that time, Aicello was supplying packaging materials to the automotive industry. One of the famous Japanese automotive manufacturers requested our services to develop a transparent film or bag for packaging with anti-rust properties. Before this product took off, its only application was for aftermarket parts. In the 70s, Japanese car manufacturers carried out knockdown shipping, where the products were shipped from Japan but assembled at overseas destinations. Knockdown shipping requires a significant amount of packaging film. Because of Japan’s high humidity that can seep through the packaging and cause rust, Japanese manufacturers simply choose Aicello’s BOSELON, which has the highest quality in the market. Even with the change to EVs, combustion engines are still the mainstream, and these engines are made of cast iron which is very vulnerable to rust. Since our packaging can protect against rust and corrosion, our company holds a 90% market share in Japan.

Our water-soluble film Solublon has a different history from other PE-related products as this is the only non-PE product in our product portfolio. We developed this product in 1964, and we believe that we were the first in the world to commercialize water-soluble film based on polyvinyl alcohol (PVA). Nowadays, detergents, the mainstream of this industry, are still booming in the U.S. and Europe, including Asia, especially China. We are now building a third factory for this product to scale up our production, and we are the first ever to equip our film production site with a seismic isolation system to ensure we can supply our customers even in the event of a major earthquake. Aside from us, no one in Japan has integrated this system in their simple manufacturing facility due to it being very expensive. Despite the high cost, we decided to incorporate this system because we believe that water-soluble film supply is important to global society. Many of our customers remain loyal to our Solublon, so we are highly motivated and committed to supplying them with our products.

In semiconductor production, every step requires a particular chemical packed and transported with our containers. The size of semiconductor products is becoming smaller, thus, there is a higher chance for contamination or impurities during the process to cause defects to the end product. To that end, because chemical manufacturers are required to keep their products as clean as possible, they also demand the cleanest packaging with high purity. We are the only company that can realize the needed quality for plastic-based bottles for the storage of semiconductor related chemical products. As far as we know, Aicello is the first to start bottle production within a cleanroom. No one had considered doing their production from a cleanroom before we began work in this field. By supporting our customers, we also support society as a whole, as the semiconductor industry needs our products.  We utilize our clean technology to develop products such as our Hyper Clean Bag used for the packaging of hard disks and other easily contaminated devices.  For example, our MA-24 is becoming an industry standard packaging for the storage and transportation of semiconductor manufacturing equipment parts.

 

What does monozukuri represent for Aicello? What are the strengths of your firm that allow you to compete in the global market?

We have the concept of “Dantotsu”, which refers to a product or business model that is one of a kind, or impossible to replicate. I believe that the level of satisfaction of the customers with the products or business model, which ultimately determines the level of “Dantotsu”, also sets each company’s competitive edge. The differences that lead to customer satisfaction indicate not only tangible aspects such as product quality, price and delivery but also intangible aspects like business marketing, production know-how and responsibility to the customer needs. It is important for us to strategically design “Dantotsu”  in our business, and I am confident that “Dantotsu” should be a necessary condition for Japanese companies to compete in the global market.

 

Japan has one of the oldest societies and a declining demography with two major impacts. First is an ongoing labor crisis, where it is becoming both more difficult to hire and to transfer technical expertise to the next generation. The other is a shrinking domestic market. What challenges or opportunities does Japan’s demographic situation pose for Aicello?

The decline in the population continues every year. Fewer people living in an area means fewer people working for companies affecting how much money they make and spend. The shrinking in the domestic market serves as a catalyst for expanding overseas. As we have seen Japan's declining population for the past decades, we have been employing our best strategies to expand and introduce our products to an international audience. The overall sales of our company portray stagnated domestic sales for the past several years. In contrast, we are profiting from overseas markets, which accounts for 45% of our total sales. We are aiming to grow our business even more overseas.



What is your strategy to take advantage of the growing PVA market? What are some new applications that you envision or that you are catering to using your PVA - water-soluble film?

Honestly, no one ever thought that the PVA market would grow to its current scale. Achieving the film’s property of water solubility is in itself an extraordinary feat. Many customers are excitedly awaiting a new application of PVA that goes beyond detergents. Currently, we are focusing our efforts on the existing applications of our water-soluble film. Our customers who extensively use our products may just be the ones to come up with new possible applications for our products.

When the detergent market was not yet mature, we had a lot of inquiries from the market about utilizing the water-soluble system. It all started from a simple idea that we never thought we could realize. In the past 20 years, however, the steady growth of the detergent market has created a certain category in the markets in North America, Europe and Asia.  Every consumer using detergents can see and touch the water-soluble film and gain a basic understanding of what it is. Recently, we feel that the inquiries we receive from the market are getting more concrete. Perhaps it is because the consumers understand how they can use water-soluble systems in their business. We believe that there will be a great opportunity for us to obtain amazing ideas from the market to pursue future applications of our product. We are not certain what could come, but through our R&D, we are looking into discovering an application for our water-soluble film related to the manufacturing of electronic materials.

 

Your hyper-clean PE film and clean containers are used in transporting chemicals for the semiconductor manufacturing process. The production capacity of significant fabs is expected to triple in the coming years. Moreover, compound semiconductors require new chemicals and technologies in the front-end and back-end manufacturing processes. What are your expectations for this product line, and how is your company reacting to these two trends in the semiconductor industry?

At the current rate of consumption, the amount of power to be used globally is expected to become 200 times greater than the present by 2050. Just in IT-related areas, we are expecting 4,000 times more energy consumption by 2050. This major issue should push us to realize a sustainable society. The IT segment of the semiconductor industry is working very hard in reducing energy consumption. Miniaturization or microfabrication is one way to do that. By reducing the circuit line width by half, we can lessen power consumption by a quarter. To achieve miniaturization, reducing the defects brought on by the semiconductor process is indispensable. Of course, some contamination can occur within the chemical production process, but Aicello's goal is to attain “zero defects'' from the transport and packaging processes. 

 

As microfabrication becomes increasingly mainstream, chips are becoming more and more precise, accelerating the risk of contamination. How do your packaging products for very precise and delicate products prevent defects from both particles and outgas?

Besides particles and outgas, metal ions are also a potential contaminant. We have techniques to control these three factors that can cause defects, but we are hesitant to disclose them. We consider machinery, resin and know-how to be under the hard part, while the soft part includes the people and environment. Both aspects contribute greatly to achieving hyperclean packaging.

 

FIXELON is a thermoplastic adhesive mainly used in the automotive sector to bond dissimilar materials. The automotive industry is shifting away from combustion engines and heavy metals like iron and steel to lightweight materials, such as aluminum, magnesium and CFRP. Manufacturers are also trying to be as eco-friendly as possible. How is your company responding to these new demands in the automotive field? What are the advantages of FIXELON in comparison to competing products?

Switching from steel to lightweight materials like plastic or wood is now a big trend in the automotive industry as well as other industries. The conventional bonding material contains a volatile organic compound (VOC), but FIXELON does not utilize VOCs, which is its first advantage. From a circular economy standpoint, people want to decompose used parts. After use, materials bonded by FIXELON can be separated to be recycled. When FIXELON was launched five years ago, there was no demand for this kind of function. However, with the advent of the circular economy about two years ago, this thermoplastic film became very desirable. We never expected this rebonding or separation to be a function of FIXELON. We actually thought that reaching the temperature limit during the thermal bonding that causes the separation of the materials was a disadvantage.

 

Is there anything up and coming with your R&D that you would like to share with our readers?

This is our new development of BOSELON that abides by the United States Military specifications. Our new BOSELON formulation is the only official Mil spec. qualified monolayer PE film. While there are other certified laminated films that serve a similar function, by being only one layer, BOSELON has a significantly reduced environmental impact. Some companies were certified in the past, but they were not recertified. With our expansion, mainly in North America, we are focusing on the automotive and aerospace markets, but we are still in the finalization stage.

In the clean segment, we are investing a significant amount of money in order to realize zero-defect packaging. Although we are already way ahead of conventional bottle packaging, we continue to work hard to pursue more to be Dantotsu or impossible to replicate.

 

Are you seeking collaboration or local partners in the North American market?

With our company's long history, we have had many collaborations with NPOs but never with profitable companies. We value our company's culture of persistently seeking originality in our products. The majority of our overseas subsidiaries are completely owned by Aicello.

 

Besides North America and Europe, are there any particular markets that you consider key? Can you elaborate more on your international development strategy?

If you draw a matrix with the two axes being our product range and the regions in which we operate, we see some openings. From that standpoint, our first focus is our clean container business in North America and Europe, as well as BOSELON.

 

Why have you decided to significantly increase your production capacity for BOSELON, and why here in Toyohashi and in Malaysia?

Our Malaysian factory was built in the 90s, so we renovated it in 2020 because it was outdated. By doing so, we are more equipped to meet the needs of the local market as well as the increasing demand and expectations from nearby markets like Thailand. Our three major locations are Malaysia, Shanghai and Japan. We are increasing our production volume to be able to deliver on time to our increasing number of loyal customers. The automotive industry continues to grow steadily in Asia and in many countries; therefore, there are more customers demanding for our products to be delivered to their production sites. Automobile production is described as "just in time", which indicates that delay is not allowed. Geographical proximity to our customers is essential as well as being able to deliver on time. When our Malaysian factory was under lockdown in 2021, we had to increase our production in Shanghai. Similarly, as Shanghai is now on lockdown, our factories in Japan and Malaysia are compensating for the production delay. Customers seek a stable product supply. Having a 90% market share in Japan's domestic market entails serious responsibility.

 

How are you dealing with the present logistics disruptions exacerbated by China’s zero-COVID policy?

These logistics disruptions are causing a lot of difficulties and frustration. Thankfully, we have stocks in our warehouse in China. The global logistics disruption, especially in North America and Asia, means unbelievable delay. They are still waiting for the products we shipped three months ago. We are doing everything we can to supply to the automotive industry and our target industries. It does not matter how much it costs because our primary commitment is to our clients.

 

Imagine we come back to interview you again on the last day of your presidency. What ambitions or objectives would you like to have achieved during your time as president of Aicello?

My vision or policy as the president is to make all our employees happy. There is nothing more important than their happiness as it directly relates to being able to transfer such positivity into their work and contribute to society. I want them to fondly remember their time working for Aicello when they eventually leave. I highly value the overall well-being of our employees because it greatly influences their commitment and engagement to the company and society in producing good products. That is my mission.

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