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Mirroring success

Interview - March 26, 2024

Penstone Corporation is navigating global markets, tackling demographic challenges, and pioneering lightweight mirror technology in the automotive industry.

HIKARU NAKAMURA, PRESIDENT OF PENSTONE CORPORATION
HIKARU NAKAMURA | PRESIDENT OF PENSTONE CORPORATION

We believe that Japan is at a very interesting time right now. With the supply chain disruptions that were caused by Covid-19 and also the fact that there is a lot of tension between China and the US, coupled with the fact that the Japanese Yen is at its lowest, we think that Japan is once again very attractive. First of all, do you agree with this premise, and what would you say are the key advantages of Japanese corporations in this macroeconomic environment?

I agree with your premise that Japanese companies are attracting more attention as suppliers. Japanese companies have many advantages. Firstly, they have always supplied high-quality products and they have always been highly loyal and disciplined. They also possess very good abilities when it comes to negotiating with the carmakers. Therefore, Japanese companies have a lot of potential in these areas. In addition, as you mentioned, we are subject to influence the current FX rate. However, Japanese commodity rates have been low for quite some time. Therefore, I think the economic potential is much higher than the FX rate shows.


Automotive assembled glass


We know that Japan has an aging population, with it being said that by 2050, the population will drop below 100 million people. This raises two main issues, the first is labor force shortage, and the second is a shrinking domestic market which will ultimately result in fewer cars being sold within Japan. How is your company adapting and reacting to these demographic shifts, and how are you relying on your overseas business to ensure your long-term business success?

As an initiative to address the decline in the population, we are focusing on factory automation as well as the introduction and standardization of IT technology for our back office. Recently, we have seen that young people are not very interested in working at manufacturing sites in Japan. Even though we try to recruit young talent, it has been difficult for us to hire them. On the other hand, there are also issues concerning aged people and the pension system. Although workers get old, some companies need to keep employing them. Also due to the law for gender equality in hiring, there should not be a difference between the number of male and female employees at a company. Furthermore, we are required to hire some disabled employees as well. That is why we have started working on the automation of our processes, and that is something that we need to accelerate further. On the first floor of this building, we have a factory for assembly. In the past, people used to move the glass parts around. However, we have introduced machines which can automatically transport the glass. We are aiming to create an environment where everybody can work comfortably and easily. With regard to your second question about how much we focus on our overseas business, of course, the domestic market has already matured, so we do not expect the demand for cars to increase. Therefore, we are looking to our existing customers and hoping that they will increase their presence and market shares in stronger overseas markets such as Asia and India.

 

Over the last decades, we have seen the rise of regional manufacturing competitors in places such as China, Taiwan, and South Korea for example, which has pushed Japanese companies into niche B2B fields. In this context, what are your company’s core strengths to appeal to foreign prospects? We know that you have business with Japanese carmakers. Are you interested in doing business with foreign carmakers such as those from the US or Europe?

Our strength lies in our products. When we consider the competition in the door mirror market, I believe that the most reasonable way to produce those parts and components is to produce each of them at the minimum size possible while satisfying the needs of the customers. We possess the technology to produce these components at the minimum size and we have the technology to make the products lightweight. These technologies allow us to compete in both the domestic and overseas markets.



The size of the mirrors is fixed by regulations. However, there is a unit that moves the mirror by using electricity which is located inside the mirror unit. There are also electric retractable mirrors. That unit is also invisible and there is no regulation for its size. We possess the technology to produce it at the minimum size possible, and we are confident that our units for the mirrors are the smallest in the world.

 

It is very interesting to hear that your advantages lie in your products’ compactness and your ability to make your products as light as possible, as energy is one of the key areas that the automotive sector has to improve on. Making a car lighter is one way to reduce energy consumption. It is known that glass accounts for around 45kg of a car’s weight which is around 5% of a car's overall weight. Safety regulations dictate that the layers of the glass in the US must be 5 mm thick for the front and rear glass, while in Europe and Japan, the glass must be around 3 mm thick. Shaving 1 mm off can help reduce the weight and therefore save energy. We know that for example, you also had the objective to reduce the weight with your CX-60 door mirror. How do you manage to produce lighter door mirrors and windows without impacting the quality and safety of your products?

We are the assembler of the glass. The specifications such as the size or thickness of the glass are decided by the car makers, and we are not involved in those decisions. The challenge is with the door mirrors. We design the smallest ones possible. We also have to satisfy the quality levels that our customers require. That is the biggest challenge for us. We work together with our clients in the early stages to see how we can align our concepts for the product with our client’s expectations. Once we reach an agreement, we begin the testing phase for assessment. As I mentioned earlier, the ability to negotiate with the client is a major advantage that Japanese companies have in general.


Rearview mirrors


In 2022, Ishizaki Holdings became the holding company for Penstone and Ishizaki Honten. Ishizaki is a company that has over 105 years of history. As the president of the holding company, Mr. Ishizaki, what was the reason behind doing this holding company with Penstone? What were your expectations and what do you envision for the future?

As you mentioned, Ishizaki has been around for more than 100 years. We started our business as a wholesaler of glass materials for the construction industry. We evolved into an automotive parts manufacturer, and we are now specialized in the assembly and manufacturing of glass products. We thought about what we would do as a business for the next 100 years. To activate and expand each of our business sectors further, we decided that we needed to be able to make faster decisions for our customers. When it comes to our construction material business, we are trying to align our working environment with our clients to improve the quality and specifications of our products. We are also doing the same for the automotive parts sector. We are trying to align our work style and quality with our customers. As a holding company, we can speedily support each of our businesses which helps us to contribute more to our clients. Our business started in Hiroshima. We would like to expand it to the global market and contribute further to society through our business. That is the core principle of this business. We reorganized Penstone, and Mr. Nakamura was assigned as the president and the main decision-maker.


Taijiro Ishizaki, Representative Director & President, Ishizaki Holdings Corporation


When it comes to your holdings, the construction business and the automotive business are completely different. However, how much do each of these fields nurture the other? Have there been any specific accomplishments you have made in the construction business that you could bring to the automotive business or vice versa that you are proud of?

Before the reorganization, we were a single company. We tried to promote communication between people so that we could create synergy. We carried out a lot of trials together with our two different businesses. However, after the reorganization, we decided to pursue specialization for each of the areas. We are still in the same group so in the future we would like to generate synergy. However, at this moment, we are pursuing growth in each of the areas.

 

Your company has factories in many locations around the world such as Asia, the US, and Mexico for example. Where do these countries help you cater your products to, and how do you ensure that the level of quality in these factories is the same as at your factories in Japan?

We deploy the same quality control system that we use in Japan in all of our overseas factories. We use mostly the same process steps for production, as well as the same facilities and machinery. We also use the same operational standards that we use in Japan. The system that we have in place allows us to check the quality of our products and check whether our production is working at a certain level. We use the same system across all of our factories and our evaluation is based on the same criteria. This ensures that all of our factories can produce at the same level.

 

In one of the interviews that we did previously with MAZDA, they mentioned the importance of partnerships when it comes to penetrating new international markets. What role do partnerships play in your business model, and are you currently searching for overseas partnerships?

We currently have a joint venture in India with a local company with a capital ratio of 50:50. We aim to build on the strengths of each company and address our weaknesses by working together. We do not have a lot of knowledge about the people’s characteristics or mindsets in India. Therefore, when it comes to hiring people, we are not familiar with the human resource structure there. Our local partner is giving us the information that we need and supplementing our efforts there. On our partner’s side, they lack the capabilities for development. This is especially the case when it comes to lightweight and compact products. We are providing our technology to supplement them in that area.

 

Are you searching for these kinds of partnerships in other locations?

Moving forward, there are several improvements that we need to make for further growth. We are trying to expand in the Asian market, and we are currently looking for a partner in that region who can help us to improve on our weaknesses and supplement our efforts there.


Automation for synchronized production


Mr. Ishizaki, your company is this year celebrating its 105th anniversary since its foundation, which is also the 1st year anniversary of the holding company. Imagine that we come back five years from now for your 110th anniversary as a company, and we have this interview all over again, what would you like to tell us? What are your dreams for Ishizaki?

As a group, we have a universal mission which is our corporate philosophy. Our goal is to realize this corporate philosophy for the next 100 years. The cover page of this brochure says “UNIQUE x SPACE.”. Based on this philosophy, we are trying to do manufacturing that impresses people. Ten years from now I believe that we will have grown further in the realization of this philosophy. That is why we showcase this kind of vision. Moving forward, I believe that we will be able to achieve our goals and based on our corporate philosophy, I would like for us to contribute to creating an environment where people can work comfortably. Through our business, we want to support our clients and our society.

 

Mr. Nakamura, imagine that we come back five years from now for your 6th anniversary as a company, what are your dreams for Penstone, and how would you like your company to be viewed in the global market by then?

We need to continue to produce high-quality mirrors that make our clients happy. When I refer to our clients, I do not only mean the carmakers, I am also referring to the end users who use the mirrors when they are driving. We have to provide the highest quality mirrors to them. That is the highest priority for our business. We are currently seeing a huge transformation in the automotive world with the switch to EVs. In line with this trend, the manufacturing of electronic inner mirrors and outer mirrors will continue to expand around the world. On the other hand, not all mirrors will be replaced by newer mirrors, and we believe that between 80 and 90% of mirrors will remain as conventional mirrors. Moving forward, we would like to work together with our partners to develop electronic mirrors and launch these new products around the world. When it comes to conventional mirrors, we would like to make them even more lightweight and more compact. I believe that in the future, mirrors will be polarized into electronic mirrors and conventional mirrors. However, we would like to produce high-quality products when it comes to both types of mirrors and I would like to speak about that when you come back in the future.

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