Since their foundation nearly a century ago, Miyagawa Kasei continues to be a key partner of the automotive industry in Japan and beyond.
Can you give us a brief introduction to your business?
We have 3 factories in Japan and 3 related companies in Thailand and Mexico, producing industrial use products made from thermoplastic or fine ceramics. We can handle the full process, such as product designing, tool building and mass production. We are honored to have the top market share in some niche markets. For example, we have the top domestic market share for the plastic container and lids for automotive starter batteries. Our production capacity in the fine ceramics injection molding is probably the highest in Japan.
The production of automotive components accounts for 65% of our business. Initially, we started with the components production for lead acid storage batteries, and 25% of our business is based on that. Fine ceramics is more than 5% in our business.
We have been sticking to the credo made by our founder that takes into account our associates, partners & customers and the locality.
“Realizing the permanent enterprise group by developing the independent management”. This is our Corporate vision and we have clearly stated our corporate direction, some of our keywords, focus areas and businesses we are looking to expand into. We strive to become financially stronger. All our investments and business activities will be self-funded; we take pride in being financially independent.
Rather than aiming to enlarge our business, our purpose is to become sustainable. To achieve sustainability, we must consider the environment and the safety, health and trust of our associates. We like our group to be where people are motivated and can pursue growth.
Could you elaborate on some of the new business opportunities you want to expand further?
In our Corporate vision, we set to add the new business field with developing the current four fields, ABCO: A as Automobile, B as Battery, C as Fine Ceramics and O as Overseas. We’ve recently developed the medical market as a new business field. Besides, in the existing business fields, we can make proposals to our customers by developing new process technology and advanced material engineering. With supporting the customers’ designing process, we propose high value and attractive products and processes to them.
For automobile, our strength is in interior components such as the hard top trim and the ventilation for air conditioning. Our plastic injection molding technology will contribute to reduce the vehicle weight, which will be more necessary for EVs. Our ventilation and decoration technology will create more comfortable and attractive internal space.
We have more inquiries for next generation of battery components than ever. These batteries would be suitable for energy saving and the energy storage capacity improving for society.
As for fine ceramics, there would be more chances to expand than plastic. Every year, we obtain new inquiries from new customers. These small orders sometimes skyrocket and become a large business.
Over the last three years, the COVID pandemic has caused major challenges to global shipping, logistics, and supply chains. However, we are also seeing many companies that have adapted to this crisis by integrating digital technologies or working from home orders. What mid to long-term changes has the COVID pandemic brought to Miyagawa Kasei?
Whenever there is a crisis, we try to reset everything in the company. We start from scratch for a fresh perspective. When a company is doing well, there is exponential growth, which tend to include something that is not relevant or excessive. The crisis has allowed us to determine what our company really needs. Similarly, we were able to cut back on unnecessary things. Every crisis is a good opportunity to reflect on ourselves.
Before going into our COVID pandemic story, I would like to introduce one of our traditions. We have experienced many social disruptions since 1934, the year of our company’s establishment. Traditionally, whenever we faced the difficulties, our associates and the management discussed and overcame those crises together.
One of the most serious examples is the “Dodge Line Recession” from 1948 to 1949. Due to the serious inventory minimizing directive in the whole country, we could not get our orders nearly for half a year. That was only 15 years after our establishment, so our finance was still low. Even when the founder let the company use his own money, it could not circulate. After suffering, he told his associates about shutting down the company, but they expressed their strong desire to keep it going. For surviving, they discussed and decided to manufacture anything they could sell, including stationery.
This lesson has been passed down to our next generation of associates. We learned that we could overcome any hardship that came our way by working together as a team.
In April 2020 right after COVID pandemic start, our sales were cut in half compared to the previous month. This continued for three months. At the beginning of COVID, it was very difficult to foresee how things would turn out. I became the president in December 2008 during the Lehman shock, so the COVID pandemic was the second major crisis I experienced. Compared to the Lehman, this was more complicated. I was unsure of what to do and was doubtful whether I could continue the business. It was like feeling our way through a dark tunnel. One day, I came to my senses and noticed that there were people waiting for us, such as our customers, business partners, associates and locals.Thinking back to the experiences of our company's founder, I encouraged myself and the company’s associates. Fortunately, since we have greatly improved our finance, I did not need to inject my personal assets.
We organized a special team to consider the things we needed to do to overcome this disaster. We completely reviewed our body, sorted the necessary and unnecessary things and stripped off the fat. Every month, I explained our situation to all associates.
Compared to the others industries, we are starting to recover relatively early. It is returning to normal, and we are returning right on track. Through COVID, along with our associates, customers, subcontractors and all involved, we reflected upon what to do next and the changes we needed to make. On the other hand, there are some things we did not change; that is the continuous improvement activities related to the quality, productivity and 5S. Under the COVID, we switched these activities from the on-site to the remote. The reporting method was changed, but we have kept the “Spirit of improvement” going.
Japan is the oldest society in the world with a rapidly shrinking population, which means a smaller pool of talented, young graduates to come through and to whom seasoned workers can pass on their experience and knowledge. Another challenge is also a shrinking domestic market. What are some of the challenges and opportunities that Japan's demographic shift poses to your business? How are you adapting to it?
With the aging population and the drop in the birth rate, fewer people are applying for jobs. The population decline in Japan is something we cannot avoid; it is important for us to open up to other nationalities and become an attractive company for associates. The recent trend made us realize that we have to actively make our company more attractive to them.
We are currently revising the evaluation and compensation system for our associates. To that end, our strategy for human resource management is to be diversified and have a fairer compensation scheme that does not give preference based on academic background, years they have worked for the company, gender and nationality. The new evaluation would be configured by 4 axes, skill, knowledge, passion and morals.
Moreover, we changed our retirement age policy; our associates can remain with the company as long as they wish if they are healthy enough and have a good performance. We want to let our associates stay longer in the company to secure and maintain our workforce.
We are looking to make our associates' work easier and more comfortable by introducing digital transformation. In last 20 years, we have worked on switching the working process from manual to digital. As a manufacturer, we have already maintained safety and created a more conducive working environment. Even then, we plan to keep on doing that in order to make our company foster a more attractive environment. We consider that the digital transformation improves our quality and relief.
Given the shrinking domestic market, we are mainly working with Japanese manufacturers that export overseas. Our delivery is actually not confined to the Japanese market.
What role do collaborations or partnerships play in your business model?
In Japan, we run our own factories with the support of many subcontracting partners. In our overseas operation, however, we run the factories with partners. Our factory in Thailand has been a joint venture for more than 30 years. Meanwhile, we outsource our production to a subcontractor in Mexico. Since our management resources are limited, we like to develop our overseas operation with these partners. We hope to grow with them together and contribute to the regional economic development.
Looking toward the future, are you looking to replicate this strategy?
At this moment, we do not have any definite plans. Automotive component production should be close to automotive manufacturers, so the answer would be where the automotive manufacturers are.
The automotive sector is going through a great change to switch to EVs. Many new specifications in cars will be required, such as becoming lighter to offset the weight of the lithium-ion battery. What opportunities does this present to your firm?
One of our strengths is the interior parts for automobiles, which will probably not change with EVs. We use resin which is the pronoun of the “weight reducible material” already. To develop the more plastic use opportunity for automobile, we have made new attempts to reduce the weight. Currently we developed the foam injection molding technology. Through this method, you can reduce the weight by 10 to 20%.
Since the Japanese government has stated that the country must be carbon neutral by the year 2050, Japan's industry has outspokenly been ambitious in attaining and setting carbon-neutral targets. As a firm that has been a pioneer in plastic molding, what are some of the initiatives and efforts you are taking in order to achieve a more sustainable society?
We have been conducting environmental management activities for more than 20 years. Our flagship activity is to reduce the amount of electricity utilized. This activity is configured by improving the productivity, quality, machine utilization, choosing environmentally friendly machines and educating our associates. Through this, we have successfully reduced our energy consumption to 44% compared to the year 2005, which is about 2.8 times more than the Japanese government objective. In the last 6 years we have received the awards from the Agency of Natural Resources and Energy. In their classification of energy usage, we were included in the S-class, which is the highest. It is our great honor and we will continue to contribute saving the energy and realizing the carbon neutral society.
In the last 25 to 30 years, Japan has seen the rise of regional manufacturing competitors from countries like South Korea, China and Taiwan, who have replicated the Japanese monozukuri process but have taken advantage of cheaper labor costs, pushing Japan out of mass industrial markets. However, we still see many Japanese firms remain leaders in niche B2B fields. In your opinion, how have Japanese firms been able to maintain this leadership despite the stiff price competition?
It is difficult to know why because we are in the midst of this competition. Japanese companies, including ours, are very much focused on the continuity of their company and the sustainability of their growth. The Japanese envision made-in-Japan products to be long-lasting with a high-cost performance and bear the spirit of omotenashi or considerateness in the products while providing thorough services. I think many people in Japan have a strong craftsmanship spirit and passion for quality. I am not saying that manufacturing companies in other countries do not have that. However, Japan, in general, has the tendency to concentrate more on quality and service than profitability. Perhaps, putting quality first and leaving profit as the last on the list.
Through our high-quality products and thorough services, we can provide trust, assurance and safety to our customers who become fond of Japanese products, also lifting other Japanese products to do well. Japan needs to keep evolving to remain competitive. 40% of the world's centenarian companies and 65% of bicentennial companies are in Japan. In 11 years, we will be one of the centenarian companies. Hence, we want to keep striving to continue our business. Maintaining the sustainability of our business is to make our company continuous.
In addition to being a pioneer in plastic injection molding, you also manufacture highly-precise ceramic products, which include translucent alumina, color zirconia and powder stamped products. How were you able to adapt your technologies to suit ceramic products? What are some advantages of your ceramic products?
In 1985, we decided to develop fine ceramic
s injection molding technology. Since then, we had spent about 10 years in research and development for materials and processing methods. I was still a student then, so I do not know their conversations and discussions. My father told me that most were skeptical about investing in new R&D back then. Although the person responsible for the division wanted to close it down, my father insisted on continuing it.
It has been more than 30 years since we started with our fine ceramics injection molding development and production. The machinery used for this field is not much different from plastic injection molding. However, the material technology is completely different from that of plastics. There are few references, so we learned some from books and experimented to find the best mix. There are still many unknowns.
If you go to plastic manufacturers, they would tell you everything. On the contrary, there are few people in the ceramics field who can share such information. Since ceramics injection molding process is unique and the market is very small, major companies do not like to enter or rather leave the field. Hence, even as a small company, we have been able to continue in ceramics injection molding for over three decades and be recognized in the market as one of the best.
Imagine we come back for your 90th anniversary and have this interview all over again. What would you like to tell us? What are your dreams for the company, and what goals would you like to have accomplished by then?
When you come back in two years, we want to pursue and achieve our objectives as much as possible and instigate our associates' personal growth for us to have more leaders and decision-makers in the company. Like my father, as the president, I am more focused on delegating authority within the company to allow each person to have a personal responsibility. In my grandfather’s time, it was more of a top-down company. However, when my father succeeded in the family business, he tried to make more of a flat environment, which I am continuing. I am working on making that even flatter so that each associate can have more authority and make decisions. I would like to make our company more active; where our associates work vividly, regardless of their academic background, age, gender or nationality. We would like to continue to be the first choice of our business partners, hometowns and people.