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Hakaru Plus Corporation seizes unique opportunity amid economic shifts

Interview - June 10, 2024

As global policies and demographic changes reshape the landscape, Yasuo Miyake, President of Hakaru Plus Corporation discusses how Japan's manufacturing sector leverages the weak yen and cutting-edge technology to outpace competition and drive future growth.

YASUO MIYAKE, PRESIDENT OF HAKARU PLUS CORPORATION
YASUO MIYAKE | PRESIDENT OF HAKARU PLUS CORPORATION

Today is a pivotal time for Japanese manufacturers. Policies such as the US Inflation Reduction Act are forcing corporations to diversify their supply chains for reliability reasons and to reduce country risks from countries such as China. Japan is known for its reliability and technology, and now, with the weak JPY, observers believe this is a unique opportunity for Japanese manufacturers. However, this goes hand-in-hand with stiff price competition from neighboring countries such as China and Korea. From your perspective, what are the advantages of Japanese manufacturers in this current macro environment, and how do you navigate this stiff price competition from neighboring countries?

First of all, the weak JPY is favorable for leading Japanese companies, and this is a source of profit for them. For example, Toyota and other automotive companies are benefiting greatly from the weak JPY. However, domestically, we have not benefited from it. Two weeks ago, I visited Shanghai. Based on the reports, the real estate market in China is in very bad condition. It has been quite sluggish recently. However, the people there are still very lively, which made me wonder where this sluggishness came from. Also, in the restaurants, I saw that people were actively consuming a lot. I had thought that the parts of society that are linked to the real estate industry would be in a difficult situation. 

There are two very different situations in China. When I spoke with Japanese trading companies whose customers are Japanese companies, they told me the situation is quite bad for them, especially those with customers who are automotive makers in Japan. On the other hand, the trading companies that have local Chinese customers have seen no impact. Recently, we have received an increasing number of inquiries and requests for quotations for weighing systems from local companies in China. The situation is similar in Thailand. Japan is quite strong in the automotive industry, and the situation is not relevant for the companies that have a presence overseas. For example, Ajinomoto and KAO have had a presence in Thailand for more than 50 years. Business is booming for all the Japanese companies that went overseas to the US, China, and Thailand. I do not think the current situation is bad for all Japanese companies. 

 

In the next 15 years, one-third of Japan’s population will be over the age of 60. This could lead to labor shortages as well as a shrinking domestic market. On the other hand, however, this could create opportunities in the production of automation technologies, solutions, and equipment used in a wide variety of industries, as well as push Japanese firms to look overseas for future opportunities. For Hakaru Plus in particular, what are some of the challenges and opportunities this demographic shift has presented, and how have you been reacting to these challenges?

Japan’s population decline is a big issue. Almost all of our customers are in the manufacturing industry, and they are all facing problems caused by this situation. Most of their operations are not automated. For example, in the baking industry, the weighing of main ingredients such as flour, sugar, and salt can be automated. However, the weighing of the taste, flavor, color, and other additives is done manually. The workers who are responsible for these activities are now in their late 60s or older, and it is becoming increasingly difficult to find workers from the next generations to replace them. Many young people do not want to work hard in factories, so these types of companies are short of workers. The situation is the same in other industries outside of the food industry. For example, the battery and ceramics industries are experiencing the same issues. Weighing the main ingredients can be automated. However, the weighing of the additives costs a lot, so they end up doing this operation manually. Japan’s population decline is a big problem for many companies in the manufacturing industry.

 

How are you coping with these decreases in labor? Are you looking to perhaps hire more foreign workers to help address this big issue?

We need some foreign workers. However, they cannot replace skilled laborers easily. Instead, we are proposing the use of robots to replace some of the skills possessed by skilled workers, as this market will continue to grow in the future. While Japan is well-known for its aging society, China and Korea are now starting to experience this issue, so this technology will also be useful for these countries. When this system is established in Japan, it could be provided to the overseas markets. 

We always focus on social issues and how we can contribute to solving those issues. Japan does not possess rich natural resources. However, we require energy and electricity. That will always be an issue for Japan. Currently, companies in Japan are focusing on energy saving to achieve carbon neutrality and SDGs. 

In the wake of the 2011 Great East Japan earthquake, there were major electricity shortages. This included nuclear power plants where the electricity demand is great. Although the plant is still not in full operation today, compared with that time, we do have electricity contingencies due to the energy-saving efforts that are underway. That is why measuring is the first step for energy saving. However, the leading companies know that they use a lot of energy, but they are not sure where and when they use energy the most. Leading Japanese companies have started to measure their energy usage and have begun to use power meters at their premises. For example, in large amusement parks like Tokyo Disney Resort, there are over 3,000 power meters in use as they have started working on energy saving. They measure and monitor electricity in detail by attraction, zone, shop, restaurant, and machine. At plants, the electricity consumption is different by line, as they use old machines at different times.  

 

Since your foundation in 1916, you have grown to become a specialized manufacturer of industrial weighing systems, electrical measuring equipment, energy-saving equipment, and medical care equipment, providing new techniques and having a record of not only in-house development but also joint development with your customers. Can you tell us how your technology is superior to your competitors and what business division you think has the most growth potential from a business point of view?

Our company philosophy is to make products that contribute to society. We have developed four businesses on this philosophy. In 1916, we started producing electrical measurement indicators. At that time, all of the electrical meters in Japan were imported, so we started to produce them domestically. Before and during WW2 was a period of sadness. We were under the Toshiba group of Toshiba, and we had a military manufacturing plant here. At our factory, we created meters that were installed on the battleship Yamato and military jets. As a result, our factory was targeted as part of the air raids on Osaka, and the area was devastated. After WW2, Toshiba removed us from the group. My father started working on electrical meters with engineers who returned from the war to contribute to the revitalization of electric power in Japan. Today, measuring the power of electrical facilities helps not only to conserve electricity but also to save energy. 



In the 1960s, ready-mixed concrete was being weighed roughly, and its quality was not correct. We were widely known as a manufacturer of measuring instruments, and the Ministry of Economy, Trade, and Industry (METI) asked us to develop equipment to record the mixing of fresh concrete. Later, we began to produce not only that but also ready-mixed concrete weighing control systems. After that, we developed custom-made weighing systems for powders and liquids, utilizing the technology we had cultivated in the weighing control of ready-mixed concrete, and began expanding into new industries. Powders have various characteristics, e.g., sticky, very light in specific gravity, highly absorbent, etc. It is very difficult to accurately weigh such powders in a given time. For example, sugar hardens when it absorbs moisture in the air, and carbon black ignites easily when it is rubbed, etc. So we need to design to order. We have been weighing various powders for more than 50 years and have cultivated many skills. Recently, requests for battery raw materials (lithium-ion batteries and solid-state batteries) and semiconductor raw materials have been increasing.

Recently, we have launched our fourth business for the elderly market, a care-assist sensor that prevents elderly people from falling. Earlier you asked which industry we are focusing on. However, we are not focusing on one specific industry. We have three main businesses. Our fourth business has not been as strong yet. However, going forward, we would like to have five different main businesses, and we are seeking new opportunities and new industries for development.  

 

What would you like to be the fifth business in the future, and when do you think you could enter this field?

I would like our fifth business to be agriculture. Agriculture is developed based on human intuition and experience, and aging is a serious problem. We believe it is important to industrialize agriculture, and sensors are a must for this. We are currently working on sensors for nitrate nitrogen (NO3-). It would be great if we could start selling them in the summer. However, it is a sensor, so it is not straightforward. 

 

Many key players in the industry that we have spoken to have emphasized the importance of forging alliances with overseas partners to enhance their supply chain capabilities and effectively serve their customers worldwide. Is Hakaru Plus currently looking for overseas partners, and if so, what kinds of partnerships would they be?

We are currently working with an overseas company in India. When I visited Hannover Messe, I met with an Indian company that manufactures energy meters. We now ask them to manufacture some of our products, which we then sell in Vietnam. By doing so, we are reducing costs and catering to the Vietnamese market. Originally, our involvement with Vietnam was not to sell products but to secure human resources, especially software engineers. At that time, it was difficult to secure engineers in Japan. We currently have 23 software engineers in Vietnam, and our technical department in Japan works together with them every day to make products.

 

Earlier you mentioned that your company is always looking for new opportunities to contribute to society. We also discussed how Japan is facing a shrinking domestic market, which will mean fewer opportunities for Japanese companies to grow. To mitigate this impact, as mentioned, many Japanese firms look overseas to find new opportunities to expand and new business partners to work with, whether that be in Asia, Europe, or North America. As a company that already has a foothold in Asian countries, what is your international strategy for the future? Are you looking to find partners, distributors, or joint venture opportunities, and which region do you believe has the most growth potential for your firm? Is it Europe or North America, or will it continue to be Asia and Southeast Asia in particular?

As part of our future international strategy, we are focusing on China, with its huge market, and the Southeast Asian region (Thailand, Vietnam, and Indonesia). We believe that there are many opportunities to contribute our weighing systems and energy measurements in these countries.

 

This year your company is celebrating its 108th anniversary as a company. Imagine that we come back two years from now for your 110th anniversary and have this interview all over again. What are your goals and dreams for the company, and what would you like to have achieved as a company by then?

Our next goal is to develop our nitrate nitrogen sensor and release it as a product. There is currently no method to measure nitrate nitrogen levels non-destructively, and agricultural workers do it manually and based on their hunch. Nitrate nitrogen has a significant impact on crop yield and quality, and at the same time, appropriate fertilizer application can help to prevent soil contamination and other environmental problems. The industrialization of agriculture will lead to sensor technology becoming very important. We would like to bring this product to Europe and the U.S., as there are countries in Europe and the U.S., including the Netherlands, that are very advanced in agriculture. We are currently working on our strategy for the nitrate nitrogen sensors. 

Lastly, our unchanged company philosophy is to help solve social challenges. I want us to continue to do so in the future and ensure that we can contribute to society.

 

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