A leading aluminum recycling company, Asahi Seiren draws on cutting-edge technology to develop high-quality, light-weight alloys that continue to meet the latest needs of industry. We speak with president and CEO, Yoshifumi Taniyama, who uses arteries and veins as an analogy to describe the two sides of the business. “The veins side would be our scrap procurement, bringing in the used aluminum for recycling, and the artery side is that which follows monozukuri: meeting customer requirements and adding convenient solutions for our customers.”
When it comes to the global market, the global demand for aluminum and its alloy is expected to drive the market value for aluminum to 150 billion USD by 2024. This demand is driven mostly from the automobile, food and beverage, construction, and motorcycle industries in Asia Pacific and North America. Would you please tell us how you plan to take advantage of this growth?
[VIDEO] Aluminum has various features such as being lightweight and steady, also it is high-quality and applicable in a wide variety of fields. It is a metal that could be reused all over again. In 1950, the demand for aluminum in Japan was only around 30-40 thousand tons. Up until today, the demand has grown to 4.1 million tons.
Aluminum is involved in many sectors and our plant manufactures mainly aluminum used in engines and transmissions for the automobile industry.
[VIDEO] For example, in 1990, the amount of aluminum used in a passenger car in Japan was only 75.5kg. The number continued to grow to 120 kg in 2005 and 160kg in 2015 due to the escalating trend of lightweight cars. The lightweight cars have contributed to increase fuel efficiency. Compared to 10 years ago, the gas mileage for passenger cars has increased from 14 to 17 kilometer per liter. As the demand for lightweight materials for automobiles is growing, the role of aluminum is going to be more prominent in the future.
Our current product will be used less within the automobile industry due to the shift towards EVs. Our industry, however, will have more opportunities on the raw material side, which means scrap recycling. Being a recycling company, our main business comes from collecting scraps and repurposing them into usable products.
When it comes to producing primary aluminum, China produces almost half of all primary aluminum in the world. However, the market for secondary aluminum, recycled aluminum, is wide open. In the last 30-40 years, developed countries are focused on recycling aluminum. Now we are seeing developing countries begin to recycle as well. Since we are one of the biggest and oldest producers of Japanese secondary aluminum, we believe we can take advantage of this growth.
Who do you buy your scrap from?
We have relationships with scrap dealers and trading companies all over the world.
[VIDEO] We collect between 800 and 900 tons of scraps daily. We might get it from factories and items that are no longer used, such as automobiles engines and window frames, and of course aluminum cans. Asahi Seiren group also accepts aluminum cans that are being given directly from the neighboring community.
It is becoming more difficult as competition increases because people are joining this industry in droves, however we have earned credibility and confidence from suppliers during our long history.
Are you actively looking to find new trading companies?
We were used to finding the scrap material on our own but it's been getting harder to do so. Currently, our midterm strategy is to focus domestically and purchase scrap from the Japanese market. However, companies based in South Korea or Indonesia, may look for scrap overseas due to the lack of domestic scrap in those countries. Now Chinese companies are looking for scrap due to their lack of recycling infrastructure making them the biggest player in the scrap market. No one can try and compete against China!
I have been researching your history as a company and you have been able to continue growing year over year. What strategies have you been implementing in order to sustain this growth?
When it comes to our business, I like to use arteries and veins as an analogy to the two sides of our business. The veins side would be our scrap procurement bringing in the used aluminum for recycling and the artery side is the side that follows more the monozukuri: meeting customer requirements and adding convenient solutions for our customers in order to grow our sales through customer satisfaction.
The veins side is more difficult due to the difficulty of recycling coated aluminum or painted aluminum. Fortunately, we have the technology to do so.
We use around 20 different types of scrap metal. Developing countries would typically use only 3 different types of scrap to make the same alloy. That means that we have the know-how and capability of making the same high-quality product from many different types of raw material.
Speaking about technology, would you please tell us about the unique technologies that you have at your company and what are their main competitive advantages?
For the customer-facing side, we try to find new alloys of aluminum to suit each customer’s specifications and needs. In the automobile sector, they are trying to find lighter alternatives to steel however existing aluminum alloys are sometimes not strong enough. We have been experimenting with different aluminum alloys and we now have a variety of aluminum alloys that will be able to handle the demands of an automobile.
Let’s talk about R&D. Many Japanese companies are investing massively into R&D in order to introduce new technologies and new products. Would you please tell us the role R&D plays for your company?
We have a technical service center for this purpose. This center tests the quality of aluminum alloys and products, for example by testing through scanning with an electron microscope. We emphasize on quality, and even for chemical composition, our standard is stricter than the Japanese industrial standards. Since the inclusion of impurity and oxides are a fatal defect for aluminum products, we have to pinpoint any defects. Our technical service center always utilizes cutting-edge technologies to conduct research and to develop our product, so we can satisfy customer needs and be more environmentally conscious. In addition, we work closely with S.S. Aluminum R&D Center to achieve even more detailed analysis and capabilities so we can provide customers with better support.
When we interviewed the president of Toyota Boshoku, he mentioned SMEs are being forced by the larger companies such as Toyota and Nissan to look abroad and diversify their client portfolio with foreign customers. Would you please give us your opinion on this and what are you doing in order to overcome this obstacle presented by the larger companies?
Our industry may differ from those other industries. The most important part of our business is the raw materials, not the product side. The key is finding the consistent and sustainable raw materials suitable for the specification. We produce secondary aluminum as an essential industrial material, so our customers appreciate steady supply and continuous improvement more than a gorgeous new product.
With the COVID-19 situation, the United States is essentially forcing their automotive companies to decouple from China and find new suppliers and new customers. Are you open to working with foreign customers and supply your aluminum-producing technologies?
Our business is difficult to diversify horizontally, or manufacture in different locations because it is limited by the local supply of scrap metals. Competition from other local companies also makes it extremely difficult to set up shop in a certain country. It is a simple business of buying scrap and recycling it into new products. Anyone can get into it. We expand by gaining more business from existing or new domestic customers.
The people of Japan have a very high awareness when it comes to recycling. Most other countries are not used to making recycling a part of their daily lives. You are currently focused domestically but you have worked in Indonesia, Australia, and other overseas markets. Have you been able to realize those cultural differences when it comes to recycling?
[VIDEO] In Japan, the demand for aluminum cans is approximately 20 billion per year, and as recycling has become more common, approximately 19 billion, around 94% of the cans, are recycled. Asahi Seiren Group purchases approx. 2.7 billion. From these number, approximately 1.8 billion new cans are created. This means that approximately 1 in every 10 cans is made by the Asahi Seiren group. In the future we anticipate even higher demand for aluminum cans due to the diversification of can beverages, and the expectation from aluminum recycle is becoming greater.
Back to the developing countries, as they start to develop, they start to generate scrap for recycling. It is easy to make money from recycling waste. For melting and casting aluminum, it is quite easy. For the quality control, it might seem easy but we have to be strict. Essentially, “Quality” means to meet customer requirement consistently. This business is more focused on building a consistent system of collection of raw materials, tightly connected customers, and suppliers too. Production itself is the easy part but developing a consistent system determines your survival and that may vary in each country.
In the last 20 years you have developed joint ventures in Australia, Southern Asia, and Canada. Are you looking for any new partners in a joint venture?
[VIDEO] . In 1992 we were listed on London Metal Exchange under the brand name “ASK”. In 1998, we established Weston Aluminum Pty., Ltd a joint venture company in Australia. Since then, we have strengthened our domestic and international presences.
There are many people asking if we are interested in a joint venture with them which seems easy for us to provide technological know-how. However we are hesitating in joining up with foreign partners mostly because the Japanese economy and monozukuri is booming right now.