Through the constant pursuit of excellence over generations, Marugo Rubber has cemented itself as an indispensable partner of some of the most prominent automotive manufactures In the world.
We would like to use Marugo Rubber as an example to challenge this misperception that Japanese firms have lost their innovative quality in the eyes of the West. Can you tell us a little more about your monozukuri, and the strengths of Marugo Rubber that allow you to compete in international markets?
We have a long history of producing automobile parts in Japan. The bedrock of our monzukuri process is QCD - quality, cost, delivery. In this time of globalization, our program conforms to IATF 16949, which is like an ISO for the automotive industry.
We place great importance on human resource development, so we have a variety of training programs and there is one program for all employees - obviously they take turns to complete this training – named Marugo Jyuku. All our employees need to complete this program at least once a year. This program covers monozukuri basics as well as how to use the quality control techniques utilizing QC 7 tools; histograms, control charts, check sheets, Pareto charts, stratification, cause-and-effect diagrams and scatter diagrams.
During this time of digitalization, we are implementing digital technology to the monozukuri field in the form of visualization. For example, to visualize the progress of multiple processes and monitor if they go as planned or if there is any delay or if there is any problem. We implemented digital technology so that everyone could understand the status of our progress. That was implemented as part of our process control. In 2019, we worked with a local vendor to develop this visualization system which subsequently won an Okayama IT Management Power award. I think that was the basics of our monozukuri process.
This might be going off on a tangent a little bit, but about four or five years ago there was a delegation that came to Japan made up of various international manufacturing companies. The members included people from Renault and I think many French companies were there. They visited the Mitsubishi Motors plant and then they came to our plant.
As well as our monozukuri philosophy, we also use a bottom-up approach to continual improvement, or Kaizen, but the delegation said that they mainly tend to set their policies and implement precisely. It looked like they were impressed with the difference between our method and theirs.
It’s often a challenge for Japanese firms to be able to effectively communicate their strengths or manufacturing style to foreign partners, visitors, and potential clients. What, for you, has been the biggest challenge in communicating your strengths overseas, and as someone with an international background, how have you been able to help bridge this gap for Marugo Rubber?
I totally agree with you that communication is critical in working with international companies, but I need to mention the differences in environments. For example, in Japan, if you need something for your task and you can place an order, then you will receive the item maybe tomorrow, or you can go to a shop to buy one immediately, but in Southeast Asia things are not really accessible, or not often available.
Even if you place an order, you need to wait for another week. I think that's one of the reasons why international business doesn't go smoothly and Japanese experts are very frustrated about local environments.
When we work with local people outside Japan, we often ask “Why haven't you finished this task yet?”. In Japan, if we ask for something today, then maybe one or two days later the task is finished, but outside Japan they need to wait for a week to have the necessary part.
Even though we worked hard to improve communications, there were still gaps to overcome. For example, I lived in a small town in Tennessee when I was in the USA. It was two hours away by car from Nashville, so for business trips I needed to drive my car for two hours to get to the airport and then take an airplane. In Japan, however, you just take the train. If you have two hours you can get to Nagoya. There was a different concept of time. That's what I felt when I was in the US.
The automotive industry is seeing huge shifts both from traditional engines to EV’s and from heavier materials such as steel to lighter ones like aluminum. Can you please share with us how your firm is responding to these changes and what impact these changes have had on your business?
When we talk about the shift to EV’s in the automobile industry, there are different types of EV’s. One is a battery-based one, it doesn't have an ICE at all. Also, we have the hybrid cars and plug-in hybrid cars. They have motors and ICE’s.
Let me talk about the impact on our current business. The increasing number of hybrid cars and plugin hybrid cars doesn't actually affect our business much, but the increase in battery-only EV’s does have an impact. Production is forecasted to increase for a while, but cars will also continue to use ICE’s.
Working under environmental protections are necessary in our products. Actually, carmakers have asked us to continue the development of parts for ICE’s, so we will continue that development but we need to consider environmental protection measures in our products.
The other thing is that it's obvious that we will have more and more EV’s in the near future, so we need to develop parts for them. This spring, Mitsubishi Motors and Nissan launched a new brand of EV, which is produced at their Mizushima plant nearby. The motor mountings used in that new EV are produced by us. Obviously, EV’s have more batteries in the vehicle, so there will be increasing demand for the piping that cools the batteries. Actually, there is an increase in demand for our production.
Once the noise created by ICE’s is gone in EV’s, the next thing that people would notice while driving is the noise caused by vibrations from the road as well as the wind. We produce a lot of anti-vibration rubber for suspension chassis, so hopefully we can take advantage of our core technology and apply it to solve these issues.
In 2018, you mentioned in an interview that you were looking for other applications for your products. What progress have you made over the last four years, and what applications do you have in mind?
For the last four years we have done some marketing to see whether we can apply our technologies to the civil engineering and infrastructure industries. We haven't had much success yet in these new industries, but as a result of this marketing and research activity, we started to find some potential in these sectors, so hopefully we can still make this a successful business.
Is it only for the domestic market or is it global?
It is a new domestic business opportunity that we are pursuing which completely differs from the current business. Have you heard of aquaphonics? We’ve experimented with aqua circulation where, for example, water in a fish tank can be circulated to a vegetable farm, and then we collect the water from the vegetable farm and circulate it to the water tank.
To what degree do you collaborate as part of these ventures? Can you tell us more about the roll that collaboration plays in your company?
When we start a new business in the international market, we obviously have no experience at the beginning, so we want to work with local partners who know that locality well. We have five international sites - America, China, Thailand, Indonesia and India. We have invested in these five sites, but we have a 100% stake in the American, Thai and Indonesian sites.
At first, the American and Thai sites were joint ventures, but reasons emerged that led us to running the business on our own, so as a result these three sites are 100% owned by us. In many cases we start with a partner who knows the local area.
Can you tell us a little more about your international strategy?
The main reason why we selected these five markets are the customers in those markets. With our five sites, we are able to meet that majority of the demands of our customers in these markets, so we are not considering new markets at the moment. Instead, we are looking to enhance these five current sites as well as create synergies between them and the Japanese site.
Could you please talk to us about your customer portfolio? What percentages of your clients are Japanese car makers compared to foreign companies? And in the future, are you looking to diversify your customer portfolio and find new foreign companies as customers?
Now, Japan has 14 makers of four-wheeled and two-wheeled vehicles, and we work directly with 12 of them. The two who we’re not working with directly use parts from other parts manufacturers, so all the cars produced by these 14 companies contain our parts.
Let's say we come back to interview you again in two years' time for your company’s 105th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?
Honestly, our business, including the Japanese and international sides, are not on the right track because of Covid and the shortage of semiconductors. Maybe it's a tiny dream, but I hope that in two years our production can return to its normal level.
We have over 100 years of history. As a company, we could be compared to a 100 year-old container. The container doesn’t change form but what's in it should be constantly changing, so a long history means repeated changes.
I always think it's important to maintain the attitude that we always try new things. Without that, it's hard to maintain this long history. In a sense, we’ve had 100 years’ worth of experience in making new things. I try to keep that in mind all the time, on a daily basis.