Since 1933, IMS Techno has specialized into developing key technologies to help a wide range of industries such as high-strength membrane material which has great heat resistant proprieties among many other materials.
It's our view that Japan and the Japanese industry are living in a very exciting time. On the one hand, the COVID-19 pandemic has caused significant disruptions in logistics and supply chains, which were exacerbated by the decoupling between China and the US. As such, many international firms are now looking to diversify their supplier networks. Japan is reputed for its reliability and advanced technologies. Moreover, the Japanese yen has recently reached historically low exchange rates against the US dollar, giving Japan a competitive edge in terms of pricing. We believe these factors make an interesting opportunity for Japanese suppliers and processors to export their technologies. Do you agree with that sentiment? Why or why not? What do you think are the opportunities that the current macro-environment allows for your business?
Our company operates in the B2B sector, focusing on highly specialized areas within our industry.
The current macroeconomic environment presents numerous favorable and lucrative opportunities for most Japanese companies. While this has a broadly positive impact, it poses challenges for SMEs, particularly those with a lower profile in manufacturing. Companies like ours in Japan are known for producing highly reliable and precise products with exceptional durability and features that often surpass those of competitors. However, the issue lies in cost-effectiveness when it comes to promoting these products abroad.
The composition of the final product typically comprises various components and raw materials. While some may assume that the historic low of the Japanese yen creates a favorable situation for export-oriented companies, the crucial aspect of production in Japan hinges on raw materials. Most Japanese manufacturing companies rely on procuring these raw materials from overseas sources, which can be costly. The added value cost associated with these materials must eventually be factored into the final product's price.
Furthermore, the cost per capita for each working hour in Japan isn't decreasing significantly, and manufacturing in Japan remains comparatively expensive when compared to other countries. The salaries we pay to our employees must be generated by achieving our mission of increasing productivity and providing more value-added product.
Despite being an island nation with limited natural resources, Japan has achieved leadership in the development of advanced materials such as composite materials by companies like Toray and the invention of CFRP. Additionally, many world-leading brands like Muji and Hermès source highly functional fabrics from Japan. Can you explain how a country that is so resource-poor has become excellent at creating innovative materials?
While the materials you mentioned, such as those produced by Komatsu Matere and Toray, are indeed excellent and positioned near the end users of the final products, I believe they have been specialized in developing products that meet the needs of the end user. I think they could have the imagination and technical capabilities to accomplish this.
One of the major challenges that Japan faces today is its demographic situation. Not only is it the world’s oldest society, but it also has a negative demographic line, resulting in two serious problems. Firstly, there is a shrinking domestic market with fewer consumers. Secondly, it has become increasingly challenging to recruit young graduates from a diminishing labor pool and to transfer essential engineering knowledge from older and seasoned workers to the younger generation. How is your company facing these two challenges due to Japan's demographic situation?
We have a team of experienced senior management personnel with a wealth of expertise, knowledge, and know-how accumulated over many years. However, transferring this knowledge, not only to the new generation but also to mid-career recruits, poses a significant challenge.
Japan is grappling with a major societal issue characterized by a declining population and a low birth rate. Unfortunately, this is a challenge that cannot be directly solved at the company level; it's a nationwide concern. As a manufacturing company, our most pressing challenge is the shortage of labor force.
To address this issue, we have introduced camera-based inspection systems to our production and will continue to incorporate new technologies such as further automation of manufacturing processes and AI solutions to minimize human error, improve safety and optimize productivity.
The specific processes in our production are very difficult to fully automate. While we've made strides in automation, the complexity of our machinery and the nature of our work means that human labor remains essential throughout our production line. We are striving to strike a balance between automation and the human element.
Recruiting workers for our production sites remains a challenge, we are working to employ people with experience, skill and knowledge regardless of age or gender, and actively recruiting workers from overseas.
IMS Techno was established in 2011 through the merger of Shinko Kogyo and Maruyama Kogyo which has roots dating back to 1933. Could you explain to us why that merger made sense, and what are some of the synergies that you have been able to create from this corporate structure?
The two companies have different business focuses and segments. However, the merger has led to a more stable and reliable work environment, with both advantages and disadvantages.
One significant advantage is that our merged entity is unique in Japan, specializing in the provision of resin and fiber solutions. Given that both companies possessed strengths in these related industries, the merger has created a positive synergy.
Your wide range of products includes rubber belts utilizing screen printing processes and certain types of conveyor belts, and many of your products are being utilized in the construction field, especially your high-membrane technologies and some of your curing mesh as well. Can you run us through the different applications that your company caters to? What particular product or application do you think has the highest growth potential for the future and you'll focus on?
One of our flagship products, which we've dedicated extensive effort to, is a high-strength membrane material with excellent heat-resistant properties, primarily designed for use in warehouse tents. .
Just for the record, the serial number is 5MRFS.
This specialized membrane plays a crucial role in maintaining lower temperatures within warehouses, thereby preventing heat-related health issues among employees. Given the current global warming trends, we anticipate a rising demand for this particular material.
In addition to our UV-resistance membrane, we are also focusing on the development of a curing mesh with UV-blocking properties.
Looking at the future, are there any new applications or industries that you would like to expand into?
We have been interested in exploring other market like food and healthcare industries.
A significant trend in this industry, closely tied to the development of functional materials, is a growing environmental consciousness. Both consumers and companies are increasingly concerned about reducing their environmental footprint, especially since the production of these materials often involves the utilization of fossil fuels or generates carbon emissions. How is your company minimizing its environmental impact in the production of your products?
Recycling and reusing products, including both primary and byproducts, are integral aspects of our business philosophy. We are committed to minimizing waste and environmental harm in our operations. This principle has guided us from our inception, and we remain dedicated to it in our use of materials such as polyesters, composite products and resins.
For instance, our sustainable materials, originally intended for tents and warehouses, allow us to utilize leftover materials from our production line to create eco bags. This innovative approach enables us to fully repurpose materials and reduce environmental waste. We create a lot of byproducts from the end of our production, and we have transitioned from discarding various byproducts to actively managing waste generated from our production.
As part of our sustainability efforts, we have partnered with a company and established online stores to sell bags made from these materials, further promoting eco-conscious practices.
Your firm has two distinct divisions. On one hand, your resin division is used to add certain applications on top of textile products. On the other hand, your fiber division is dedicated to textile semi-finished products. What synergies or advantages do these two distinct yet somehow complementary business divisions create?
While these two divisions operate as distinct businesses, they fall under the same corporate umbrella. One of the notable positive outcomes is the cooperation and strong working relationships fostered among our personnel across both divisions.
In your particular field, there are similar types of companies in Japan and internationally that process fiber and resin products. What would you say are your firm’s competitive advantages?
While it's true that numerous companies operate within the fiber and compound resin industry, our unique approach involves merging these two sectors to enhance productivity and quality control for our customers. This integration extends our ability to guide and support our clients from the initial design phase to the final product launch. We take pride in our effective system, where our primary goal is customer satisfaction.
We use the quality of low materials being supplied by major domestic yarn manufactures in most, which is the advantage from competitors who cannot offer Japanese quality product.
You have a long history of processing polyurethane resins to manufacture conveyor belts. This niche industry not only demands expertise in designing the final product but also in creating the machinery required for resin and belt production. Could you tell us about your history, and what enabled you to be competitive within that particular sector, especially considering that polyurethane resin is known to be a hard material to process?
About 30 years ago, we weren't capable of producing polyurethane and compound resin conveyor belts. When we received a proposal for an OEM from another conveyor belt manufacturer, we took on their challenge to make it happen for our customers. Fortunately, our prior experience in handling polyurethane resin, along with the possession of a calender machine capable of processing polyurethane resin, provided us with a solid foundation. Through our concerted efforts, we successfully introduced polyurethane resin as a final product to manufacture conveyor belts.
Within your business model, how important is the role of partnerships? Are you c urrently looking for partners to develop foreign markets or new products?
Regardless domestic or international, our products cannot reach out to users without our value partners as we manufacture semifinished product or component of merchandise to end user.
That been says, we are always looking for partners, like a distributor, fabricator, and construction company to work with potential business and markets.
Additionally, we are exploring partnerships with companies engaged in thread spinning, woven material handling, and fabric manufacturing. Our product range can be tailored to suit different requirements, depending on our collaborators' access to new machinery and innovative solutions.
Expanding beyond the domestic market is a key objective for us. Foreign markets offer substantial potential, both in terms of attracting new customers and establishing partnerships to grow our business.
It's worth mentioning that weaving and spinning equipment are predominantly imported from foreign countries. They aren't sourced from domestic manufacturing companies anymore, indicating the industry's strong ties to overseas markets and highlighting its potential for expansion abroad.
Could you run us through your international strategy, and what are some of the markets that you believe to have the highest growth potential?
In Japan, a new regulation to limit working hours for truck driver will become effective in coming 2024. In order to prevent having long hours driving, we have seen more project on constructing logistic facilities as a hub to transload cargos and packages, which needs more conveyor belt.
Internationally, wages have risen at a faster pace in some low-cost countries than in others over the past few years. We would expect to get more opportunities to supply our quality material of conveyor belt to overseas market as many companies that are already transforming their global supply chains are simultaneously increasing their investments in robotics and automation to reduce labor costs.