Industry Leading Packing Materials, Design, and Technology

Japan is expected to undergo a significant demographic shift characterized by both a declining and aging population, with about one in three people expected to be over the age of 60 within the next fifteen years. This will create both a shrinking domestic market and a labor shortage deficit of about eleven million people by the year 2040, which will affect both the food and agricultural industries. How does this demographic shift create challenges for your company, and how are you planning to address these challenges?

I feel like this will cause a crisis, especially in terms of monozukuri or making things. Our company used to have a lot of high school graduates that were very diligent, clever, and worked very hard. Gradually, some became management of the factory, because it’s important to have factory managers who understand the machines and processes and have a lot of accumulated know-how, but recently no high school graduates want to come to small businesses like ours. It’s a big problem.

For example, in our company, those kinds of younger staff joined, and they learned about how to operate the printing and other machines. They then operated the machines, and gradually they could work up to become managers on the floor inside the factory. But now few high school graduates are entering the manufacturing sector, especially for small companies. Larger companies like Toyota may still get those workers, but not smaller companies.

Part of the reason for this is that the number of high school graduates who want to get a job is decreasing dramatically. They want to go to university. For example, we are operating in Toyohashi, in Aichi prefecture, and there is a high school that specializes in industrial instruction, which we call kogyo koukou. There used to be maybe 300 to 400 graduates that joined companies, but now most of them go to university. Only 150 these days are joining companies. Now, for each of those 150 students, seventeen companies are recruiting. Among those seventeen are big companies like Toyota, Denso, etc. These companies can pay better salaries and offer better holidays and benefits, so they are hard to compete with. That is what’s happening here in Japan.

We also have Koutou Senmon Gakkou, which are five-year technical high schools that specialize in monozukuri. There are 51 of these, and they are a unique education system here in Japan. For each graduate of those colleges, 31 companies are recruiting, so it’s very difficult for companies to get young new employees.

Although Japan’s demographics are declining, the global population is going in the other direction.

The thing is that the Japanese government recently changed the rules for immigration to attract foreign workers. So that may be one option in the future.

One way many companies are trying to tackle the shrinking domestic market is by looking overseas to find new opportunities. Is this something your company is doing, or more generally, how are you adapting to the shrinking domestic market?

I don’t have a good idea about that. We have a factory in China, but this was not the result of a strategic choice to launch into China. Rather, it was because human relationships made that possible. We export some food packaging materials to Hong Kong, and one guy there buys from us and then he sells them in Hong Kong and China. He had no experience with the manufacturing side. He just buys and sells, like a trading company, but he started a factory in Tianjin, China. There was no way for him to succeed because he had no know-how. He doesn’t know anything about making things, so he asked us to do a joint venture with him to take responsibility for manufacturing. That’s how we got involved. It wasn’t a strategic idea to go to China because the market is growing, nothing like that. We are not such a big company, so we don’t have the capabilities for such a thing.

Automation has become a crucial element in the food production process, transforming the methods of packaging and distribution. It has significantly enhanced efficiency, productivity, and safety, leading to reduced production costs among all sectors of packaging. How has technology and automation affected your packaging process, and how do you foresee those things influencing it in the future?

Our work is not packaging per se, but we supply the converted material for those packaging manufacturers.

Do you implement any automation into your own production process?

Of course. We automate things like the movement of materials inside the factory, but these are normal things in the industry, nothing special.

In Japan, 55% of added value manufacturing comes from SMEs, which represent 98% of total companies globally and, in Japan, 75% of total employment. Your company was founded in 1938. Could you tell us what are the main competitive advantages of your firm, and what makes you different from your competitors?

It’s a difficult question because I don’t even know how our factory compares to our competitors. We don’t know their facilities, their equipment, or their efficiency, so it’s quite difficult. I can say that our factory when the new factory was built, we automated the film handling, which required a significant investment. That was around 2007 and the results were very good.

Sustainable packaging is a top priority for consumers, with 53% prioritizing the reduction of plastic, 45% prioritizing more sustainable materials, and 44% wanting a reduction in food packaging overall. How is your company reacting to the demands of customers and clients for more sustainable packaging?

We are a converter, so material things are kind of the film manufacturers’ issue. As a converter, we try to handle all types of materials, including Polylactic Acid (PLA) and other environmentally friendly materials. As long as we can convert those in a way that adds value, we can survive.

For example, we recently developed a special kind of paper. If you go to a fast-food restaurant and look at the paper that wraps a hamburger, the inside usually has film, but we have created a new type of paper that doesn’t need that film. We apply a coating directly instead. We also have a similar packaging option that does have the film but is used with environmentally friendly paper.

Your comprehensive production process encompasses a plate-making department, a laminating department, and a cutting division, among other specialized areas. You also undertake the complex task of processing functional materials, including those with conductive and shading properties. Could you elaborate on the strengths of your overall production process and what sets it apart from your competitors?

I believe our factory will be very competitive in the future because we have a clean room for gravure printing. Conductive materials really need a clean room, but as far as I know, there aren’t many competitors that have this. I hope this will be one of our competitive advantages in the future, though we have already started taking orders for conductive things to be made in the clean room.

In 1995, you achieved a significant milestone with the introduction of an innovative laser stream system. This advanced technology allows for the direct writing of images processed by a response system onto the cylinder during plate making. When combined with your traditional engraving process, it provides the flexibility and high-quality results necessary to maintain industry leadership. What sets your research and development process apart and enables you to create innovations like this and ultimately stay ahead of the competition?

Actually, the laser stream was developed by Think Laboratory Co., Ltd. My father and I have a very good friendship with the president of that company, so that is one reason we introduced that system a long time ago, but now many competitors have laser stream systems as well, so I don’t think it is a competitive differentiator anymore.

Your company has long catered to the food industry, and now you’re venturing into the non-food areas. Could you talk to us more about your R&D activities in those areas? Are there any new technologies or products that you would like to share with us?

I’ve been trying to use our production know-how in a different area. For example, we have been converting glassine paper for a long time, and we just call it paper for manju. It’s the paper at the bottom of that traditional Japanese confection that you can find in many places. That paper has a silicone coating because if we don’t do that, the manju will stick to the paper. We’ve been converting that paper for about 50 years, but nobody recognized that it can be used for anything other than manju. My thinking is that this could be a kind of advanced technology with pattern coating, so I am trying to think in new ways.

Another example is cellophane tape. We have been doing the printing on that tape for a long time, but if you think about the technology to do that, there is a lot of know-how involved. For example, we use a special ink to print on the cellophane, and then we send it to  cellophane manufacturers, and they add glue. Therefore, it’s very important to match the ink type and the glue. I think this kind of technology and know-how can apply to other things, and our challenge is to figure out how to use our equipment, technology, and know-how in new areas.

Besides semiconductors, are there any other industries that you believe that your technologies and know-how can be applied to?

We are only a very small part of the supply chain, so I don’t really know yet which ways we convert things are important.

Throughout our time in Japan, we’ve learned about the importance of building partnerships to stay competitive on both the domestic and global scales. What role do partnerships play in your business model, and are you looking for any new partnerships overseas?

And as I mentioned, it’s about relationships. The Tianjin factory is due to a relationship with the guy in Hong Kong, and the laser stream is a result of the relationship with that manufacturer as well. Relationships also drive our joint research and development. Those kinds of human relationships are very important, so that’s all I am thinking about now.

I understand that when you do your product development, you build your business based on these relationships. On top of that, we’ve seen many SMEs looking abroad not just to expand their sales but also to share technology with other companies. To do so, they participate at exhibitions to showcase and see technology and build connections with other people. In your specific case, are you open to such new partners overseas, and if so, which type of partners would you be looking for?

Of course. I don’t know what type of partners, but it would be important to be people I trust, and mostly in B2B areas where we could add value and take some of the supply chain. We actually go to many exhibitions, not only in Japan but also in Germany, China, and Thailand, and we try to make some new relationships there. We also look at new materials, equipment, and machinery. My son has gotten involved in the business, and he’s active in this.

This is a family business which was founded 1938, so this year marks your 86th anniversary. Could you highlight some of the key milestones of your company and what we can expect from your company in the years to come?

My grandfather founded the company as a family business, and my father joined the company, although he’s not the son of my grandfather. He married my grandfather’s daughter.

At the time my grandfather started, he bought paper, cut it, and sold it in a shop. That was the starting point, and the first innovation was cellophane. In the beginning, my grandfather was selling Western paper (youshi), which differs greatly from Japanese paper (washi). Then, cellophane was developed. At that time, there was no film that came from petroleum, so cellophane, which was transparent paper, was such a big innovation. And I would say we were lucky because in the Toyohashi area, there were a lot of jelly manufacturers, and they started to wrap their products in cellophane, and our company sold cellophane to them. Then, those jelly companies asked us if we could print something on cellophane, so we thought maybe we could get into printing. That was the second big change for the company. Over time, other kinds of paper, like plastic films, became popular, and we started converting them as well.

Another factor is that Toyohashi is a very small town, so at that time, we were forced to have the entire production system in-house. For example, if you go to Nagoya, there are different companies handling different processes, so a printing company may only do printing. Since we were in an isolated area, we were forced by the environment to do all the production processes. Of course, we made investment decisions to expand our production capabilities, but in a sense, we were forced to do it by the circumstances. In the end, that became a good thing, a source of competitive advantage.

Your company has businesses in China and, as you mentioned, you take part in various exhibitions around the world. What is your international strategy, and are there any countries that you’re looking to enter?

No. There is no particular country I am thinking about. Of course, if a chance presents itself, maybe we will go overseas because I think we now have the capability.

How would you like your company to be seen in the eyes of the global market?

If a company has some special needs or problems to solve with paper or web-formed materials, we can help with our expertise and knowhow.

For more information, visit their website at: https://www.daisan.com/en/