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Innovative packaging for mutual sustainable growth

Interview - April 20, 2022

With almost a century of experience, offering a diverse range of cutting-edge packaging solutions to meet specific client needs continues to be the driving force behind forward-thinking company Nitto Pack.

ATSUSHI GOMI, PRESIDENT OF NITTO PACK CO., LTD.
ATSUSHI GOMI | PRESIDENT OF NITTO PACK CO., LTD.

In recent decades, regional manufacturers in China, South Korea, and Taiwan have been able to replicate Japanese monozukuri, but at a cheaper cost. Nevertheless, Japanese companies retain large global market shares especially in niche B2B fields. As a specialised manufacturer of packaging materials, what do you believe are the competitive advantages of Japanese firms?

I believe that Japanese companies’ philosophy and approach is not centred on making profit in the short term but creating a sustainable business in the long term. In Japan, we utilise a bottom-up approach, rather than the other way around; people in factories communicate with each other to make improvements and come up with new products. This is the strength of Japanese companies, but it is also their weakness – and this applies to the government as well.

In Japan’s industries there is a close relationship between customers and material suppliers. In our case, we have strong communication channels with our customers as well as upstream and material providers, which allows us to make improvements and develop new products. This fundamental promise is important to contribute to customers’ growth, on which that of Nitto Pack is also founded. Our company grows together with its customers. This is the kind of approach that characterizes Japanese firms. Our products must be saleable so that our customers continue buying from us, and this idea is shared among Japanese companies. 

 

Japan’s demographic decline is threatening consolidated ways of doing business. In the next 15 years, a third of the country’s population will be over the age of 65, leading to a labor crisis and shrinking domestic market. How is Japan’s demographic decline impacting your company, and how are you trying to overcome these challenges?

It is a fact that all Japanese companies are suffering from this shortage of manpower; some companies have even had to close their factories. It is indeed difficult to hire new employees here in Japan, but it all depends on how a company approaches this issue. Nitto Pack is quite unique because most of the people working here are young, ranging from 20 to 30 years old. In our management team and sales department, the oldest employees are in their thirties. This has been made possible by continuously recruiting fresh university graduates, and we also hire high school graduates to work in our factories.

Overall, Japan will suffer from the shortage of manpower but there is room for improvement if you pursue productivity and efficiency. About ten years ago, work sharing was a trend. In Japan the turnover rate and productivity are low, so we have adopted the work share model. In truth, I am optimistic because Japan still has leeway when it comes to making productivity and efficiency improvements. If we can improve in these areas, we can compensate for the shortage of manpower and continue working together with our young employees. What is most unfortunate is that many Japanese companies are hiring foreign workers as trainees, but I think that is not a sustainable solution as it would be better for them to come to Japan as immigrants. Nevertheless, I realise that finding the right answer to this problem is a struggle.

 

You provide a diverse range of packaging solutions in the areas of food, fishing supplies, and pet food, such as your Wide Open Cut (WOC) packaging, and Line Deco R (LDPR) for mayonnaise and sauces. You also have many eco-friendly packaging solutions such as zippers, sliders, bag pouches, cap seals, and labels. What is the focus of your business?

The bestsellers are our food-related packages. Many of the packaging surrounding the mayonnaise bottle is provided by Nitto Pack; we supply a very thin film, which used to be 40 microns thick and is now less than 35 microns, with the purpose of reducing the amount of plastic, and the cost of course. We also provide packaging for chilled food items and a lot of food packaging for businesses, but the latter segment was hit hard by the COVID-19 pandemic. While Japan was under a state of emergency, many restaurants were closed, so our sales of packaging in this area were reduced.

In some cases, we have provided our unique products, such as Line Deco R, to customers even before giving them their brand names. These products are also for business use: for example, we provide packaging to mayonnaise companies, and they sell it in bulk to restaurants and bars. 

 

The COVID-19 pandemic has had mixed effects on packaging companies. Sales to restaurants have been negatively affected, as you mentioned, but on the other hand, food sales in supermarkets have skyrocketed. How has the pandemic impacted your business?

The amount of packaging for bulk use was reduced due to COVID-19. However, this was compensated for by retail sales in supermarkets. Overall, the level of sales stayed the same. Having talked to other people in the industry, I know that some companies, for example those who only focus on souvenir packaging, suffered due to the pandemic. However, I still feel that the packaging industry is not particularly vulnerable, not even in the face of natural disasters, because if one side of the business suffers, it is often compensated for by another. That is why it is important to have a sustainable business. 

 

We know that your WOC packaging, which won the Japan Packaging Contest in 2006, is easy to open and handle – which is especially important for elderly consumers – as well as being microwaveable. What is this product’s most distinguishing feature?

Our Wide Open Cut (WOC) product was developed in response to communications with our clients. It is now used for many snacks, some of which people enjoy as an accompaniment to alcohol, as well as for shumai, a type of Chinese dumpling, which can therefore be microwaved while it is still in the bag.



Honestly, it is quite costly to manufacture this kind of bag. In 2006 and 2007, the Japanese economy was not doing well, and people wanted cheaper products. We had a hard time penetrating the WOC market but over time, our marketing strategies have paid off and we have many contacts now. In Japan, it is quite difficult for new products to spread in the short term, and it often takes 10 to 20 years for them to become popular. In this industry, you cannot just develop new products by yourself, you must work with customers and material suppliers. It takes time to make a product and launch it on the market; you must somehow foresee the future. Three years ago, we introduced digital printing. Although it is still not fully operational, we foresee that there will be a huge demand in this area in the future. 

 

Plastic manufacturers are being pressured to reduce their environmental footprint and the packaging field has also come under scrutiny due to plastic consumption. Your company is developing eco-friendly materials, including recyclable ones. What future do you foresee for environmentally friendly packaging solutions?

It is a common understanding within our company that we are using fossil fuel-based plastics. We must be aware that without plastic in our packaging, there would be more food loss, as well as problems in distribution. As of now, there is no real alternative to plastic. However, looking to the future, it is important to find an alternative and to do so, we must work together with material providers as well as end-users to develop appropriate solutions.

Some packaging companies are shifting to paper, but I am doubtful that this ultimately contributes to the transition to a carbon neutral society. I believe it is important to stand back and evaluate what is important for the environment. In a way, plastic foam is easy to make, you just need to apply heat; this is the only process required. Paper packaging is more expensive than plastic because more energy is required. The worst option is to have paper with plastic inside: it is deceitful to call this product environmentally friendly. To pursue truly ecological products, you must go deeper. For example, digital printing is one solution. With conventional gravure printing, the lots that are printed need to be quite big, whereas with digital printing you can reduce the amount of packaging that is lost.

 

You mentioned the need to work with your customers and material suppliers to develop new products. What role do co-creation and collaboration play in your business? Are you looking for partners inside or outside of Japan?

All our products, including Line Deco R and WOC, have been developed through collaboration with our customers and partners. For example, our R&D department is currently working with a soap company to develop a product that would leave less residue inside the container. Collaboration is a vital part of our business, and yes, we are looking for partners domestically and overseas. For example, when it comes to digital printing, we feel that the machinery is still in need of some improvements.

We are open to working with foreign companies, including welcoming outsiders to our factory, since our resources are scarce. In fact, five or six years ago, we came up with the concept of having an open factory that people can come and see. We have welcomed local and foreign visitors to our factory and have invited them to learn about us and work with us. We have even been conducting online tours of our company – an idea that emerged in response to the pandemic. As recently as last month, some people from Indonesia and the Philippines visited our factory remotely.

 

With regards to your international business, in 2020 you established a business alliance in Indonesia. You also have operations managed by local agents and partners in Thailand and Malaysia. Could you elaborate on your international business strategy?

Our basic approach in both domestic and foreign markets is to contribute to our customers’ growth. We grow as a company by working with our customers. Speaking of our company in Indonesia, we visited an exhibition there to learn about how we should be improving our packaging solutions, including improving our products to reduce food loss. In terms of the Indonesian market, Some Japanese packaging manufacturers have factories to provide good quality printing. Therefore, whilst it is true that good quality packages are available in Indonesia, newcomers in the food industry are trying to enter the food packaging market but they do not have access to good packaging materials.

I think the same is true in Japan, with them providing high quality packaging to major companies, whilst demand for our packaging comes from SMEs. In Indonesia, we would like to reach out to local food manufacturers that are not operating on a big scale. By having multiple pillars in the packaging industry, with major companies working with bigger ones and SMEs with smaller ones, that diversifies the range of products and enriches the culture. We can see this in Thailand and the Philippines, where traditional food stands are now decreasing because people are increasingly shopping in supermarkets. While there are still a lot of food stands in Indonesia, I believe this will also change in the future. 

 

Imagine we come back to interview you again in ten years’ time. What would you like to tell us? What dreams or goals would you like to have accomplished by then?

I would like to contribute to a new food packaging culture in Indonesia. I would love to convert the use of conventional gravure printing into digital printing. Through communication with our customers, people are acting as mediators to pass on ideas. If we could make this process automatic in some sense, that would be ideal. We want to provide an efficient system where we can propose suitable printed packaging solutions to each of our customers, with various designs to choose from.

The number of SMEs in this industry is large, and in the future, I expect there will be more M&As. Our company has a lot of history and technology, and we are predisposed towards collaboration; just last month, we purchased the company that makes shrink labels to work in concert with them.

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