Kiyotsugu Yamashita, President and CEO of SankyoTateyama, explains how the company’s award-winning evironmental procedures and “belief that we should be a trustworthy partner to our partners and customers” are not only good for the planet, but also the firm’s bottom line and its plans for expansion.
Japan is truly going through an exciting time at the moment. In a period of global economic recession, Japan is making the difficult choices to reorient its economy for a more globalized world. As Prime Minister Shinzo Abe has said, Japan is taking economic reforms that are “once in a generation,” through the popularly termed economic paradigm, Abenomics. But we are trying to understand the perspective of the private sector in this transformation. What would you say has been the impact on the manufacturing sector or indeed SankyoTateyama specifically?
Certainly the Shinzo Abe administration was very well accepted by the industry in Japan. Contrary to the previous administration, Mr. Abe is pro-business and he’s stated so, which had a great positive impact in the private sector.
Although Mr. Abe made these announcements early in his administration, since that moment various measures have been taken in order to meet, for example, a more favorable foreign exchange rate that benefits export oriented companies.
Because of the policies of Abenomics, such as the monetary easing arrow, the Yen has weakened substantially, which has helped to increase Japanese exports dramatically. How is SankyoTateyama working to capitalize on this new environment? How are you working to increase your exports?
We are not exactly working on increasing our exports because we’re not a solely exporting company. When the economic environment turns favorable to the export-oriented companies, this certainly enhances the economic capability of corporate Japan.
This helps our domestic demand side, which is the major part of our business. Our company’s main segment is Construction Materials, which is largely a domestic business.
Currently Japan is the third largest market in the world in construction and is valued at $333 billion, but recent reports have indicated that because of Japan’s demographic problem, less construction is happen in the future. What are your expectations for Japan’s construction sector?
The industry has already reached the ceiling and other industries are expected to gradually decline at a very slow pace, especially those in the area of new housing.
However there’s a factor capable of offsetting the decline in new construction and housing starts, which is existing buildings.
There’ll be an increasing demand in renovating existing buildings or to higher specifications with a lot of improvements to be retro fitted, and that certainly will be a growth factor we see in the sector.
Recently you’ve completed the acquisition of Aleris’ extrusion business, which allows you to build on your rail, automotive and aerospace industries capabilities as well as your international capabilities as the deal includes facilities in Europe and China. How does this acquisition fit into SankyoTateyama’s Vision 2020 growth strategy? Is this just the first step towards further internationalization?
This would be the first step in our further internationalization indeed. In our vision, the company’s internationalization starts with ASEAN countries which may seem strange as Aleris is a company based in Europe.
However, at the time of Aleris’ acquisition we also acquired a Thai company called Thai Metals, which is one of the top three aluminum extrusion companies in Thailand.
Since it’s based in Europe, Aleris has various customers in automotive and machinery manufacturing sectors.
Companies in these sectors look forward to entering the ASEAN region and once they have achieved that they’ll seek the same level of quality that they enjoy either in Europe or in Japan.
So what we’re planning to do is to transfer such high levels of technology to Thai Metals so that when these companies come to ASEAN they can procure what they need within the ASEAN region.
That’s how we plan to expand our ASEAN market.
Central to this ambition is your Life with Green Technology corporate culture. In fact you’ve won many awards for environmentally friendly building practices and design, such as the Good Design Awards in 2014. Can you share with our readers some of your leading green technology?
Actually what we do in terms of developing green technology is not in the so-called high-tech area which involves manipulating chemicals and things of that nature.
We rather do more basic things, for example in terms of materials we try to develop them in a more environmentally responsible way with less environmental burdens.
We have a program of environmentally responsible engineering which consists of several parameters that have been made into a checklist for the developers to evaluate how their new designs are better and greener than the existing products.
These parameters include fewer materials to be used in making any product or using and reusing existing resources in a more effective manner, reducing CO2 emissions as well as energy consumptions.
So, you mentioned the corporate culture, and this is the kind of program that has been imbued into the minds of the engineers who work daily in developing new products, the program helps them to find the criteria of developing better products.
When our engineers and designers have to design a window frame, for example, they’ll concentrate on how to simplify its design so they can reduce the number of components and the amount of raw materials they use.
It’s also important making the design disassemblable so that when they discard the product it’ll be easier to disassemble and materials can be reused.
Green business practices are something that has become very popular lately, but this isn’t anything new for SankyoTateyama. You first implemented your Green Procurement Standards back in 2001 to ensure your environmental footprint was small. Do you think this was one of the main reasons SankyoTateyama has enjoyed such impressive growth recently, growing your net revenue by almost 10% to 300 billion JYP? Why are these practices not only the right thing to do for society, but also good for your bottom line?
Your observation is right; actually it was our founder the one who showed us the great importance of gaining our business partners’ trust by supplying them with products that have value, products that they can easily sell to end-users.
This made our longstanding business relationships with our partners possible. When our partners find that our products are easily sold into the market it means that the end-users are also finding value in these products.
So there’s this continuation of being able to supply value to our partners and to the end-users.
I think SankyoTateyama embodies all the characteristics of what makes Japanese manufacturing truly unique, your high quality and efficiency, but most importantly your commitment to environmentally friendly policies, something very few Chinese or other SE Asian manufacturers have. Indeed, one of the key objectives of the G20/B20 conference is climate change and spreading the green economy policies, so taking this opportunity to reach out to all these leaders, why are Japanese companies and especially SankyoTateyama, the partner of choice for these initiatives?
We are a partner of choice neither because we’re a manufacturer nor because of our technology but because of our belief that we should be a trustworthy partner to our partners and customers.
Actually, this explanation applies also to the entire country. Japan should be considered a trustworthy country although, as you might have noticed, Japanese people are not exactly very good at showing or communicating that to the world.
However as you become friends with Japanese people you gradually understand how trustworthy Japanese are. So as a company we do not seek short-term profitability but long-term relationships with our partners.
Japan as a country, as well as Japanese companies, has the ability to be a trustworthy partner to the world. I hope this virtue can be shared by other countries and companies, what will eventually lead us to a better world.
Trust and confidence are essential to the success of Abenomics and it can be argued that Japan has suffered recently from a lack of trust and confidence not only from the Japanese public, but also from the international community. This is exactly what we are trying to change with our report. What would you say to the international community who may still be hesitant to invest in Japan or do business with a Japanese company?
Japan is not an easy country to understand but I’d love to see investors from overseas coming to Japan and meeting with corporate managers so that they understand what it’s actually like in this country.
The best way to do this would be visiting a couple of manufacturing factories because they epitomize the entire corporate Japan and the Japanese society.
Of course we also try to go abroad and to have contact points with investors and business leaders but the best way for them to know us would be to come and see by themselves.
Whenever we have new business partners we always ask them to visit our factories so they can get to know us and feel confident doing business with us.
When it comes to manufacturing, in my opinion, it’s always gemba (Japanese term meaning the actual field where the action takes place).