Reasonably contained and nothing harmfully constrained is name of the game with these storage solutions offered Sekisui Techno
In the last 25-30 years, Japan has seen the rise of regional manufacturing competitors who have replicated Japanese monozukuri processes but done so at a cheaper labor cost, pushing Japan out of mass industrial markets. However, we still see that many Japanese firms are leaders when it comes to niche B2B fields. How have Japanese firms maintained this leadership despite the stiff price competition?
Your description of how Japanese companies are lagging behind is certainly true, and we are seeing a number of overseas companies now capturing the market. However, Automation is no longer unique to Japan, and foreign manufacturers are no longer surviving on assembly alone. I think the current situation is that the manufacturers that survive today have some kind of innovation and are growing their businesses by improving the functions of their products.
It is not something that can be imitated by collecting materials and information, and the materials themselves have been innovating and enhancing. We believe that the establishment of a system to sell technology packed with know-how not only in Japan but also overseas has led to the re-growth of Japanese companies.
I worked for another company in the SEKISUI CHEMICAL Group for a long time, to increase the profitability and sustainability of our overseas operations in Shanghai, China, Bangkok, Thailand and Jakarta, Indonesia. What both Chinese and Thai people expected from Japanese companies was that they make something that is different from other companies and has high added value. And that's what they were proud of for working for Japanese company.
We made a lot of products for computers and smartphones etc., and our employees in China were very positive about our products being used in such cutting-edge products.
Ever since the Japanese government announced that the country must be carbon neutral by 2050, Japanese companies have invested in technologies to achieve this goal. If we look at plastic however, it is notorious for creating large amounts of pollution, and in Japan alone, 9.4 million tons of plastic waste is generated every year, making it the third highest in the world. As a manufacturer of plastic products, what efforts are you taking in order to ensure that your products are more sustainable?
We are prioritizing the concept of the circular economy. Products such as plastic logistic boxes are collected from the customers who agree with our approach and put back on the production line to be reused again. We try to follow this principle as much as possible. We do these kinds of activities across the board and through all sorts of different industries and different clients. It is not limited to logistics, with other sectors such as automotive and food following these sustainability principles. Realistically, we get a lot of inquiries from various customers, and we feel that value is added when we introduce circular economy products to our customers. It solidifies our position within this long supply chain, and more importantly, it wins the trust of our clients. Trust is important to us.
Generally, containers are collected, heated and pelletized, but it's hard to get them back 100%. We use the sandwich method, in which the upper and lower layers are molded with plastic, but waste plastic (a material that can't be put back into resin) is sandwiched between the layers. We are making a move to deliver these products again, to the original customer, to Japanese automobile manufacturer and others, and we expect this to spread to other fields in the future.
You mentioned how your products are used in a number of different fields, ranging from automotive, agriculture, storage, logistics, civil engineering, and more. Are there any other industries or applications that you are looking to expand further into?
First, let me try to break down our activities per industry. The foreign expansion into India is 100% focused on supplies for the automotive industry. 100% of what they do in India is devoted to automotive clients. In Japan, a large percentage of our activities are also dedicated to the automotive industry; 60% to be precise. Another 20% is for environmental applications such as rainwater collection. I guess that could be considered in both environmental and civil engineering applications. The last 20% is focused on logistics as well as smaller, miscellaneous applications.
Now that we understand the breakdown, let me talk about each industry in a little more detail. Automotive is obviously our largest focus, with 100% of our Indian business and 60% here domestically. We do have plants in Japan, those being in Aichi, Mie and Tochigi prefectures, that is because the production lines of our clients are also located in these prefectures. It is important to be present and work closely with clients. The Japanese production of automobiles requires flexibility, quality, and fast delivery, and by having our plants close to the actual production lines of our clients we can deliver that.
A big change happening in the industry is the electrification of vehicles, and there is a big push from some of our biggest clients to switch over to EVs. We see this in a positive light. We have a positive track record with plastics, so clients understand that we are able to create plastic products that can adapt and fit their every need. There is a tendency right now in the industry for seamless construction of vehicles, and for that reason, we are seeing larger parts taking a preference over smaller parts. 2030 will be a big turning point not just for Japan, but the world as a whole, so for that reason, we are preparing ourselves by offering clients solutions that cater to the electrification of vehicles worldwide. Design-wise and production wise, we are clearly capable of producing solutions for this industry for many years to come.
Automakers are trying to reduce their CO2 emissions and to do so, they are adopting lighter-weight designs for vehicles, ditching heavy ferrous metals such as steel in favor of lighter-weight materials such as aluminum, magnesium, and CFRP. Your company has its own metal substitute technology. How are you adapting to this new trend for lighter materials, and could you give us a specific example of how your metal substitute technology was used, and what were the results?
There are several tendencies in the car industry itself, and this is just one part of a larger movement happening. Of course, our technology to manufacture special plastic components instead of conventional ones is helping in many ways in the industry. Currently, we cannot highlight too many examples at this point in time, but we probably will be able to with the next generation of models that our engineers are working on. Those engineers are working hard to help replace metal or ceramic products with plastics.
Another element that has become a hot topic is heating, and more specifically heat dissipation. Obviously, with the change from engines to motors and batteries, there needs to be an aspect of adaptability to fit the needs of a different structure. We are looking forward to the next steps of the industry and where it will lead us in the future. At this point in time, nobody can accurately predict exactly where the industry is going to go further down the line, but we certainly can continue to follow the tendencies of the industry and support our clients with added-value products and services.
As we see CASE technology advance, the number of electronic components inside a vehicle is multiplying. This is creating a challenge when it comes to electromagnetic wave interferences, and there are more security concerns than ever before. There might be certain in-vehicle electronics that may malfunction because of the electromagnetic waves in surrounding areas. You have the technology to make molded resin products with high heat dissipation. How can your products help shield or protect against electromagnetic waves that have the potential to cause malfunctions?
Unfortunately, I cannot reveal any secrets today, but let’s just say that we are capable of providing products that can shield against interference, especially electromagnetic wave interference. The area where the electronic control unit (ECU) is most prevalent is the engine, so we see a need to shield the engine itself. Additionally, with heat dissipation, we offer to dissipate heat by encasing key components in our plastic products. Those needs as you alluded to are on the rise right now, so we are able to look optimistically for an increased need in our technology in the future. Not only is this in the domestic market, but overseas as well. I can say for sure that our enhancements will be helping some automotive and manufacturing companies located all across the globe.
One particular product that caught our eye was for civil engineering: the Cross Wave. Due to global warming, water disasters such as flooding and typhoons are becoming more commonplace. Your solution is the Cross Wave trench, a completely buried rainwater storage system. Can you explain how the Cross Wave can aid in the event of major flooding or torrential rain? How is it superior to more conventional rainwater storage systems?
It all started 25 years ago, with a consortium that allows us to do so. We were thinking about getting into the environmental business, and as a result of our research, we came up with this solution. We were able to successfully commercialize the product in 1998.
The purpose of the Cross Wave is to prevent major flooding from torrential rain because it happens frequently in Japan. The country is quite vulnerable to natural disasters, including floods and torrential rain. Essentially it functions like a kind of temporary collector for the immense amount of water that falls from the sky. Over the course of time, this water will then
evaporate flows with restrictions or dissolve seep into the ground itself without causing any kind of damage or harm. Before this product came to the market, people utilized concrete reservoirs, and those had a lot of problems. This was not an efficient solution, so it was only natural that we would look to something else to solve the problem.
One feature of the Cross Wave is the ability to stack, almost like Lego bricks. Also, you can restructure by simply rotating the layers 90 degrees. Basically, there are many different configurations in which you can install the Cross Wave.
As you can see on our website, we have a variety of products in our Cross Wave lineup, and our motto is “smart and resilient, strong to natural disasters.”
We SEKISUI CHEMICAL group also do a piping business, such as drainage and sewage, and the idea is to complement the Cross Wave and essentially provide a solution to entire towns. We are passionate about everything we can contribute to society below and inside the ground.
I understand that concrete is heavy and difficult to move, and the idea of having stackable plastic makes sense, but one of the big advantages of concrete is its long lifespan. Plastic tends to have a shorter lifespan; the product gets damaged faster for example. Was that ever an issue and how do you ensure that your plastics have the appropriate lifespan for a disaster prevention solution?
The Cross Wave actually has a guaranteed lifespan of 50 years. Concrete may be a solution for some customers out there because it has a longer lifespan of roughly 100 years. The Cross Wave is also constructed from 100% recyclable plastic so obviously, once the product reaches the end of its lifespan, we can take care of the recycling.
Could you elaborate on the role these kinds of partnerships play in your business model? Are you looking for any partnerships in overseas markets currently?
Yes, looking to the future, we as a manufacturer need to adhere to all the rules introduced by the countries we are looking to operate in. We already have an established track record in Thailand, Indonesia, and Taiwan. And in the future, these countries will have the legislation in place for "Cross Wave" construction.
Moving forward, have you identified any countries or regions that you would like to expand your physical operations to? What strategies will you employ to do so?
We have 5 locations in India. Many things still cannot be done because of the COVID-19 situation, and that is unfortunate because we just opened the newest factory there three years ago, right when the pandemic first hit. The plant itself is solidified, but because of the pandemic and lockdowns production has had to slow down. I would say that our priority right now is getting this plant off the ground.
Aside from this, the Indian market is still huge for us, and we would like to continue our operations in the region. In terms of new regions, we do have some ideas but right now we are not thinking about a particular area. Timing is important with such changes happening particularly in the automotive industry, so we will follow the trends looking for the right trigger point.
Interview conducted by Karune Walker & Antoine Azoulay