Established in the aftermath of the Second World War, Kodama Chemical Industry has been producing molded plastic products for over three-quarters of a century. At the heart of the company’s philosophy are the concepts of kankyozukuri, monozukuri and hitozukuri, on which president Junichi Tsubota delves into more detail.
In the last 25-30 years, Japan has seen the rise of regional manufacturing competitors who have replicated Japanese monozukuri processes, but at a cheaper labor cost, pushing Japan out of mass production markets. Yet, we still see Japan as a leader in many niche B2B fields. How have Japanese firms been able to maintain their leadership despite the stiff price competition?
Everything you have said about monozukuri is accurate, and we cannot argue against anything you have said so far. What we can add to that though is what Kodama’s excellence is all about. Monozukuri is the spirit itself, and being able to touch people's hearts, which in itself is a very important philosophy shared amongst all the affiliated companies of Kodama. All of our affiliated companies, clients, partners and anyone connected to Kodama are important and it is crucial to stand on the same ground. Doing so results in good sustainability and has good results in business.
Normally when you hear about monozukuri, the art of making things, it is usually written in hiragana. Here at Kodama, we define it as two separate words. Mono means thing or object and zukuri means making or producing. We separate it so that we can highlight the importance of the product itself. How much you devote to this product and how much you contribute to it trickles back to the history of Japan. We really emphasize making an effort to produce truly excellent products, and traditionally Japanese people are thinking about that, and always try to walk the extra mile needed.
Zukuri, as I said, is production and making. We do not just highlight product making, but also human making. In Japanese, we have another word, hitozukuri which is the art of making people. Getting the mutual efforts of people who are working in the company, the employees of Kodama Chemical Industry, is very important too. Hitozukuri is also a big part of our manufacturing process. We want to add the contribution of the human touch to the products we are proud to introduce from our company. By doing that, you can add value and satisfy customers.
Kodama Chemical Industry has a management philosophy of "contributing to society through the pursuit of the potential of plastics and manufacturing that deserves trust”. We will earn the trust of all our stakeholders, including our employees, and engage in various activities toward sustainable development and the creation of a better society.
Kankyozukuri, monozukuri and hitozukuri are the three pillars on which Kodama Chemical Industry stands on. Hitozukuri, the art of fostering human capital, monozukuri, the art of making things and kankyozukuri, the art of making an environment favorable. Without this foundation, nothing is possible and we stand on a very firm base.
Building human capital and establishing a good relationship between every single individual that works for the company is important, and crucial for making a good working environment. Obviously, it is very important to make a good company. This is our managerial philosophy and gives you an insight into the Kodama way.
It is also important to note that Kodama Chemical Industry is a firm believer in the Kaizen philosophy, the idea of continual improvement. You have to put in the time and effort, step by step, to reach your final goals. Each and every employee knows and believes in the Kodama way.
The Kodama way actually splits into four methods. First, we have the production way, then the sales way, then the generic way, and finally, the management way. This is how we describe excellence in manufacturing and making things. We are always observing and looking for ways to improve our philosophy and staff. We collect a lot of information and hand it out monthly to our employees to reflect on and improve, and it is not a new procedure for us, we have been doing this for a long time now. It is an ongoing process of improvement. Level 5 is the highest level of excellence for our own internal assessments, and despite that being the final goal, we consider this goal years away. Many things still need to be done. If you come back in a few years, everything will be at least at level 4. Do not think that this information and assessment is only related to the production sites. In fact, every single employee in the company receives this information and assessment, especially in sales. Every department follows the Kodama improvement sheets, and they are very detailed. The sales department alone has over 30 items on their checklist, and each is graded up to level 5, with level 5 being the highest. Everything can be improved with time and effort. That is why I wanted to explain our idea of monozukuri in such detail for you because it is not just the art of making things. It applies to the way someone thinks, the way people behave and the way people strive to improve themselves.
After WWII, Japan was very fast in adopting different technologies that were coming from America and Europe. A lot of people took that technology, adapted it and made it applicable for export. It was for this reason that we stepped into the bubble period of the 1980s and 1990s. That is why Japanese excellence caught so much attention on a global scale. Naturally, history carries on, and now we see countries such as China, Taiwan and Korea entering the forefront. They have taken an approach similar to Japan adapting technologies from other countries. Essentially it is the cycle of things. Our expertise has never really been in R&D, but has more been focused on creating an excellent pool of high-quality products. Back in the day, we used to say that “if the product is good enough, it can sell itself.” It is not only Kodama Chemical Industry that are facing the problems of these emerging markets, but all across the globe, companies are also finding solutions to survive despite stiff price competitiveness.
Obviously, now mass production has been dragged to other countries, and Japanese companies have not been winning in the global market. It is a negative, but all negatives will become positives too. That quality and preciseness of Japanese monozukuri is still there. It is the contribution of these companies' best practices and best efforts to create amazing things. Japanese manufacturing is still acknowledged around the world for its quality and preciseness, and many people appreciate that to this day. With this quality comes an extra price, but people are willing to pay if they know they are getting products that are of the best quality with no defects.
Japan as a country is known for its collectivism. You show respect to your business partners, employees, superiors and everyone affiliated with the company. Mutual efforts across all aspects of the country are something that defines the Japanese national character. This is a key point for Japanese companies and a major strength when doing business on an international stage. It is very similar to what happened to Germany, which was known for very high quality and could not compete pricewise. However, they still have won over the hearts of their customers and are very good at what they do. In fact, you could say that Japan is a high-context country, often not requiring long lengthy conversations. The Japanese people are also very good at working as a team, combining their efforts to create something spectacular. Mutually creative efforts with many people involved are something that Japanese companies have been doing for a very long time now.
In many of our interviews, this theme of teamwork and collaboration has come up, and often many of the companies interviewed have mentioned how working with local partners is the key to unlocking a region. What role does collaboration play in your business model and are you looking for any collaborative partners, whether that be in Japan or overseas?
We are actually working in Thailand with a group known as CP Group Thailand. Establishing connections with companies that are located overseas is definitely something we feel is a necessity and something we are looking forward to optimistically. A good example can be seen in Thailand. Thai people are very close to Japanese people in terms of their values, philosophies and religious beliefs. That became a connection point for us. Another reason we moved to Thailand ties in with the expansion of our major customers into Thailand. At the time, CP Group, who had a special relationship with our founder, named Mr. Koseki, had been supporting our business as our partner. Even after we became a member of the Mitsubishi Group, this cooperative relationship was maintained, and with their help, we have expanded our business in Thailand.
Our idea was to produce products locally in order to help expand Japanese companies across the Southeast Asian region. At a certain point in time, we decided to go our own way, and separated from Mitsubishi Chemical. Since then, we have gone solo in our pursuit of local partners, and that is how we found and partnered with the CP Group in Thailand. It was a very strategic maneuver on our part, and in order to be successful in these markets, it is essential to have local knowledge. So far so good, and we have been producing products locally and winning the trust of other Japanese companies that have also localized their production there.
Going beyond this, we are not only thinking about Thailand as a production site. We are considering it as a strategic base, almost like a local hub, that will open the gates to other countries in Southeast Asia. More focus and effort will be going into this site in Thailand and our other site in Vietnam to open up opportunities for the future.
As you know right now, the automotive industry is seeing a once-in-100-year change, and it is not just the car manufacturer that is involved. Everyone who contributes to the production of a car is experiencing this shift. One big aspect that is felt is the necessity to reduce CO2 emissions. Car manufacturing itself does not produce a lot of CO2, but as you follow the production line down further to some of the components, you can see some problems with CO2 emissions. Battery production is one such component that produces a lot of CO2 which is terrible for the environment. A lot of things will be changing in that aspect. The connected-autonomous-shared-electric (CASE) era is coming, safety measures are changing, and unmanned hybrid self-driving cars are now a thing. A lot of things are on the table right now as far as the automotive industry goes.
When we talk about EVs themselves, Tesla is the big player, but their approach is to create commercial cars. Behind Tesla, there are fewer key players, and currently, the necessity is now changing towards regulation. There are options for low-cost, small electric buggy cars alongside Tesla’s options. These are coming from countries such as China and India, and I think this has a relation to the wealth of those countries. In most cases, people in China and India cannot afford to buy Tesla vehicles. With the smaller vehicles and new safety regulations come opportunities for reinforced plastics and Carbon fiber-reinforced polymers (CFRP) which are great for saving people's lives. Conventional iron does not work due to the weight limitations of smaller vehicles. We believe that more and more CFRP is being used in this way and we are looking optimistically at the Indian and Chinese markets. This is why the Thailand hub I mentioned earlier is so key.
Another reason we mention these smaller vehicles is that they can be charged at home. You can drive around all day and then when you come home just plug it into the wall. That is another reason why we find these markets to be exciting, and rife with opportunities.
As you mentioned, the automotive field is experiencing massive shifts, and we see it as being separated into three races. The first is the race to fit more and more electronics inside existing cars. The second is the change from the internal combustion engine to EVs. The third race is to make materials more lightweight, yet durable. Are there any specific products your company has developed to match these changes in the automotive industry?
The reduction of CO2 is something that many companies are thinking about, and many companies are struggling to decrease their footprint. Toyota group company has declared a target of a 50% reduction in CO2 emission by 2030 and has also said that by 2030, all Toyota cars will be 25% lighter than they are now (our estimated calculation). It might not seem like a lot, but for a company as big as Toyota, it is a huge challenge. With the change to autonomous driving, there is an idea that the vehicle won’t need as much safety equipment, which may contribute to a decrease in weight. With that said, it is still a very challenging target.
Many people think Kodama Chemical Industry is purely a plastics products processing manufacturer. This is not the case. Of course, plastic products are one part of our production, but we are introducing the full scope of things. We think about how plastic products can be introduced, scaled-up, designed and produced before finalizing a product. Another big problem that we are tackling is recycling. If you introduce plastic products these days, you must think about reuse. A big part of our focus right now is on alternatives besides plastics, and one good solution is reinforced carbon. Reinforced carbon and reinforced plastics are kinds of trendy materials right now. Plastic companies are really looking forward to more usage of these materials in the future.
We know that your company uses a new glass-mat thermoplastic (GMT) method in the creation of auto parts. In recent decades, there has been a debate over the use of long fiber-reinforced thermoplastic (LFRT) and GMT, and the industry is leaning right now toward LFRT because they offer more flexibility. Your GMT method, however, is capable of making complex shapes. Can you tell us more about your GMT method and how it is superior to not only LFRT, but also older GMT methods?
I am actually in charge of this new GMT manufacturing method. Basically, we heat a long fiberglass mat and inject plastic using press molding, thus creating the possibility of making very complicated and unique shapes. As you know, fiberglass is a very flexible material to a point, but it can break quite easily.
What is good about GMT manufacturing is that not only do we introduce impregnation with plastics itself, but that plastic is a good replacement for conventional materials like steel. If you look at the back seat of a car, for example, the seats have an iron or steel frame. The conventional way to achieve this is by welding. Welding is great, but it has very limited flexibility in the design. GMT is much more flexible and you are only limited by your imagination.
Iron comes in one piece and has to be welded with several other pieces. Cost-wise, you would have to hire welders onsite and production can become large and very costly. GMT allows the piece to come as one right from the mold. I think ultimately the biggest advantage of GMT is its lightweight design. These lightweight materials are the final goal of a lot of car manufacturers these days.
The biggest downfall of GMT however is the cost, and that is still quite high. Our R&D department is working very diligently on ways to decrease the price of GMT and ways to make it more affordable.
Seat frames are only a single application of this new GMT method. The company is excited and looking forward to the next 10 years or so. We are focusing on the best use for GMT.
Since establishing your first joint venture in Thailand in 1988, you established another Thai company in 2002 and most recently, you have moved to Vietnam in 2012. What other countries have you identified for further expansion into and what strategies are you looking to employ in order to do so?
North America, Europe, Australia and Southeast Asia have been marked as potential locations. Many opportunities can be found through further expansion. It is not clear yet exactly how the company will approach these locations, and it will solely depend on the market. Each location is its own challenge. The other aspect we need to consider before making a decision is listening to the customers. If a customer requires us to penetrate a certain market, then we need to take that under consideration. One thing I can highlight for sure is further expansion into Southeast Asia. We already have an established presence there.
The strategy we think will either be in the form of M&As or perhaps some form of strategic collaboration with local partners. It is not clear at this point, but when the opportunity presents itself, we will be ready.
Imagine we come back on the last day of your presidency. What goals or dreams do you hope to achieve by then?
There are many things I would like to achieve during my time as president. The first thing that comes to mind is the idea of creating a more sustainable society. We need to eliminate the burden of plastic, and it is our responsibility as a plastics manufacturer. Obviously the issue of CO2 emissions is key too, and we at Kodama Chemical Industry want to be a company that helps contribute to society in a positive manner.
I want to make an impact on the employees too, and I consider each one very important. You can spend all the time in the world strategizing and coming up with plans for expansion and sales. At the end of the day though, people are the ones that will make or break a company, and it is those people that make the company great and generate profits. It is of utmost importance to keep people happy in their jobs and create excitement where they cannot wait to come to work the next day.
I would also like to be a part of the company’s pursuit of new potential materials, especially as we live in a multi-material world. I am always looking for new horizons. If I reach the last day of my presidency and I have created a lucrative & vibrant environment that people love to work at, I will have accomplished my goals.