Omori Machinery is a world-renowned packaging machinery manufacturer, whose machines are used to package food products such as instant noodles and confectionary, as well as pharmaceuticals. Around 60 percent of all instant noodles consumed globally are packaged using Omori’s machinery. In this interview, Toshio Omori discusses the company’s strategy to gain a stronger foothold in overseas market and new market segments as it contends with a declining market in Japan due to the shrinking and aging population.
In recent years, we have seen regional competitors copying and replicating the manufacturing processes of Japanese manufacturers. What has been the impact of on your sector and how do you remain competitive internationally?
Thanks to the diversity of our product portfolio, Omori Machinery has the skills to provide solutions for a variety of sectors. Nonetheless, we have historically catered for the food industry. Our main activity is to provide automated packaging machines for bakery and noodle-related items.
Years ago, Japan invented the instant noodle concept. As it grew increasingly popular amongst Japanese citizens, food manufacturers requested industrial equipment to enhance their productivity. Omori Machinery therefore started by offering noodle packaging machines. Sixty percent of all instant noodles worldwide are packaged by Omori or by subsidiary companies of Omori.
We also provide other kinds of solutions, such as plasters. Similarly to instant noodles, this product was also created in Japan. As we have been working on it for years, we have acquired extensive expertise in its manufacture and we have grown into a technological leader.
At Omori Machinery, we are constantly challenging ourselves by developing solutions appropriated to a variety of sectors. Our objective is, and always will be, to combine innovation with high-quality products. As a Japanese corporation, our domestic clients always had extremely high standards and we are therefore subjected to total quality control.
If we observe other competitors in Asia, we witness their rapid growth thanks to cheaper price offering. Since quality and cost are always related, we will not and cannot drastically reduce our prices. At Omori Machinery, our strategy is to be a quality leader. This dedication to adding-value and to maintaining high-quality standards are the advantages of Japanese Monozukuri. By combining our unique know-how and our state-of-the-art technology, we guarantee high-quality products.
As the Japanese market is currently shrinking due to its demographic decline, where are you looking for future expansion plans?
Because of Japan’s decreasing demography, we have expanded through affiliated companies and distributors all around the world. Nowadays, our products and machines can be found in China, India, Thailand, Canada, Europe and the USA.
To that end, the Chinese market represents a great opportunity for us. As China is a big consumer of instant noodles, our historical expertise and proven track-record allowed us to be highly competitive. We expended in China as early as 1994 through a joint venture. At our Chinese facility, we hired local employees and transferred our know-how to them, quickly allowing us to be successful. This “act local” strategy is exclusive to joint ventures and we do not apply it when collaborating with distributors. Our knowledge and expertise is what makes Omori unique; it is the essence of our “Monozukuri” and we strive to keep that value alive.
How do you ensure that the Omori quality is respected at your overseas manufacturing cites?
Our strategy consists of importing simple machinery equipment and parts from China. While this strategy allows us to reduce our manufacturing cost, it does not offer the high-quality standards that our clients require. As all the equipment and parts arrive in Japan, we complete the machine by customizing it to the demands of our client. At Omori Machinery, we can adapt each of our products to respond to the needs and quality standards of every customer. One the one hand, this strategy allows us to reduce price burden. On the other hand, it enables us to offer the high-quality standards we are renowned for.
As we provide machines to international clients, from India to America and Europe, the quality standards required differ from country to country. At Omori, we have the technological capacity to finalize the machines by adapting them to every customer’s needs and budget.
Can you tell us more about your corporate philosophy?
Omori’s philosophy was inspired by my father. My father was a truly inspirational man and he said many things that still resonate in Omori Machine today. For example, he strongly believed that curiosity and difficulties were key to keeping employees motivated. If one’s job is monotonous and routinely dictated by another person, he will get bored and his productivity will fall. However, if one’s job is difficult and if he is curious about what his labor has to offer, he will strive to achieve and to become the best.
Is food your business segment?
In the oversea market, our largest segment remains confectionary machinery. If we take a look at wheat consumption worldwide, a quarter of the wheat produced is used for bread-making. Another quarter is utilized for confectionary while another one goes for noodle-making.
Anywhere around the world, people consume enormous amounts of wheat. In the USA, people are very fond of Cookies. Throughout Asia, wheat is the base for noodles and for Chinese buns. While the instant noodle market represents 100 billion dollars every year, biscuit cookies is also a massive sector, especially in the EU, USA and in India.
In the case of India, we did an M&A with a packaging machinery manufacturer. The client base of our Indian partner includes the biggest names in the biscuit and cookies manufacturing realm. From India to the USA, Omori Machinery has the potential to tap into many markets. In Japan however, cookies aren’t that popular. Consequently, we were late to develop machinery for cookie manufacturing. Therefore, our Indian company is there to complement our lack of expertise by developing innovative machines. By combining our knowledge in base machinery and their expertise in cookie manufacturing machines, we have been able to produce highly technological products.
Omori alone cannot expand in all potentialmarkets. Furthermore, Indian quality standards are not internationally qualified nor recognized yet. If we grant support and enhance production quality, in 5 to 10 years we will be able to move into the American and the European cookie business thanks to our Indian partnership.
From a more general perspective, our strategy is to utilize the Chinese factory as a manufacturing base. As time goes by, the idea is to turn India into a second factory of the sort. In the future, we would like to localize the Omori technology to our bases around the world. The international market represents an endless sea of opportunities, and at Omori Machinery, we are willing to tackle it.
While India and China are two key markets, we are actively investing in our European and American activities. We also have a sales office in Thailand. As ASEAN is a booming market, we carefully observe it. All in all, Japan’s population is shrinking and going abroad has become a necessity.
How are you adapting to environmental trends?
As a machine manufacture, what we can do to protect the environment is limited. This issue is more of a packaging material problem. That being said, environmental consciousness has grown into a consequent concern, especially in Europe. As innovative packaging materials consume less than traditional plastic film and are therefore less harmful to the environment, we aim to develop machines with the necessary precision to handle any type of material.
Furthermore, we have lessened the material consumption needed for our machines to package and operate. We also make efforts in product positioning, which effectively reduces packaging consumption. Lastly, we also utilize our unique sealing technology to reduce the necessary packaging material, therefore lessening the environmental burden.
Are you looking for a joint venture in the USA?
We have a JV in Canada and they sell our products to the USA as a separate company. As they are not a machine manufacturer, we may find a possible M&A. At this moment though, we have no clear candidate. However, we are open to opportunities.
Your machines aren’t only used in the food industry. You also have clients in the pharmaceutical field. Can you tell us more about this diversification process?
In pharmaceutical field, Japan’s “Galapagos syndrome” is real. In comparison to Europe and to the USA, Japanese pharmaceutical products use many blister sheets. In Europe and the USA however, packaging includes one or two blister sheets per box. In Japan, people demand for prescriptions and the unit of blister sheets is greater than 10. Since the ways of selling products differ from one country to the next, so does machinery types. Our machines are fit to the Japanese market.
China for example is more half and half. Half of the packaging isJapanese style and the other half is western, creating an opportunity for us to grow. In the EU and in the USA however, our Japanese machines are not appropriate.
What are your competitive advantages in markets such as Europe where you compete with established brands?
Our name and brand is famous and we have established a strong reputation for cheese and sausage wrapping. We must now purse efforts to become renowned in confectionaries and in pharmaceuticals. Our expertise is linked to our ability to deliver high-precision and high-performance hermetic seal packaging machinery.
Furthermore, “controlled-atmosphere packaging” is currently trending throughout the world. This process includes putting nitrogen gas inside the package while taking the oxygen out of the package – therefore creating longer shelf-life. Products like cheese and ham require this type of technology. As we are specialized in hermetic seal and as our reputation is well-known, our name is recognized as a provider of superior technology in cheese and ham thanks to high-controlled-atmosphere packaging.
Because pharmaceutical products require similar products, we expect growth in the upcoming years. While we are not yet popular in that sector within the European market, we will develop our name in order to acquire more market share thanks to our superior technology.
What ambitions would you like to have achieved within the next 10 years?
Currently, our sales stand at 20 billion JPY. In comparison, our competitors, such as BOSCH or IMA, have ten times that revenue. Along with their quest for innovation, the limited size of Japanese corporations is a distinctive feature of Japan’s SMEs. In Japan, we strive to become a top niche organization.
In comparison, European enterprises believe in getting larger through M&As. To use a metaphor, when navigating the sea, having a big boat is safer than a small boat. Japanese SMEsare small boat and we must be careful of big waves. Therefore, my dream is to become a Global Top 3 packaging machinery manufacturer.