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Mabuchi’s fusion of monozukuri and logistics

Interview - September 28, 2022

Founded 68 years ago, Mabuchi started out as a packaging firm and over time, in line with the needs of its clients, the company branched out into logistics, which led to the creation of its renowned Integrated Logistics System (ILS).  We spoke to president Mikio Sakamoto to find more about how the company’s journey from a packaging firm to a leading logistics provider reputed for innovations such as its ILS and steel packaging solutions, which were a first for the Japanese market. Mr. Sakamoto also touches on Mabuchi’s global expansion and looks ahead to the company’s upcoming 48th anniversary of rebranding to ‘Mabuchi’.

 

MIKIO SAKAMOTO, PRESIDENT OF MABUCHI CO., LTD.
MIKIO SAKAMOTO | PRESIDENT OF MABUCHI CO., LTD.

In recent decades, Japanese firms have seen the rise of regional manufacturing competitors, who have replicated the Japanese “monozukuri” by taking advantage of cheap products that have a lower price, but also have a higher rate of defect. Yet, we still see many Japanese firms maintaining a large global market share, especially in B2B markets. As both a specialized manufacturer of packaging, and in logistic systems and distribution, what does all this occurring mean for you and your firm?

One thing for sure is that compared to the rapid economic wealth phase of the Japanese economy, currently you see that it’s actually quite costly to do business in Japan. This includes the high labor cost, as well as the country being geographically an island. There is indeed a lot of cost in terms of transportation and it has been quite an advantage for many Japanese companies to have shifted their manufacturing sites overseas. However, I do believe that the value of monozukuri continues to be an essential component in terms of vital roles, both domestically as well as worldwide. That is something that we must continually have to export.

We believe that the spirit behind “monozukuri” of always thriving to respond to the client needs, is very intrinsic to the Japanese companies and is something that we must continue to provide to the world. “Customer first”. This spirit of always placing the customer first and always thinking of the customer needs, has always been the most important priority. As seen in last year’s Olympic Games that took place, the spirit of “omotenashi” - hospitality welcoming embrace - is a true trademark of Japan and is required nationwide. Here at Mabuchi, we believe that is also the foundation of our company and we strive to fulfill it.

Currently, there is a rapid acceleration of automation and mass manufacturing, and we still believe there is an important role to be played when it comes to niche areas. Here at Mabuchi, we pride ourselves on ensuring that we pay meticulous attention to all the details and that we’re able to satisfy each specific client's requirements, making sure that our manufacturing and packaging is optimal at all times. One of our greatest strengths here is the fact that we are able to take care of packaging needs of large-scale products, as well as extremely heavyweight products, up to 60 tons with high precision and delicate packaging. We try to continue to find ways to really enhance the strength that we do have in order to provide our unique style of service that can distinguish ourselves from our competitors who provide cheaper service in search of some kind of “price war” if I may say.

Something I want to show is actually an image of our steel packaging. Mabuchi was the first in Japan to provide such products. We pride ourselves on being pioneers of this type, as before us, only wood and other materials were on the market. The reason why we focused on steel is that it could make the whole package much smaller than wood in terms of its cubic volume, keeping its strength, and accordingly can contribute to the cost reduction of logistics for our customers.

 

When western media covers Japan, it’s through the context of its “super-aging” society, where one in three people in Japan will be over 65 by 2035. What is the impact of this demographic challenge for Mabuchi and what steps are taken to overcome this?

It is very difficult to get and maintain young talented human resources. Nowadays, young people tend to choose to take on jobs in other industries that are up and coming, such as the IT industry, and that is very challenging within the logistics department sector. One of the measures that was taken to face these challenges was to introduce a mechanism where we extend the retirement age from 60 to 65 years old and over. Also, to further increase the motivation, we have been implementing training programs for our older workers. It’s a structure where we provide opportunities for them to enhance and advance the current line of work they have and to then let them be able to continue working furthermore.

When it comes to the packaging and logistics manpower sector, there are also various manual tasks that can be automated, systematized and structured to be more efficient. There are of course different elements, such as marketing and the administrative tasks, and we have CRM (Customer Relationship Management) and SFA systems for them. By doing so, we are looking to systemize and digitalize where we can make things more “streamlined”. One of our recent developments in that realm is that we launched the Mabuchi Packaging Support System “MAPSS”, which is a system providing to our factory workers with specifications of wooden and steel boxes designed for optimized packaging.

 

What advantages does your history as a packaging manufacturer bring to your logistics business? What synergies are you able to create?

We began as a packing company, and over time, we started to receive many calls from our clients, telling us: “I’ll leave you with my product and my machine. I want you to do it all, from packing to ensuring that it reaches its destination safely”. From there, we began to roll out our system that we call: “The Integrated Logistic System”.

We started with a mandate to allow us to create the entire process, which involved receiving the freight, inspecting it and packing it, clearing the different customs obligations and approvals, and finally shipping to the destination factory. At that point, we make sure the whole process is taken care of by us and in the best way possible for the clients.



You have a packaging recycling initiative. What efforts is Mabuchi taking for environment protection and sustainable development?

This push towards carbon neutrality, especially when it comes to the packaging and transport sector, is posing a challenge and making our job quite difficult. It is extremely challenging not to try to produce waste when it comes to transporting material that is always wrapped in plastic or cardboard for example, but it does not mean we do nothing. We look into various measures in terms of reducing our carbon footprint. One of them is that now, in our factories, we are introducing the electricity generated by renewable energy. Also, we are switching to hybrid engines for our cars and forklifts, so we can run on cleaner energy.

Regarding our plastic materials, we have been using recycled plastic for a very long time already, and recently, we started using more natural resources too. Same goes for our steel cases; they are recycled and reused.  We also created an entire system for our client with a give and return system. We make an effort regarding the way the plastic is stacked and transported so it is efficient as possible, discussing with our customers.

 

How would you describe the role that collaboration plays for your business? Are you looking for new collaborators, particularly overseas?

In the past, when we were just doing packaging, we were working directly with the machine makers and then doing their packaging, as we had direct contact with them. Today, it’s much more complex and we work with various traders. Of course, with each different client, there are different contracts, so we need to make sure of their details and everything else involved. For example, knowing the movement of the freight, how it is going to be transported, whether it’s by air or sea, and when it reaches the destination country, where it will be delivered. From there, how it is going to be transported again. Furthermore, and like I mentioned earlier, we need to know what kind of waste will be produced. So really understanding the different steps in the logistic process, and for that, we are always working together with different partners and finding ways to create those mutually beneficial types of systems and projects.

With regards to our overseas activities in Thailand, our business involves working with a number of different partners and within the region itself, having all the services is needed, for example, the actual assembling of the packages, all the logistics, and ensuring that the human resources are in place. From that perspective, yes, we are looking for various partnerships to join our ventures there.

An interesting opportunity that has been revealed to us through our operation overseas is the fact that regarding our business in trading and selling various packing materials, some of the companies are pretty mainstream or have expanded within Japan. But when you go overseas, they have a whole range of new materials that are used for packaging, and it’s quite interesting to see that sometimes, if you add a little bit of modification or adjustment to that material, they can be something that the domestic market in Japan could also use. We are looking at how we could actually import that kind of material and eventually spread it throughout Japan.

 

Mabuchi already has a very international profile, with locations in Malaysia, Thailand, Indonesia, and you also expressed your desire to further extend your international business. How are you planning the development of your overseas business and what strategies will you employ?

We have a long history when it comes to overseas expansion. The first place we developed overseas was Singapore in 1978. Since then, we really have grown together with a large number of car manufacturers. When they shifted their sites overseas, whether it would be countries such as Thailand, Indonesia or Malaysia, we’ve been able to grow alongside them and bring our services from Japan to those overseas sites.

Of course, we are proactively seeking to expand our activities overseas, but there are many challenges, such as the difficulty to obtain and keep qualified human resources, that we are facing at the moment. If we were to find partners with attractive offers that would be possible to do within our capacity, that is definitely something that is appealing. However, the reality is that we will keep working with our current group of companies centered in Asia.

Expansion into western countries and other international regions other than Asia, I believe, is very important for this company, especially with the pandemic. Up until now, our clients have focused on the Asian manufacturing sector, but throughout this pandemic, we see the importance of the international supply chain. We see more and more companies, such as Toyota and Nissan, struggling with the shortage of components for their manufacturing, creating difficulties in the business. Nevertheless, in terms of our international strategy, how we can improve the imports into Japan, and facilitate that process is something that we are looking forward to.

Our overseas sites, the offices and facilities, are beginning to look at packaging, studying it and importing components into Japan. On the Japan side, coordinated operations of marketing, sales, and storage facilities to acquire clients who require such imported components is the key.

 

Imagine we are having this interview again for your 75th anniversary: what would you like to tell us? What is your dream for this company?

It’s been 68 years since the foundation under our previous name, but as ‘Mabuchi’, it has actually been 46 years. Currently in the office, we are moving towards our 48th anniversary as the benchmark. For our midterm strategy, our goal is to expand our sales back to pre-pandemic levels by the time we reach our 48th anniversary..

On a more personal note, it’s really about the wellbeing and the prosperity of all the employees and all their families. I hope Mabuchi is able to provide for those in its network in more than 50 years, even 100 or 200 years’ time, and to have an environment where the staff can work cheerfully and provide for their families, so that all the employees are proud of Mabuchi. To achieve that, I think about what we need to do.

When it comes to the expansion of the packaging and the logistics business, I believe that M&As are incredibly important. If we could acquire a company that is dealing with a direct manufacturer of the materials or the logistics itself, then we can further expand and provide interesting products, such as packaging materials under our company brand and other types of developments where we can put to use our R&D skills to roll out our products.   

 

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