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MARUKI SANGYO, the one-stop provider of plastic material

Interview - November 20, 2023

MARUKI SANGYO strong of 5 decades of experience established itself as a leader into plastic components, especially recycled ones which always taken in consideration since its foundation.

YUJI KOZONO, PRESIDENT OF MARUKI SANGYO
YUJI KOZONO | PRESIDENT OF MARUKI SANGYO

We would like to start by discussing Japan’s aging population. This pressing issue is currently creating two major problems, a labor crisis and a shrinking domestic market to sell products and services to. As a company that specializes in thermoplastic materials What do you feel are the challenges and opportunities that Japan’s demographic shift is bringing to Maruki Sangyo? To what extent do you need to look overseas to ensure long-term business success?

This shift is obviously something our company is facing and we can tell this purely by the numbers. 70% of our materials are sold domestically and 30% are supplied to overseas markets, so I think the figures there speak for themselves. As time rolls on I think this proportion is going to shift even more to overseas markets.

You might be wondering why this situation is happening, and I think it comes down to this population issue you mentioned. There is less usage of plastic materials by manufacturers of plastic products here in Japan. There are many firms that are now concerned with the environment and sustainability, and I think the idea of a circular economy is becoming a more popular tendency in the industry overall. The numbers are going to shift and we are going to become more dependent on overseas markets, that is just a reality of the situation.

We are trying to forecast and get ahead of the curve by introducing new technologies and pursuing new innovations. To avoid the situation caused by the shrinkage of the domestic market we are trying to innovate our production lines, develop and introduce new technological solutions. Japanese companies alongside us are dependent on overseas markets for access to advanced technologies and innovations in thermoplastics. This is where cooperation with local and international partners can be key in allowing our firm to stay competitive and develop new products and services to meet the evolving market demands.

 

Over the past 25-30 years we have seen the rise of regional manufacturing competitors from countries such as China, Korea, and Taiwan, who have replicated the Japanese manufacturing process, but done so at a cheaper labor cost, thus pushing Japan out of certain mass industrial markets. However, Japanese firms have still remained as leaders in certain niche, B2B fields. How have Japanese firms retained their competitiveness despite the stiff price competition? What do you believe to be the competitive advantages of Japanese manufacturers?

I believe that we have several features of our company that paint us in a positive light when compared to some rival companies in the industry. We have over 90 machines in our production lines including various machines of different scales and features. That allows us to get ahead of our rivals in terms of realizing just-in-time (JIT) delivery for customers. We are always prompt in this sense and we don’t allow ourselves to postpone or deliver products late.

With over 50 years of experience in dealing with different plastics, Maruki Sangyo has dealt with almost every possible variation you can imagine in the plastic world. Starting off with general plastics and making our way up to very sophisticated application purposes. This kind of accumulation of experience has allowed our firm to retain our commitment to quality. By producing high-quality products that can meet the high standards of customers, we are capable of meeting the challenges of our customers and build trust with our excellent quality.

 

Japan’s legislation is tightening when it comes to waste management and disposal options are diminishing right now. The Japanese regulatory environment is in constant flux, and companies have to make changes to become more responsible for their waste. What efforts are your firm taking in order to integrate yourself and your clients in this circular economy? How are you relieving your clients when it comes to very complex legislation regarding waste management and disposal?

Specifically, we are seeing more everlasting changes in legislative matters all across the world, and these are bringing much more of a spotlight on creating sustainable societies. This circle-type economy is somewhat of a tendency right now in many industries, and obviously, our company is looking to speed up these initiatives.

Talking to the customers is something that we always do, and that is because the customers are aware of the issues related to resource circulation. These customers already have started implementing measures in their production lines to leave less of a carbon footprint, so CO2 reduction is something that customers themselves are initiating in scope 1 and scope 2. As a company that provides these customers with raw materials, we have been implementing several strategies to assist with sustainability. One strategy we have implemented is obtaining Science Based Target (SBT) certification. As one of the 2,140 SBT certified companies worldwide, of which 350 are Japanese, we are committed in reducing carbon dioxide emissions in our manufacturing, sales and logistics process, hoping to achieve the goals that our company set for year 2030. On the operation side, we are replacing our manufacturing, logistics, and office equipment with more energy efficient tools to reduce our CO2 footprint. We believe that this activity can contribute to reducing our customers' carbon dioxide emissions in Scope 1 and Scope 2, as well as in Scope 3.Whereas for our sales process, on top of recycled materials, we are venturing into the sales of materials with biomass content and we believe that in order to achieve carbon neutrality, there will be a progressive shift from current mainstream fossil fuel based plastics to 100% biomass materials in the near future. Our company is also participating in the Pararesin Japan Consortium and is taking on the challenge of recycling Pararesin (biomass plastic) made from Euglena and cellulose.

In summary, Maruki Sangyo is implementing many strategies to promote better sustainability including the reduction in CO2 emission in manufacturing and sales process, and the sales and recycling of biomass materials.

 

Maruki Sangyo promotes itself as a one-stop provider of plastic material; from prime feedstocks to recycled materials. You offer different types of plastics including polyethylene (PE), polypropylene (PP), and polystyrene (PS) among many others. Experts are predicting that cars of the future will be 70% plastic, made up predominantly of polyamides such as Nylon, PP, PET, and polyvinyl chloride (PVC). Among all the plastic types you provide, which do you believe has the most potential for future growth within your business model?

If we go down the list by order numbers, the most prevalent plastic-type we are dealing with right now is PP, and the amount we are dealing with is actually a huge amount; almost a third of all of our business. PE and acrylonitrile butadiene styrene (ABS) are the next two most prevalent plastics. 4th would be PS, a widely used plastic that people use in their everyday lives, for example for food containers.

PP and compound resins have been forecasted for more use in the automotive industry which allows us to demonstrate our best features to major carmakers. They are not just buying raw materials, they are looking for plastic compounds with different components bonded together. This combination of different materials is something we are promoting as a strong point of our firm along with our ability to adjust to sophisticated customer needs.



Can you elaborate on your solutions and strategies for aligning your products and services with environmental SDGs, particularly those focusing on your compatibility with recycled resins? How are you able to maintain the quality of your recycled resins when compared to your more basic types?

This is a big problem for us and we are trying to take keen action towards solving this problem. First of all, from a recycling point of view, the ultimate situation is to have car-to-car in the automotive industry. We already have achieved this in the PET bottle industry but we don’t have that in the car industry yet. The idea is simple; to have plastic products that expire in a car to be recycled and then embedded into a brand new car as recycled materials.

Being a Japanese company does have its benefits in this regard. Japanese people are very well educated in these matters and that is needless to say anything about manufacturing companies here domestically. They do a good job of segregating waste material produced by manufacturing processes, and we think this is great. However, this segregation is not perfect, and the development of new segregation technology is one of the challenges.

Another aspect to mention is compounding process, and this is taking place as a secondary process, getting out the best features of plastic derived from scrap. Obviously, scrap is not perfect and it requires very sophisticated processes. I’ve already mentioned how we have over 90 different types of machines in our facility in Toyama, and this makes us the biggest Japanese recycling company dealing with thermoplastic products. That allows us to reach a high scale, high-quality level with our products.

Last but not least is temperature control. This is very important when dealing with plastics and throughout the process, it is very vital to control the range of temperature because plastic deteriorates when exposed to heat and oxygen. The temperature referred to here is the heat generated by the extruder's heater and the heat generated by the plastic itself due to the shear stress generated by the rotation of the screw. Keeping these in optimal condition is very important to maintain quality. As we own such a large range of different machines we are able to apply specialized equipment for certain types of resins and there is no risk of mixing plastic types. With the vast amount of know-how we’ve accumulated over the years we are very familiar with the processes needed.

 

Another aspect of your business is your coloring department. Right now coloring is essential for branding, and we know that you offer fully customized coloring options to your client, with special shades such as stone, pearl, and metallic. Could you give us an example of the most interesting or challenging coloring project that you’ve completed?

I cannot name one particular project, everything we deal with is quite interesting, specifically the wide variations of different coloring techniques we employ. Through recycled plastics, we can come up with different color variations with the scrap material. It is fascinating that there is no unified material because the scrap comes from different sources, so the coloring results vary and are interesting to see. We can see the variations and accumulate knowledge in a database, and with that knowledge, we know how to mix different pigments and polymers to achieve a desired color. Each project is unique and each color is also its own. We are also working with AI/computer manufacturers to increase recycling rates across industries.

 

Japan is known widely for its capacity to innovate and currently has some of the most R&D expenditures in the world at 3% of the national GDP. In comparison, the US only spends 2% and China only spends 1.5%. With that in mind, can you tell us what is your current R&D focus? Are there any new products that you are able to share with us today?

Another approach we are taking is applying new recycling techniques and technologies such as chemical recycling. This is a new tendency overall in the thermoplastic industry. Conventionally, heat is the major factor involved in recycling plastic, and additionally, extrusion machines operate on the basis of heat. Chemical recycling can be applied as long as it complies with environmental regulations and that it doesn’t exceed certain temperature levels. To use these new techniques and technologies in a proper way is the ultimate goal here.

Last but not least we must mention an industry trend that is becoming more popular, that being the reduction of the use of plastics. Basically, we are talking about less virgin plastic and more dependence on biomass plastics. In fact, more and more products are now switching over to paper, especially for organic products such as food. As these trends take hold we as a company need to follow, and in order to do that we need to acquire new machinery to handle things such as biomass plastics.



At the beginning of the interview, you mentioned that 30% of your material sales comes from overseas and that you are trying to increase this number by having new partners to procure these materials. What about partnerships that allow you to export your products? Are you looking for any partnerships to help export your raw materials to a wider range of areas?

International partnerships are something that our company needs in order to secure our future for the upcoming years. There is so much dependency on that 30% overseas sales rate. Throughout our processes, we understand that we need more partners. The key is local partners who can understand what we do here and what kind of plastics we are dealing with. We are always looking towards finding new partnerships as a way to address plastic recycling which is a global issue, through imports and exports.

 

In 1995 you opened your international department with the intention of finding partnerships internationally for exports. Are there any specific regions you are targeting right now for further international expansion?

There are two regions, and Europe is the number one priority right now. Plastics regulations across Europe are becoming more strict and companies are looking towards more environmental initiatives for recycling materials including plastics. Obviously, we are aiming for this area as somewhere we can go to help local companies recycle their plastic products.

CO2 reduction is another global trend that is becoming a critical factor now in Europe with all the regulations being put in place. The first big question is whether plastic manufacturers should be responsible for recycling, and this question is becoming a global problem in terms of reducing carbon footprints.

The ASEAN region I do believe will be a target that will become more and more important in the years to come. We procure from countries in the region, so in order to further develop the region discussions need to be had with local government organizations there. Getting information firsthand will be pivotal in creating a strategy for the company moving forward.

 

In terms of Europe, are you considering opening any subsidiaries or offices in the region?

We have been considering the possibility of opening a plant in Europe, but right now we consider a joint venture with a partner company or a partnership with affiliate companies as the best way to approach this move.

 

Imagine that in 2027 we come back and have this interview all over again to celebrate your company’s 60th anniversary. What goals or dreams do you hope to have achieved by the time we come back for that new interview?

I would like to have reached a level where we are utilizing cutting-edge technologies such as AI. Currently, we rely heavily on human work for recycling operation. With the power of new technologies such as AI, there are so many things that are now possible which we could never have imagined ten years ago. Technologies that can complement the work of humans are something we are thinking about quite seriously these days. We hope we could utilize the latest technology to create a comfortable working environment for our employees and to solve the global challenges of resource recycling and reducing carbon dioxide emissions.

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