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Sakaguchi looking to bring its industrial heating and sensing solutions global

Interview - September 1, 2023

Since its foundation in 1923, Sakaguchi has continued to develop industrial heaters and sensors of unrivaled quality.

MAYUMI HACHIYA, PRESIDENT OF SAKAGUCHI ELECTRIC HEATERS CO., LTD.
MAYUMI HACHIYA | PRESIDENT OF SAKAGUCHI ELECTRIC HEATERS CO., LTD.

What do you believe are your core strengths or competencies that set you apart from your regional manufacturing competitors?

One of our key strengths and reasons for our longevity is our ability to sustain business operations for over 100 years. It’s not unusual for companies to wind up within 30 years, but we survived this 30-year-cycle three times already. In fact, more than 30,000 companies in Japan are lasting for over 100 years. As you may be aware, quite a few research and studies have revealed that there are some common characteristics in these longevity companies, and one of them is that they have a clear management philosophy.

One crucial aspect of our company's success is the understanding of our core values by our employees. They comprehend what Sakaguchi stands for and our company's principles, which contributes to our strength. Additionally, our personnel work under varying circumstances, including having family and personal concerns. In such situations, teamwork becomes crucial, allowing us to leverage individual characteristics and collaborate effectively with our employees.

We have successfully aligned our employees' perspectives, and one reason for this alignment is the founder of our company. He shared with us the founding spirit of the company and the reasons behind its establishment. According to him, we are not isolated but rather connected to society and owe gratitude to the people around us. Repaying this favor is manifested through managing the company, which becomes his way of expressing gratitude for being part of this world.

This corporate philosophy has helped us overcome difficult situations, demanding orders, and client expectations. We continuously cultivate a sense of gratitude for the people around us, and this mindset has stood the test of time.

Guided by this philosophy, we have been able to respond to various client demands across different sectors. By doing so, we fulfill market and industrial needs for heating solutions. This approach has enabled us to accumulate the know-how and technology we possess today.

By understanding the requirements of our diverse customer base, we provide optimal solutions tailored to their needs. This positive cycle we have created as a business model forms the core competency of our operations. As you mentioned, we are not engaged in producing consumer products but rather specialize in providing specific, tailored made products to meet certain requirements. Our diverse client base and their varied orders have helped us accumulate capability, overcome challenges, and gain experience over the years.

So-called “lost decades” were indeed challenging. Our business has been sustainable because we serve the needs of different clients, even during difficult times.

Although certain sectors may decline, others thrive, allowing us to maintain stability in the industries we serve. During these challenging lost decades, some Japanese companies, including public agencies, continued their R&D efforts. By responding to the technological and R&D needs of these entities, we have gained the resilience to survive.

 

You mentioned that your strength lies in the accumulated know-how and technology that has allowed you to thrive in this dynamic environment. However, the challenge for SMEs like yours is how to maintain and preserve this knowledge for the next 100 years and future generations. On one hand, there is declining interest among young people in Japan to pursue careers in manufacturing, which makes recruitment challenging. On the other hand, you need to find ways to preserve and codify the expertise you have accumulated over the years and pass it down to the next generation. As the president, could you elaborate on how you are approaching this challenge in relation to Japan's demographic situation?

This is a very good question. In fact, during the period of high economic growth in the mid 1950s to early 1970s, know-how and technology were rather accumulated within individual personnel, which was a result of their dealing with rapidly growing customers’ and industries' needs. This situation became relatively invalid in the postbubble period because the whole industrial and economic environment has changed so that successful experience in the past no longer applied. One of the keys to create “another” successful stories was to share those know-how and technology within the company to arm ourselves to tackle drastic changes in the lost decades. I talked with all sales personnel across the country and found out that they also recognized appropriate information sharing and utilization within the company was a crucial element in surviving the post bubble.

As a president, it was obvious that one of my missions was to address this issue of knowledge transfer, so I implemented a new system of internal information sharing.

This system has allowed us to collaborate on projects that are rather difficult for a single person to handle. It enables personnel to teach and learn from each other, fostering a culture of knowledge exchange. A person who has experience in a process can teach someone who is new to it. This process allows personnel to accumulate successful experiences, which has been one of the key factors behind our success.

Looking ahead, I anticipate that the challenge of attracting younger generations to monozukuri and the manufacturing industry will persist. To address this, we have two approaches to recruitment. Firstly, we recruit new graduates who join us as fresh talent. Secondly, we also consider mid-career recruitment from various industries, not just the heating industry. We welcome individuals with diverse backgrounds, including bakers, car-sales, or professionals from other fields, because they have experiences and knowledge of how to be an attractive businessperson.

While they may not have much knowledge about the heating industry initially, they recognize the value of hard work and the opportunity to learn from our customers. They understand that even during challenging times, there is much to gain from working in the heating industry.

For new graduates, we emphasize that even if they lack a technical background, we provide training and support. We assure them that everyone starts without much knowledge, but through dedication and accumulated experience, they can develop successful careers. This positive attitude and the worthiness of the work itself is a characteristic of our business model, which attracts individuals from various backgrounds.

In terms of retaining knowledge and expertise, we also value our long-serving employees. For example, one of our board members has worked with us for over 40 years including when he was an employee. We have adjusted the retirement ages of employees to accommodate their valuable contributions. Even after retirement, we rehire them, allowing them to work until the age of 70 or even over 80 if possible.

Lifting the retirement age ensures the transmission and inheritance of our company's know-how. While working actively may be challenging for employees at such advanced ages, it remains crucial to pass on our assets both tangible and intangible to younger generations.

Although we cannot control the population issue currently faced by Japan, we focus on the quality of recruitment rather than quantity. Each year, we carefully select bright students or individuals, and sometimes the number may be as low as one or two. Additionally, to overcome recruitment challenges, we have already begun recruiting individuals from diverse backgrounds, including those with international experience, who are interested in our industry.



You talked about how in the past, there was a non-sharing culture regarding internal operations and product development. I'm really curious to learn more about how you've challenged and changed that culture as the president. You’ve had some interesting collaborations, like the one with a company in the peripheral equipment industry for the stirring implements. I'd like to know more about how you're not just opening up internally, but also externally, and if partnering or collaborating with foreign companies is something that you're pursuing.

Let me share a remarkable story with you. We had a highly exclusive high-temperature heater that no other company could replicate. This technology was known only to a single person, a gentleman around 60 years old. We were unsure how long he would remain with the company or when he would retire.

I realized that if he was the only one who knew how to create and operate the technology, the company would face a problem if he passed away or retired. My father, who was the vice-chairman, told me that the engineer could take the technology to the

grave, and we should keep it a secret.

However, I believed that if the engineer were to pass away, it would create issues for our customers. Losing their trust would result in lost orders and potentially the demise of the company. To address this, I proposed videotaping the process of creating the technology and documenting it through written questions and answers. I asked my father, the vice-chairman, to keep the records locked in the cabinet and open them only after the engineer passed away. He finally agreed.

Convincing the engineer to allow videotaping and documentation was also challenging due to the previous instructions not to disclose or share such information. However, I eventually succeeded in gaining his understanding and cooperation. This became one of significant milestones expressing the shift of value within the company: When it is necessary, go ahead and share and utilize that information in appropriate manners; Such culture leads to customer satisfaction in accordance with the times.

This experience led me to establish a shared information system within the company. Initially, some of the older personnel questioned why we were becoming more open and sharing information within the company. However, as we evolved and improved the system, the content of the shared information became more sophisticated.

Regarding collaborations with external partners, our extensive experience has allowed us to meet our clients' needs by matching them with the best suppliers. We consider not only the technological aspects but also the character of the companies we collaborate with, which influences the quality of our offerings to clients.

We have a network of over 500 partner companies with whom we collaborate to provide various solutions across different sectors and applications. Each client has unique requirements for heat types and control, and we strive to fulfill those needs. This collaborative approach has been a successful strategy for us, and we continue to explore new suppliers with innovative technologies to meet customer demands.

In addition to collaborating with industrial partners, we have also been actively engaged in partnerships with academia and the public sector. One example would be the collaboration with the National Institute of Advanced Industrial Science and Technology (AIST), a public agency, on semiconductor manufacturing technology. Starting from 2011, we have been conducting joint research with AIST in the Minimal Fab project. From 2018 to 2021, we also conducted collaborative development with Professor Kanamori from Tohoku University and AIST under the government's support program. During this period, we successfully developed the Minimal Laser Hydrogen Annealing device. Since 2021, we have been continuing our research collaboration with Professor Kanamori from Tohoku University.

AIST is currently constructing a new semiconductor system called the Minimal Fab, which caters to the demands of high-mix low-volume and variant-variable production. Our company has been involved in the annealing process within the Minimal Fab since 2011. By significantly compacting the investment scale of both the factory line and the prototype line, the Minimal Fab aims to not only enhance cost competitiveness but also establish a research and development-centric approach as a source of high added value. Simultaneously, it aims to capture the potential market of variant-variable production, striving for a new industrial model. The investment amount for a single line is approximately 500 million yen, which is thousands of times smaller compared to conventional mega-fabs.

If you search for "SPring-8" on YouTube, you will find detailed information. SPring-8 is a research facility located in Hyogo Prefecture, Japan, where they use a type of light called "synchrotron radiation" that can reach brightness levels billions of times brighter than the sun. This facility allows researchers to investigate the structure and function of materials at the atomic and molecular level.

Approximately 30 years ago, Sakaguchi delivered products to the SPring-8 facility. Recently, a new facility called "Nanoterras" has been established in Tohoku, which is a next-generation synchrotron radiation facility with longer wavelengths than SPring-8. Interestingly, our products (heaters and control devices) have also been installed in Nanoterras. This is because the reliability of our products at SPring-8 was recognized, leading to their use in the next-generation synchrotron radiation facility, Nanoterras. Just the other day, our young engineers updated the heating technology from 30 years ago and delivered products to Nanoterras.

It has been reported that ministers from various countries who attended the G7 Science and Technology Ministerial Meeting in May in Japan visited Nanoterras for an inspection.

Recently, thanks to the kind invitation of the customer, our young designer who worked on the design of products for Nanoterras had the opportunity to visit the facility and witness the actual utilization of our company's products. It was an inspiring experience for him, and his knowledge was further updated as a result

Our company was chosen due to our reliable and controllable installations over the years. In the photo you can see a heating jacket and the controller used to control the heater.

One of the Nobel Prize-winning experiments is related to the Kamiokande experimental apparatus. We were involved in its creation, using light sensors to capture information from 160,000 light-years away. Some details about the Kamiokande cannot be disclosed due to confidentiality, but our heating technology was used in the final finishing touch of the device.

This example showcases our growth alongside our customers. Now, we are in the fourth generation of this Kamiokande technology, called the Hyper Kamiokande. Our engineers are currently working on it.

 

You have a long history of participating in all kinds of trade shows like SEMICON, and Metalex is coming up this fall, a machine tool exhibition in Thailand. Can you tell us more about the process for you of connecting with prospective clients, and which particular sectors are your main focus?

We have had a store in Akihabara for more than 60 years.  In the heating industry, we are the only ones with a brick-and-mortar store. Akihabara itself has been evolving dramatically for the past decades and is also known to have good access to near-by universities such as Tokyo University. Tsukuba, an academic and research city, has been connected to Akihabara by an express train. In other words, our store has been able to receive attention from academia, which could be one of the building blocks of our strengths.

Thus, since the beginning, our capability and technology have received high praise from academia. Researchers would come to our store whenever they needed heat-related solutions. Through word-of-mouth and recommendations, our reputation grew.

Back then, without the internet, people relied on trying our products, and when the results were positive, they introduced them to their students, who in turn became professors themselves. This is where many of our stories originated.

I have also heard stories like Soichiro Honda (founder of HONDA) visiting our store, dressed in a working jumpsuit, searching for what he needed to build whatever he was designing. Stories like this symbolizes how our store played an important role in the dawn of Japanese industrial development. Now we have our branches close to customers, allowing us to understand and respond to their needs, thus providing them with ideal solutions.

 

In terms of your overseas development strategy, are there any particular sectors in which you're trying to increase your presence?

To address your question about our expansion plans overseas, our clients' products involve devices in which our products are embedded, and sold within other products. That is one aspect of our business. Additionally, we conduct business trips, typically lasting two to three weeks, mainly in Southeast Asia, where our sales team engages in marketing activities with clients in those regions.

We have several agents in various countries mainly in East and Southeast Asia, and we visit them, as well as local and Japanese companies based overseas, targeting areas with significant growth potential. It's essential for the agents to have a deep understanding of our heating products, so we collaborate with them, share information, and explore the potential for more clients overseas.

In terms of trade shows, our focus is on several key overseas markets, which include South East Asian advanced industrial countries, emerging markets, and rapidly growing regions where demand is high. Through meticulous analysis of market needs and competition in each market, we adjust our product development and marketing strategies to meet local requirements, with a strategic approach aimed at expanding market share.

Speaking about specific markets, we’ve seen growth opportunities in SEMICON and medical sectors. Even without physically attending events, we receive online orders from European countries. For example, this small product that I'm showing you is a ceramic heater that has garnered interest from various parts of the world. It measures 5mm square and can be heated up to 1000°C. While it is just one example, I've heard that it is sometimes used to observe the behavior of substances at high temperatures.

 

Your company is celebrating its 100th anniversary this year. If we were to return on the last day of your presidency, is there a personal goal or ambition you would like to have achieved by that date?

On the last day of my presidency, I would feel a deep sense of gratitude if, despite various challenges and difficult times, we were able to overcome them and accomplish everything we set out to do, and each and every employee would say, “Working with Sakaguchi has been a wonderful experience in my life,” nothing would be better than that.

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