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Sanyo Seisakusho: Pioneering excellence in mold design and manufacturing

Interview - January 30, 2024

Sanyo Seisakusho, a prominent company specializing in mold design, manufacturing, and plastic product molding, provides insights into its diverse business operations and strategies. The company's core strengths lie in its integrated production process, which seamlessly combines mold design with molding, and its expertise in super engineering plastics (SEPs). While discussing the evolving demands in the automotive sector, Sanyo Seisakusho explains how it leverages its specialization in SEPs to capitalize on the industry's shift toward lightweight and eco-friendly materials.

MASAHIKO KATO, REPRESENTATIVE DIRECTOR AND PRESIDENT OF SANYO MANUFACTURING CO., LTD.
MASAHIKO KATO | REPRESENTATIVE DIRECTOR AND PRESIDENT OF SANYO MANUFACTURING CO., LTD.

Could you provide an overview of your company?

The two pillars of our company are the mold design and manufacturing division and the plastic product molding and processing division. The secondary processing division exists to cover the plastic product molding division. Developing a second process machine internally, we can add second processing on the product and produce with additional value.

Through seamless communication between the divisions, the manufacturing of molds and the molding process using the molds are performed consistently, enhancing the synergy effect.

This "integrated production process" is our strength. It not only reduces adjustment costs, but also enables us to handle high-performance, high-value-added resins. This integrated production process is also the reason for our extensive expertise in super engineering plastics (SEP). This interaction enables us to serve a wider range of customers and contributes to improved sales and profitability.

The ratio of external sales of molds, handled by the mold manufacturing division, are 81% for automotive parts manufacturers and 16% for consumer electronics manufacturers. Our independence allows us to offer a broad range of products, aiming to serve diverse industries as comprehensively as possible.

In the plastic molding and processing segment, sales of tag fasteners, tag pins, and cable ties (binders) accounted for 72% of total sales, followed by automotive parts (22%) and SEP products for special industries such as medical equipment (6%).As for tag pins and tag fasteners, fashion giants such as Uniqlo, Adidas, Hanes, and Nike are currently using our products. Our SEPs are used in medical devices as well as in the aerospace industry, where they are highly appreciated.

 

The automotive industry is undergoing a significant transformation, transitioning from combustion engines to hybrid and EVs. This shift is impacting material choices and design preferences, favoring one-piece designs over multiple assemblies. There's also a focus on lightweight vehicles, reducing the use of heavy metals while increasing the adoption of new plastics and resins. How is your company addressing these evolving demands in the automotive sector, particularly concerning compact components and the development of lighter-weight materials?

Our company hasn't been directly affected by these new demands as the parts we manufacture primarily serve as decorative components rather than core structural or engine-related parts for cars. We see the increased focus on automotive weight reduction as a great business opportunity for our company, which also specializes in SEP products.

Polycarbonate components comprise a mass market with significant competition from Chinese manufacturers and other countries like Vietnam. How does your company maintain competitiveness in an industry where pricing plays a crucial role?

Our stable clientele in Japan enables us to operate with flexibility and stability. While general-purpose plastics are indeed produced in China, factoring in shipment costs and customs, the final sale price would surpass what we offer to our Japanese clients. Our enduring relationships within the Japanese market sustain our presence.

Additionally, China and Vietnam primarily focus on mass production, unlike our approach. They are less inclined toward small lot orders, whereas our specialization lies in crafting unique products tailored to our customers' specific needs.

From your perspective, which industry do you believe holds the greatest potential for future growth?

Resins are constantly evolving and new resins are coming onto the market. We handle everything from general-purpose resins to high-performance resins (super-engineering plastics), and recently we have also been handling environmentally friendly materials. As research and development facilities, or as "mother plants" (which are "high-value-added factories" in charge of making prototypes of new products and key components), we are familiar with a wide variety of resins, which helps us to respond to the various requests of our customers in the mold and die business.

To become a mold manufacturer that can survive in the global environment, we must take on the challenge of manufacturing high-value-added molds. There are three major global trends. The three are "guaranteed accuracy," "high-end," and "fine/precision." In order to meet these challenges, it is essential to specialize and to be familiar with the environment, processing equipment, and resins. We believe that the essential condition for a mold maker to survive is to take advantage of our strength in the integrated production of molds and molding to take on the challenges of these new fields.

Japanese manufacturing is at an exciting time. The past three years have seen large supply- chain disruptions due to COVID and the US-China decoupling, and as a result, corporate groups are looking to diversify suppliers for reliability. Known for their reliability and advanced technology, Japanese firms are in an interesting position. Due to a weakened Yen, observers argue that this is a unique opportunity.

- Do you agree with this sentiment?

Yes, I partially agree with this sentiment. We do not deny the interest of various countries in Japan's manufacturing industry due to the international situation. Certainly, Japan is politically stable, the revision of laws and legal interpretations are legitimate, and since we are not under dispute with other countries, our country's geopolitical and country risks are low. In this respect, our reliability is high. Since Japan possesses advanced technology, there is a possibility that it can replace China. On the other hand, while there is a labour shortage worldwide, the shortage of human resources in Japan is becoming an even more serious problem. Even when we receive inquiries, only companies with highly automated production systems are able to respond. The recent weakened yen has been an advantage for Japan's export industry. However, we do not see it as a great opportunity. This is because exchange rates fluctuate. Changes in the international situation, especially in the U.S. domestic situation, may cause a major change in the U.S. interest rate policy. It is quite possible that the yen will appreciate even in the short term. Negative factors such as the rising cost of raw materials due to the weak yen cannot be ignored.

- What are the advantages of Japanese suppliers in this current macro-environment?

I see there are only few advantages in this current macro-environment However, due to geopolitical risks and the weak yen, some major Japanese manufacturers are returning to their manufacturing bases in Japan, so-called 1 "reshoring", which are for projects that do not involve large capital investments. This trend of returning to Japan is an opportunity for small and medium-sized suppliers to increase new transactions and orders. We are also focusing on this trend and conducting sales activities to acquire new customers.



Japan is known for its monozukuri capabilities; a philosophy deeply rooted in Japanese culture and industry, emphasizing the pursuit of excellence, precision, and quality in the creation of products. This commitment to "monozukuri" sets Japanese manufacturing apart and is a key factor in the success and reputation of Japanese suppliers. Your company is no exception and perhaps represents this more than most in its ability to develop molds for different kinds of injection molding used in various industries like automobiles, home appliances, and weak electricity-related industries. For Sanyo Seisakusho in particular, how do you ensure the highest quality of your products?

We maintain the quality of our molds and mass-produced products in accordance with ISO-based quality standards and based on know-how that has been handed down for 65 years. In addition, we have documented our own design standards, and we also systematically manage the problems that have occurred in the past by compiling them. Moreover, we ensure that work is not assigned to a single person, the work does not belong to a specific person and maintains the same quality. (Supplement) - Recent Trends and Our Definition of Quality The commitment to MONOZUKURI is one of the outstanding aspects of Japanese manufacturing, and this commitment is based on the perfectionist mindset of the Japanese people. We have been uncompromisingly and thoroughly improving the quality of our products, bringing to market products that we believe are 100% perfect. In the past, those were the usual goals of companies at all levels. In the global world, however, the trend has shifted to how quickly products can be brought to market and how cost-effectively they can be produced. Also product life cycles are becoming shorter, and customer quality requirements are declining, with the trend not to demand 100% quality except for some very advanced equipment and products requiring safety for parts and people. Under such circumstances, our products are not designed to be of the highest quality, but rather to be of a level that will not cause any problems in use. The demand for the highest quality and perfection increases the cost of production, which is reflected in the price to the customer.

In the next 15 years, one in three people in Japan are expected to be over the age of 60. This could lead to a labor shortage, as well as a shrinking domestic market. - For Sanyo Seisakusho in particular, what are some of the challenges that this demographic shift has caused, and how are you reacting to those challenges?

The shortage of human resources is an urgent issue that requires structural reform in all industries. In March of this year, we reformed our website and strengthened our recruiting (personnel recruitment) site. We also visit 2 universities and vocational schools to introduce our company and actively engage in recruiting activities. We will promote the company's appeal, including the fact that it offers a healthy and comfortable work environment, to increase employment opportunities. We do not believe that simply stepping up recruiting efforts will solve the labour shortage issue. Among existing human resources, we will promote multi-skilled workers and increase opportunities for female employees. Furthermore, as a manpower-saving measure, Japan needs to further strengthen DX and automation, which are lagging far behind developed countries. As for the promotion of DX, Japan is lagging behind, but there is room for growth. The situation is similar in our company. We will aggressively promote those measures to address the labour shortage. As for the shrinkage of the domestic market, we do not feel such a great sense of urgency because our competitors in both the mold and injection molding divisions are being eliminated as the market shrinks.

Sanyo Manufacturing can trace its roots back to 1956 and you have since grown to become a specialized manufacturer of molding and forming of different materials such as plastic, ceramic, metal, and super engineering injection moldings. - Could you highlight some key milestones in your history and how your business model evolved over time?

Our company was founded in 1956 and established two years later. At the time of our founding, we handled only molds, and our customers were mainly manufacturers of home appliances, audio equipment, and miscellaneous goods. Four years after its founding, the company established an injection molding plant. The reason why we started an injection molding factory was based on our belief that we must be familiar with the feelings of the injection molding manufacturers to whom we deliver the molds we produce. At the end of the 1960s, we began development of price tag pins and succeeded in mass production. In the early 1970s, we successfully developed and mass-produced tie-binding band, and in 1980 we developed and produced tag fasteners. We believe that this is the result of the company's two-division structure, the mold manufacturing division and the injection molding division, which we have operated since early on. During this time, our mold manufacturing business has expanded its customer to include home appliances, audio, general merchandise, automobiles, and medical products, and we have built up our capabilities to meet the demands of all industries. In 1986, we began manufacturing molds for super engineering plastics and molding products made of super engineering plastics for the medical industry, expanding the range of products we could handle. - The population grew during the 1970s and 1980s, and the apparel industry entered an era of mass production and mass consumption. In proportion to this, 3 demand for price tag pins and tag fasteners increased, and with a view to global expansion, we sought to collaborate with overseas companies. In 1986, the Plaza Accord led to a transition from a fixed exchange rate system to a floating exchange rate system. A visit to China and Hong Kong allowed us to assess the situation. Seeing this as an opportunity, we entered into a partnership agreement with a Hong Kong company in 1988. First, we moved forward with the overseas transfer of production lines for tie binding band, followed by the transfer of price tag pins and tag fasteners. In 1993, we established a factory in China in order to expand our global operations in earnest. After this, we will also promote export business of molded products to the U.S. and Europe. In the mold making business, the demand for molds decreased in the 1990s as consumer electronics makers began to produce their products overseas. We have started business with automobile molding manufacturers with whom we had no business at the time of our establishment. In 2002, a new molding plant was established in Japan. We have started production of injection-molded automotive parts with the aim of developing a pillar of revenue other than the products we have handled until now (price tag pins, tag fasteners, and tie-binding band). In the 2000s, in Japan, Sanyo promoted plant consolidation and organizational reforms with the aim of reducing manufacturing costs. In China, in response to rising labor costs, we established an injection molding production plant in Shandong Province in northern China, bringing our total number of production bases to two with DG in the south. - In the future, with a declining population and a sense of stagnation with no innovation, we need to intentionally strengthen our global awareness to more deeply "see Japan from the world" and "see the world from Japan. As in the past, domestic demand in Japan cannot be expected to increase. On the other hand, the market for price tag pins and tag fasteners, which developed globally at an early stage, is facing an uphill battle due to the aggressive competition and growing environmental awareness in Europe. The era of mass production is over, and people's needs are shifting from "getting things" to "experiencing things. Manufacturing should essentially be centered on "people" and should be creative. We are convinced that innovation will occur when our molds and molding technologies are matched with solutions to the problems of many people. - Tag pins and tag fasteners are the best of our mold design and injection molding technologies, we must reaffirm that these are creative products with "people" at the center. Furthermore, we believe that our mission is to develop products worldwide that exceed these existing products.

 Sanyo manufacturing prioritizes stable mass production, drawing on vast experience from making over 12,000 molds for resin molding. You excel in mold design for diverse products, including those in home appliances, electronics, automotive, and medical sectors, and offer post-production support and mold repair services. -How does your company maintain high-quality standards during mass production while producing molds for various products with different resin types and processing technologies, such as home appliances and medical devices?

Even from the perspective of supplying molds, what customers ultimately want is to use those molds to produce quality molded products. Soon after our company was founded, we established a molding factory. As a mold manufacturer, our objective is to acquire molding know-how. We believe that sharing know-how on resin characteristics and molding conditions will enable us to produce molds with good moldability. Specifically, we will include people with molding expertise in the preliminary mold design review meeting. Incorporate mold and molding training into the curriculum for new employees. We believe that through these activities, we have been able to produce molds that can guarantee mass production molding. Resins are constantly evolving and new resins are coming onto the market. We handle everything from general-purpose resins to high- performance resins(super-engineering plastics), and recently we have also been handling environmentally friendly materials. As research and development facilities, or as "mother plants" (which are "high-value-added factories" in charge of making prototypes of new products and key components), we are familiar with a wide variety of resins, which helps us to respond to the various requests of our customers in the mold and die business.

As mentioned before, Sanyo Seisakusho produces molds for different products with various resin types and processing technologies such as your tie-binding band and super engineering plastic used in the automobile industry. -With such a wide range of molds made, which one would you reckon to have the most growth potential from a business perspective?

-Are there any new types of models you would like to produce in the future?

As you say, there is a wide range of mold types we produce. The mold industry was Japan's strong area. The recent (2023) ratio of mold production output is as follows, China ranked first with 47%, the U.S. second with 15.3%, and Japan third with 14.4%. Competition will further intensify in the future. Chinese manufacturers are on a remarkable offensive and are expanding their market share in Japan. Traditionally, they have had the advantage of low cost and quick delivery, but recently quality has also improved. To become a mold manufacturer that can survive in the global environment, we must take on the challenge of manufacturing high value-added molds. There are three major global trends. The three are "guaranteed accuracy," "high-end," and "fine/precision." In order to meet these challenges, it is essential to specialize and to be familiar with the environment, processing equipment, and resins. We believe that the essential condition for a mold maker to survive is to take advantage of our strength in 5 integrated production of molds and molding to take on the challenges of these new fields.

In many interviews with other key players in the industry, they emphasized how participating in open innovation finding local partners overseas, and combining their expertise was crucial to unlocking the international market.

- What role do partnerships play in your business model?

- Are you currently looking for new partners, particularly in overseas markets?

We believe that partnerships with partners that accelerate B2B business and innovation are the triggers for business chemistry, and we keep our antennae up and always on the lookout Currently, that movement is only taking place in Japan. Sanyo is located in Aichi Prefecture, JAPAN. The word Aichi means "love of knowledge". In October 2024 One of the largest startup support centers in Japan will open in a center of knowledge”Aichi. We have been participating in this activity since 2022, when it was still in the preparatory stage. We are taking various actions such as building connections, participating in open innovation events, attending pitch events, connecting with students who aspire to become entrepreneurs, and communicating the appeal of manufacturing in university classes. One of the reasons for the stagnant Japanese economy is the lack of major innovation. It is said that innovation happens on the frontier. We believe that when values intersect, a chemical reaction occurs. We are trying to create movement in Aichi/Nagoya by participating in exhibitions of different industries and holding cross-industrial exchange events hosted by our and we are doing so. different a company, Focusing not only on the domestic market but also on overseas markets demand in the tag pin/tag fastener business is not expected. This is because the population is declining, domestic production of applicable products in Japan is decreasing, and there are fewer places where they are used. On the other hand, if we look around the world, we see countries with growing populations and intensified production. The Southeast Asian market in particular is growing remarkably, and we are targeting it. We are looking for partners with local expertise in those regions.

Sanyo Seisakusho not only has operations domestically but also through your production plants in China (1993) and subsidiaries in Hong Kong (1996)?

 -How are you able to ensure the same quality as if it was produced in Japan?

We believe in the importance of people-to-people relationships, even in different countries. Respecting each other's values, culture, and business practices, and continuing to do so, leads to a strong relationship of trust. We believe that without a relationship of trust, they will not understand what we are seeking. Our partner factory in China mainly produces tag pins and tag fasteners, which are our main products. We sell our products to customers in Japan and overseas, and have established a firm position as a high-quality product. In order to continue to assure quality, we must meet these requirements, which include highly difficult 6 Domestic molds and molding, and rigorous inspections. In addition to technical guidance, we established a quality assurance system early on. Furthermore, we have made it a rule to have issues and problems reported and discussed immediately. Recently, we have also been working on online communication.

 Sanyo Seisakusho has broadened its sales channels through North America and Europe.

-Where would you like to expand your sales channels and how do you aim to do so? Are there any specific countries or regions you would like to cater your products to? - Where would you be interested in continuing your international expansion and/or which strategy would you use to achieve so? (New subsidiary, joint-venture, M&A, etc...)

We believe that strategy and sales channels are a pair. It is important to gain a new and deeper understanding of our products. Our products, as mentioned above, are molds, molding, and tag pins/tag fasteners. We cannot proceed with business unless we clearly define "what kind of strategy we want to use to expand our sales channels," and based on these, match the needs of our customers with our strengths. This is even more true overseas. We will exhibit at SMART MANUFACTURING SUMMIT (2024.3), an event for the manufacturing industry connecting Japan and Europe, and promote research. https://sms-gi.com/ Many of the manufacturers in our industry who have expanded overseas belong to KEIRETSU. We consider it extremely risky for an independent manufacturer like our company to enter the market. In addition to careful research and targeting, it is essential to secure a basis for ensuring profitability. Since domestic demand is not expected to grow, we place importance on designing overseas sales channels. There is still an untapped market in the existing tag pin and tag fastener business. We value our contacts with overseas sewing manufacturers and buyers who come to fashion and general merchandise exhibitions held in Japan. Currently, we have been conducting business (making contact) with those customers online. In the future, we are considering visiting local markets with high potential and exhibiting at trade shows.

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