With unique products such as the MULTI-BAG or the MICRO PERFORATION BAG, Siko is making sure that the future of packaging is a secure one.
If we could start with a brief introduction to your company, what are some of the key strengths of your company that set you apart from your competition?
SIKO was established in 1950 and we have about 300 employees and 8 factories in Japan.
SIKO puts effort into four categories: Multiwall Kraft Paper Sacks, ARRANGE BAG, PE heavy-duty sacks, and Plastic cardboard and box.
1. Multiwall Kraft Paper Sacks
Features of our Kraft Paper Sack: Sift-proof function, quick filling, and stable stacking, with other functions including an air vent by means of the inside of the bag having PE linings with MP (Micro-perforations).
BAG IN BAGs such as our bottom pasted BAG IN BAG or our valved type of BAG IN BAG can be helpful in a clean room. These bags are useful when you would like to take contents from outside to inside of the cleanliness room.
Regarding MP and MULTI-BAGs, now we operate with what we call MULTI-BAGs. The construction of the bag is that the outside is paper and the interior is gusseted polyethylene, essentially creating a double-bottomed bag. We supply these bags to the plastic industry.
The reason we started this is that with a conventional kraft paper bag is because there is heat and air inside. The inside air expands, and it makes the bag unstable, especially when stacked on a pallet. Customers wanted a bag that could easily release the air inside without contamination and compromising the seal. The bottom is heat-sealed, and kraft paper is applied over a plastic tube with MP. This tube is forming along with outer Kraft paper precisely together. This is our original design, and I will say that it is not easy to make.
Details are as follows;-, we start with the polyethylene tubes, and blow the small tubes with a punching needle. The paper then must conform to the gusseted shape of the bag, meaning that the air must leak out from the inside, but too much air would result in the bag losing its structure. It is a strict balance of air volume and pressure. That is why not many companies can make this bag. Many have tried and have failed. Conventional bags contain a lot of air when they are filled with contents, and during you are transporting by pallet there is a considerable amount of shaking.
2. Our ARRANGE BAG can replace corrugated cardboard boxes. The feature is fewer packaging materials and compression packaging. In fact, for example, when they are used for toilet roll packaging, the weight of the bag is one-fifth, stock space is only one-tenth, the supply frequency of an auto packaging machine is one-tenth, purchase order frequency is one-tenth, and packaging costs can be reduced by 30% or more.
3. PE heavy-duty sacks,
Our PE heavy-duty sacks are for various applications.
Micro-perforations (MP) bags are used in fertilizer bags and FFS bags in Japan.
Our MP bags are known for stability when they are stacked. These bags have embossing and holes on one or both sides. It is mainly used for fertilizers. We expanded this business in Japan.
MEIRO sealed bags for animal feed are for fermentation animal feed as Total Mix Ration (TMR). This bag has a labyrinth-sealed vent function for the gas to go out automatically so that there is no need for management during fermentation.
Regarding the FFS system (Form Fill Seal system), SIKO introduced this to Japan for the first time. This system is to supply printed gusseted PE rolls to customers, and they used FFS machines and cut empty bags from the roll, filling of their products, and close the bag mouth by the heat seal. We started this business because there were some inquiries from Singapore; which was known as our group company, SIKO PACK SINGAPORE PTE LTD (SPS). They were supplying paper sacks to a plastic manufacturing company. Due to requests from the market, SPS had to change the style of bags from paper to plastic. However, SPS did not have production facilities, so SIKO installed this machine from Germany to start producing FFS rolls in Japan, then sent them to SPS, and supplied them to customers in Singapore.
4. Plastic corrugated board and box
This has been widely used as a returnable box, for example, automobile parts and BIO COOL (insulation box for clinical specimens).
Why did you choose fertilizer as the first application for this product?
At our company, we produced PE bags for fertilizers for a long time. An agricultural organization called ZEN-NO mainly contributes to this market in Japan.
As an anti-moisture function, NO-PIN BAGs are widely used. However, when you transport without pinholes, bags filled with fertilizer may be in trouble due to expanding by barometric pressure and high temperatures, and stacked bags possibly slip.
For stable bagging and transportation, SIKO suggested MICRO PERFORATION BAGs (MP). These PE bags have small holes to vent out. The holes are too small for water to go through the bag. We designed the size, number, and positions of the holes without any effect on the quality of the content. A chemical company confirmed this water resistance function.
Do you have any new applications or fields that you would like to introduce this product into?
We have quite a high share of the Japanese market already. There are other companies in the market because this product is not patented. Simply just making a hole in a bag cannot be patented. There is a German company that has been utilizing this technology for a long time. In the domestic market, we produce the product and others copy us, but the customers can see the difference. The reason is that we strictly control the size of the holes. This is important, and to make these bags, you must meet this specification. We use a microscope to check the size of the holes. In terms of copycats, we do not compete with them. If I am honest, there are cheap copycats out there, but they cannot compete with us in terms of quality, and customers see that.
You could argue that this focus on quality is why Japanese companies have maintained leadership in niche B2B fields given the price competition from other countries. What is your take on this?
I feel we are no longer involved in this price competition. To compete in the price competition, you need machines, you need facilities, you need electricity, and you also need people. We cannot fight because of Japan’s nagging issues. The population is declining, so we can no longer easily increase our workforce. That is why we are targeting much higher-quality products and high-quality requirements. To maintain high-quality products, we have developed our own quality check methods and trained staff and operators for each function of the bag.
Plastic is one material that is notorious for causing large amounts of pollution. In Japan, 9.4 million tons of plastic is wasted every year, making it the third-highest country in the world in terms of plastic waste. When we look at paper, it makes up 17% of global waste generated every year. Can you explain to us the efforts your firm is taking to contribute to a more sustainable society?
Wasting plastic is a difficult thing to do because the materials in our industry making heavy-duty sacks can be recycled. Our production waste is recycled.
Usually when people think of plastic waste, they normally first think of shopping bags, as well as wrapping for food. These plastics cannot be recycled, and this is a serious problem. Japan has a big issue with wrapping excessively - it is not always necessary. When there are two or three layers of plastics around a food item, that is in my mind excessive waste. I think this is why, as Japanese people, we need to perhaps review our manner, or more specifically our culture. Without this review, I think that sustainability is something difficult to achieve.
Regarding paper sacks, I have been discussing with our production staff ways to reduce the number of layers. It is important for us to think about it but also consider how the bags are stacked and transported in bulk.
Despite our eagerness to reduce the amount of material in our bags, Japanese customers do not like change. Many are worried that modifications will lead to problems. However, these days, costs will dictate these changes. It becomes popular worldwide, and the price of kraft paper has increased by almost 50% recently. Add to that, there are problems in Eastern Europe with Russia’s invasion of Ukraine. After NATO’s sanction against Russia, they are not able to supply any wood or paper materials, and it has led to a shortage of materials. Russia had previously supplied 5% of the world’s paper material.
Luckily for us, Japan imports paper materials from North America, especially from the East Coast. We are not really affected by the conflict in Ukraine. Europe on the other hand is suffering from the shortage.
Additionally, we can produce bags for the ASEAN market on behalf of western companies. Japan still has room for production capacity. There are 50 members of the paper bag association here in Japan, so if we combine our efforts, we can produce a lot of bags. We always work with our customers to offer them the best option for their business.
Another product that is famous for SIKO is the Valved type pasted BAG IN BAG. Can you elaborate more on this BAG IN BAG and how it is superior to other kraft bags in the market?
SIKO developed and patented this valved bag with an inner polyethylene bag. We have many types of BAG IN BAG, which differ slightly from our Micro-perforated Multi Paper Bags (MPM), and it comes down to the filling type. MPM uses an inner polyethylene tube with a bottom-pasted bag so that after you fill it with the contents such as animal feed, starch, and alumina, the shape will become square. For the Valve type BAG IN BAG, we have developed our leak-resistant bag technology. We have experience working with many kinds of fine powders, such as foodstuff and fine chemicals which are used in a clean room. In Japan, we also are the largest producer of packaging for the carbon black market.
Could you elaborate more on your R&D strategy for us? Are there any products that you are currently working on that you would like to showcase for us?
Our big innovation is our product, ARRANGE BAG, which is a replacement for corrugated cardboard boxes. Our company has this concept of replacing boxes with paper bags, and we have received a lot of inquiries about ARRANGE BAG in recent years when the price of boxes increased. However, it is also true that it is difficult to replace boxes for our ARRANGE BAG unless conditions such as the characteristics of the contents and the cost of the contents are met. As a replacement for boxes for toilet rolls, rice, and secondhand clothes, the transport we implemented for our ARRANGE BAG has been able to reduce costs dramatically. We feel this would be of great aid to some developed nations that have been affected by the increase in raw material prices recently.
What is the role that partnerships and co-creation play at SIKO, and are you looking for any partnerships in overseas markets?
Unfortunately, we cannot talk about this right now. I will say however that we do want to make good connections with some overseas companies in Europe and ASEAN countries. We want to create a network so that we may introduce our products to more people globally.
Japan has the oldest society in the world and a rapidly shrinking population, creating issues such as a labor crisis and a shrinking domestic market. What are some of the challenges and opportunities this demographic shift presents for SIKO, and how are you adapting to them?
In Japan, the market is shrinking, and it is becoming increasingly difficult to hire new machine operators. Take for example a machine that we have that we call the BAG MAKING MACHINE. This machine consists of two machines, the tubing, and the bottoming machine. Imagine that the tubing machine operator is sick today. Now I have lost the production of 50,000 tubes. Because one person is absent, the factory has to stop. This is not just my factory; factories all over Japan are the same. We are in a lucky position ourselves where we can operate our factory even if we are missing an operator. That is why we have been receiving orders, and that is not only directly from customers, but also the profession. We can run our machines.
Honestly, we are a little concerned once this population decline hits. Other industries and companies will start to increase the pay of workers to attract the necessary manpower. SMEs are going to struggle in that environment. The efficiency of production in this environment is the key to survival, and we at SIKO feel like we need to work hard to build trust and loyalty with our customers.
About 10 years ago, we felt that this population decline was coming, and it is why we have continued to hire as much as we can, as well as built trust and loyalty among those workers. We like to think of ourselves as a family; working together and supporting each other. I do not want to create environments where workers do not want to come to work, but rather the opposite. However, manpower is still difficult to maintain.
With our workers, they are recommended to take national qualifications for Certified Skilled Worker of Machine maintenance. There are three grades, with the first grade being the highest and the third being the entry point. We pay for the examination fee for our employees, and then we pay a further JPY 3,000 a month for the qualification fee every month that the employee continues on the production site. This monthly payment to the employee is paid until they retire. If that employee achieves second grade, it is JPY 6,000 per month, and if that employee makes their way to first grade, it is JPY 10,000 per month. We want our workers to have pride in their work, and pride in working for SIKO. My target is to have around 100 workers go for this national qualification, and already we have 72 employees that have achieved at least a third grade.
We are building a new factory in Fukushima. To be proud of themselves for working at SIKO, we will hang the names of the employees who achieved this national qualification. I am sure it will help them to have self-confidence.
Imagine that we come back five years from now and have this interview all over again. What are your goals for the next five years?
I began to work outside the company as a sales engineer after graduation. While I was belonging to the previous company, I was stationed in Asian countries. My son and daughter were born in Thailand. I joined SIKO in 1991. Although I started working as a salesperson, I kept suggesting new ideas since I knew well about machinery structures and it was also based on my character of “never give up, and never end until achieving customer’s satisfaction and my goal”. Even now, my mind is full of new ideas and I still keep creating new products. I am always thinking about how to make them happen, discussing with mechanical companies and my subordinates. Thanks to the people around me, I feel like I am in a lucky position where I am free to explore possibilities in the heavy-duty sack industry.
Five years later, I believe that the President of SIKO Tadaomi Shiraishi will enhance our products’ features.
I want SIKO to develop each one of us by keeping learning in each field as a specialist and appealing to both all of our valued employees and graduates feeling like they are all SIKO’s treasures. By working hard together as one team, we can create great things.