Harves is a manufacturer of special lubricants used in automobiles, electric instruments, electronics, optical and office equipment. For more than a century, their business has been supporting the quality of Japanese products behind the scenes, and today their expertise could be applied to any industry, with infinite possibility for growth. We talked with CEO Tomonori Maeda to learn more about their high-quality lubricants such as the DRYSURF and HI-LUBE, as well as how they are facing new challenges and turning them into business opportunities like their aging care line and skin care products made with natural sparkling water.
In recent decades, Japan has been somewhat overwhelmed in terms of mass production by regional manufacturing competitors such as China, Taiwan, and South Korea. Yet, we still see Japanese firms maintaining a large global market share especially in B2B markets and niche fields. As an integrated manufacturer of special lubricants and fluorine materials, what does monozukuri mean to you and your firm? What do you believe to be the competitive advantages of Japanese manufacturers that allow them to remain competitive?
Japanese are excellent in manufacturing not only due to our technology; there are many contributing factors as to why we remain competitive despite the tough competition. Having teamwork and working together for a common purpose is one of the greatest strengths of Japanese manufacturers.
The combination of efforts of the management and all the divisions in the company is very essential for the success and a good track record. For example, the person responsible for R&D cooperates together with their staff, and we have sales employees who are attuned to the needs of our customers. All of these combined bring benefits to the company.
It is a fact that there are other companies in the lubricant industry, and that these companies use the same raw materials. What is important in this competition is the technique and know-how that we utilize to create added value products for the customers. In-house technology also plays a major role in treating these raw materials. In comparison with other companies in the same industry. We are always having strategies to attract our own customers, who are willing to pay that extra amount for particular expectations. It is not only the quality of products that matter but also the techniques used and the sustainability that create these kinds of benefits for the company. Another important aspect to be successful in the business is to provide support and solutions to their problems. Merely thinking on how to sell the products is not enough.
In the next 15 years a third of the Japanese population will be over 65. This brings major problems in manufacturing because there are fewer talented graduates in terms of recruiting, there is an issue when transferring the know-how onto the next generation, and the domestic market is declining. What has been the impact of Japan’s demographic challenge to your company and how do you respond to this?
Japan’s aging society brings a huge problem to numerous companies here in Japan. For instance, it is getting much harder to employ people and bring fresh graduates to work, especially for SMEs. Our company is responding to these challenges, for example, one of the tasks for the person in charge of the general affairs office is to explain to the new graduates what is good about this company and why it is beneficial to work here.
In the Japanese recruitment system preliminary steps are usually done one year before the actual day of hiring. During this time, the possible graduates are already starting to seek jobs. It takes a year for these graduates to look for a company to work for and this also gives the advantage for companies to have enough time to look for possible employees and assign them to the divisions they are most suitable in. This also allows the companies to know the person very well, to know the knowledge and know-how that needs to be transferred, as well as the kind of OJTs these new graduates need to undergo. The recruitment system does not only end after the employee has been accepted, it is important to handle these personnel. Japanese people tend to spend their whole life working for that company they are already in. I believe this has to be changed by decreasing the working hours and creating a better work-life balance. If an employee wants to spend extra hours, it has to be explained to them the benefits of having balance in their lives.
There is a diversity in your business lines, and it is interesting to see five of them between lubricants of fluorine products and coating, OEM filling and packaging, the natural spring water, and the cosmetics. What kind of synergies have you been able to create between these business lines? How does this diverse portfolio help you navigate during this pandemic?
This Covid-19 situation has brought hard times to everyone and we are no exception. Of the different business lines that we have, I would like to outline our filling-and-packaging division as I am about to talk about the synergy that we have created. The sales number that we are able to generate from this business is very good. The reason is during this pandemic situation, a lot of manufacturers have to create more sanitary-related products such as anti-bacterial and anti-viral solutions. This has something to do with our packaging business - the packaging of bottles for example. As a result, this has generated good profits to our company.
Your technology DRYSURF, is a quick drying lubricant used in OA equipment, AV equipment, as well as in automotive components. Can you tell us the distinguishing features and strengths of this product? Can you tell us how the dry surf helps manufacturers make their operations more effective and efficient?
<A video for product introduction was shown>
This video which you may also refer on our website https://www.harves.co.jp/en/, introduces our products especially for the automobile industry, which is the biggest of our main businesses. Quick drying DRYSURF overcomes the traditional problems seen in grease. It improved functionality with luxurious quality feel while eliminating unwanted noise with wide temperature range for versatile use. We have two types of lubricant products in that line-up, DRYSURF and HI-LUBE, which can be applied for the automobiles adopting CASE technologies as well.
The automotive industry has been moving away from the traditional combustion engines and going towards EVs. There is also the material revolution which is the move to replace heavy materials by lighter alternatives. In the next ten years, by 2030, more than 50% of the cost of the car will come from the electronics inside. What impact does this shift to electrification bring to your company?
The demand will not be changed drastically even though the automobile industry is experiencing these trends towards car electrification. This product DRYSURF can be used for heating, ventilation, and air conditioning (HVAC) as well as for electric components. We do not see this as a potential problem for our company, what we see is another business opportunity. We are certain that the market share that we have for automobiles will remain, even if this industry shifts to electrification. Lastly, as mentioned before, most of our income in the lubricant section comes from the automotive industry.
Co-creation and collaboration has become a key topic as Japanese companies, especially the SMEs are facing an increasingly globalized economy. What role does co-creation play in your business?
Co-creation and collaboration is not something new to this company. We have been doing some kind of R&D cooperation to provide solutions to automobile makers in Europe and in other countries. We closely work together with these companies that create moving car parts such as around the steering wheel.
How do you plan to further develop your international business? What regions or markets do you consider key for your overseas expansion?
The method that we adopted when we went abroad and established our facility is the same with the ones used by many Japanese companies. We follow our partners wherever they go to create better solutions and services. But ideally, it would be more lucrative for us to find a local partner in a country that we plan to go to. Hopefully we would be able to find partners in United States, Europe or China. We are aiming to be present around the world.
Your company focuses on R&D as the core value, a testament to this is the new research center that you opened two years ago. Could you please share with us your new innovations or the new focus of your R&D?
We built that new R&D center to be used for planning the next steps that we will take because we respond to the needs of our customers. Back in the day, our lubricant business was very profitable working with camera and home appliance companies, but since the advent of smartphones, the necessity of cameras has been reduced. There have been a lot of changes that are happening, and we never know what might be the next opportunity that will show up. The objective for creating this R&D is to tackle any ideas and opportunities that can come up. It is hard to identify which particular segment this R&D center is working on because currently the touch panels are applicable to many areas, including automobiles and home appliances. We are working on the functional side of the touch panels by creating better water or oil repellents, thus, preventing rust from happening. All kinds of sophisticated surface treatment for touch panels is something that our current R&D center is working on.
Imagine we come back in five years and have this interview over again, what would you like to tell us? What are your dreams for the company and what would you like to have achieved by then?
I am going to talk about my goal for this company for the next five years. We are a company with many divisions and segments, and each of these has its own targets and goals. Harves is not the same as other Japanese companies because we are not pressured to achieve a certain amount of sales, we do this because we want to have some sort of flexibility. With this kind of air to breathe, our personnel’s motivation would go up. This approach is beneficial for both the company and our customers. Instead of feeling the pressure, our employees in the different divisions would focus on providing better solutions for the customers. By not adopting a mindset where we engage ourselves in a race to reach our financial targets, we are able to create a better working environment where our employees as well as affiliated companies are giving contributions to the company that allow us to grow together. At some point in time, my son in law, SHUNTARO SEKI, will be taking over this company and I will gladly pass everything that has been accumulated that resulted in the successes in this company.