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Togawa Industries: treasuring human capital

Interview - May 21, 2023

Founded in 1959, Togawa Industries is a leading manufacturer of plastic hoses that has been accumulating technologies and manufacturing techniques for many years alongside its customers

IKUO YOKOTA, PRESIDENT OF TOGAWA INDUSTRY CORPORATION
IKUO YOKOTA | PRESIDENT OF TOGAWA INDUSTRY CORPORATION

What is your take on monozukuri? What sets your company and Japan apart from its regional manufacturing competitors?

One of the major things I would like to mention when describing monozukuri is the fact that here at Togawa we cross the line to hitozukuri too. Any attempt to make something in Japan will result in companies treasuring hitozukuri, or the human aspect involved. Our employees fulfill a very important role, and in fact, that is the case for the foundation of each and every business. Without their contributions, nothing would be possible. Basically, rather than talking about monozukuri, I would like to touch upon the hitozukuri; emphasizing the importance and role of each employee in our company. In the end, you spend most of your time at a job rather than with your family, and while working you are contributing to mutual gains and implementing the excellent elements of Japanese monozukuri. That’s why I felt it important to mention that aspect.

Another key element of Japanese monozukuri companies is reliability and devotion toward the customers. We are always thinking about monozukuri our customers, and after 60 years since our establishment, we pride ourselves on always being loyal to our customers. We might even say that our existence depends on our reliability and good response to customers. I truly believe that Togawa is really no different from all the other manufacturing companies in the fact that we have all been accumulating technologies and manufacturing techniques for many years alongside our customers, that in the end are the ones that buy our products.

 

The importance of human resources is a particularly pertinent conversation in Japan, which has the world’s oldest society and a declining labor force. What has the impact of this aging society been on your company?

Yes, we do feel these kinds of social problems with the existence of the declining population. That fact has been causing drastic effects for many companies in Japan, and that is no different for Togawa Industries. It has been causing problems in recruitment. Back in the day, it was easy to recruit, but nowadays things have changed so much. These days people just don’t want to devote their lives to production sites, especially within manufacturing-related industries. That is a big factor in itself.

Recruitment is not always as easy as it seems, so we tend to treasure human capital more than before. It means that we try to foster our human capital, thus resulting in better results from what we have in our hands. We work on the idea of quality over quantity. Of course, these social issues have been causing problems, but we struggle and overcome this situation.

It is not just enough to foster human capital, it is also important to continuously preserve this human capital and sustain it in a caring manner. Our company is aiming to create a better working environment, and how we do this is by creating a lucrative situation with more benefits and a better working-life balance. Another way is by extending the retirement age. Officially in Japan, it is 60 years old, however, if you have enough energy and desire to continue, we are happy to allow workers to continue to work as long as they wish. Recently, some of our employees have continued to work even past the age of 70.

I believe this is a feature of SMEs in Japan. Big companies have a lot of employees working for them, meaning they are less flexible in their ability to allow people to work as much as they want. SMEs struggle to preserve human capital and thus have better working environments to entice people to stay.


Your company is a reliable partner in supplying hoses to a large number of industrial fields such as semiconductor manufacturing and construction. Is there a sector that you would consider your main focus or a sector that you’ve seen more demand from in recent times?

It is hard to define one particular field or industry for which the products we produce are aimed for. This is part of our concept, essentially to avoid prioritizing one particular segment. By prioritizing one path you are putting all your eggs in one basket, so this is something we want to avoid. Since our establishment, we have tried to diversify and go into as many fields as possible. 60 years ago plastics were a new and trendy thing with not so many companies in that industry. Our company started with basic things like hoses for gardening and in-house usage. Agriculture was the first application for our products, but as time has gone by, many other customers have come to inquire about different types of hoses. Our company is always trying to satisfy any customer that makes inquiries about our products.

Of course, we won’t stop just at that; there are plenty of emerging industries, and one, in particular, is the semiconductor field. Our R&D efforts are focused not only on preserving our current product portfolio but also going to new fields that are outside our usual box. We are trying to think up new areas and new applications for our hoses.

 

Earlier we were talking about the aging population in Japan, and one of the symptoms of this problem has been a shrinking domestic market. Many companies, particularly SMEs are now looking overseas to find new customers and clients to compensate for the shrinking demand in Japan. Are you also seeking new overseas clients, and if so, from what industries are you looking to make those connections?

There are two points to our strategy for expansion overseas. First of all, the company has been very traditional in our ways of exposing our efforts to overseas markets. We are very strong in the domestic market and have followed some domestic companies that have at some point in time expanded their business overseas and have started localizing their production in other countries. Those have tended to be North American and Southeast Asian countries.

A second approach has been to work with more local companies; trying to introduce our products to some more local players. In this way, we are acting through distributors attached to particular regions. We are trying to increase our presence in these areas and capture more territory. We can’t name a particular country, but we do have a strategy on how to tackle foreign markets.



Are there any particular markets or sectors that you have your eyes on?

As was mentioned; the Southeast Asian countries, and that is because to some extent we already have a presence in the region. Preference is given to countries like Thailand, Malaysia, Indonesia, and Vietnam. Of course, we would be remiss if we didn’t mention India; one of the fastest emerging markets on the planet right now. It is too big to be ignored.

 

As a plastic hose manufacturer, can you tell us about some of the products or technologies you’re developing to have a more sustainable product portfolio?

We started using a solar power plant around 3-4 years ago now. Plastic itself can be quite troublesome with its non-environmentally friendly features and the company has been dealing with plastics since its establishment. To be frank, it would be hard to betray the major product that we are dealing with, and at this point, it would be pretty much impossible for us to refrain from using plastics at all. We are implementing big initiatives in the company such as our commitment to SDGs. One aspect is to reduce the weight of plastic which is one strategy from the company to reduce the burden plastic has on the environment. The other big initiative is the switch to eco-friendly energy sources such as the solar power plant I mentioned. Some of the motors at our production sites are eco-friendly and oftentimes we will use LED for lights. The company foresaw this change and we have been making concerted efforts to conduct SDG activities.

 

We read about an anti-algae eco-green hose that you developed that uses recycled material for the inner layer of the hose itself. Could you tell us a little more about this product? What percentage of the total material is recycled?

This is a very hard question. The keywords here are the 3Rs, Reduce, Reuse, and Recycle. These themselves are trendy words right now. We installed special equipment inside the production site around 13 years ago, and this special equipment makes these types of hoses. It is a spiral type of hose that is made of a blend of two materials. Thread and plastic are used in one product, however, that allows easy separation of the hose when it no longer works and needs to be disposed of. This means that the plastic goes one way and the thread goes another. Plastic that is used in the initial production can then be reused or recycled completely. The preference is given to no scrap when producing hoses, and we feel this is a key factor here. What creates pollution is waste material and scrap. The company developed special equipment in the early stages to prevent the company from having any kind of waste material.

This introduction of combining new materials has allowed the company to have a complete recycling cycle for hose manufacturing. Additionally, it has allowed us to decrease the amount of scrap material to less than 1%.

 

Could you tell us a little more about your international plans? You’ve already talked about trying to find new local partners, clients, and customers overseas, especially in Southeast Asia and India. What is your strategy to do so?

We already have a factory in China, so we aren’t thinking about a new hub as an expansion point. At this point, one production site outside of Japan is enough. On the other hand, we are thinking about utilizing distribution channels, something that should be done both in existing and new areas. Trade houses could also be a route, with a number of those having distribution channels outside the domestic market.

The reason we aren’t interested in local production sites outside of China right now is because of the risk involved. Being an SME means it is tough to gather enough human capital to dispatch to new locations. It just requires a lot of people and a lot of finance. We learned this by having the production site in China, which opened in 2002. In 2019 we recalled all of our ex-pats back to Japan from China, and that is because we are now at the point where we can rely on local recruits and local managers. These cross-cultural endeavors can sometimes be difficult to fit with just Japanese understanding. We understand that, so for that reason we recalled all Japanese back to Japan.

 

Imagine that we come back on the very last day of your presidency and interview you all over again. What are the goals and dreams that you hope to achieve for Togawa Industries?

Currently, my number one goal is to summarize all of the achievements of the company so far because this year is a very big year for the company, marking our 60th anniversary since its establishment. Currently, I’ve been working very hard to summarize everything in terms of the company’s history, achievements, and milestones along the long path of existence. It's a lot of work to do, and I will be finalizing that work sometime this year.

When the next generation comes along new managers will come to replace the existing ones. They will be the ones that need to think about the company in the long term. They will need to plan for the 100th anniversary.

I would like to emphasize how much the company really treasures its human capital. It is always important for me, as the president, to establish a good working environment inside the company. We want to make life easier for our employees so we can continue to sustain the excellent human capital we have accumulated as well as simply make people happy.

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