Totani: building pouch-making machines for a new green manufacturing era

In the last 25-30 years, Japan has seen the rise of regional manufacturing competitors who have replicated Japanese monozukuri processes but have done so at cheaper labor costs, pushing Japan out of mass industrial markets. How have Japanese firms been able to maintain their leadership despite the steep price competition?

What we have cherished over many years is our ability to focus on niche fields and through that, we gained a position as the number one in the global market. That has been our company’s philosophy and without that, there was no way we would have survived. Over the past 50 years, we have developed new technologies on our own without outsourcing. What we are producing now has come as a result of that accumulated technology that we have focused on over many years. We have focused on making developments in a good environment, and to add to that, we have internally developed hardware and software without having to resort to external sources.

For over 40 years now, we have also focused on after-services. Suppose we were to adopt software developed by a third party, if they stopped supporting us, we could not provide after-sales service to our customers, which would cause them inconvenience. One of our biggest missions is to support our customers long after the sales of our machines, so we stick to in-house development and production.

You have developed the Totani Data Communications System (DCS) for bag-making machines. What are some of the strengths of the DCS and how does it help make your client’s operations more efficient?

When you deal with machines and operators there are always some mistakes, and this DCS system can trace back and see what happened should a mistake occur. Maybe someone changed the temperature or the conditions by accident, or perhaps someone did not pay attention to a notification that they should have paid attention to. We are able to trace such data using this system and this gives us the ability to enhance the quality of production going forward.

We developed this software on our own alongside another team that developed our production management system. As a result of the excellent communication between the two teams, the DCS system was completed in only two months. The internal investment was kept for this kind of research, and the level of R&D is on par with some academic institutions, making our R&D ventures a key strength of the company.

At an early stage, we provided PCs to all employees and encouraged their use, and as a result, I think we are one of the earliest companies to achieve paperless operations. However, we do believe that our technology will be copied at some point in the future, so we must be ready for when that time comes. This is why we have kept making new developments. We have made our efforts to satisfy our clients at the forefront of our operation with the hopes they will recognize the value of our company and products. We are also proud to say that we have never had to lay off any of our employees before and this puts us in a unique position, especially when compared to other companies in Japan.

We have seen in recent years concerns about the environment and with plastic pollution increasing, the demand for packaging materials that are more recyclable and sustainable are increasing. However, changing the packaging configuration or material is a fundamental change in the process, and this can often require new and costly machinery. As many manufacturers begin moving towards more environmentally friendly materials, what opportunities does this present to Totani?

We are actually getting a lot of demands and orders related to the recyclable pouch making machine (pouch made of recyclable material), especially from western countries. As we have mentioned before, we have accumulated special technologies to enhance productivity and speed, so with these in place, I believe that we are able to cater to the new demand for eco-friendly materials. We are always trying to keep up with those new demands with our accumulated knowledge of bag-making machines. When it comes to new materials, one of the strengths we have is that we have accumulated test data going back 20-30 years. One example is that we know how a material will change depending on adjustments made to temperature. We are then able to apply that data to new materials, and in fact, the data is so detailed that it goes all the way down to the micron level.

In Japan, there is increasing demand to make bags smaller, especially for food packaging like sausages. We are about to manufacture a machine that can make much smaller bags.

Toyo Seikan is a food packaging company, and together we produced the world’s first retort pouch using a machine that we at Totani made for them. Our mission is to be number one in this niche field. We use a lot of measurement devices to accumulate data and in fact, I used to be a part of this R&D department. We are always facing new challenges thanks to the constant changes in materials, so our job must be to respond to these new demands based on the accumulated data we have collected over many decades. The company has always followed a policy in which we make our own investments in new developments so that we can satisfy our customers with products that exceed their demands and expectations. At the initial stage, we cannot be profitable at all because all the money goes back into investments, and as you know, R&D is a very expensive pursuit. However, one thing we do believe is that in 7-10 years down the line, those investments in development will pay off because of the assets that the company now possesses.

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One notable product that comes from your machines is the BOX POUCH®, a next-generation, eco-friendly flexible packaging. How is the BOX POUCH® superior to conventional flexible packages?

One of the strengths of the BOX POUCH® is its low film consumption per volume meaning that you can put more content in the bag than a similar sized one. It also means that when you lay out the products in the shop or transport the products, the shape makes the job much more efficient. Compared to a conventional plastic bottle, despite the thinness of the material, it has a good barrier performance meaning that it does not have oxygen going through. All this equates to food preservation results that are way higher than conventional packaging.

The BOX POUCH® is an evolution of the innovation we had on a previous product that we developed and showcased in Germany. One of the environmental association groups said that pouches made from thin film were eco-friendly and nowadays, that pouch is used as a refill bag for washing detergent. In those days, only the German environmental group recognized the value of the refill bags. These bags used to be more expensive than the original containers, but thanks to the assistance of the German environmental group, we were able to reduce the costs. The key strength of the refill bag is that it is recyclable. One drawback however is that because of the high oxygen transmission rate of the film, production is quite difficult, and as you can imagine, the key point is to seal the bag with a heat seal to prevent leakages. In Germany at the time, they were burning a lot of plastics. They really did help us a lot to expand this product. We believe that all bags should be recyclable and that is why we are focusing on this kind of eco-friendly technology now.

Back to the BOX POUCH®, one thing we are trying to do right now is to switch the material back to a recyclable one. We are currently in the testing phase and hope to have a solution soon. It is a difficult task from a technological perspective to switch to recyclable materials.

Your pouches are used for a variety of applications. Is there a specific application you are currently focusing on and is there one that you believe has the most potential for future growth?

We believe that food and pet food are the two largest markets for the bag-making industry. So we would like to, as a Japanese company, continue to focus on these two large markets. Saying that, as you have alluded to, the pouches themselves can be applied to a myriad of applications ranging from medical all the way to disaster relief. Personally, I want to keep focusing on the food industry because there are huge upsides in emerging markets such as Africa. Food packages are used worldwide and I do not see that changing anytime soon, so a focus on excellent packaging is a clear goal for the company.

We also process parts for our bag making machines (our products) internally, so we are able, in that sense, to keep producing reliable machines for clients and through our R&D processes, we are able to continue constant improvements to our widely recognized machines. Through the data collection that we emphasize here at Totani, we are able to understand not only the features that customers appreciate, but also the issues and breakage that happen with different machines.

What role does collaboration play in your business model, and are you looking for any co-creation partners in overseas markets?

Looking back at the company’s history, a company in the U.S. helped us sell our products as a partner, but they went bankrupt, so we established a U.S. branch. After that we have had some collaboration (co-creation) with our branch offices in the US, Germany, China, and Singapore. In South Korea and Taiwan, we also have sales offices, but they only focus on the sales of our products.

Sometimes we choose to go into a local market on our own, but sometimes we cannot do so. To truly penetrate a new market, we understand that we must collaborate with local partnering companies. In countries with a large potential market, collaboration with local companies can be effective, but we ask them only to sell our products, developing machines on our own. This has been our company’s philosophy for a very long time now. This philosophy may change when the next generation of Totani comes about.

Moving forward, what other countries or regions have you identified for further expansion, and what strategies would you employ to do so?

We have opened our forwarding sales offices one after another because we have been quite concerned with the declining population domestically here in Japan. We understand that our market is going to shrink, and therefore have decided to branch outside of Japan to the global markets which have bigger populations. We are looking for markets where we can supply our pouches and bags to. Turkey was identified as a potential target as it can be used as a hub for exports to other European countries.

We will have two pillars for our international operations, those being to expand the existing market and to discover new ones. Regarding production bases in foreign countries, we are still yet to decide because of the recent weak performance of the JPY. Despite this, however, we would like to establish a production base somewhere other than China in the near future.

Currently, 70% of our revenue is coming from exports and the United States is the largest market among all. For the past 20-odd years, we have developed machines based on the requests from our overseas customers rather than domestic customers. We do have a subsidiary in the US and the employees of that company work hard on after-services for their local clients.

Imagine that we come back five years from now and have this interview all over again. What are your dreams for Totani?

I am an engineer at heart, and I would like to educate our engineers in this company. I would like to foster their skills and help them make improvements to our existing equipment. Continuing to cherish our clients is something we take seriously here at Totani, and although we are a private company, we like to take a more public company approach to business. I do not want to leave a negative legacy based around the idea of discarding employees for shareholders. I would like the next generation to continue the ideas of fostering our valued employees and clients. Essentially, what I would like to ensure is the happiness of everyone related to Totani far into the future.

For the next five years, we would like to continue our global expansion, reaching around 60 countries worldwide. Although we are in a niche field, we would like to continue to enhance the global market’s awareness of our endeavors. We want our employees and clients to be proud of their association with Totani. The Totani way is to continue to be a hidden champion for the foreseeable future.