"Aluminum lightens the world" is the slogan of leading Japanese manufacturer UACJ, which continues to unlock the endless potential of aluminum as the company moves forward with its VISION 2030 plan.
UACJ Group was born from an integration of Furukawa-Sky Aluminum and Sumitomo Light Metal Industries in 2013. Can you give us a quick overview of this integration, your company's activities, and some key milestones in your history?
Our company group was established in October 2013 by the merger of Furukawa-Sky Aluminum and Sumitomo Light Metal Industries. The two firms were respectively known as the largest and second largest aluminum rolling companies in Japan at that time and have made the history of the aluminum rolling business in Japan since 1898. After we formed UACJ, we accelerated expansion of our business base to the United States and Thailand, on top of our historical business base in Japan. We currently have about a 50% market share – the top market share – in aluminum rolling in Japan, making us the fourth largest aluminum rolling company in the world with about 1.3 million tons of annual output in total from Japan, the United States and Thailand.
With established business bases in the three locations, the competitive landscape for us has totally changed as we compete with the global giants and manufacturers in emerging countries. Furthermore, one of the strategic advantages of three-location operations is that it allows us to organically and flexibly utilize the production capacities to meet market demand. For example, regarding the can sheet, we have sent exports for our customers in the U.S. from Japan and Thailand on top of the local production in the United States.
Those new investments in those three locations took a long time to show evidence of profitability as we slowly got returns. However, around 2019, the whole market started shrinking not only due to our reduced generated profit in Japan but also the sluggish economy in China from their trade war with the US. With the slowing down of our business in Japan, we thought that we urgently needed to make a profit structure resistant to environmental changes domestically and maximize profits by taking full advantage of the capacities of large investments already executed overseas. Hence, we began structural reform in 2019, which thankfully helped us gain profit again. As of March 2022, we were able to achieve our highest consolidated profit yet. Upon embarking on an unknown voyage to the sea, so to speak, we tried to redefine the purpose of our company in February 2020 to motivate our employees again. Our redefined purpose is to contribute to society by using raw materials to manufacture products that enhance prosperity and sustainability. In the UACJ VISION 2030, we have made our purpose as a company very clear to be able to steer the company in the right direction. We wanted to solidify what we want to contribute and specify which field to contribute to as UACJ.
To clarify our position of wanting to contribute globally, we joined the Aluminum Stewardship Initiative. Our 2030 vision portrays how much we value aluminum as an added value material and our desire to expand our area of expertise. In addition, we listed three key areas to achieve our vision. The first area is mobility, considering we might have flying cars and drones in the future. We believe that this field will give us a more comprehensive range of areas where aluminum can be of use. The second area is lifestyle and healthcare, including cans, food storage and the medical field. Japan experiences a lot of natural disasters, and we believe that we can contribute to disaster prevention and disaster risk management. The third is the environment and energy. Aluminum is an excellent electrical conductor; it also releases heat well and is recyclable. As the world moves away from fossil fuels towards hydrogen and many other fuels, we believe that aluminum inspires our work in building a better world and a healthier environment. In these three key areas, we are trying to envision how the company will be by 2030.
We live in this great time of transformation and paradigm shift in the automotive sector. In conjunction with vehicle electrification or CASE technology, we see the material revolution in this sector. For example, heavy ferrous metals like iron or steel are being replaced with lighter alternatives like aluminum, CFRP, and certain plastics to reduce the vehicle's weight and increase efficiency. Can you tell us more about how you are catering to the shifting demands and needs of the automotive sector?
In shifting from steel to lighter materials, there is a lot of competition in the field of lighter material manufacturing among different industries. Metal is strong and stable, and the lightness of aluminum contributes to the running stability of vehicles. The engines, engine blocks, heat exchange and cooling systems are almost totally made of aluminum. I believe that each material plays a different role in the automotive industry, and aluminum has become an essential material because of its various uses. For example, there are different combinations of materials in the automotive industry that can be used to create new automobiles, such as aluminum-plastic and steel. Aluminum plays two key roles. One is to make the product lighter so that we can contribute to the body panel. Secondly, with the acceleration of electric vehicle production, we can contribute to the battery sector. Aluminum is able to release heat in different electrical parts. It is a material used in smartphones. Aluminum serves as more than just a part of a product, it also releases heat. With these two key roles, aluminum is competitive as it is a unique raw material.
In the automotive components business, in addition to supplying bumpers based on our clients’ design, we can design and develop a new product using an optimal type of aluminum alloy. Having different combinations of extrusion, processing and molding in our business division for product development is an advantage because we can suggest and provide new solutions to our customers. Those kinds of projects are on the rise because we have a research and development division in our company.
Your latest released technical report detailed some of the latest discoveries in regard to the corrosion resistance of new alloys for automotive radiators. Are there any new sectors you are targeting through the development of new alloys, and what is the current focus of your research department?
With the special features of aluminum, we want to target the sector of environment conservation - the use of recyclable materials. We can be involved in collecting and recycling aluminum products. The material itself changes, but even with that change, we want it to be pertinent to the needs of our clients. In that regard, we are working on developing recyclable alloys. We have already been able to use recycled aluminum in cans, and in some car models, the body panels of cars are made of 50% recycled aluminum. We believe that the development and expansion of recycled alloys is our mission.
Japanese firms are increasingly embracing a more horizontal model of cooperation as a way to be competitive on the global market. Are you also seeking opportunities to collaborate with firms overseas?
It is something that we can explore moving forward. However, we do not have anything concrete to discuss. Still, we can either keep our expertise and expand on our own or cooperate with other markets and further develop our expertise. The latter takes less time and can be developed quicker. I realized that the increasing demand in the battery sector in the United States may provide a significant opportunity to introduce our company and grow our business.
You released a new product through one of your subsidiaries called "MIZUYOJIN(TM)" - a lightweight, easy-to-install flood prevention system. What is your motivation behind entering the disaster prevention market? Is this product more geared toward Japan, which has a high rate of natural disasters, or intended for export?
Our product "MIZUYOJIN(TM)", meaning beware of water is available only domestically at the moment. Natural disasters are rising in frequency, especially catastrophic water disasters. When metropolitan or urban areas experience water disasters, subway systems and convenience stores are affected. Conventionally, we prevent water from entering infrastructure by putting up sandbags, which are very heavy and make for laborious work. Even then, that work should be done by a veteran.
On the other hand, anyone can set up our product because it is lightweight and easy to assemble, and it can be stored in a compact space. We wanted to create a flood prevention system that could be put together in a short amount of time so that everyone could be prepared and quickly respond to a disaster. Aluminum foil can be of great use during a disaster, as it can be utilized for cooking or as a thermal barrier. For example, we explain the aluminum foil package to educate people on how to use aluminum foil in the event of a disaster.
The ongoing global logistics disruptions have been exacerbated by the ongoing conflict between Ukraine & Russia and China's zero-COVID policy. There have been persisting quarantine measures and staff & operator shortages, leading to delays at every level of the supply chain. As a firm with a diverse global presence, how have you been tackling the challenge of supply chain disruption?
It has had a significant impact on our business. For example, it has affected the shipping of the beverage can stock we manufacture in Southeast Asia to North America. Nevertheless, with our credibility and regional cooperation, we have been able to request that our shipments to North America be continued. We have also passed through our sales prices to mitigate the more expensive freight costs. Even with the increase in the freight and product costs, we have still received demand from our customers. Above all else, we want to ensure that our customers can continue to trust us to deliver their ordered products.
Looking to the future, are there any key new markets that you have identified to be your focus as part of your international strategy?
Our key markets are still North America and Southeast Asia, and Japan will remain a strong base for our company. In the North American market, we are focusing on beverage can stock and automotive parts. Working towards environmental conservation, we are using more aluminum cans for beverages that are easy to recycle and save energy. We believe that we can fill the substantial need in the market. In Southeast Asia, we believe that we can be a key player in the beverage can market, especially with the region’s economic growth and rising demand. Our industry already has a system in place in Japan which recycles over 90% of aluminum cans, but it is a system that we are yet to establish in Southeast Asia. We can collaborate with the companies involved in the process of recycling aluminum cans to expand our market. Through such efforts, we can contribute to mitigating regional environmental issues through our products. We aim to solidify our existing businesses in North America and Southeast Asia and keep expanding our business in these key markets.
Imagine we come back in six years for your 15th anniversary and have this interview all over again. What are your dreams for this company, and what goals would you like to have accomplished by then?
Moving forward, we have created Vision 2030 to paint a picture of what kind of company we want to be. By that time, I believe that the younger generation will be contributing to the company and society. I want to see how the younger generation would have created a new and remarkable product in at least one of the three areas I have mentioned. In other words, I want to see the world like our corporate slogan “Aluminum lightens the world” is beginning to be realized.