Flexibility and a wide product range could be the answer by SMEs to the challenge rising from globalization. We talked about it with Shimazu Kasei, a Japanese family company operating in the PU market.
February 6, 2020
Small and medium-sized enterprises (SMEs) are fundamental for the market-ecosystem. According to the World Trade Organization, they represent more than 90% of all businesses and around 60-70% of employment.
Competing with biggest companies is difficult; SMEs can quickly respond to a changing world, but their size often makes them weaker against fluctuations. The difficulties they face are often related to financing, access to international market opportunities. The risk of disappearing, engulfed by the global market, is high.
In Japan, SMEs produce components that end up mostly in Japanese products. But in order to remain competitive, they are forced to greatly diversify their production.
This is particularly true for companies operating in the Japanese polyurethane market. Given the contraction this already niche market has been facing, SMEs must be flexible to continue competing, a flexibility that generally translates into highly diversified production.
We met Mr. Takashi Shimazu and Mr. Yoshinobu Shimazu, respectively Director of Sales Division and Manager of Production Engineering Division of Shimazu Kasei, a small Japanese company (30 employees and about 400M Yen turnover), established in 1995, which produces many different polyurethane products: from the Tokyo subway turnstiles, to car components, to toys.
Shimazu Kasei has made product diversification a weapon for facing the market.
Cannon News (CN): In a globalized world, small-medium companies struggle to thrive because either they become part of a bigger corporation, or they disappear. How do you see this evolution in the Japanese market and how do you cope with it?
Shimazu Kasei (SK): The PU market in Japan is quite limited and dominated by so many giants. Competition with these big companies is very high and if we continued producing small shapes of PU foams, sooner or later we would close. This is why recently, to face this situation and avoid collapse, we have changed our strategy, not only varying our production, but also focusing on complex component molding. To make these components, we develop the molds ourselves, based on requirements or data provided by customers. It is a tailor-made production with low volumes. However, this type of product is quite expensive for the end user.
CN: As we could see during our visit to your plant, you succeed with a highly diversified production, covering everything from automotive components to toys and dummies. How do you manage this kind of large product portfolio? What are the key factors of your success in this complex scenario?
SK: As we said before, our portfolio reflects our strategy: we are a small company, so we have to provide many different products to compete against bigger companies, both in terms of costs and production volumes. For this reason, we prefer to turn to niche markets, like that of automotive spare parts. Shimazu Kasei produces replacements for old models of cars for tier-one, but the volumes are very low, and, at the same time, the market pressure on the costs very high. This mechanism is leading us to shift our production the spare parts from those for old models of vehicles to those for new models.
CN: Since you have diversified production, how does chemical blending vary? Product by product?
SK: Shimazu Kasei produces 200 different kinds of products in one month. Products range from one piece to 1,000 pieces per batch. All our products require a specific chemical formulation: automotive components need less density foam than some toys, for example. Also colors (which are directly injected into the chemical formulation) vary a lot from one product to another. Furthermore, some niche products are so dedicated that it is impossible to find suitable formulation on the market. These situation led us to develop our own expertise for PU chemicals: in our plant we use both pre-blended chemicals from raw material suppliers, and other chemical formulations than we blend ourselves to have total control over the finished product, with the guarantee that it is exactly as the customer required.
CN: It seems that the two key elements of your production are flexibility and precision of mixing. Is it correct? How the Cannon machines help you in reaching these goals?
SK: As you saw during our tour of the plant, we have five Cannon high-pressure dosing machines. Some are pretty old but still working very well. And we continue buying your dosing machines and mixing heads – and, you see, we are still investing – because they provide the best mixing performance, compared with other solutions on the market. Cannon dosing machines are very easy to operate, allow a quick change of chemicals and, together with your mixing heads, guarantee a superior mixing quality. Furthermore, we can count on your Japanese local unit, which is very close to us and provides us all the support we need: for a company like Shimazu Kasei, having a team of specialists to assist us and ensure a prompt intervention in case of anomaly is essential so we do not waste precious time and can maintain high quality levels for our final products.
CN: As a PU manufacturer, we are a small community around the world and are facing a sort of instability about the future of this material, which could be replaced by less expensive or more performing materials, maybe more environmentally friendly…so the question is: what is your opinion on the future of polyurethane? Are you looking also to other materials?
SK: Well, PU is essential for some production (see insulation) and can therefore hardly be replaced. Shimazu Kasei is specialised to manufacture on polyurethane foam: luckily our company strategies generated a wide market range so we think we can be positive about the future. But of course some important evolutions will concern PU: from the environmental point of view, it is necessary to start developing a new, maybe greener, polyurethane or new materials. However, these changes will probably become effective in a not-so-immediate future.
