Tanazawa Hakkosha is a unique company, as it not only manufactures printed circuit boards (PCBs), but also conducts texturing for the surface of molds, being used in products such as home appliances and automobile interiors. With the manufacturing sector always evolving and changing, president Hajime Tanazwa discusses how his firm is adapting to industry trends and how he plans on growing the company in the future.
Can you give us a brief introduction to your company?
Introduction of two major businesses in our company:
Texture Division:
Sells technology to process the surface of molds. The process of applying patterns to the surface of molds is called "texturing (graining)", and one of the representative technologies is called "etching".
Textured products of the plastic resins are now widely used in household interior materials, automobile interiors, and home appliances because of their decorative effect as well as their scratch-resistance.
PCB Division:
Production of printed circuit boards (PCBs).
Formation of conductor patterns by etching on the material for the board in order to connect between components based on the circuit design.
PCBs are the essential electronic component in the design of electronic circuits used in all kinds of electronic devices.
I assumed the presidency around 30 years ago at a time when all Japanese companies were facing financial difficulties. In my initial years as the president, I was convinced that despite the economic conditions, there must be an excellent company somewhere out there, so I started my search for it. At the same time, the riots of Japanese university students in the 1970s, along with the labor resistance campaign in Italy, caused several companies to go bankrupt. Some companies and skilled engineers from bankrupt firms survived and sustained the Italian economy. They possessed great skills and technologies for printing, certain river valley, packing tobacco cases, and sewage management. Those companies have continued their business by importing excellent fabric materials for printing. We can find examples of successful SMEs in Portugal, the UK and the US, despite the difficult economic conditions. I realized that there must be a way to manage this company whatever the economic situation may be.
Your company, established in 1905, emphasizes quality, the ability to adapt to customers’ requests and a fast delivery time. You have stated that companies that appeal to price points will not stand the test of time. Could you tell us why Japanese firms are so successful, especially against regional competitors today?
I think the price does not matter. Businesses for luxurious bags, sold for ¥1 million, and cheap bags sold for ¥100 have something in common. Both businesses try to manufacture their bags based on the materials they can obtain; manufacturing capabilities and delivering deadlines. For example, even when a shop selling sweets located in front of a temple lowers the price of their products, they may not be able to gain two or three times more customers. If they have 5,000 customers each month, I do not think that they will suddenly get 10,000 customers just because of lowering the price. They are serving the number of customers in that specific market, which shows that it is very important to satisfy the target customers. We have about 530 employees, and our mission is to help solve the problems our customers encounter. A cheaper price lowers the quality of service, and quality equates to true service. Different aspects are involved in safety, such as the safety of materials, logistics and the supply chain. Regardless of the price, the procurement channel must be constantly moving to enable us to safely sell our products and provide a sense of assurance to our employees. I am not trying to scale up this company from 500 employees to 50,000. The 19-year-old employee we hired in our subsidiary in Ohio continues to work in that company 30 years later, which proves that we are maintaining long-term employment. It is vital to ensure the satisfaction of our existing employees and our existing clients. Even when luxurious brands lower their prices, I do not think that they will have 10 times more customers than they have now. I consider the people who run wineries, sweets shops or restaurants in small communities as my teachers instead of those who own mass-production companies.
Japan is an aging society where 28% of its population is over 65 years old, and with the declining birth rate, there will be less than 100 million people by 2050, creating two serious problems for major enterprises. Firstly, there is a shrinking domestic market to sell products to; secondly, it is harder to recruit talented graduates. In your case, what steps have you taken to offset this population change? What opportunities or challenges is it presenting you with?
If we were a company that manufactures baby clothes owning 100% domestic share, then the declining population poses a real problem for us. However, although the products in this industry are being sold three times more expensive than the average ones, they are still selling. I think that is one way that can help us survive with this population change. It is inevitable for us to hire and train new graduates or amateurs to become seasoned engineers.
There was a time when Japan's population was only 80 million with a good economy. When the population is declining, we might think that industries in Japan will follow suit. However, I think that we should pay attention to what those companies need and want. Some might want a shorter delivery time, while some might want cheaper materials imported from overseas markets. Or perhaps there are some companies that have difficulties controlling their subsidiaries in the overseas markets. There must be an opportunity for us to provide support to those companies in terms of delivery or maintaining quality. The declining population does not necessarily entail negative aspects because there is always an opportunity. Some people might be delighted if the population is increasing, but some disadvantages can come with that increase. If the population grows by 5%, the capacity of universities cannot be increased immediately, which means that some students will have to give up entering university. On the other hand, as it will be harder for universities to reduce their capacity all of a sudden, it will be easier for students to enter university. There are positive aspects too, and we need to look at both sides of the coin. There have been a lot of painful events in the history of mankind. The Bible says in Matthew chapter 6 that although birds do not sow seeds or reap or gather into storehouses, they are continually fed without fail. I think that is how we should survive in this kind of situation. No matter what happens with the population, Fx rates or the prices of the goods, we should be able to find a way to survive. I am half Buddhist and half Shinto, and I have experienced much pain and suffering. I believe that it is important to transform those pains and sufferings into opportunities, a mentality that has helped me live through this hard life. While I may not be able to become a rich person in that sense, seeking out opportunities is the foundation of our company's philosophy. I think others in the world cherish that similar philosophy.
Tanazawa Hakkosha is an integrated PCB manufacturer providing both prototypes & mass production and a surface treatment company engaging in etching. Could you give us a breakdown of the two divisions? Which is your focus and your biggest revenue generator? What type of customers are you mainly selling to?
For the past couple of decades, we have been trying to make a profit, even as low as a single yen profit, from each of our factories every month. We have always encouraged our employees to try to plant seeds in the ground that can grow to future profits. Our current diversified divisions are intended to facilitate growth that will continue in the next 10 years ahead. Our diversification is based on a more long-term vision. Most companies expand to overseas markets due to the cheaper labor costs, but they often do not hire the locals for their management teams. On the other hand, there is no distinction between our employees and our local recruits. They are all part of Tanazawa, and we treat them equally. When we look at overseas companies that have subsidiaries in Japan, they hire people in Japan who understand the thinking of the locals. We often see the same strategy applied by Japanese companies that try to enter the overseas market. It is a sensitive topic at the moment, but a good relationship between the countries can foster a long time of working together successfully.
Miniaturization is a huge trend in the electronics industry. How is your company responding to the trend of designing smaller and lighter PCBs and electronic components?
There are various PCB sizes. One of the smallest ones is 0.6mm by 0.3mm, and we have 1mm by 0.6mm and 1.6mm by 0.8mm. The biggest is popular, but it is very difficult to manufacture. It is very hard to find a company that can manufacture the PCB with the printed method, especially for the smallest ones. Besides us, there are only several companies around the world that can do the printed method. The photo printing method, which is more expensive than the printed method, is mostly used for manufacturing small-sized PCB, and thinner PCB is preferred in the market. Anyone can do the mass production of PCB with about 0.2mm thickness. However, only a few companies can produce thinner PCB that can equal the investment. With our miniaturized PCB, we would like to serve industries with water boilers and lighting equipment - car headlights, tail lights or room lamps. Lighting equipment emits heat, which requires a high standard of safety. We also want to expand to bathroom drying systems that also need to abide by higher safety standards. We have been concentrating on the safety of the components used in these industries. The face recognition systems we find at airports are sensitive, but we would like to extend our products' application to that industry as well. At this point, we are not focusing on putting our products into wearable devices. Sometimes we receive requests to produce only 50 PCB for specific products that have ceased to be manufactured a long time ago. Even without a design provided for the development of components needed to repair certain products, we are still able to manufacture them.
Printed Circuit Board (PCB)
Your company has established a joint venture in the US since 1987. Are you interested in pursuing joint ventures as you seek to expand abroad? What are your plans and new targets for your operations in Guangzhou, Shanghai, Thailand and Indonesia?
Including overseas, but with the exception of two domestic factories, all factories are part of the Texture division.
One of the major Japanese automotive manufacturers announced that they are going to increase the number of models they produce in the domestic market. Since their chosen base for that production is in Tohoku, we established a factory in the same area, which opened April 1st of this year. If they are to produce cars in Japan we should apply texturing domestically as well. We would like to adapt to these kinds of trends. Even when the products are manufactured by other countries and industries, we accept any requests for texturing repairs. That is how our factories have been operating all over the world for years.
Apart from the new branch that you have recently opened in Hubei, China in 2019, you have participated in major international projects such as the lighting for some of the world’s most famous buildings. What kind of strategy are you adopting when you are looking outside of Japan? In what way do you want to continue being a global company looking to the future?
My aim is not to be a big company, but one that avoids bankruptcy. I do not want to dismiss or let go of any of our employees unless it is related to a very serious offense. In order to be a disciplined company, we want to educate and transfer the knowledge and know-how we have to overcome economic downturns ahead. Matthew's Gospel also mentions a narrow road that involves countless difficulties but leads to a brighter future.
There is a self-help book written by Samuel Smiles 200 years ago that was translated into Japanese and used in school textbooks until the Meiji Era. As an oriental, I have some knowledge of fortune-telling, however I do not believe that I can rely on it for success. Good things and happiness do not come without any effort. When we settle and close our accounts, I go to the shrine to express gratitude. There is a very strict Shinto god who gives significant compliments whenever you overcome hardships. This highlights the importance of ceaselessly working diligently even under harsh conditions.
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