Founded in 1989, Puequ specializes in industrial environmental equipment and disaster-prevention systems.
It is argued that this is a highly critical time for Japanese manufacturing. After three years of severe supply chain disruptions caused by the COVID-19 pandemic and ongoing tensions between the United States and China, multinational corporations worldwide seek to diversify their suppliers with a strong emphasis on reliability. Japan is globally renowned for its advanced technology, high quality, and reputation as a highly dependable business partner. Due to the weak yen, they have never been more cost-effective. This presents an opportunity for Japan to reintroduce itself as a key player on the international stage. Do you agree that this is a pivotal moment for Japanese manufacturers?
Although some might assume that Japanese companies benefit from macroeconomics, the reality is quite the opposite. While there has been a yen depreciation and a favorable situation due to the supply chain decoupling resulting from the trade war between China and the United States, Japanese suppliers are still grappling with challenges in procuring raw materials. The scarcity of materials has led to inflated prices for most resources.
Domestic manufacturing companies are contending with high energy costs, contributing to the elevated expense of Japan's human resources compared to anywhere else in the world. Consequently, Japanese manufacturers have been compelled to elevate efficiency standards, harness DX and IoT technologies, and explore alternative energy sources to mitigate production costs. These factors underscore that the macroeconomic environment is unfavorable for Japanese suppliers.
Numerous challenges within domestic manufacturing arise from the aging population, spanning from high energy expenses to material procurement and workforce recruitment. To what extent are these challenges affecting your own operations, and how are you addressing the issue of an aging workforce?
We have taken a proactive approach and implemented measures to address this socio-economic issue. We recognized this challenge well in advance, even before it reached its current magnitude. The foremost concern revolves around the difficulty in recruiting individuals from external sources. Fortunately, our company's name carries recognition and prestige. People are familiar with our company's operations, and many continue to express interest in joining us. Our track record boasts a notably high year-to-year retention rate, encompassing both recent university graduates and accomplished professionals from technical institutions.
Moreover, we have integrated DX and IoT solutions into our production lines, complementing our workforce. We have achieved a balance between male and female employees and have also embraced the recruitment of skilled international technicians. As for the subsequent significant challenge—the contracting market—we have been somewhat insulated due to our integration within a network of six interconnected companies instead of operating as an isolated entity. This configuration has enabled us to establish a successful synergy, facilitating collaborative efforts among these companies to achieve their respective core objectives.
You have a diverse group of six companies, and in 2021, you acquired Marine River, a firm based in Kasuya-gun, Fukuoka Prefecture. What are the core strengths and synergy you have created within this group structure, and what are the advantages of this type of group business?
We indeed possess a synergy that aligns with our parent company's primary focus on industrial environmental equipment. We have amassed extensive experience in water treatment systems over numerous years. Marine River specializes in heating and cooling units essential for fisheries. Effective water treatment systems play a pivotal role in purifying waters from impurities, a critical aspect for fisheries. This alignment facilitated a seamless integration of our businesses.
The big news in Japan today is the release of the treated water from the Fukushima nuclear plant. As water treatment specialists, what is your take on releasing that water into the ecosystem?
An international committee was entrusted with overseeing the water treatment procedures. They visited Fukushima to conduct an on-site inspection and reported no anomalies. All protocols were meticulously followed in compliance with international waste management agreements. I am confident that all actions were executed in accordance with international legal standards.
You mentioned that the synergy between your companies allows the individual companies' expertise to be combined and focused in the same direction. How could this business model be incorporated into your overseas businesses? In 2009, you had a joint venture in Korea along with the Korean firm Taigen. What was your experience with this venture? Are you looking for similar ventures to collaborate with overseas companies?
We are actively pursuing opportunities to expand our reach and introduce our products to international markets. Our engagement with Taigen proved to be highly beneficial. Taigen operates as a manufacturing company and maintains affiliations with trade entities involved in raw material distribution, a synergy that greatly favored us. Our goal is to establish collaborations with companies that possess connections to the raw materials we rely on domestically in Japan.
Are there any particular regions or countries you want to target for this expansion?
Our concentration is directed toward Southeast Asian countries that require water treatment solutions, a domain in which we specialize and can offer our expertise.
Japanese firms have developed a distinct approach to wastewater treatment and disaster prevention, exemplified by your products. These offerings are finely tuned to the Japanese market and can carry a substantial price tag. However, when venturing into Southeast Asian markets, they might be relatively costly and potentially misaligned with local market requirements. How do you intend to tailor your products for the Southeast Asian context, addressing both cost considerations and technological appropriateness?
At present, we lack the specific products suitable for introduction into these markets. Nevertheless, when the opportunity arises, we will formulate a strategy for tailoring our products to suit these markets' needs. A previous attempt in China proved a bad experience that we are determined not to replicate. We intend to adopt a measured approach, allowing ample time to develop a comprehensive plan for product introduction.
Our focus may pivot towards industrial waste management solutions, given its relevance to numerous regional manufacturers. We are developing such a solution and intend to launch it in our domestic market. Should this initiative prove successful, we will contemplate expanding its reach to other countries.
This initiative is a world-class subcritical waste treatment technology, and it is a revolutionary technology that can solve the problem of pollution, which is particularly troublesome in chemical disposal treatment. With this technology, even waste that is in a mixed state of various substances can be disposed of collectively without the need to separate the waste. If there is an approach from a company that wants to introduce such waste treatment technology in its own country, we would like to actively consider it as a joint business.
Your Naias fire extinguishing system has a novel nitrogen processing method requiring limited electronics for disasters and extreme environments like Antarctica research centers. What specific technologies did you provide that helped your clients reach their sustainability targets?
We currently have 800 Naias units operational in various industrial sites, nursing homes, and hospitals throughout Japan. Notably, our installations extend to ten units in Antarctica and an additional 109 units in steel manufacturing facilities. This technology is distinctive: it operates without needing supplementary power sources. As the world's pioneer in utilizing a pressurized water tank for a pressurized water system, it operates solely on a compact battery.
Our company undertakes essential maintenance duties, although these units do not necessitate extensive upkeep. The Japanese government has legislated this technology. Our focus does not extend to targeting other countries with this technology because most countries already possess their proprietary fire-extinguishing systems.
How did you ensure this system worked properly in an extreme environment such as Syowa Station in Antarctica?
We do not have the track record to show that each installed unit works properly since they have not had to be used. Of the 800 units installed, only one unit has had to be used. That instance proved that the system worked. We have been fortunate not to have to use the Naias system in Antarctica. The Naias system is backed by university research and studies. We trust that research and those studies that the system will be effective in times of disaster.
In addition, this "Naias" can be used in other situations other than firefighting, so I would like to introduce it. "Naias" is equipped with a water storage tank, which stores water for fire extinguishing. In order to spray water in the event of a fire, nitrogen gas is constantly applied to the water storage tank. As a result, the water in the storage tank can be stored without oxidation, so it has the function of being used as living water without spoiling forever. In the past, "Naias" has been used to provide living water to evacuees affected by earthquakes and help maintain their lives as human beings.
If we return to interview you on the final day of your presidency, is there a personal goal or ambition you would have liked to achieve?
I would like to change our position in the stock exchange market from standard to prime.
Interview conducted by Neale Oghigian & Paul Mannion
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