There’s no denying that Japan, amid a severe labor crunch and a shrinking population, will need to rely more on foreign workers in the coming years, and that’s especially true for small and midsize companies.
Because of language issues and cultural differences, smaller firms often struggle to integrate foreign workers. But once they overcome those hurdles, many find that the addition of foreign perspectives can lead to new opportunities.
Sakae Casting Co., a small aluminum cast manufacturer in Hachioji in western Tokyo, learned this the hard way. But its experience may be an example of what other firms will have to go through in the coming years.
“For small companies like us to cultivate overseas markets, foreign employees are essential,” said Sakae Casting CEO Takashi Suzuki, who took over as leader of his family’s business. “I also thought it was necessary to change the mindset of the Japanese workers. I wanted to do that by integrating non-Japanese workers into my company.”
For more than 65 years, aluminum casting machinery has been whirring at Sakae Casting, located within an industrial park near Tokyo’s famous Mount Takao.
But it was the 2008 global financial crisis that forced Suzuki to adjust its business model — and that came just months after the death of his father, who used to be the president of the company.
The death of his father, the main engineer at the firm, dealt a heavy blow to its operation, Suzuki said. At the same time, sales took a severe hit due to the financial crisis, forcing Suzuki to lay off some employees.
“Before then, our business orders were 100 percent from Japan. We were a 100 percent domestic subcontractor,” Suzuki said of his firm, which now has 30 employees.
“I’d never really thought of doing business in other countries. I don’t even like to get on a plane. But I started feeling a sense of crisis — that we wouldn’t be able to survive if we didn’t expand our business overseas.”
Four years later in 2012, Suzuki, exploring possible overseas opportunities, was served a wake-up call during a visit to Silicon Valley. When he toured a small manufacturer run by a Chinese owner, he felt that the quality of work was much lower than that of Japanese manufacturers. For instance, the firm would ship aluminum plates with burrs, claiming they would be hidden in the finished products.
Despite the quality issues, the Chinese owner told Suzuki that his company would be busy with orders for the next two years.
“I realized that we may have better technology but we were far behind in terms of sales techniques,” Suzuki said.
“I couldn’t sleep on the plane back to Japan,” Suzuki recalled, his mind instead occupied thinking about what was necessary to cultivate overseas markets.
Suzuki came up with two answers — language skills and a mindset open to looking beyond Japan.
That was where foreign workers would come in. Later in the year, he started hiring foreign nationals he hoped would bring fresh perspectives to the company and stimulate the Japanese staff.
But right away Suzuki realized the company wasn’t properly prepared to take in non-Japanese staff. Language limitations meant many had trouble communicating, which frustrated their Japanese co-workers tasked with training.
That frustration piled up among the Japanese workers until one day the following year, it exploded. They demanded that Suzuki stop hiring foreign employees, threatening a walkout.
“It was (choosing) either them or foreign workers,” Suzuki recalled. “Thinking of the company’s future, I couldn’t give up on the strategy to expand business overseas.”
And that was what he told the Japanese employees. In the end, the plant chief whom Suzuki worked with for many years walked away. But the rest stayed.
Suzuki believes his hard line — refusing to meet the workers’ demand to stop hiring foreign staff — made the Japanese workers realize he was serious.
“From there, I think their mindset changed a bit,” he said.
Japanese workers started making efforts to create a work environment more friendly for foreign employees, using English for some in-house communications and taking online English lessons that the company provided.
Now, 10 foreign employees work at the company, successfully blending in. Meanwhile, the firm has expanded its business to South Korea, the United States and the Philippines.
Its main source of revenue now comes from business in South Korea, where it sells products such as aluminum cooling plates used for manufacturing semiconductors. With 70 percent of sales coming from outside Japan, the firm saw a record profit in the last business year.
Sakae Casting has also opened an office in Idaho and, along with the University of Idaho, is jointly developing a vessel to store and cool spent fuel rod assemblies used at nuclear power plants.
And now that it has built up know-how related to hiring foreign workers, the company has partnered with colleges in other countries, such as the Philippines and South Korea, to accept interns for several months, giving them a chance to experience working at the company. It also gives the firm the opportunity to get to know them and how they might fit in.
Despite all the ups and downs, Suzuki says he is “absolutely certain” that he made the right decision to hire foreign workers.
Sakae Casting’s move has apparently influenced other local small and midsize businesses, with more companies of the Hachioji Future Association — a group of about 80 members from local businesses of which Suzuki is a founding member — having hired foreign workers in recent years.
Atom Seimitsu Co., a factory automation manufacturer, started thinking about hiring foreign employees several years ago to achieve two goals — securing manpower amid a labor shortage and shaking up its Japanese-only organization.
“I wanted to hire foreign workers but I was also worried about how other employees would react,” said Yasutaka Ichinose, president of Atom Seimitsu.
But to Ichinose’s surprise, Japanese employees were positive about the move, with many closely looking after the newly hired foreign workers.
“Japanese workers need to thoroughly teach them how to do their jobs. … This actually helps them (Japanese workers) improve their skills as well,” Ichinose said. “Teaching others is actually a very effective way for them to learn as well.”
The company now employs six foreign nationals, which is about 10 percent of the total workforce. The firm says it told other employees to communicate and take care of them from the beginning.
As a result, only one foreign hire has left the company and moved to another country for personal reasons.
Parnward Manakul, a Thai native, is one of the workers at Atom Seimitsu. She first worked as an intern and then joined the firm in 2017.
When she was an intern, the initial goal for Manakul, who was studying Japanese at her college in Thailand, was to improve her Japanese-language skills. But as she learned about Atom’s business, she felt that selling factory automation devices was an interesting business and wanted to learn more.
“I want to learn more about the Japanese way of sales. I also want to learn about machines,” she said.
Asked if she would prefer working for a bigger and more well-known corporation, she said she thought she could learn more at a smaller firm.
“There are a lot of people at a big company, which I think makes it harder to present my ideas and actually getting them implemented,” she said.
As a native of Hachioji, located about an hour by train from central Tokyo, Sakae Casting’s Suzuki jokingly describes it as Tokyo’s “countryside,” where the residents don’t really like leaving their city.
But another member of the Hachioji Future Association is embarking on a new adventure after visiting the Philippines in 2017 along with other group members.
Fumihiko Shintani, who heads Human Life, a company that runs smartphone and computer repair stores, may have been what Suzuki calls a typical Hachioji resident — reluctant to go outside his comfort zone.
“I didn’t even have a passport. I had no desire to (travel) outside of Japan,” he said, adding that he did not think there were opportunities for his business overseas.
“But when I actually visited (the Philippines), I realized there were,” he said.
For instance, foreign nationals working in the Philippines, who may use expensive computers but don’t trust the quality of local repair shops, may want to bring their computers to Human Life because it’s from Japan, Shintani said.
To run a store in Manila, Shintani hired a Filipino intern and trained her in Japan so she could learn to run the business. She will be overseeing the Manila store as its manager after it opens later this month.
“Now I don’t need someone to nag me to get out of Japan,” he said.
This is part of a yearlong series examining Japan’s immigration policy as the nation opens its gates to an increasing number of foreign workers.