Refwin: Mr. Heiki Miki, thanks for accepting our interview. I note that it has been almost seven years since you took charge of overseas business at Shinagawa. Can you talk about Shinagawa’s main achievements on overseas business, during this period?
Mr. Heiki Miki: Thank you very much for giving me this opportunity for the interview. After 30 years of overseas business experiences at NKK/JFE Steel, mainly in the US, yes, I joined Shinagawa almost seven years ago and, since then, have been exclusively managing our overseas businesses. In order to better service our overseas customers, and to increase our presence in the global market, we restructured our overseas business organization in 2015. We combined sales of all products, regardless of their origins of production, into each local sales office. For example, Shinagawa Americas was only responsible for production and sales of mold powders in the US, while all export sales from Asia to the US was managed from sales organization in Japan. Since 2015, Shinagawa Americas has been responsible for sales of all refractories, insulating products, as well as locally produced mold powders in the Americas, all the way from Canada to Brazil. The same applies to our company in Australia. Shinagawa Refractories Australasia is responsible for not only production and sales of locally produced monolithic refractories but also sales of all other products in the region regardless of their production origins. This sales structure allows us to provide a one-stop-shop in each region for our global customers, allows us to service them in more efficient and effective manner.
Refwin: Building on the previous question, would you please introduce your global business structure both on business segments and regions? What are the sales strategies for those segments concerning those large markets currently?
Mr. Heiki Miki: We now have our own production sites, including joint ventures, in 7 countries, i.e. Japan, China, India, Indonesia, Australia, New Zealand and the US. Overall our largest customer industry is iron & steel, while we are increasing our businesses in cement, mining, non-ferrous, glass, energy and other industrial markets. There is certain focus for each market though. Iron and steel industry is definitely our main market in China, India, Japan and the US, i.e. the four largest countries in the world for crude steel production, while cement and other industrial segments are our main target in Indonesia. The bottom-line is that our focus has always been, and will be, on maximizing long-term value for our customers by providing high quality products regardless of countries and locations. Any plan for further expansions? Yes, Shinagawa is always ready to establish our new production locations as long as they bring us positive returns. We will be there for our customers worldwide: we are reachable where they need us most, with solutions and improvements they need most. In order for us to efficiently and effectively tap into new markets though, it is extremely important to find right partners who locally serve the markets. We continue to further expand our business portfolio through international collaboration and new investments.
Refwin: This year many industries and sectors face great challenges due to the impact caused by Covid-19 pandemic. According to the financial data released recently, Shinagawa’s revenue for Q2FY21 showed a decrease of 19.7%. Some analysts said the epidemic’s influence on the refractory industry would last for 2-3 years. What’s your point of view? Will you regard it as also a chance for Shinagawa?
Mr. Heiki Miki: 2020 has been certainly a very difficult year for everyone all over the world. Taking this opportunity, I would like to offer my heartfelt condolences to the families and friends of those who had lost their lives from the COVID-19 pandemic. With positive news on vaccine, I believe we start seeing the light at the end of the tunnel, while there is still considerable uncertainty in 2021 and beyond. I am sure we will see certain recovery in 2021 and we are fully preparing for it, cautiously optimistically. In any case, Shinagawa continues our operation seamlessly as refractories are essential for our daily lives, play a critical role in the daily operations of almost every sector of manufacturing, while our top priority is, and always has been, the safety and well-being of our employees and the communities in which we operate.
Refwin: What is your strategic development plan and blueprint in the next five or ten years? Do you have any plans on expansion and acquisitions?
Mr. Heiki Miki: Again, all options are on the table for Shinagawa. One thing for sure is that we are always looking for an opportunity to grow our businesses with either expansions of existing entities, strategic business alliances with potential business partners or acquisitions. We will highly probably have more locations for sales and productions of our refractory products outside of Japan, could be through technology transfers, joint ventures or wholly owned entities. Japan continues to be the major market for Shinagawa’s business, while we do not expect to generate significantly further growth there considering its market matureness. It is vital for Shinagawa to expand our business globally into the US, India, Asia and any other locations where we could see growth opportunities.
Refwin: As one of the leading global suppliers of refractory products and services, what do you think are the key factors that keep Shinagawa maintaining its competitive advantages in the industry for around 145 years? And what do you think will be the key factors driving Shinagawa to continue its success in the market?
Mr. Heiki Miki: Shinagawa’s refractory solution originated from the very true Japanese craftsmanship, and the company places the greatest importance on pursuing improvements and providing one-of-a-kind solutions. Shinagawa promises the highest value through a close relationship, both geographically and practically, with our customers in all fundamental Industries. We do not consider refractories as standardized products: they are highly engineered products specifically made to order, item by item, piece by piece. To carefully balance “highly industrialized efficient production processes” and “careful attention and commitment to details,” that’s what makes Shinagawa unique, differentiate ourselves and stand apart from competitions.
Refwin: Do you think we can see some new development trends in refractory industry in the coming years? And what are they?
Mr. Heiki Miki: As ongoing improvement of processes, products and/or services through incremental and breakthrough improvements are vital for any industry to be successful in a sustainable manner, the refractory industry is no exception. Process innovation and further automation in production processes, products with longer service life and inexpensive alternate raw materials, easier and safer installation methods, etc. I believe further consolidation in the industry would be inevitable too as the global refractory industry is still very fragmented. More cross-border consolidations would happen considering the same trends happening in our customer industries. I believe, in any case, in order for our industry to be successful in the future, further collaboration with our customer industries is absolutely necessary. Not just precisely meeting with our customers’ needs from our side, i.e. one-way streets, it is important to create added values together, to make our collaboration always two-way streets. A certain customer operation practice would dictates a certain refractory product as “ideal.” At the same time, however, a certain “different” refractory product could dictate a certain “different” customer operation practice as “preferable,” which might provide better values overall for our customers in terms of production costs, efficiencies and throughputs. The best solutions for our customers could only be found and achieved by close collaboration between refractory suppliers and their customers, and that’s where our industry needs to advance toward further.
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