COMPANY MAN
After a lifetime with the Japanese industrial conglomerate IHI, Hiroshi Horiguchi still relishes new opportunities and challenges.
Shinsotsu-ikkatsu-saiyo, the tradition of simultaneous recruitment and employment of new graduates by companies, has long been unique to Japan and South Korea, before the latter abolished the practice in 2010. But in the world’s third largest economy it is so embedded in the culture, who’s to say it’s not working for the country and its people? The Japanese system has its critics, who say that shin sotsu (new graduates) who miss out on one of these allor-nothing recruitment rounds could find themselves unemployed for months or even years. The mental stress associated with the recruitment and screening process can be severe for those aspiring to jobs with top corporations.
A growing number of Japanese millennials, though, are determined to avoid the salaryman rat race. In the new age of the digital economy, e-commerce and startups, talented young people do have more entrepreneurial choices, and they pay more attention to a prospective employer’s values and ethos in addition to what it produces.
Jobs are also easier to come by for Japanese young people these days because the population is ageing and declining. The once-common system of lifelong employment is no longer the only option. Yes, there are more young Japanese who now hold part-time or non-permanent jobs, but youth unemployment is quite modest at 4%, compared with 9.8% in South Korea and 8.1% in the United States. So maybe having the lifelong employment system as an option is not such a bad thing after all.
In any case, you won’t hear Hiroshi Horiguchi complaining about the system in which he has spent his working life. The veteran executive still loves what he does and is proudly loyal to the only company he has ever worked for since he graduated in 1984. An associate director with the diversified industrial conglomerate IHI Corporation, he is also managing director of IHI Asia Pacific based in Thailand.
“Let me explain to you the Japanese style (of employment),” he tells Asia Focus during an interview at the IHI Asia Pacific headquarters in Bangkok. “In the old days, after people graduated from university, everybody went straight to work for a company and normally, it would only be for one company. They graduate in March and by April it will already be a new working year.”
The diverse nature of IHI and the products it made was something that appealed to Mr Horiguchi when he first set out to look for a career.
“More than 30 years ago, I chose to work for IHI because I felt that it is very easy to understand when you are making something that is tangible. It is easier for me to understand than banking because it is very clear to me what I am making and what I am selling,” he says.
“I had a choice between Mitsubishi Heavy Industry and IHI but I choose IHI because they are more flexible and I believed I would have more chances to express my ideas.”
Like Kawasaki and Mitsubishi Heavy Industry, IHI started life as a shipbuilding company 165 years ago. Ishikawajima Shipyard was Japan’s first modern shipbuilding facility when it was established in 1853. By 1877, it completed the Tsu-Un-Maru, the first steamship built by a private Japanese shipyard.
Today IHI is much more diversified as it also produces jet engines, industrial and construction machinery, social infrastructure and offshore facilities, all the way to components for rocket systems and space exploration. IHI now has 231 affiliated companies with a presence in 39 countries.
IHI earned gross revenue of ¥1.48 trillion (US$13.8 billion) in the 2016 fiscal year to March 31, 2017, with net profit of ¥5.2 billion ($12.7 million). In the first nine months of the current fiscal year to Dec 31, revenue was ¥1.13 trillion, an increase of 0.9% from the same period last year, with net profit of ¥9.8 billion, compared with a loss of ¥9.1 billion a year earlier.
Since it entered the Thai market in the 1990s, IHI has delivered 31 gas turbines to local power plants with a combined generating capacity of 1,580 megawatts, making up 35% of the market share of gas turbines sold, second only to Siemens.
Mr Horiguchi says that in the Japanese fashion, you start to work at the bottom and you work your way up the ladder. In his case that meant starting out in the shipyard and studying welding and gas cutting for three months. It was a “very good experience”, he recalls, because it allowed him to explore almost every part of the products that he would eventually manage and sell as a salesman and general manager in various capacities throughout his career.
All of his skills in engineering and salesmanship were acquired on the job, as he studied social sciences in university. That doesn’t necessarily mean that a love for religious philosophy can’t be applied in the field of heavy machinery. Mr Horiguchi has always taken a keen interest in the people side of the business as he believes it’s important to know as much as possible about those you are dealing with.
“In order to become a business broker in Asia, like in Thailand, it is very important to understand the basic history of the people who are living there. It was also useful to understand Christianity when I was working in the United States,” he recalls of the time he spent in Detroit, which was in the midst of a challenging time as the automobile industry was entering a decline.
PROMOTION TO THAILAND
Mr Horiguchi came to Thailand in 2016 when the company promoted him to a regional role. He considers himself “very lucky” to be here because it is a “dream country” for most lifelong employees in Japan. The lifestyle holds great appeal, but so too does the economic and business potential, in his view.
“Thailand is stuck in the middle-income trap but the government has made efforts to free itself from this trap and the country is on its way out. Meanwhile, the automobile industry in Thailand is the best the world,” he says when asked to compare it with those in the US or Europe.
“Thai is because, in Thailand, there are OEMs (original equipment manufacturers) and tier 1, tier 2 and tier 3 suppliers. Everybody is here. In Japan, capital relationships are important where Toyota will only trade with Toyota Tsusho, but in Thailand, Japanese companies can trade among themselves, where Honda can supply to Nissan for example, so the country is a kind of a dream situation for the automobile industry.”
The auto industry, he believes, is the main reason why reason why Japan and Thailand have such a strong and close relationship. Japanese automakers’ production and sales account for over 75% of the Thai market and they have positioned the country as the production base for one-ton pickup trucks and eco-cars for export all over the world.
The one-ton pickup segment represents 50-55% of total automobile production and is regarded as Thailand’s product champion by major manufacturers including Toyota, Mitsubishi, Isuzu and Nissan, which have invested in local manufacturing hubs for export. US-based GM and Ford have done likewise.
IHI Corp is one of the key players in the global automotive gasoline engine and turbocharger market, and it is also Japan’s leading maker of jet engines with a market share of 60-70%. When asked about Thailand’s aviation potential, Mr Horiguchi says the country still has a long way to go to develop its capabilities. It will take a long time and a vast amount of investment before it can compete with the likes of Singapore where jet engine makers have already set up research and manufacturing arms.
“There is a need to cooperate with American and European giants to further develop the country’s manufacturing capability in aviation with huge investment to transfer and internally develop such capability, while IHI is also willing to work with Thai companies in this aspect in the near future,” he says.
As for his recommendations for Japanese investors looking to expand to Thailand, Mr Horiguchi believes it is important for Japanese companies to help develop local management capability instead of bringing over a huge management team from Japan, which is a common practice that IHI has avoided.
“The goal is to help our subsidiaries develop their own management teams and that is very important because there is a high turnover rate in Thailand, unlike in Japan where the one-company man like me still exists. Therefore, the Japanese way of thinking will always struggle here if they are not willing to adapt to local customs,” he explains.
How long he will remain in Thailand is up to the company, but the idea is to stay for three to five years before moving on to the next assignment, which is normal for his industry.
“For other industries such as construction, a Japanese managing director will stay for around ten or more years as it takes a longer time to develop relationships with Thai companies here, while banking is around two to three years,” he says.
Mr Horiguchi believes Thailand is on the verge of entering a new phase of its industrial evolution, and that could include the development of its own automobile brand if that is a direction policymakers want to pursue.
“There are many investors in Thailand but not enough entrepreneurship in the automobile industry where there are successful companies such as Thai Summit Group which has various investments but it does not make its own cars,” he points out.
The possibility could be realised if Thailand decides to increase research and development spending, which currently accounts for less than 1% of gross domestic product, compared with 3.5% in Japan. It might take 10 years or more to develop an original car brand but this is the logical next step for the industry, in his opinion.
IHI continue to see Southeast Asia, especially Thailand, Malaysia and Indonesia, as its most important markets in the region, which is why it opened the IHI Asia Pacific regional headquarters in Bangkok.
“Before the establishment of IHI Asia Pacific in 2014, we only exported machinery to Thailand but now we also provide other services such as maintenance, and since we are still seeing the expansion of Japan’s automobile companies to Thailand, we want to supply both machinery and services for them here,” says Mr Horiguchi.
The company’s plan for Thailand is to increase its marketing programmes to make itself more visible to Japanese companies that are looking to expand here. It is looking to expand its work in gas turbines and other energy businesses, including its ventures with Rojana Power and phase two of the pier and liquefied natural gas (LNG) storage depot and distribution terminal for PTTLNG in Map Ta Phut district of Rayong province.
“Thailand is changing its energy plan away from coalfired boilers, which we also produce, toward biomass because it has abundant resources, but our gas turbine business with Ratchaburi World Cogen and Sahacogen is still going strong,” he says.
“Thailand is also investing heavily in solar energy in Japan and I expect we will continue to see this development in the near future,” he says, though he believes that Japan’s clean coal energy is something else that Thailand should considered looking into. “Everyone can get solar panels easily but how we manage energy is very important,” he observes, given that the country is an importer of energy.
Away from the job, Mr Horiguchi is an avid golfer, and he is looking forward to his wife joining him when she moves from Gunma in Japan to Thailand this year, Then he will have one thing less to miss besides onsen. And while it’s not yet clear where this one-company man will end his career, his loyalty remains unwavering, and he’s determined to make the most of every opportunity.
“Despite the differences in culture, Thailand will continue to be one of the dream stations for all Japanese lifelong employees like me for many years to come,” he says.
The goal is to help our subsidiaries develop their own management teams and that is very important because there is a high turnover rate in Thailand, unlike in Japan where the one-company man like me still exists. Therefore, the Japanese way of thinking will always struggle here if they are not willing to adapt to local customs