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Globalized business

October 7th, 2009 / By: / Management

Fostering global business relationships was key to Moto Nohmura’s leadership and Taiyo Kogyo’s success.

During the IFAI Japan meeting in April 2009, Moto Nohmura, IFAI Japan honorary chair, shared insights about his business experiences in the U.S. IFAI Japan director, Kikuko Tagawa, IFAI Japan directors Hideyuki Nishikawa and Toshio Katayama, who was the emcee for the event, interviewed Nohmura.

Nishikawa: In 1970, after graduation from the university, you went to New York for your father’s company, Taiyo Kogyo Corp. Tell us about how you started.

Nohmura: My father wanted to develop our business in the U.S. As I did not speak English, I was just doing everything by feel, but I was so interested in the U.S. The first thing I did was visit IFAI headquarters in St. Paul, or CPAI as it was called at the time. I did market research for membrane structures and flexible containers with their help. The World Expo in that year was a turning point for the Japanese tent industry with new types of fabric structures showcased—many of them done by Taiyo, including the U.S. pavilion.

Katayama: In 1973, you acquired 51 percent of Holcombe, a tent and awning fabricator, in California. How did this acquisition transpire?

Nohmura:My business life in the U.S. started with mergers and acquisitions (M&A) and ended with M&A. IFAI offered me quite a lot of information on that. There were three companies who answered our proposal and finally we bought Holcombe. The personnel were very good, which I believe was the most important thing, and the president of the company stayed on after the acquisition.

Another big advantage of IFAI membership was the great network of industry peers. My father and I became acquainted with Dr. Frei Otto at an IFAI symposium. He proposed the acquisition of L. Stromeyer & Co. of Konstanz, Germany, the world’s biggest fabric structure fabricator at that time. We declined because we were focusing our resources in Japan and the U.S. rather than in Europe. But five or six years later, the company was divided into five companies and in 1997 we bought one of those companies. This kind of thing could not have been possible without the networking that IFAI offers.

Growth and change

Nishikawa: In 1975, you acquired 100 percent of Holcombe, changed the name to Helios Industries, became president of the company and expanded in the U.S., Middle East, Asia, Central and South America. Can you talk about this process?

Nohmura: The product we wanted to market was tension structures, which were not recognized—nor acknowledged in the architectural society—in the U.S., unlike in Germany and Japan at that time. I emphasized the uniqueness of tension fabric structures. First, I sent marketing materials to possible users in California, but had no response at all. Then I thought of putting an ad in a magazine for architects, changing the target from the users to the architects. Surprisingly, I got many responses, not only from the U.S. but also from other parts of the world, including the Middle East, Asia, Central and South America.

Katayama: In 1985, construction of the Tokyo Dome, the first permanent fabric domed structure in Japan, was underway. Tell us about the role Taiyo played in the project.

Nohmura: In the late 1970s, Taiyo received an inquiry about reconstruction of the Tokyo Stadium, planned as a domed stadium. At that time Japanese building codes did not allow membrane domed structures to be classified as permanent structures, so they needed a new building code. Many experts came to inspect domed structures in the U.S. In the 1970s all of them in the U.S. were built by Birdair, including the Metrodome, the Silver Dome, the Hoosier Dome and the Carrier Dome. They had the know-how, not only in fabrication but also in installation and construction. As a membrane structure fabricator, the toughest competitor to Helios was Birdair. I was very conscious of the company and thought about transferring the ownership of Birdair to us.

During this time the Japanese Ministry of Construction wanted to know how their codes compared those in the U.S. I told them that there was no department of construction in Washington, D.C., and they were surprised. Major Japanese general contractors also became interested in membrane structures. General contractors in Japan were very powerful, had deep pockets and were the undeniable ‘kings’ for fabricators. We also were aware that a general contractor might purchase Birdair. I was concerned that if that happened it would influence our marketing strategy in Japan and in other parts of the world. So, I thought that to include Birdair in our group was the inevitable mission for us.

The PTFE proposition

The Tokyo Stadium project was a big challenge for us, including the material to be used. We wanted to use PTFE from Chemfab, not only because we had had a good relationship with the company for a long time, but also because their material was the one used in acclaimed domed structure projects all over the world.

At first, the Ministry of Construction (MOC) and the general contractor requested that we use Japanese materials. In any case, it was very hard to get non-combustible certification for the PTFE material that Chemfab offers as a construction material. At that time it seemed to us that the Japanese bureaucracy made it impossible to use the new material, and we had to fight for it. They had to ensure the safety and quality of the material and even asked us to verify the production of the PTFE material to be certified. There was, however, no test procedure to certify it.

We even asked President Bush to write a personal letter to Japanese Prime Minister Takeshita in support of our request. After a series of snafus, that letter idea failed, so we needed to find a different way. We then asked President Bush to write a personal letter to Makoto Hosaka, the president of Tokyo Stadium, who was so impressed to receive a letter from the U.S. president that this time the effort was successful.

It was decided to use PTFE material. A joint venture company of Chemfab and a Japanese company was formed to supply PTFE for the outer membrane material and an inner membrane material was supplied by another Japanese company. This satisfied the MOC and the general contractor.

It actually took more than 10 years to get PTFE certified as a non-combustible material for architecture, a process that was successful because we had a good relationship with Chemfab.

Finally, Birdair

Nishikawa: Another big M&A you accomplished was the one with Birdair.

Nohmura: Birdair had been sold to Chemfab and then became a joint venture of Chemfab and OCF. Chemfab had been the fabric material supplier to Birdair and to us. The relationship with Chemfab and us became a little complicated: supplier/customer and competitors.

It was learned later that Chemfab and OCF did not want to be the owner of Birdair. There were many reasons for that, but one of them was that as the material supplier the risk of construction was too much for them. We acquired 5 percent of the ownership of Birdair in 1987 and I became one of its board members. At a meeting it was noted that I was speaking as a shareholder, not as a board member. It was a good process for me to understand the management system of U.S. companies.

I have been impressed that the U.S. government tries to help companies who pay taxes to the U.S. government and help U.S. companies win bids in foreign countries. This is not true with the Japanese government. That’s one of the reasons that I found that it difficult to globalize the Japanese company, Taiyo, and much easier to globalize Birdair. Many orders and bids were taken by Birdair as an American company. Of course Taiyo and Birdair helped each other to supplement the resources, people, material, production and design.

We finally got 100 percent of Birdair in 1989 and I merged it with Helios and moved back to Japan. Later, Birdair won the Millennium dome project in London and many other projects in the world, and today the Taiyo group continues to work on projects around the world.

Tagawa comments

There was a successful merchant group in Japan several hundred years ago, called Ohmi Shonin. Their policy was that business should satisfy three parties: seller, buyer and the general public. Most business people know the phrase “win-win,” which refers to satisfying sellers and buyers, but that may not be enough. Nohmura says that globalized business should satisfy four parties: seller, buyer, the general public and the local government. Even in this digital world, he says, human interaction is still of prime importance, and face-to-face meetings that cement relationships are simply irreplaceable.

Moto Nohmura was executive vice president of Taiyo Kogyo Corp.; he retired in 2006. He was chairman of the board of directors of IFAI Japan for many years. Kikuko Tagawa is executive director of IFAI Japan.

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