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Alcoa In Profile: Japan
Although small geographically, Japan has the second largest economy in the world and is a potentially large market for Alcoa products produced in that country and elsewhere. The hurdle is understanding and breaking through the complex and firmly established relationships that exist between suppliers, distributors, and customers.
“After years of overinvestment and a struggling economy, Japan is starting to open up to foreign suppliers,” said Lloyd Jones, president of Alcoa Asia. “The economy is beginning to improve, creating opportunity for many of our traditional products if we’re able to deal with the market’s complexity. Since it’s such a large market, a little bit of growth could mean a lot of return.”
Forty Years of Growth
Alcoa's roots in Japan extend back more than 40 years and were formalized in 1973 with the creation of Alcoa Japan, which today sells around US$110 million annually in sheet, plate, extrusions, and forgings manufactured within and outside the country.
Today, Alcoa has two manufacturing facilities in the land of the rising sun. Howmet Japan produces castings for jet engines. Alcoa Wheel Products Japan polishes wheels manufactured in Hungary and Cleveland—and, in the future, Russia—that are sold in Japan and the rest of Asia. Alcoa Fastening Systems also has a sales office in the country.
| By the Numbers: Alcoa in Japan |
- 2 production facilities, 2 sales offices
- 623 Direct Jobs
- US$300.9 million in 2005 revenues
- US$6.7 million in 2005 exports
- US$272.7 millionin 2005 expenditures
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“Because Japan has such a big economy in a small space and with many people who need jobs, there are multiple layers between a supplier like Alcoa and the end customer,” said Mike Garcia, vice president of Marketing & Sales for Alcoa Asia. “Traders, agents, and distributors clog the distribution channels, and cross-ownership and traditional alignment between these groups create further complexity. Often it’s not easy to discern the existing relationships between suppliers and customers, and it’s very hard to get through to the customer to even begin building a relationship.”
In addition to growing traditional market channels, Alcoa’s strategy moving forward is to reach the end users directly, find out what they want and need, and then develop a solution based on technical innovation—a major skill of the Japanese and one that is highly valued in the country.
“This is a very sophisticated end market, so it has potential for Alcoa to concentrate on solutions rather than products, and to use the Alcoa Business System to help with market penetration because of the system’s foundation of alignment with the customer,” said Jones.
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