Translation | Strengthening company’s identity in a foreign locality and the localization achieved through a firm management

Exedy Friction Material Co., Ltd. Mr. Tomoaki Goto

[ This article is an English translation of an article written for Japanese. ]

What is necessary for the localization of management? The answer of Mr. Tomoaki Goto, a president of EXEDY Friction Material Company producing automotive parts, is clear. Mr. Goto, having said that “Communication is what matters the most”, is the one who revived this company from its previously so-called worst condition within Amata City Chonburi Industrial Estate and paved a way for it in becoming an enterprise where all staffs can effectively think and work for themselves. We would like to understand the core of localization from the experience of Mr. Goto.

Building a company of which the employees can be proud

EXEDY Group is an automotive parts manufacturer who has one of the biggest shares in automotive parts market in the world. For EXEDY Friction Material, it is an affiliated company based in Thailand, manufacturing friction materials to be used in automotive parts. Among all product ranges manufactured, product for manual cars always has a high share within the market. Over 50 percent of Japanese-branded cars that are sold all over the globe are built using parts of this same company.

The company has run its business in Thailand since 1997 and has transferred its Research and Development (R&D) to Thailand in 2009. It has continually been awarded by Thailand’s Ministry of Labour as being a company with an excellence in safety, hygiene, and environmental management”. The firm has also cooperated with Thai universities to conduct research and shape highly skilled individuals. Therefore, it can be stated that this is one of the Japanese companies which has rooted so deeply and has steadily been striving in Thailand. Nonetheless, the journey of the firm has not been a bed of roses since its inception.

“It was spoken of that we were the worst company in Amata City Chonburi Industrial Estate in all aspects ranging from working environment to company’s welfare. In the past, some employees had issues of corruption, embezzlement, or even drugs. There were also frequent reports of accident. The turnover rate was high. The quit rate once reached 10 percent.”, said Mr. Goto.

EXEDY Friction Material, however, nowadays shows no sign of 3Ks (Kitsui (difficulties), Kitanai (dirtiness), Kiken (danger)) at all. The quit rate has decreased tremendously. Moreover, there has not been any report of situation preventing or stopping a production line.

“As we supply parts for cars worldwide, the pause in production will likely cause severe consequences. I think there are 3 types of risk: legal risk, human resources risk, and safety risk. If the operation involves something against the law, if the employees strike, or if the safety cannot be maintained, the production is inevitably forced to cease. Safety is especially important. Thailand is good at swiftly taking in and adapting new things into practice. Nevertheless, an awareness about safety has not actually been strongly established. The reformation of technology can only succeed if the safety can be completely maintained. The reformation must be done alongside the consideration of safety.”

Even though nearby companies were pressured to stop their production due to labour dispute, the staffs in this company had zero call for a strike, positively contributing to smooth manufacturing activities. The employee retention rate has increased. In addition, the safety level has also been greatly improved.

How were all these possible? The keywords given were “Making the company a place the employees can feel proud working for”.

Communicating with similar perspective to the Thais

Mr. Goto emphasized that there are 3 factors needed to create an organization where the employees can be proud of. The first factor is ‘Communication’.

“What should be done in the first place is communication planning. It’s crucial to have a perspective similar to the local people. Thus, routinely chatting with the employees when walking around the factory or the office to communicate with them every day is essential.”

There is also a ‘Suggestion Box’, which is a system aimed to foster communication. The employees can use this application to anonymously present ideas and comments directly to company’s president. The comments or ideas received will be shared with managers to proceed on ‘Kaizen’ (Improvement) right away. This two-way system has generated a profound trust between employees and managers.

The opportunity to exchange information on ‘Vision’, ‘Mission’, or safety-related regulations daily is also significant.

“I try my best to communicate to deliver my determination to everyone of how I want to make our company like. If we always keep our eyes on them, we would know whether what we want to deliver is well received or not. If only 30 percent of all employees get what I attempt to imply, that is enough for me. If 30 percent of all employees feel involved, we can drive the company in the way we want. I am committed to “firmly govern”, but the solid foundation of this governing cannot happen without communication. If a person in the highest position cannot convey his intention or demand to employees, he cannot successfully run the overseas business.”

Mr. Goto places importance on communication followed by action. For instance, if any employees get into an accident in the factory and have to be hospitalized, Mr. Goto always give these employees a visit.

“In this situation, if the company’s president does nothing, it would be so meaningless. It is impossible that I skip or deny paying an employee a visit at the hospital with a reason that the production line is busy. We usually tell one another that safety must come first. If, in case of an accident, I do not give that employee a visit, that employee would never realize that safety is very important.”

It goes the same way with funeral. Even if it takes place somewhere far like North Eastern Thailand, Mr. Goto always make time to attend.

“Doing so, I want my action to show how much I value the lives of my employees. In any case I have to be away and really cannot attend the funeral, I will attend the 100th day death anniversary or give the family a visit when I have a chance. Talking with employees’ parents and family is important too.”

From caring for employees’ lives and physical safety, paying a visit in case of sickness or accident, attending a funeral, to talking in these circumstances, these are all a part of communication. It is necessary if we want the employees to conduct in accordance with company’s visions or rules and regulations.

A seemingly impossible R&D and a formation of communication system to create new things

EXEDY Friction Material has moved it R&D base into Thailand since 2009, with its headquarter in Japan clearly stating that they “will not support it in any way”. The purpose of intentionally cutting off a support from Japan is to encourage the new company to quickly build themselves up.

From that point, the team here had to do all things by themselves. Although Mr. Goto had already prepared for this, the result in the first two years was useless. He was unsure of why no practical result was achieved. And to find out the cause of the problem, Mr. Goto started doing one thing.

That thing Mr. Goto did was gathering all Thai employees, letting them draw pictures showing what was happening or what the issue was. The outcome was satisfying and interesting. In one drawing, 2 Japanese expats posted in Thailand were standing. And 1 Thai employee holding a nearly-exploding bomb was standing in the middle. 

In another drawing, a Japanese was driving Thai employees who worked in R&D to somewhere. From these 2 drawings, it indirectly revealed that the Japanese and the Thais lacked communication.

“For general task which requires basic operating steps, we can just simply inform the employees by giving an instruction “please do this”. On the other hand, we cannot do this with R&D. We have to show them steps. An instruction alone cannot facilitate R&D, hence, cannot contribute to innovation. So, we repeatedly did ‘Kaizen’.”

First of all, Mr. Goto tuned different perspectives of Thai and Japanese. If any matter is too difficult to be communicated through email or papers, a meeting is held. The attendees then use a Post-it on the work plan, specifying what has been done and what is the next step. The information is then used as a reference for the discussion and operation. It is a communication system built by each Post-it combined.

For the case of specifically technical communication, Mr. Goto has invited a professor from specialized university to help in communicating.

“In cases relating to difficult terminology, using English or using a translator may not be able to capture the true meaning or true intention, resulting in misinterpretation and misperception of the Thais and the Japanese. So, I went to many universities in Thailand to present about technology and to meet professors who are specialized in particular techniques our company uses. We have conducted research between manufacturers, institutions, and governmental agencies, to prepare a structure of system where each party can comprehend.”

General work and specifically technical work require different styles of communication. Creating a system supporting and facilitating communication in 2 different types of work will help employees sufficiently communicate, forming a firm basis for localization.

Competency Assessment helps finding employees best fit for company’s organizational culture

The second factor to build a company which employees are proud working for is the revelation of information, creating visions and missions together.

Mr. Goto has revealed a system used to evaluate employees for a promotion, a Step Up System, to everyone. He also has created a work-friendly environment that motivates employees to work. For the assessment system, he aimed to make a well-balanced system between Japanese and western systems. A university professor was invited to help adjusting the system.

“Thai people like job hopping. Therefore, Japanese assessment system cannot be directly applied. We made a clearer Career Path System compared to the Japanese one. What we focus on is the ‘Core Competency’. We put each competency point required in being a company’s employee into the assessment system and promote those employees who fit with company’s organizational culture. Being a company in Thailand and having our R&D base here, if the employees do not fit with our organizational culture, the work cannot continuously proceed. And for any company without an organizational culture, it is less likely they would reach 50 or 100 years after this. All in all, emphasizing on competency assessment in work is for this purpose.”

His objective is to transfer the management to Thai people. To do so, he has to train the employees to give importance on, understand, and apply the organizational culture.

Constantly doing Corporate Social Responsibility (CSR) activities to make the employees proud and realize their contribution to the company

As Mr. Goto wants EXEDY Friction Material to be a company which its employees are proud of, the third factor is ‘Corporate Branding’.

Looking at market share of parts produced by the company, it can be seen that the company has a large global market share. Being a manufacturer of friction materials which are OEM products, however, the brand has not been generally recognized. The company cannot do a branding by using product name like Toyota or Nissan. So, Mr. Goto has done his best in community service.

“The Ministry of Labour’s ‘Safe Educational Institution Project’, currently supported by our company, has 848 Thai institutions, from primary level to university level, involved. Because there is a very high rate of road accidents in Thailand, ranked second worst in the world (according to the ratio of death from road accident to 100,000 citizens), and there has not been safety or evacuation training and study related to safety in these institutions, we began to provide them with information to give them knowledge on safety. From now on, Thailand will use high technology alongside an awareness in safety to compete with other international manufacturers on a global stage. Thus, the realization about the importance of safety must be done since a young age.”

Apart from this, the company also conducts EV Project with Thai universities and plans to bring a tram to Khon Kaen province.

“All these were completed to build this company to the point it has some significance in Thailand, standing as a manufacturer who are good citizens of the country. Previously, we could not say we had a good working condition. With the nature of the products, the site was always hot, smelly, and dusty. The salary was limited. It was said of us that it was unhealthy working here cause we produce these products. The quit rate then was high. At the present, nevertheless, after we have listened to the voice of our employees and have constantly done ‘Kaizen’, we have the lowest quit rate in Amata City Chonburi Industrial Estate. There is no more labour issue. Consequently, we have received many awards from the Ministry of Labour as being a manufacturer with excellence in labour relations, safety, and hygiene. I think this is an outcome of our attempt to improve the brand image of the company.”

A good brand image of a company can make its employees feel proud in their position and their environment. The pride links to the will to work and the ambition to improve. This results from the continual works and service for community and society.

Understanding a culture and a religion before going to work abroad

Lastly, Mr. Goto has talked about a hope he has for any Japanese businessman:

“The fundamental requirement for those who will be posted in Thailand is the comprehension of Thai tradition, culture, and religion. Also, a concrete setting of duties for those expatriates is compulsory. To achieve this, the parent company must make its missions clear when posting someone in Thailand. I see many of Japanese companies in Thailand which is facing problem about people. In several cases, the issue is caused by the Japanese expats. I want Japanese expats coming here to think of what they can contribute to Thailand during their time in the country. We should be expats who can certainly tell, within a specific duration of overseas placement, what to be accomplished for the employees, and what has been done already.”

Mr. Goto said that the communication between two parties, based on the attempt to understand and respect different cultures, religious beliefs, and values, is the true beginning of localization process. Also, sharing visions, missions, and drawing the future together, simply said enabling employees to think and analyze for themselves, will solidate the localization of management which is the final goal.

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