Dealing with Change in Japanese Shipbuilding Industry: Teramoto Iron

At one time shipbuilders in Japan accounted for around half of all new ships built in the world, however from the 1990’s the sector came under increasing competition from rivals in South Korea and China, with some shipbuilders in those countries receiving government assistance. As a result many shipyards in Japan have been closed, merged with other yards or the yards no longer build ships and have shifted into other business areas. Founded back in 1934, Teramoto Iron Works Co., Ltd. is a small Japanese company located in Onomichi that has strong links to shipbuilding in Japan and has seen the highs and lows in this industry over many decades.

In recent years the company has evolved, and in addition to manufacturing its traditional range of ship fittings it has also branched out into new areas. These include manufacturing fittings for offshore use, producing industrial structures, designing and fabricating solar panel frames, plus working on innovative renewable energy projects including the EnergySail.

To find out more about the company and its plans for the future, the current president, Yoshitaka Teramoto, agreed to answer some questions and provide a unique insight into how small companies in Japan are dealing with a changing business environment.

Questions and Answers with Mr. Teramoto
Q: Your company has been in business for a long time and has had to deal with many challenges over the years. Now in 2020 what do you see as the major challenges your company faces?
A: Nearly 80% of our products are related to ships. The current work volume we have with Japanese shipyards is very small, less than 1.5 years, and accordingly, our biggest concern is the
downward trend in work volume. In addition, the impact of COVID-19 may accelerate the economic downturn and I think that we will have to review our management strategy for the future.

Q: The shipbuilding industry in Japan has been struggling over the last few decades and many shipyards have closed and shipbuilders merged. Do you think the worst is behind the shipbuilding sector for now?
A: I don't know if this is the worst time, but at least the Japanese shipbuilding sector is expected to  continue to undergo a period of change, including consolidation for a while.

Q: Teramoto Iron Works has a long connection with the shipbuilding industry but also has undertaken projects not related to shipbuilding. What are some examples of these?
A: Although it is difficult to include as “shipbuilding”, we have products for merchant ships and work vessels such as crane ships. Other than shipbuilding, we manufacture products for construction machinery makers. Also we have worked on monuments at the request of local artists. These monuments are included as part of a fountain in front of Hiroshima station, at the Fukuyama Museum of Art open space area and in front of Ochanomizu station.

Q: Recently your company undertook a project to design and build a jack-up rig system for use in the offshore sector. Can you please briefly describe this system and also discuss who the potential customers might be? (A jack-up system is a lifting device that raises a working platform above the surface of the water)
A: We manufactured a cylinder and pin type jack-up system with a lifting capacity of up to 5,000 tons (@1,250 tons per leg). Recently renewable energy solutions have been receiving much attention as an alternative to fossil fuels and one of these is offshore wind power generation. Our jack-up rig system is the size and type that is in demand for offshore power generation maintenance.

Q: Is Teramoto Iron Works looking to increase exports of its products to markets in Asia & beyond? If so which countries are you aiming to export to?
A: We would like to target the European and United States clean energy/eco industry markets.

Q: Recently in co-operation with Eco Marine Power, Furukawa Battery & other companies you established the Onomichi Marine Tech Test Center. What are your plans for this and can shipyards and other potential customers make arrangements with your company to visit this center?
A: This center is an exhibition space for our products and has been set up with the expectation of inviting many customers to see our products. We cannot accept visitors by our own decision, but we expect as many customers as possible to visit the center after consulting with our development partners.

Q: Lastly your company is located in the very scenic city of Onomichi. The city is very popular with tourists from Japan and abroad, so can you share one thing to see or do in Onomichi that tourists may not know about?
A: Onomichi has the world-famous cycling course, "Shimanami Kaido". We hope people will enjoy the scenic beauty of the Seto Inland Sea and also the food.