The Japan NewsHarry Kobrak is something of a Japan connoisseur, traveling to local areas of the country and finding each place’s various strengths. The representative operating director of Caterpillar Japan LLC (see below) also understands old-fashioned Japanese ways and thrives on applying them to business today. The Japan News recently spoke to Kobrak to learn about what he has seen during his time in the country.
Q: In order to meet dealers or customers, at least once a week you visit regional sites, where many challenges have arisen such as the rapid aging of society or the severe shortage of a young labor force.
Kobrak: I think that there’s a general belief that because the society is aging there must be a labor shortage. But what I see is that some companies are becoming more innovative in addressing the problem and are becoming more proactive in their communities and how they reach out to and access young people. They have been successful in bringing young people to their businesses.
I see that of the different industries that Caterpillar works with. Some industries have been more successful than others bringing in young people.
Q: For example?
A: I’d like to share with you [data on] the forestry industry. In the forestry industry, the number of people who are older has been in decline. And young people are actually increasing in the forestry industry. It’s clear that they are making a dedicated effort to promote with advertising and bringing families to exhibitions, or tenjikai. [The forestry industry] understood they faced a crisis and so they began to proactively reach out.
In contrast, with the construction industry, I think they have been more conservative and they have been less proactive and, frankly, less innovative in trying to promote the industry to young people.
I think there are a lot of young people today that leave high school and they don’t know what to do. But if they could see a career in construction or some of the technical fields related to construction, then they would understand that in 10 years they could have a much higher salary, a much higher skill set and would always have a kind of confidence in their employment. They could reach a higher professional level, a more interesting career.
And I think within the companies, we have to take the best part of Japanese corporate culture, which is kind of the senpai-kohai relationship [usually based on length of service], and make it a positive relationship. I think sometimes the image is very negative, and young people may pull back from a kibishii [strict, severe] senpai when they’re too tough. There’s also a very positive aspect to mentoring and that’s really the strength of Japanese companies.
I think older, more experienced employees naturally teach younger, incoming employees through teams and with their department, in a very effective way. I think we need to be mindful about that being a positive relationship.
Q: In Japan, Caterpillar has a long history with Mitsubishi Heavy Industries. In 2012, Caterpillar Japan became a wholly owned subsidiary of Caterpillar Inc. in the U.S. Before and after that date, there were probably some dramatic changes. What were the most significant ones?
A: There have been some significant changes that happened around the same time, but I would say not all of the changes are related to that particular change. Caterpillar, globally, has undergone a lot of changes, so that would have happened with or without the joint venture buyout. In terms of the culture of the company, it varies a lot by which division you are in and somewhat by what location you are in.
During the joint venture, some departments had comanagers, so you’d have one person from Caterpillar and one person either from the joint venture or periodically from Mitsubishi, and that could complicate or slow down decision-making. So, one positive outcome of the Caterpillar buyout has been faster decision-making as a result of that.
Tech is key to safety
Q: What do you focus on?
A: I think a traditional Japanese company — and we were a traditional Japanese company, in many ways — was very focused on market share. I think it’s changing, but at that time we were very focused on market share. We’ve shifted that focus and we need profitable growth throughout the company; not all market share is good market share, for us.
What hasn’t changed is the organization has always been very focused on customers. And traditionally, Caterpillar’s strength has been not only in the products we sell, but aftermarket. So, after the product is sold, how we support the product and the customer after the sale. I think the joint venture was very focused on that and we will be even more focused on that going forward. There are some transition issues always, but we want to have a partnership with the customer. That’s very important.
Q: You have also become vice chairman of the Japan Construction Equipment Manufacturers Association (CEMA). Could you tell me about the situation and future perspective of the industry?
A: Technology will continue to be the main change that we see in the industry. It’s been driven by the need for greater efficiency. As you know, the MLIT [Land, Infrastructure, Transport and Tourism Ministry] is very concerned about a shrinking labor force and so they see technology as a way to raise productivity and be able to do more work at lower cost. They are very much promoting technology to the industry and I think manufacturers are quite happy to introduce more technology because it helps us from a margin perspective and we do want our customers to make more money. So if we can become partners with our customers in helping them make more money, ultimately, we’ll have stronger relationships and that will help our companies in the future.
Q: How do you incorporate ICT [information and communications technology] with the business in the country?
A: What I would say about Caterpillar is that we were a leader in ICT technologies before it became a priority for the Japanese government. We have been focused on how to help customers maximize their profits.
We [also] have technologies that help from a safety perspective. We know that safety is very important to customers and [one] of the innovations that we’ve developed, for example, [is] something called e-ceiling, so you can set the machine so that the boom and stick will not go above a certain level. So, for example, if there’s a power line here, the operator can set it so it will not hit it.
And we have a related technology, e-fence where the operator can set how far it swings and it will never swing into that.
First fear, then curiosity
Q: What was your first impression of Japan? When and why did you come to the country?
A: It was a long time ago. My uncle was working for a pharmaceutical company in Tokyo at the time, and I came over with my parents to visit [during middle school]. Everything was completely different. It would have been [in the late 1980s].
I grew up in Michigan, which is the home of the U.S. auto industry. At that time, there was a lot of fear about Japan. We can look back and say, maybe it was not rational, but at the time people felt like that. Factories were closing and people were nervous about American competitiveness and those things. So I grew up in that environment and then had the opportunity to visit my uncle in Tokyo.
I had been lucky as a child — my parents were both immigrants to the U.S. so they made a point of, on vacations, taking us outside the U.S. Sometimes we might go to Europe or we might go to the Caribbean, but I could always read a sign — if there’s a sign I can see, I can figure it out, even if it’s in German or something.
In Japan, I had no idea what was going on. So much neon and blinking lights and at night lots of loud sounds coming out of stores. You see something like pachinko. It looks like an arcade, but there are old men in there wearing suits and ties and smoking, right? What is that? There are lights like for kids. So it looked, to me, very strange. Everything was very new, and so for me it was interesting and I really wanted to understand what [was] going on. And the more you learn, the more interesting it is to dig deeper and learn more.
Q: Do you have any advice for the Japanese business world based on your lengthy experience in the country?
A: I think that there’s been a big kind of yo-yo in confidence in Japan, whereas during the bubble maybe people were too confident, to the point of being pretty arrogant about Japan’s place in the world. And then after the bubble burst it went too far the other way, where people felt that everything was kind of dame or no good. I think it’s beginning to settle a little bit more and people are recognizing there are strengths and weaknesses within the economy and Japan is a normal country and it should capitalize on its strengths.
I would like to see people here have a little more confidence about their ability to solve their problems, and I would like them not to give up on the country’s future. I think there’s too much focus on the fact it’s an aging society. Demographics will change over time, but Japan has many strengths — culturally, technologically, many strong institutions, both educationally, culturally, business-wise, research-wise. It’s a dynamic country. I would like to see people relax and be a little bit more confident of their place in the world. That’s how I look at it.
Q: Do you have any ideas which direction the business relationship between Japan and the United States is going?
A: I’m very optimistic that the relationship will continue to be strong in the future. I think that Japan, in many ways, has a different approach to its democracy and a different approach to how it wants to run the economy. But generally speaking, I think that Japanese people do value democratic freedoms and as a result of that I think the U.S. and Japan have a natural basis for cooperation and collaboration in the world that goes beyond business.
We have business relationships, both Japan and the United States, with many countries that we would not like to emulate. That’s just life. We need to do business with many different kinds of countries. But I do believe that countries that respect human rights and civil rights and have that feeling for democracy ultimately need to cooperate on the world stage in a positive way. And by doing that, I think we can make a better world.
This interview was conducted by Japan News Deputy Editor Takeshi Nagata.
After joining Caterpillar Inc. in 1999, Kobrak was appointed to several important positions including global distribution manager in the United States and area product manager for Japan, Australia and New Zealand in Akashi, Hyogo Prefecture. He assumed his current post in July 2015. He earned an MBA at Georgetown University in the United States and attended Osaka University as a Fulbright scholar.
■ Caterpillar Japan LLC
Its parent company Caterpillar Inc. is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Caterpillar’s worldwide sales in 2017 reached $45.5 billion (¥5.2 trillion).
The U.S.-based giant has sold products in Japan for more than 90 years. The company first established a presence in the country as a manufacturer in 1963 by founding a joint firm with Mitsubishi Heavy Industries. In 2012, it made the firm a 100-percent subsidiary. Caterpillar Japan sells, rents or leases construction equipment in the country, while developing and producing hydraulic excavators mainly in its Akashi plant in Hyogo Prefecture. Its headquarters is located in Yokohama, and the number of its employees is about 1,870.Speech