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Vol. 16 Hirofumi Sato – CEO, Kyouritsu Engineering Corporation and Kinoko-no-Sato Corporation (Agricultural Production Corporation)

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Mr. Hirofumi Sato

CEO, Kyouritsu Engineering Corporation and CEO, Kinoko-no-Sato Corporation (Agricultural Production Corporation)

This interview was held at the end of December in 2013, while Mr. Komori visited Sanriku as a usual courtesy call around the end of the year.

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1. It is a challenge, not hardship.

2. Damages from the tsunami beyond all imagination

3. Tremor of excitement with no certain evidence and promise

4. Shipment restart of shiitake mushroom two days after the earthquake

5. Further success in the mushroom business

6. Reconstruction of the engineering business

7. Co-operation with skilled co-workers

 

1. It is a challenge, not hardship

Komori: I really appreciate you taking time out of your busy schedule. The series of talks about a recovery from Tohoku earthquake are approach to the recovery and to record their memories by interviews with people who are dedicatedly involved in activities. Thank you for your help.

Sato: Thank you, too.

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Komori: I am afraid you are really busy. You are a CEO of Kyouritsu Engineering Corporation, a consulting firm in the area of measurement, engineering and city planning. And also CEO of Kinoko-no-Sato Corporation, which is a famous agricultural production corporation for mushroom.

Sato: Exactly. Kyouritsu Engineering is a base of our business and Kinoko-no-Sato is a successful company as a diversification of business.

Komori: I heard both businesses had damages by Tohoku Earthquake. I thought you had painful hardship. May I ask you the track of the recovery until today?

Sato: Well. I didn’t regard it as hardship.

Komori: I know the damages were tremendous.

Sato: I have tried to think this is a chance and challenge, though it was very tough. I’ve never had a negative way of thinking like hardship.

Komori: Ah-ha. Your basic stance is a challenge to a chance. Please talk about the challenge.

 

2. Damages from the tsunami beyond all imagination

Komori: Where were you at the time of the earthquake?

Sato: I was in Sendai for business. I immediately predicted tsunami because I am an engineer and the shock of the earthquake was very big. I left Sendai at 17:00 and headed for Rikuzentakata on a general road, because I didn’t use the highway. I could not get any information about Rikuzentakata from TV on a mobile phone and car radio.

Komori: You really worried, didn’t you?

Sato: Yes. I assumed two scenarios in the situation of no information. One was a good story where people had been relieved by a breakwater against Tsunami. Another was a bad story where people had not been able to provide any information by damages of Tsunami. Finally, I got just before Rikuzentakata at 23:00. I stopped my car on a mountain, stayed in the car that night with anxiety.

Komori: You got near here that day in one way or another.

Sato: On the next morning, I headed for the center of Rikuzentakata by crossing over the mountain on Route 340. I asked a fireman about Rikuzentakata on the way. He replied Rikuzentakata was devastated. It was a bad story. Then, I saw the devastated city from the hill where we can see the center of the city. It was 5:00 in the morning.

Komori: You saw the damaged city just after the quake on the next morning.

Sato: My house was washed away. Our head office and 7 greenhouses for cloud ear mushrooms were fully destroyed and the bases of the buildings were only left. I knew a big quake should bring tsunami because Great Chilean Earthquake (in 1960) triggered 8.5 meter tsunami which hit Rikuzentakata. For this reason, I built a storage house on a higher place just in case. But, the tsunami washed it away. It was beyond my assumption.

Komori: The tsunami had a massive scale beyond all imagination. But, I heard that some buildings could escape from being washed away.

Sato: Exactly. 7 houses for shiitake mushroom on a mountain survived. I built those houses on the mountain, as I thought of tsunami. Tsunami reached just in front of the houses. A cultivation house for cloud ear mushroom also survived.

Komori: All buildings for mushroom were not wiped out. Was your engineering company completely destroyed?

Sato: Yes, it was. All hard assets of our engineering company were destroyed. All were washed away. However, technological capability is a key point in the engineering industry. So, special skills our employees have are our main assets. These survived.

Komori: I see. Human assets with special skills were preserved in your main business, engineering. And, some of productive capabilities miraculously survived in your mushroom business. Ordinal people must despair of the situation. Not only companies but also whole city sank down. You started from that point, didn’t you?

Sato: Yes I did. We started from not the zero point, but the minus point.

 

3. Tremor of excitement with no certain evidence and promise

Komori: How did you restart against tsunami damages beyond all imagination?

Sato: I restarted just when I overlooked the devastated city the next morning of the disaster.

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Komori: You restarted at that very moment? Was it the time when you saw the city with unthinkable damages and you saw your company’s place with only basement of the building?

Sato: Absolutely. I restarted then! I trembled with excitement, though I had no certain evidence and promise. I thought “This is where I come in. This is where I can get a chance even though the damages are tremendous”

Komori: I cannot imagine how many people were able to tremble with excitement at 5:00 in the morning on the 12th of March. What pushed you forward?

Sato: My business is engineering and mushroom production before the quake. I can contribute to reconstruction of Rikuzentakata if I use engineering skills of our company. And, our mushroom business with high quality can provide job opportunities in primary sector of the economy. I had an epiphany that our businesses could have significant roles through reconstructing period. I thought the devastated city looked like a white campus. I believed I could pave the way for recovery, if I went ahead.

 

4. Restart the shipment of shiitake mushroom two days after the earthquake

Komori: What did you do after the epiphany early in the next morning after the earthquake?

Sato: At first, I resumed the minimum work in the surviving mushroom plants, while confirming the safety of our family and employees.

Komori: Did you start immediately rebuilding of business operation while coping with crisis?

Sato: Exactly. We started to provide evacuees with shiitake mushrooms for free which were growing in the surviving houses. They thanked us, because they faced lack of fresh foods in the evacuation shelters after the quake.

Komori: You provided mushrooms two days after the disaster! They should be happy. I heard Kinoko-no-Sato’s shiitake mushrooms tasted good and had good keeping, due to a special growing environment opened up to sea winds. This aspect had a good evaluation just after the quake, didn’t you?

Sato: Yes. Anyway, we tried to do the best for evacuees. We had been providing mushrooms for around ten days before supports by Self-Defense Forces entered a stable situation.

Komori: When did you restart your business for sales?

Sato: I think it was the 24th of March.

Komori: So soon?

Sato: Yes. There were many people in the ocean side who could buy mushrooms in a normal way, while evacuees could not. Our duty was to restart the delivery for those customers as soon as possible.

Komori: I heard people faced food shortage, even though they had enough money and could go to a shop. Under the circumstances, it was a big step to restart the delivery in the early stage.

Sato: I think so. I negotiated personally with an owner of a supermarket. And, I got to be able to deliver as many as possible. After that, I did shipping operation alone through the night and delivered a truckload of mushrooms next morning.

Komori: You did that alone all night.

Sato: I really struggled against the situation, and got to recover the delivery of mushrooms quite early. It caused labor shortage. I asked for help. 4 or 5 evacuees came to help. Mushrooms were in-kind wage, as I didn’t have enough money.

Komori: I think they appreciated you under the circumstances.

 

5. Further success in the mushroom business

Sato: After that, mushroom business has grown at a healthy pace as a result of some bumps and detours. Our labors increased from 15 part-timers before the disaster to 45 workers including regular staffs.

Komori: Great! You have created jobs in the mushroom business, as you expected.

Sato: I set up new 17 green houses below Capital Hotel on the 22th of May this year (2013). Actually, before the construction, I had already expanded the number of labors to 40 in May of 2012 (a year before). Thanks to that, we could escape from the booming labor market in 2013. So, I could pay salary without delay so far.

Komori: You gambled on early securing of human resources a year before the expansion of your business. You challengingly staked yourself on your business plan, despite of uncertainty such as securing the land for green houses. I think that betting on your intuition is your policy for business, and it was shown when you trembled from the excitement on the next early morning after the quake. How do you manage financing for that challenge?

Sato: It is very important to secure sustainable financing, when I do business with a great vision both in the engineering and mushroom business. We had a support from “Disaster recovery project for joint facilities of SME associations” from Ministry of Economy, Trade and Industry.

Komori: So-called “Group subsidy”?

Sato: Exactly. In addition, we applied for “Everyone’s Dream AWARD” organized by an NPO which was established by Miki Watanabe who is a chairman of Watami Corporation and an adviser of Rikuzentakata. We finally won the grand prize in that award in January of 2012.

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Komori: It was announced in the various media.

Sato: We got 20 million yen ($200,000). 16 million yen was borrowing and 4 million was capital injection. It was a big support to make our vision realize. We also have had advices about management from Mr. Watanabe.

Komori: How did you make a presentation in the award?

Sato: We had only one month for the preparation of the award. It was the morning of the award when we finalized the materials. Other competitors had made elaborate preparations because they were short-listed through a couple of selections. On the other hand, we finally completed the materials on the morning of the award.

Komori: Just in time!

Sato: We received some harsh advices at rehearsal, because we simply read a script. We nearly gave up the prize due to a quick fixed presentation. And then, we changed the strategy. We tried to achieve one’s understanding of the current situation in Rikuzentakata and tell our vision honestly.

Komori: As a result, judges of the award understood the situation. Your strong will for the business touched audience hearts.

 

6. Reconstruction of the engineering business

Komori: How did you deal with the reconstruction of your main business, engineering?

Sato: Engineering business restarted from the meeting by all workers on the 11th of April after the restart of the mushroom. We built a temporary office at my place on a hill in Takata-cho, using 4 bulk containers. All of 13 workers came to the office, even though pencils were not there.

Komori: It was just one month after the disaster, wasn’t it?

Sato: That’s right. Anyway, workers are critical resources for this business because they have expertise. At first, we borrowed engineering machinery from peers in the same industry. However, we finally introduced a new machine, as they didn’t work efficiently.

Komori: And then, your engineering business caught a wave in the recovery process. Things worked out as calculated, thanks to the early restart one month after the quake.

Sato: The business has grown steadily since the restart in April of 2011. We worked in the containers for a while. It was a tough condition because the containers were vulnerable to cold, dew condensation and heat. We could move to the current office at last in January of 2013.

Komori: Your engineering business has been going back to normal for around two years.

Sato: Financing is not easy. But, our company can pay salaries without delay.

Komori: Have you done the work such as drawing a picture on the white canvas, as you imagined?

Sato: Things are going well. As I said before, our company built new green houses for mushroom below the Capital Hotel. In fact, we are engaged in the planning of the reconstruction for the hotel and green houses.

Komori: Really?

Sato: A grand design in the area is for a complex facility which includes a hotel, homes, a power station and agricultural plants. The design should have a planning concept including an injection of external funds. The direction of the design is very clear, though all blue prints are not completed. Moreover, there is another plan for a construction of commercial complex adjacent to the area.

Komori: I see. You are designing the town totally, not individually.

 

7. Co-operation with skilled co-workers

Komori: I think you need a network in the various fields in order to draw the blueprint and accomplish it. How do you make the process go?

Sato: You know. I am not alone. A team makes the process forward. Concretely speaking, I am a deputy director of “Future Forum Association”. It currently has 13 members. The association lobbies councilors and administrators, for example, dealing with offers from big companies in the CSR activities.

Komori: Do you have many offers in the CSR activities?

Sato: Well… Rikuzentakata receives great attention from home and abroad about the reconstruction, because the whole city had a devastating damage. We have many offers. But, we have to discuss the each offer in detail in order to make it effective each other in the medium and long term. We are trying to find a Win-Win solution between the reconstruction of Rikuzentakata and CSR activity of a sponsor company.

Komori: Are you lobbying administrators and councilors through this association?

Sato: Exactly. What we need is not only money but also improvement of administrative procedure, for example, easing of regulations and special economic zone. We frequently express concerns and make presentations about those issues, because we don’t know the national and local government would craft a bill. We visited Nagata-Cho (Central place of Japanese politics) five times and an office of a prime minister two times.

Komori: So, a change of the current system may be one part of your grand design. Cooperation with skilled co-workers in the various fields can change it.

Time is almost up. Sato-san, thank you very much for taking time to speaking with me. I sincerely hope the recovery in Rikuzentakata will speed up by exercising ingenuity and collaborating with many people.

sato-san-fin

 

(Translation supported by Yoshinori Kamiya)

 

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