Japan Sun Oil Carves a Niche


Whenever Japans 1.7 million metric ton lubricant market is discussed, it is impossible to escape mention of the industrys two titans, JX Nippon and Idemitsu Kosan. But Japan Sun Oil Co., with only 100 employees, continues to compete in the countrys lubricants arena through a focus on specific niche markets.

Should that name ring a bell with readers, its no wonder: Its a wholly owned subsidiary of Sunoco, the U.S. energy company which at one time was a major player in North American base oils and lubricants. Although largely faded from the lubricants scene on its home turf, Japan Sun Oil is keeping the Sunoco name flying in Asias growing lubricants market.

The history of Sunocos expansion to Japan summons memories of Asias ties to the West during the inter-war period. The U.S. oil companys relationship with Japan Sun Oil has lasted for more than half a century, and was forged as a result of a friendship during the 1930s in Shanghai.

It was in this Chinese port city where W.C. Farham, a distributor for Sunoco products in the Far East, met Hiroji Iguchi, a Japanese national working for a marketer of Sunoco products in China. Iguchi and Farham developed a special bond in Shanghai and this formed the basis for Sunocos move into the Japanese market. Sunocos toehold in Japans lubricant market began through a trading company Iguchi set up under the name Nihon Tsuho.

World War II interrupted this budding partnership but ties were rekindled postwar and resulted in the establishment of the current-day Japan Sun Oil Co. in 1965. Since then, Japan Sun Oil has expanded from a trading and marketing company to its position as a significant blender and distributor of niche lubricants for Japan and Asia. Throughout, the company maintained its historical connections to the Iguchi family line. Hiroji Iguchis youngest son – Yasuhide – is the current CEO of Japan Sun Oil.

The core of Japan Sun Oils lubricants business is built upon its blending plant in Ichikawa City, Chiba Prefecture, close to Tokyo. The Ichikawa plant, which became operational in 1966, has a blending capacity of 50 million liters per annum and tank storage of 12 million liters. The plant is complemented by a corporate head office in Tokyo and sales offices in large centers in southern Japan, such as Osaka and Nagoya. Moreover, the Ichikawa operations have achieved ISO 9001 and ISO 14001 certifications, which cover its resource and energy conservation, and responsible management of environmental risks.

According to Plant Director Tohru Nomiya, the Ichikawa plant has nine mixing tanks and is focused on producing lubricants for high-end niche markets. For example, Japan Sun produces a range of lubricants for racing automobiles, including the Brill Series which utilizes the companys ester technology in order to improve stable oil flow and combat engine abrasion and evaporation of oil. The company also produces a range of lubricant products for passenger cars (the ester based Svelt, Airy and Ultra lines). The Svelt line is targeted towards European sportscars and new hybrid vehicles and has European ACEA A5/B5 certification. The Airy line is positioned as an eco-conscious product that conserves energy while simultaneously reducing hazardous substances such as phosphorus and lead. Finally, the Ultra series is a multi-use mineral oil for engines and gear boxes.

During LubesnGreases visit in September, CEO Yasuhide Iguchi revealed that motor oil represents just a fraction of the companys market – some 20 percent of sales in 2012. The largest sales came in process oils at 35 percent, refrigeration oils (30 percent) and industrial lubricants (15 percent). While process oils share has spiked in recent years due to a growth in exports and a weakening yen, refrigeration oils remain the most important market sector for Japan Sun Oil.

According to company officials, the company uses a dry-air method to blend its lubes by blowing dry air from the bottom of the blending tank. This method is different than the usual techniques which employ a gearbox or propeller to mix the ingredients, and where lubricants or water may travel from mechanical parts and mix with the product batch. The proprietary dry-air system, dating to the 1960s, minimizes this risk and has proven especially efficient for blending refrigeration oils, where impurities are strictly forbidden.

Following the Montreal Protocol in 1987, Japan Sun Oil, along with other lube companies, was forced to adapt to new production methods in the refrigeration sector. The protocol is an international treaty designed to protect the atmospheric ozone layer by phasing out the production of numerous substances believed to be responsible for ozone depletion. Banned were various types of refrigerants, such as CFC and HCFC, which were used in refrigeration and air-conditioner compressors – an important target for Japan Sun Oils lubricants.

Through years of research and development work, Japan Sun Oil was able to develop synthetic lubricants that are compatible with todays alternative refrigerants that comply with the Montreal Protocol. These it sells under the Suniso and Sunice brands, with approvals from many of the major air-conditioner, refrigerator, freezer and automotive air-conditioner manufacturers in the world. To meet these evolving needs, the company opened a research and development center in 2007 which continues to work on expanding its refrigeration lubricant technology.

The companys other key markets are rubber process oils and industrial lubricants. Process oil volumes spiked last year but normally they are Sun Oils second-largest market. Theyre used in manufacturing rubber products such as tires, conveyor belts, rubber hoses, water-resistant films and sheets, etc. These oils are sold under the Sunpar, Sunpure, Sunthene, Sunthetic, Sundex and Sunflex brands.

On the industrial lubricants side, Japan Sun serves a wide range of industrial applications with hydraulic fluids, spindle oils, gear oils, compressor oils and vacuum pump oils. Other industrial lubes focus on metalworking, quenching, cutting and gear oils and are sold under the brands Sunvis, Sunquench, Sungrind and Suntac.

Sunoco meanwhile, through a Chinese sales and marketing subsidiary named Sun Oil Far East (China Sun Oil Co.), has gradually expanded its distribution network to more than 10 other countries across Asia- Pacific. In 1986, China Sun Oil set up a lubricant blending, packaging and marketing facility in the Shenzen Special Economic Zone as a joint venture with Sinopec. This joint venture is significant as it was the first-ever foreign investment in Chinas lube blending and packaging industry. China Sun Oil has a capacity of 50,000 metric tons per annum. Keeping up, in 2005 Japan Sun Oil also set up a trading company in Shanghai to provide greater service, sales and marketing to the emerging Chinese market.

Japan Sun Oil has also expanded to Southeast Asia, highlighted by the establishment in 1995 of a joint venture named Sunoco Thailand Co. Ltd. The Thai unit focuses on lubricant sales, marketing and distribution, with a large warehouse in Bangkok for storing finished products.

Through its expansion in China and Thailand, as well as its Ichikawa plant, Japan Sun Oil now has a substantial distribution network that reaches Japan, the Asia- Pacific region and customers and affiliates in Europe and the Americas. Its retail activity is conducted through agents and distributors in almost every Asia-Pacific country.

Shaken by 3/11

On March 11, 2011, northern Japan was rocked by a massive 9.0 magnitude earthquake that devastated large parts of the northeast coastline and was responsible for more than 15,000 deaths. The fallout from 3/11 was significant not only for the residents of northern Japan but for the entire country, as the nation came to grips with a triple disaster: a historic earthquake, a monstrous tsunami and a crippling disaster at the Fukushima Daichi nuclear power station.

Speaking with CEO Yasuhide Iguchi and Executive Director for International Affairs Anna Hiramatsu, LubesnGreases gained a stronger appreciation of just how paralyzing the event was for the country and for their industry. During transit from Tokyo to the Ichikawa plant, Hiramatsu pointed to a nearby refinery that suffered significant damage from fires after the quake, which also shook the Japanese capital heavily. The Ichikawa plant survived relatively unharmed, although there was some limited damage. Shortly after the earthquake, the CEO instructed several of his senior staff to travel up north to the devastated areas to offer help.

While not unique – hundreds of companies and individuals pledged support post-tsunami – this commitment to be on the ground was remarkable. As well, many aid groups had supplied dried noodles and other food supplies that required heating or electricity. Immediately after the disaster, however, these utilities were a luxury to many in the area.

Japan Sun Oil officials took another approach, recalled Hiramatsu: We brought Kentucky Fried Chicken as a hot meal and a treat to young children affected in the areas. We knew that they would not be able to eat the instant noodles so we felt it was better to bring something immediate.

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