Re: Looking back over my life and business in the United States (9) April 22, 2022

The investment amount for frozen/chilled warehouse business in Los Angeles was about 5 billion yen. It was not small amount for the company whose annual turnover was about 90 billion yen at the time that was 35 years ago. Moreover, it was an overseas matter, and needless to say, there were opinions on the pros and cons of this matter. The background in which I finally decided the investment was following factors.
・It is excellent in convenience for the logistics. To put it concretely, the facility is located at close range, approximately 10 km from the two ports of Los Angeles and Long Beach, the gateway to the United States, and close to a highway too.
・It is adjacent to Burlington Northern Railroad connected with across the United States, and once a sidetrack is made, full usage of railroad transport is possible. Thereby, we can offer transloading function where domestic products are exported and import goods are delivered domestically.
・According to a pre-survey, there were insufficient frozen/chilled warehouses in the planned site, besides it coincided with blue ocean strategy (choosing a market where competitors are few) bearing on my mind.
・A joint venture partner had experience in the same business in Seattle and was reliable.
・While I examined the investment, Pete Wilson, the Governor of California, and Tom Bradley, the Mayor of Los Angeles, at the time tried to attract me eagerly and offered to support me.

By the way, the United States was very strict in environmental problems. In order to get permission for construction after the acquisition of the land, it was necessary to clear the Toxic Substances Control Act, and it took me about two years to get a permit.
However, when I did not know how long it would take to get a permit, the incident where contaminated soil was dumped illegally within the premises occurred. Due to the anxiety saying “What will happen to me from now on” at that time, I woke up many times in the night. After that, a criminal was arrested, but he had not the ability to compensate for damages. While I was absorbed in my thoughts, I was advised that “In such a case, sue the origin of soil”, and the criminal accepted the payment after I informed him. I keenly realized that the United States was a litigious society after all. But it took me one year to improve the land caused by illegal dumping.

After that, I finally started the construction, and a warehouse was completed at the end of 1994. It was a big facility whose capacity was 26,000 pallets and having about 300 m loading dock and 56 truck gates, but goods to be stored were nothing at the opening ceremony. I remember that I was asked by a reporter of the trade paper going along with me “What do you want to do after you have built such a big warehouse?”, and I acted tough “In the United States, about such sized one works well.” But after the start of the business, claims appeared one after another due to shipping error and error in the billing, and I piled on deficits every month. I writhed in agony at that time, and I felt as if I were sitting on thorns.

On the other hand, I convinced that the function that can be offered was excellent, and I thought that it would be definitely on track as a business if operation soft, in other words, business knowledge or experience was acquired. Therefore, I decided to appoint an experienced local staff as the local chief executive officer. And I was touched by fate, and was able to invite a well-qualified person. As a result, the business was on truck, and Konoike has three frozen/chilled warehouses now. They say that “a child with a hard birth grows up”, and now I realize it and am full of sweet memories. And happily, Konoike received “Foreign Direct Investment Award” from the Chamber of Commerce and Industry in Los Angeles in May 2018.

I think that what is important for overseas business is how to proceed localization and “how to find a right person” necessary for it. To do that, I fully realized that it was necessary for the top management to expand its network and keep an ear to the ground, and to have good eyes to “judge” a foreign talented person above all.
And I think that this series will end next time, and I would like to sum up my business in the United States.

(P.S.) Recently, I often hear a word like M&A, TOB, MBO, or Activist. On top of that, there is a term difficult to translate properly like Poison Pill, White Knight, or Greenmailer seemed to be unrelated with the management.
I am not going to explain these words here, but 40 years ago when I worked in New York, I saw these on a daily basis in the “Wall Street Journal”. I can say that companies in the United States have already advanced dynamic reform since then.
On the other hand, Japanese companies are caught by the constraints, and not good at decluttering. Even in Japan, it seems that we have entered the world where acquisition or sell-off of companies is transacted as a management strategy. Personnel system is changing from membership-type such as an old lifetime employment to job-type, and a career change also tends to increase. An individual has to grasp the changing times and think about how to gather strength and conduct itself.

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