Rebuilding to stay in the black at the bottom of the cycle, with stepped expense management (2007)

Until a goal turns into procedure

The goal set out in January 2007 — profitable even in the trough of the cycle by 2010 — was tested by the financial crisis well before its deadline. In the year to March 2009 sales fell 42%, and the operating profit left standing was ¥100 million. It was a margin Sekiya Kazuma himself called “a fluke,” closer to an interim mark in an examination than to an achievement. What made it meaningful all the same was that the goal had been translated into operating-margin and expense levels and had come down into procedure across the whole company.

Yet the structure did not abolish the cycle. Sales in the year to March 2010 were ¥61.7 billion, a sluggish rebound, and it took two years to recover the earlier level. Stepped expense management worked, too, only because the business had first been confined to “cut, grind and polish” after the diffusion-furnace failure, and because equipment and consumables were already turning together as two wheels of one machine. Copy the expense mechanism alone and the result would not be the same. Not making losses and growing, one could say, have to be designed separately.