HIROSHI HAMADA : Ricoh Is Wired for Expansion : Japanese Electronics Firm Keeps Adding U.S. Operations
Fifteen years ago, when Ricoh Corp. began manufacturing electronic desk-top calculators in Irvine, the company’s Japanese employees had a difficult time finding a good Japanese restaurant in the area.
Ricoh Corp. was one of the first Japanese companies to set up shop in Orange County, joining Canon, Mazda and TDK, which arrived at about the same time. Since then, the county has not only sprouted a lot more Japanese restaurants, but also an estimated 150 other Japanese companies, including Fujitsu, Toshiba and C. Itoh.
In the early ‘70s, Ricoh Co. Ltd., the Tokyo-based parent company of Ricoh Corp., was part of a first wave of Japanese firms lured to Orange County by its attractive land prices, abundant labor force, mild climate and West Coast location. Ricoh’s Irvine plant was the company’s first manufacturing operation in the United States.
Ricoh, now the county’s largest Japanese-owned electronics concern, has expanded its operations in the county several times during the past 15 years.
In 1976, it became the first Japanese manufacturer to begin making office copiers in the United States. In 1978, Ricoh Electronics expanded its Irvine factory to begin producing plastic bottles and liquid toners for copiers.
Ricoh built a second factory in Santa Ana in 1985 to produce the thermal label paper used in supermarket weighing scales. A year later, Ricoh began making facsimile machines at its Irvine plant.
And earlier this year, Ricoh completed construction of its third production facility in Orange County, in Tustin. That facility also will serve as headquarters for Ricoh Electronics Inc., a unit of Ricoh Corp.
In the last two years Ricoh has doubled its local work force, to 1,200.
As part of its U.S. expansion, Ricoh plans to build a manufacturing plant in Georgia and a computer software research and development center in Santa Clara.
Ricoh Electronics reported sales of $194 million for the fiscal year ended in March. Company officials expect sales to grow 28% to $249 million this year.
Last month, several top Ricoh officials from the United States and Japan dedicated the Tustin facility in traditional Japanese style. During an outdoor reception attended by 400 employees and guests, Ricoh Co. President Hiroshi Hamada took a wooden mallet to help break open a large cask of sake for the traditional “kagami wari” ceremony. The ceremony is believed to bring good luck, health and prosperity.
In an interview with Times staff writer David Olmos, Hamada, speaking through an interpreter, discussed U.S.-Japan trade relations and the company’s operations in Orange County.
Q. Can you explain the reasons for Ricoh’s recent expansion in the United States? How much does that expansion have to do with trade tensions between the United States and Japan, and with the strengthening of the Japanese yen?
A. The United States is the biggest market for our business, which is the office automation equipment business. Also, the United States is a big country with a lot of resources. For the last two or three years, the international economic situation has been uncertain. But our involvement in the United States started long ago, before such uncertainties began. We started our business in New Jersey and San Jose and also here in Irvine. The yen-dollar relationship and the recent economic changes did not bring us to the United States. We started our activities before that--15 years ago, which is really a long time ago.
Q. Has the appreciation of the yen relative to the dollar helped speed up your plans for expansion in the United States?
A. As far as manufacturing activities, yes. It has affected us strongly. We are speeding up our activities.
Q. Has the recent strengthening of the dollar affected the sale of products that you bring in from Japan?
A. Our main products--copiers, facsimile machines and cameras--have almost no U.S. competitors. Most of the manufacturers are Japanese. In the office copier market, we have mostly Japanese competitors, except for the big guys like Xerox, IBM and Kodak. So there has been no effect there due to the dollar appreciation.
Q. Do you think there has been some easing of trade tension between the United States and Japan because of the lowering of the U.S. trade deficit? Has that reduced any of the pressure that Japanese companies feel to make some kind of response to that issue?
A. The trade tensions between the two countries seem to be easing because, as you pointed out, the trade deficit has been narrowing recently.
Q. What is the effect on your company of the trade bill recently signed into law by President Reagan? (The bill is intended to strengthen the government’s ability to retaliate against certain foreign trade practices. The bill adds new interpretations of what constitutes an “unfair” trade practice. For example, “export targeting” by Japanese companies can now be considered an unfair practice. Japan, along with South Korea, Taiwan and West Germany, is among the countries expected to feel the brunt of the tougher measures. The bill also expands the president’s authority to negotiate bilateral and multilateral trade agreements during the current round of trade talks in Geneva and to enact tariff reductions of up to 50% without congressional approval.)
A. As stated earlier, Ricoh continues to expand its U.S. operations. You can see our facility and also our equipment, which is the evidence of our commitment. After the huge investment we have made over the years, we can’t withdraw from here.
The trade issue between the U.S. and Japan is a complicated one. At this point, we are not certain what effect the new trade law will have upon our U.S. operations. Our strategy is to continue contributing to the American economy in the same positive direction we have taken all along--by localizing our manufacturing, research and development, and sales and service operations in the United States.
Q. Where else is Ricoh investing overseas?
A. Besides the United States, our other international investments are taking place in the United Kingdom, where we are expanding our manufacturing facility, and in France, where we are building a new manufacturing facility. We’re also expanding a camera manufacturing plant in Taiwan. We haven’t made any additional investment in Japan during the last two years.
Q. Looking down the road into the mid-1990s and beyond, do you believe that there will be a different pattern of investment for your company or for Japanese companies in general?
A. Of course, it’s subject to the international economic situation, most importantly by the (foreign currency) exchange ratio. If the exchange ratio is stable, say, at the level of 130 yen to the dollar, which is the current situation, then Japanese investment in the United States and Europe is going to be increased.
Q. Could you describe Ricoh’s management philosophy for its U.S. operations?
A. We have more than 3,300 employees working for Ricoh in the United States. Out of that total, we have 110 or 115 Japanese employees. So, we have a very small percentage of Japanese employees. Our philosophy is that an American company should be managed by American people. And so there are many of our American managers who have a long tenure with us.
Our operating philosophy has been to bring Japanese managers in from Japan to start an operation, but then to send those engineers back to Japan and to have the American managers run this operation. That’s the basic situation. To be honest with you, those (Japanese) guys working in the United States love living here and working for an American company. They are often reluctant to go back to Japan, and so are their children. There is one case where we had a father who had worked for Ricoh for a long time, and after a certain period he got a reassignment back in Japan. He decided to leave the kids in the United States, and he and his wife went back to Japan.
Q. Ricoh recently opened in Silicon Valley what it describes as the first Japanese computer software research facility in the United States, saying that the company hopes to become a major player in the software field. Why did you open the facility in the United States in general and in California in particular?
A. We opened in the United States to be closer to the computer market here. In research and development operations, there are two crucial conditions. First is location. We want to be closer to Japan, because we need to transport our technology as well as engineering capabilities back from Japan. The closer we are to Japan, the more convenient it is for us. The second condition is the environment that is available for the Japanese people. The cultural environment is important. We look for one that is very warm and one where Japanese strangers from abroad will be welcome. It is a strange culture to the Japanese people working out there.
(Hamada said one potential drawback of California is that wage rates are higher here than in other parts of the country.)
Q. Were the higher wages paid in California a major reason why the company recently decided to build a new manufacturing plant in Georgia?
A. Wage rates were not the crucial reason for us to build in Georgia. The main reason was the geographic size of the United States. This is a big country. We wanted to be closer to our markets. So that’s why we built a factory close to the East Coast.
Q. Do you foresee future growth of your Orange County operations?
A. We would like to use these facilities more effectively. We would also like to enhance our marketing function here in Orange County, so we are considering acquiring some other building to accommodate additions to the sales staff.
RICOH ELECTRONICS ORANGE COUNTY FACILITIES Tustin Facility One Ricoh Square 1100 Valencia Ave. Company headquarters Two buildings: 253,189 square feet Opened: 1987 Products: copiers Employees: 422 Santa Ana Facility One Ricoh Plaza 2320 Red Hill Ave. Three buildings: 210,000 square feet Opened: 1978 Products: Liquid and dry toner, developer, thermal label stock and thermal paper Employees: 441 Irvine Facility 17482 Pullman St. Three buildings: 243,000 square feet Opened: 1973 Products produced: Facsimile machines; sorters (collating attachment to copiers); molded plastic and die-cut parts for copiers, faxes and sorters Employees: 339
