State firms see growth from 'reborn' Japan

Article by: DEE DEPASS , Star Tribune
Updated: July 6, 2011 - 7:18 AM

Post-disaster rebuilding has sparked a new yen for color and an increase in exports.

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Hirshfield's customer and Japanese paint business owner Chiemi Akiyama wants to bring richness of colored paint to Japanese homes that traditionally have been fairly black and white. She tried out some new paint products with her interpreter Mieko Kushimaejo in the paint studio of Hirshfield's in Minneapolis, Minn. on Wednesday, 6/29/2011

Photo: Richard Sennott, Star Tribune

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A curious mix of post-tsunami rebuilding and changing design tastes have combined to boost orders for Hirshfield's Paint in Japan since March.

"Orders to Japan easily increased 100 fold,'' said Jason Boedigheimer, operations director for the Minneapolis-based paintmaker. "We would normally ship one truckload or 5,000 gallons every quarter. Now it's 13,000 gallons in the last three months, and we have another one on the way."

Hirshfield's is among a handful of Minnesota companies, including 3M Co., H.B. Fuller, agricultural firms and a few other U.S. manufacturers, experiencing a surge in business from Japan following the March 11 tsunami, earthquakes and nuclear disaster that devastated the island nation. As the country continues to rebuild, more business opportunities will be created, experts say.

Minnesota commodity exports to Japan, for example, shot up 61 percent for April, compared with a year ago.

"That is definitely significant," said Minnesota Trade Office Executive Director Katie Clark. "We already know that Japan is our top buyer for cereal grains. What we are seeing now is that Japan is starting the rebuilding phase. So that will continue to create opportunities for Minnesota. We could definitely see a further impact in manufacturing."

3M, which gets 9 percent of its sales from Japan, initially forecast a 7 cents per share hit to second-quarter earnings because of Japan's disaster. But CFO David Meline said the second half of the year should tell a different story.

"We could see additional sales opportunities" in the second half of the year for 3M respirators, traffic safety products and commercial graphic products, Meline told analysts.

Clark expects 3M and other local solar-panel component makers to "see great potential as Japan goes through this rebuilding and transitions away from nuclear power." 3M makes solar Fresnel lenses that amplify rays of sun for higher energy yields.

Vadnais Heights-based H.B. Fuller saw a bump in orders from Japan for adhesives, paints and construction materials. Fuller is perhaps best known in this country for the glue used in cereal boxes, diapers, toilet paper, shopping bags, magazines and other consumer products.

In Japan, however, Fuller enjoys a joint venture with factories in the undamaged southern region of that country. "We are very strong in Japan in construction and expect there to be further growth in that area as the year goes on and rebuilding gets much stronger," said Fuller spokeswoman Kimberlee Sinclair. "We have been doing well in the post-tsunami Japan." Some customers ramped up orders in preparation of rolling blackouts that are expected to last all summer. Others needed supplies to replace damaged stock.

Replacement revenue

At Hirshfield's, overall sales jumped 6 percent from a year ago thanks to the boost from Japan. And that's helped the family-owned business overcome the slump in U.S. housing. New home construction in the United States represented about 40 percent of the business before the housing bust.

"Japan is a piece of the replacement revenue for us," Boedigheimer said. "This is one of the most positive sources of revenue and has a lot of growth potential."

Higher Japanese sales can be tied directly to Chiemi Akiyama and her husband, who own four paint stores and a new four-story design studio in Tokyo.

The couple started selling Hirshfield's paint in Tokyo eight years ago. They now distribute to 60 big-box home centers around the island nation.

Akiyama said she will be in 300 home centers in three to five years. The reason? Tastes are evolving. And the tsunami accelerated changes in how the Japanese envision their homes.

"It is normally hard to change things easily. But because of the earthquake and tsunami, people realized that life can be different. March 11 is the day Japan was reborn with a new way of thinking," Akiyama explained through an interpreter while visiting Hirshfield's Design Center in north Minneapolis on Wednesday.

Homeowners increasingly want to discard their traditional Japanese plastic wallpaper and white walls for a touch of color. They are learning that colored walls can demonstrate personality and lifestyle, Akiyama said.

She said she noticed a swing in demand after the tsunami. Housewives suddenly bypassed the hiring of contractors and flocked to industrial home centers themselves to buy batteries, flashlights, hammers and other supplies.

Suddenly, home centers realized they could sell directly to consumers, not just to contractors. That shift is opening new distribution channels, said Akiyama who provides the centers with Hirshfield's 2,000 color choices. Japan's traditional home centers, which resemble industrial warehouses, offer just 16 colors.

"Color is becoming more important. And that is allowing my business to grow," she said.

Entering Hirshfield's design studio Wednesday, Akiyama hugged employees, touched textured wall samples, grabbed brushes and sponges and swirled new metallic paints and textured glazes on large test panels.

She studied Drew Beninati, who runs the company's plaster center, as he showed off his new line of textured products and brushing techniques.

"This is very exciting," Akiyama said as she reached for her camera and clicked away. She was last in this studio more than a year ago when she took lessons on feathering, stenciling and making paint look like slate and rock.

The Akiyamas made great partners, said CEO Hans Hirshfield while introducing Akiyama to his father, a tradition common in Japan.

Still meeting the new demand can be "frustrating and challenging," Hirshfield said. "The ports are still damaged. They are overrun with other ships, so it's tough to get product in.''

But the Akiyamas' business and passion to introduce color into Japanese homes has helped his company patch the hole left by the depressed U.S. housing market. Their relationship has built over time.

Hans Hirshfield and Boedigheimer visited the Akiyamas last year and spent time with their entire families. When the tsunami and earthquakes struck, they quickly called to make sure they were safe.

"We are excited to help our friends and support them in challenging times," Hirshfield said. "The Japanese do business based on relationships, and we are excited by this opportunity."

Dee DePass • 612-673-7725

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