(1) The steel drum reconditioning industry in Japan is made up primarily of small and medium sized, family-run businesses. Total steel drum production is decreasing gently. (2) Customers now demand reconditioned drums that are as high in quality as new drums. However, reconditioners have low profit levels as they cannot pass on increases in raw material costs. (3) Due to decreasing demand and low profits, the future of the reconditioning industry is seen as "cloudy" or resembling "drizzle." Cooperation between member companies will be important to maintain the industry.

1. <Session Ⅲ>
5/14/2015 1
Panel Discussion
“Things are going to be different: How the New Generation Sees the Future”
By NoriyukiYokoyama, JDRA
The future prospects of Reconditioning Industry in Japan
 The current situation of Japan
Mr. Nagai of JDRA will announce the details tomorrow, but the total production of steel
drums is decreasing gently in Japan.
 The characteristics of Japan
(1) Steel Drum Reconditioning
The most members of JDRA are engaged exclusively in steel drum reconditioning at
present and hardly handle IBCs or plastic drums, excepting several suppliers and the one
that produces new drums also.
(2) Only the small & medium-sized business
The representatives of the JDRA member companies are of the founder’s blood relatives
only and JDRA consist of unlisted stock small and medium-sized companies with no
acquired company by a big business until now.
(3) High-quality requirement for reconditioned drums from customers
The quality (the degree of inside cleanliness, body appearance, outer coating etc.) of the
reconditioned drum required from customers has become very high as if a new drum.
(4) Low profit level
While the reconditioner cannot pass the price fluctuation of raw materials (raw drums)
on to the selling price like new drums, the reconditioner is in severe financial situation
oppressed the profit very much with continuing high raw drum price situation, because the
shortage of raw drums which are the raw materials for reconditioning is chronic.
(5) Relations between the member companies of JDRA
I feel the relations between member companies are stronger than other industries.
Although there is a little friction behind-the-scenes very rarely, they are building up good
relations.
 The future prospects of Reconditioning Industry in Japan
(1) Questionnaire to young successors
In such situation, the questionnaire survey "If compared the future of our industry to the
weather forecast" was conducted to the young successors.

2. <Session Ⅲ>
5/14/2015 2
As the results, the answers of "Drizzle" and "Cloudy" prediction accounted for
respectively 15% and 65%.
(2) Personal view
As for my personal viewpoint, I also think the consumption in Japan decreases gently.
I think that the component ratio of new and reconditioned drums continues ups and
downs because the raw drums are influenced to the shipment number of new drums,
although the supply demand for reconditioned drums from customers is high by the price
difference between the new and reconditioned drums.
Even if each company in the industry gets a new customer by lowering price and
improving service under such situation, they cannot prepare the raw drums to supply. In
such cases, there is no way excepting to ensure the profit margin by keeping up the current
selling price (if possible raising the price).
In addition, as for the purchasing, I recognize, by past experience, that purchase
competition to scramble for the limited raw drums by manipulating a price is a folly
behavior to thin the profit finally.
It will connect to protect conventional profit if the existing customer and the existing
supplier could be made their possible efforts, without competing as much as possible with
the other companies in the same industry even for the selling and/or purchasing.
If, properly speaking, the demand has decreased and cannot anticipate expansion of the
business; the company explores the diversification to other business fields or aims at the
advance to overseas. But, as mentioned before, we do not have such vigor and surplus of
fund because we are in the exhausted condition with the demand decrease and the low
profit level that last for many years in addition to the small businesses.
In the principle of capitalism economy, the companies are to compete against one another
and make “indefatigable assiduity” for the acquisition of new customer and the
improvement of customer satisfaction. However it is the best way to aim for the
"coexistence and co-prosperity" calmly so that the industry continues under such current
environment.

3. <Session Ⅲ>
5/14/2015 3
However, it is assumed to enter into the next stage of "coexistence and co-prosperity" if
the demand drops more and production falls less than a break-even point. In the drum
reconditioning factory of Japan, the operating rate has been fallen by the demand decrease
now, but if we raise the operating rate and lower the production cost by concentration, it
becomes possible to return the margin created to the customer and turn it to the capital
investment for further quality improvement. Of course, the possibility that leads to profit
more comes out if we concentrate not only the factory but also the distribution side.
To that end, the information such as the characteristics or the problems of each
production factory is to be shared and it is necessary to exchange information about the
feasibility of co-operation positively. I believe that the human relations and the relationship
of mutual trust between the tops of each company to make co-operative work are the most
important.
I am expecting that, in future, the information toward the cooperation of member
companies is collected and the suggestion of cooperation between members by JDRAis led.
The reconditioned drum market in Japan is never said being attractive even at present
stage, but I think it will become more severe in future. To prepare for it, I think the
cooperative work is a good measure.
I think the feasibility is not slight because the relation of JDRA member companies is
good, as I said with "the characteristics of Japan" actually. The business may be
maintained keeping good relations mutually for the future if we muster up the courage to
decide in the stage of a little margin.
Although it seems a very restrictive opinion within a closed Japanese market, I wish you
understand that this is the characteristics of reconditioned drum industry in Japan.