Trying to turn a profit by shipping American-made chopsticks to Japan sounds about as logical as sending supertankers loaded with Texas crude to Saudi Arabia. But that's exactly what a Midwest-based manufacturing company did last week when it packed up a railroad boxcar with more than 12 million chopsticks, sending them off to three Japanese distributors.
Using high-tech, Popsicle-stick making machines and durable Midwestern workers, Ian Ward, an entrepreneur from Vancouver, British Columbia, is aiming to carve out a niche in the fast-growing Japanese market for disposable chopsticks.
Japanese restaurants and institutions use and throw away an estimated 130 million pairs of waribashi, or disposable wooden chopsticks, every day, more than 40 billion pairs a year. As Japanese incomes have risen, so has the use of disposable chopsticks, which has increased at about 17 percent annually in recent years. The use of reusable bamboo chopsticks has declined, partly because of greater concern over communicable diseases, Mr. Ward says.
By the time his highly automated plant reaches full capacity at about 7 million pairs of sticks per day, Ward hopes to have captured a 3 to 4 percent share of Japan's chopstick market. That would be about 1.8 billion pairs of sticks a year.
``I found a long time ago that it really behooves the smaller businessman to look for the unusual opportunity,'' says Ward, who is president of Lakewood Industries, the Hibbing, Minn., company that makes the chopsticks for export.
Ward's novel idea is no joke to the cold little town of Hibbing, about 180 miles north of Minneapolis-St. Paul and smack in the middle of the still-depressed iron range. The downturn in the steel industry has kept regional unemployment high.
``There are other locations, but the labor pool is excellent and raw materials abundant,'' Ward says. He cites the economic incentives offered by the state as ``the final straw'' without which he probably would have located farther west.
``It was an innovative thing to do, and it has helped expand our ideas about business,'' says Hibbing Mayor Richard Nordvold. ``The downturn in steel has hit us along with everybody else, and Lakewood's 100 jobs are very much appreciated as we try to rebuild.''
The opportunity to make a play for part of the chopstick market is largely due to rising Japanese labor costs. Also, the wood to make chopsticks must be imported from all over Asia and is becoming more scarce and expensive.
Ward spotted this possibility while working for an overseas trading company in 1983. When a Korean company came to the firm requesting a large load of poplar logs, he discovered they would be made into chopsticks.
``One of the first questions I asked was, `How much of the fiber would end up as chopsticks and how much would end up as waste?''' Ward says. ``When I found 60 percent would be wasted, I realized we were paying an awful lot of money to ship a lot of wood that would be wasted.''
Ward then studied how the Koreans and Japanese made their chopsticks to see if their production methods could be imported to North America. To begin with, he realized, any sticks made in North America would have a tremendous advantage in the cost of raw materials and quality because of the abundance of smooth white poplar wood.
But even with favorable raw materials costs, ``we recognized there was no way we could make the sticks economically in North America using the same labor-intensive methods used in Korea and Japan.''
In Japan and Korea, Ward found the chopsticks were being made on relatively old, low-volume machinery. And the sticks were also inspected visually by teams of workers. If the low-cost material from North American trees was combined with automated processes, labor costs and overall costs would be reduced.
Japan's market was most promising because it was growing and because its consumers were extremely conscious of quality.
A top-quality chopstick at a low price might make inroads, Ward concluded, if the sticks were made of very white wood with no dark spots or knots. Hence, the location in northern Minnesota, where the wood from poplar trees grown in clay soil tends to be unmarred.
Sophisticated European equipment for making Popsicle-sticks was modified and allied to a computer-vision system that monitors defects in the sticks.
It took several months for Lakeside's managers to make the chopping knives of the European equipment turn out sticks that were just right, so the computerized inspector wouldn't throw them all out.
Now that the process has been tuned, Lakeside makes a pair of chopsticks with about one-sixth of the labor required to produce a pair of chopsticks in Japan, Korea, or elsewhere in North America. It now costs Lakeside about 3 cents to make a pair of chopsticks later sold at a 23 percent markup for 3.7 cents a pair.
If all goes according to plan, Lakeside will reach full production and be shipping to Japan three or four times a week. A second plant could be in the offing if the Korean, Taiwanese, or Chinese can be persuaded to use more disposable chopsticks.