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Fuji Oozx Inc. is one of hundreds of auto parts suppliers in Japan, whose survival is threatened by the world's shift to electric vehicles.

For nearly 70 years, the company has been manufacturing intake valves—an important part of any gasoline car that controls the flow of gas into and out of the engine’s cylinders. They are usually made of copper, have light weight and high heat resistance, and use technologies that are not needed for any electric car decades ago.

"We have to start looking for new businesses," said 63-year-old president Satoshi Tsujimoto in his office near the Fuji Oozx factory in Shizuoka Prefecture, a slender area that stretches along the Pacific coast. Fuji Oozx supplies automakers, including Toyota Motor Corporation and Nissan Motor Corporation.

Marine engine valves are an option, but the board of directors of the Tokyo-listed company has also set its sights on further areas, such as getting involved in the field of medical equipment. "We have no choice but to fight for survival. We must find the answer within the next ten years."

As the industry accelerates to get rid of the internal combustion engine, Tsujimoto's plight is a plight faced by other traditional auto parts suppliers in the world. They either also make a change, or find a new way of business.

Satoshi Tsujimoto, president of Fuji Oozx's Inc., poses in his office near the company's factory in Shizuoka Prefecture. | Bloomberg

This situation is particularly serious in Japan, where the Japanese government has pledged to achieve carbon neutrality by 2050. One of the key parts will be the transition to cleaner cars, which currently account for only 1% of cars, compared with 30% in some areas. China, a global pioneer of electric vehicles.

Management consulting firm Arthur D. Little predicts that if the auto industry fully shifts to electric vehicles, as many as 300,000 jobs in Japan will disappear. This is equivalent to about 10% of all current jobs in the industry. In the United States, if battery electric vehicles account for about 50% of domestic car sales by 2030, it is estimated that about 75,000 jobs will be lost.

"This is a boiled frog phenomenon," said Kensuke Sobue, an Arthur D. Little consultant. As other countries, especially China, nurture the electric vehicle industry and create jobs, Japan may lose jobs slowly but surely.

Shizuoka is home to countless auto parts suppliers who regard some well-known industry figures as customers. Data from the Shizuoka Institute of Economic Research shows that it is one of the main hubs for Japanese internal combustion engine auto parts manufacturers, accounting for more than half of the county's supply chain in 2018.

After World War II, Shizuoka prospered. By the 1960s, the coastal city of Hamamatsu-the birthplace of the legendary motorcycle company Yamaha Motor Company, Honda Motor Company and Suzuki Motor Company (and to this day also has car and motorcycle theme parks)-produced the most two-any Place of wheeler.

Motorcycle production peaked in the early 1980s, but Hamamatsu accepted gasoline cars. Ten years ago, the city had an estimated 2,000 auto parts manufacturers supporting nearly 100,000 jobs. With the emergence of cheaper manufacturing centers elsewhere in Asia, Hamamatsu’s other two major sectors—textiles and musical instruments—declined, and auto suppliers gained a foothold.

A Hamamatsu Gasket employee works at a cylinder head gasket factory in Hamamatsu City, Shizuoka Prefecture. | Bloomberg

Now, it is difficult to see how they can stop the rising wave of electric vehicles for longer.

Honda has stated that it will not sell internal-combustion vehicles after 2040 and has urged suppliers to join. Even Toyota-which is a bit behind in terms of all-electricity-launched a new battery-electric car series in April, the Toyota bZ. The company is working hard to finally build a complete lineup of electric vehicles, including hybrid vehicles and fuel cell vehicles, and will launch 70 models by 2025.

Traditional cars have about 30,000 parts. This is far more than an electric car, which can run without an engine block, fuel pump or muffler. There is also competition from China, which is mass-producing thousands of small, cheap electric cars.

The Shizuoka authorities are aware of the coming revolution. In 2018, they established the Next Generation Automotive Research Institute to help component manufacturers develop new electric vehicle components. The agency receives funding from the Ministry of Economy, Trade and Industry to assist companies in the transition.

"We felt this sense of crisis long before Japan declared carbon neutrality," said Eiji Mochizuki, head of the institute. But he said that while the larger suppliers are making adaptation plans, the smaller suppliers are still sleeping. "We are trying to wake them up."

easy to say, hard to do. Many smaller suppliers have survived on meager profits. This is a feature of the strategy adopted by powerful buyers such as Toyota. They often let component manufacturers compete with each other and choose the one that can make the cheapest small parts. business. There is no spare money to expand into another area.

"To be honest, it will be difficult to survive," said Masakatsu Suzuki, 56-year-old owner of Masa Engineer, a small company that makes equipment for assembling and inspecting auto parts. "I hope I can take the initiative."

Suzuki has been in business for approximately 25 years. He worries about how he will pay the wages of his four workers as electric cars become more and more popular. He likens the car to a cheap panda car in an amusement park: "You only need a battery, a steering wheel and a chair. ."

Workers of Hamamatsu Gasket rest at the factory in Hamamatsu City, Shizuoka Prefecture. | Bloomberg

Others don't think electric cars are a direct threat at all. Yaichi Sakai runs Hamamatsu Gasket, a family business passed down by his father. Among other things, this 67-year-old company produces cylinder head gaskets that provide a seal between the engine block and cylinder head to prevent coolant or engine oil from leaking into the cylinder. Although electric cars do not need cylinder head gaskets, other types of seals can protect the electric car's engine from dust and water.

"I don't have a sense of crisis right now, because gasoline-powered cars won't return to zero immediately," Sakai said. He estimated that in the era of electric vehicles, about 20% of Hamamatsu Gasket products will be unnecessary, but he said that insisting on using engine parts is still more profitable in the short term.

"Small companies like ours have no financial resources," said Sakai, who dropped out of high school to study trade. "We just need to focus on the task in front of us."

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