■Business Overview

1. Business content

The business of Hirayama Holdings＜7781＞ is disclosed in four business segments: insourcing/dispatch business with the manufacturing industry as the main customer, engineer dispatch business that dispatches development and design engineers, etc., overseas business focusing on manufacturing dispatch in Thailand, and other businesses. In terms of the composition ratio by segment for the 2024/6 fiscal year, the outsourcing and temporary staffing business is the main business accounting for 80.1% of sales and 76.2% of operating profit.

(1) Insourcing and temporary staffing business

The insourcing/dispatch business has expanded its business mainly for the manufacturing industry, but since FUN TO FUN became a subsidiary in 2018, the business area has also been expanded for retail and service businesses (food outing/lodging/logistics, etc.). The contract ratio is at a level of less than 40% for the 2024/6 fiscal year. In manufacturing contracts, they are trying to differentiate themselves by providing services not found in other companies, such as working to improve productivity and reduce costs in cooperation with site improvement consultants* belonging to Hirayama.

* It is composed of experienced people who have been engaged in improvement activities for many years at manufacturing sites of major manufacturing companies, etc., and they strive to improve problems from the customer's point of view, improve competitiveness in terms of technology, quality, and cost, and build highly productive manufacturing sites. Currently, there are 5 full-time employees and about 20 consultants working as partners.

Since the business model of a manufacturing contract is a contract where rewards are paid from the orderer for deliverables, sales are determined by the unit price of deliverables x number of units produced (manufacturing equipment is leased from a business partner (manufacturer)). Therefore, productivity is improved through site improvement efforts, and if manufacturing costs can be lowered, profit margins rise; conversely, if productivity falls below expectations, profit margins also decline. Meanwhile, sales of dispatch services are determined by the number of people dispatched x hourly wage x working hours, so while gross profit margin stabilizes at a fixed level, differentiation from competitors is difficult. Therefore, as a sales strategy for new customers, it is proposed to first enter from a dispatch contract and then switch to a contract agreement.

The sales structure ratio by customer industry accounts for about 60% of the total in the three industries of automobile parts, medical devices/pharmaceuticals, and food. In addition, it is being developed in a wide range of industries, such as construction equipment/special vehicles, digital-related (office equipment, home appliances, electronic printing, etc.), retail/hotels, housing equipment, logistics, and semiconductor/electronic components. Of these, the manufacturing industry is in Hirayama, and most of the service industries such as retail, hotels, logistics, etc., and the food industry are handled by FUN to FUN. The number of companies operating transactions in the 2024/6 fiscal year decreased slightly to 682 companies (703 companies in the previous fiscal year), but the main reason is that FUN to FUN proceeded with the consolidation of low-profit projects centered on the food industry. Major customers by industry include Toyota Motor Corporation ＜7203＞ Group for automotive parts, Termo for medical devices and pharmaceuticals, Ricoh ＜7752＞ Group for office equipment, Maibasuket Co., Ltd., which operates the small urban food supermarket “Maibasuket” with the AEON ＜8267＞ Group for retail, LIXIL ＜5938＞ Group, TOTO ＜5332＞ Group, etc.

(2) Engineer dispatch business

In the engineer dispatch business mainly developed by Top Engineering, in addition to dispatching engineers to perform design/development, evaluation/analysis, etc. to manufacturers in a wide range of fields such as aerospace, automobiles, railways, plants, home appliances, and precision equipment, they also dispatch field engineers and IT engineers for data centers. The number of companies operating transactions in the 2024/6 fiscal year was 150 companies (123 companies in the previous fiscal year), and the number of engineers enrolled at the end of the fiscal year was 525 (495 at the end of the previous fiscal year), all of which hit record highs.

(3) Overseas business

The majority of sales from overseas businesses are manufactured and dispatched to local Japanese companies in Thailand. Similar to Japan, it provides services in cooperation with site improvement consultants, and is proceeding with customer development as a manufacturing temporary staffing company that can perform site improvements. The manufacturing dispatch business is JSHR, which is developing consulting services and labor management services for foreigners in Hirayama Thailand. Since there are many customers in the automobile industry, there is a high correlation with automobile production trends in Thailand.

(4) Others

Other businesses include consulting business, foreign employment management support business, paid employment placement business, and disability welfare service business, machinery/equipment manufacturing/repair business by Heiwa Iron Works, which became a subsidiary in 2018, and nursing facility management and nursing service business of Hirayama Care Service, which became a subsidiary in 2019.

In the consulting business, in addition to consulting services aimed at improving productivity at manufacturing sites, we also plan and provide services such as study tours that combine manufacturing site tours and training services within Japan to managers of overseas manufacturers. Also, as the movement of the manufacturing industry to return to Japan intensifies against the backdrop of heightened supply chain risks, factory start-up support consulting services have also started in 2022. Overseas production shifts continued for a long time in the manufacturing industry, and human resources with experience in starting up new factories were exhausted, and they started with the appearance of responding to needs from such companies. In order to increase productivity at a new plant, it is important to design the layout of equipment lines and build a production management system that can be visualized in real time, etc., and support is provided from such a design stage. The contract period depends on the scale, but since it is as long as about 2 years, it is a stable source of revenue. In addition, services providing total support, such as dispatching operators and entrusting contract work necessary after the new plant is put into operation, have also started.

In the foreign employment management support business, we are entrusted with everything from entry support for foreign technical interns and entry support to host companies, dormitory/company housing property management and living support, and return home support. The group company Sunrise Cooperative Association has obtained permission for “general supervision business” from the Foreign Technical Intern Training Organization (OTIT), and is accepting technical interns in cooperation with local specialized organizations in Vietnam, Myanmar, and the Philippines.

(Author: FISCO Visiting Analyst Joe Sato)