Flush With Business: Japanese Toilet Maker Expands in Downturn

Mr. Strang calls it "reshoring," the process of bringing production back into the region where products are sold. During a tour of the plant, he said the cost of making toilets in Morrow is competitive with making them in Beijing and shipping them to the U.S.

In 2006, TOTO put a new factory in Mexico to serve the North American market. The Georgia factory was already maxed out and expanding, and the factory south of the border both diversified risk and supplemented production.

In addition to all these factors, Mr. Strang stressed a uniquely Japanese element to TOTO's success. Unlike American companies that tend to look at quarterly results, Japanese firms take a longer view, which allows them to stay committed to a market and a strategy.

"Starting a new plant here in the U.S. can be a very difficult thing to do," Mr. Strang said. "Seeing it grow, seeing it struggle, and not backing away from it, but saying, 'We're going to stay the course, we're going to make this work, we're going to be here, this is the right thing to do,' has made TOTO successful."

Economic struggles have driven many Japanese companies out of the U.S., said Taro Toyoda, chief operating officer of InSpec Group, an engineering and construction firm in Portland, Ore., that helps Japanese companies build and expand factories in the U.S.

"Because of the couple rounds of the recession, it's really filtered some of the strong companies versus the mediocre companies. And the only ones that are left are those strong companies," said Mr. Toyoda, whose firm has an Atlanta office focused on the Southeast.

Though not directly, TOTO is involved in sectors that Mr. Toyoda believes will be especially strong for Japanese companies in the near future: renewable-energy and energy-saving technologies.

Last October, TOTO USA received a water conservation award from then-Gov. Sonny Perdue, one of many accolades commending its products and manufacturing processes.

"I don't consider us a toilet company, a bathroom company. I consider us a water company," Mr. Strang said. "We're in the business of water - how you get it to the client and how you get it away from the client, and how you do it in a way that is fulfilling, satisfying, enriching and unlike any that they're going to experience in their entire lives."

TOTO's toilets are constantly being redesigned so they use less water while removing all the material in the bowl.

Technicians at the Morrow facility use TOTO's secret weapon, a gloppy brown material containing soybean paste (miso), to test the flushing mechanisms in "real-world" bathroom conditions. The ability to test with this secret formulation has been integral to the company's success, leaders say.

Since TOTO began as a plumbing products spinoff from fine-china maker Noritake in 1917, the company has been steadily evolving, taking cultural considerations into account when designing products for new markets.

A tour of a TOTO showroom in the southwestern Japanese city of Fukuoka in January displayed how the company's approach at home differs from its overseas tack.

The facility showed off unit bathrooms, a concept that started as Tokyo rushed to build new apartments and hotels before the 1964 Summer Olympics. Now, these full-room units, complete with tubs, showers and sinks, have taken on a luxury appeal while keeping their utilitarian design.

Also on display were bathrooms outfitted with lifts and bars to help the disabled and elderly, kitchens decked out with new faucet models and toilets that use body-heat sensors to automatically raise their lids when a person approaches.

In Japan, TOTO is focusing less on high-end products than in the U.S., but the ethos of environmental responsibility remains.

In the next five years, the parent company plans to triple its overseas sales as countries enact more stringent standards on the amount of water used per flush.

Visit www.totousa.com for more information.

This story is part of GlobalAtlanta's exclusive Japan special issue. Click here to read more.

When Japanese toilet maker TOTO put a factory in Georgia in the early 1990s, the economy in its home country was about to swirl down the drain.

Japan was entering its "lost decade," a period of economic malaise from which it still hasn't fully recovered.

In the ensuing years, as many Japanese manufacturers pulled out of the U.S., outsourcing production to China and other low-cost countries, TOTO gradually expanded its facility in Morrow, Ga., which sits just off Interstate 75 about 15 miles south of Atlanta.

Though highly mechanized, the factory and North American headquarters now employ about 600 people. Large machines use a slurry of kaolin and other clays, some mined in Georgia, to form molds for seven toilet models. Workers speaking six languages tend the malleable pieces along the assembly line, smoothing out seams in the clay with the care of artisans.

The toilets move into a kiln as long as a football field where 2,100-degree heat bakes the moisture out of the glazed clay, shrinking and hardening it into a near finished product. Workers test the toilets for leaks, add a patented flushing mechanism and send them to be boxed and prepared for shipment.   

The factory is operating at full capacity, with each shift putting out more than 300 toilets, adding up to about 21,000 per month. While some models saw slight sales dips during the recession, its overall effects were minimal, said Bill Strang, TOTO USA's vice president of operations.

At the height of the downturn, the factory temporarily moved to four-day weeks but avoided cutting any jobs. In fact, the company eventually added more space to accommodate growth.

"I did that seven months ago. At the height of the downturn, I added more brick and mortar to this operation," Mr. Strang told GlobalAtlanta in an interview.

TOTO's resilience amid a tough economy can be traced to many factors, Mr. Strang said.

For one, the company isn't dependent on new home construction, which was slammed during the downturn. Most of its business comes from remodels as consumers upgrade to more luxurious and energy-efficient fixtures.

That was intentional; from the beginning, TOTO has made it a point to stay away from being tied to bulk home builders, instead focusing on higher-end products, Mr. Strang said.

It helps that TOTO's products are seen as a "green" solution as consumers and companies grow more conscious about energy usage. By installing TOTO's products, Hartsfield-Jackson Atlanta International Airport saved 3.7 million gallons per month, which is especially critical considering Georgia's ongoing water disputes with Tennessee, Alabama and Florida.

TOTO has also learned to take advantage of its decades of experience in markets like China, Indonesia and Thailand while continuing to localize its manufacturing process in each new operation, said Daijiro Nogata, president of TOTO USA.

"Investing in the local economy sets TOTO apart from other international manufacturers that simply import their products," Mr. Nogata said. "Throughout the world, each time TOTO launches a subsidiary, it sets down roots, becomes a member of the community, and contributes to the local economy."