Several important European clients – especially big optical retail chains and buying groups – have completely suspended all relations with Hoya, waiting for its operations to become normal again before placing orders with the Japanese company, whose facilities in Thailand have been idled by floodwaters since last October. Other clients – especially independent opticians – have continued to order Hoya products as they have become available in one way or another, accepting long delays for shipments in some cases.
Other lens manufacturers – notably Essilor, Rodenstock, Shamir and Thai Optical Group – have surfacing facilities in Thailand, but they have suffered a lot less structural damage than Hoya from the floods, or none at all. Reportedly, workers at Shamir's plant managed to move the machinery higher to keep it out of the water. Thai Optical had to stop operations because its workers could not come to work, but a company spokesman said production and deliveries started again in mid-November and all processes are now back to normal.
Officials of Hoya, which is the world's second-largest supplier of ophthalmic lenses, are confident that customers will come back to it soon because of the Japanese company's technological assets and the measures that it is taking in the short and longer term to normalize deliveries and to avoid a repeat of what they describe as “a big technological accident.”
Hoya made a big strategic mistake when it put all its eggs in one basket by concentrating the manufacture of its most sophisticated lenses in a big super-laboratory at Ayutthaya in Thailand about 10 years ago, without taking into consideration the possible consequences of a natural disaster.
The company will decide in the next few weeks on the location of a new super-laboratory in Southeast Asia that will act as a second source, targeting 2013 as the startup date. It will likely be established in the Philippines, in Malaysia or in another low-cost country with good connections by air freight with the rest of the world.
Meanwhile, Hoya has been taking strong action to recover from the disastrous effects of the floods that have disrupted its facilities in Thailand, reorganizing operations and investing about €24 million on new equipment in Europe alone, although some retail clients have temporarily switched over to other lens suppliers to respond to the demand from final users.
Hoya is probably going to spend a lot more to repair the damage at its super-laboratory in Thailand, but the financial effort is not huge for a company that has nearly €2 billion in cash. Operations at the Ayutthaya facilities were suspended last Oct. 12 because of the floods. Many of the free-form lens generators at this super-laboratory, which were mostly supplied by Schneider, were put out of use as the water infiltrated them, damaging their sophisticated circuitry.
Water pumping and cleaning are now being completed. Based on delivery schedules given by equipment suppliers and other critical partners, Hoya said on Jan. 19 that it expects to resume production of prescription lenses in Ayutthaya no later than April 1. Company officials had previously given the month of May as the deadline for fully functional activities.
Hoya Vision Care's other Thai factory in Pathumthani, which makes semi-finished and stock lenses, suffered minimal damage, and it started up again at the beginning of December. In this product segment, the impact on customers' inventories has been minor because Hoya has a backup facility for stock lenses that started operations two years ago in Vietnam. The Vietnamese factory has already started to make some finished lenses and will manufacture more of them in the future.
Of all the major markets where Hoya Vision Care operates, the disruption in its deliveries has been highest in Japan, where the company has only one laboratory and a market share of 40 percent. In the U.S., Hoya can rely on a large network of own and independent labs that can handle its stock lenses.
In Europe, Hoya is still focusing all its efforts on the ramp-up of production capacities at its 11 regional Rx labs, the expansion of overall product availability and the reduction of delivery times. This regional plan should be finalized by the end of February, when its central European lab at Mátészalka, Hungary, will reach full capacity.
Along with Hoya's large production facility in Germany, which specializes in double-face surfacing and makes the widest range of products in Europe, the Hungarian lab will play a pivotal role as a source of lenses for the European market. Its capacity will be doubled. At the same time, smaller regional laboratories, such as those in France and the U.K., have already started new lines, in some cases installing new generators that Schneider was going to deliver to other, less-hard-pressed clients.
The European labs of Hoya have been working 24 hours a day, seven days a week since last November under a carefully orchestrated contingency plan, with new product flows among them. The French subsidiary has been keeping clients constantly informed of the progress in Hoya's efforts, and it is now telling them that 90 percent of Hoya's product range will again be available by the end of January. The staff at its laboratory near Paris has been expanded by 30 percent and backed up by technicians brought in from Thailand to train them and to guide them.
Following the company's investment in a new R&D center in Tokyo last year, Hoya officials hope to recover lost market share through technological superiority, accelerating the launch of new products. The company is going to introduce many new and innovative products in the course of this year, starting with the presentation of a new generation of lens products and services at the Mido trade show in Milan in March and shortly afterward in various countries.
Meanwhile, in a move that is partly intended to put the horrendous past behind, Hoya Vision Care has launched a new marketing program all over Europe to celebrate its 70th anniversary. It has distributed 27,500 copies of a special magazine in seven languages, called Blinq, to loyal opticians throughout the continent in the past days.
The nicely laid out magazine tells the history of ophthalmic lenses and of Hoya, it explains to final consumers the way in which the eye works and its interaction with the brain, and it tells them about the work of the eye doctor and the optician. The French subsidiary has also launched a digital edition of the magazine through a new interactive website, along with a contest for iPads and champagne bottles.
Hoya should have celebrated its 70th anniversary last November, but the company decided to postpone the festivities because of the Thai floods. It was decidedly an “annus horribilis,” considering also the earthquake and tsunami that hit Japan last March.
The company was founded in Hoya City, which is now called Nishitokyo, by two brothers, Shoiochi and Shigeru Yamanaka, in 1941. It was originally called Tokyo Optical Glass Manufacturing because of the type of product that it made at the start. It subsequently diversified into the production of crystals for home use and many other more sophisticated products, but the vision care segment still represents about one-third of its total revenues.