Beverage companies and foodservice operators committed to using natural refrigerants in their display coolers and vending machines inevitably come to a fork in the road; one path leads to using carbon dioxide as a refrigerant, the other to using a hydrocarbon like propane or isobutane. A choice needs to be made.
Most companies, including major players like Red Bull, PepsiCo and McDonald’s, have opted for hydrocarbons, while Coca-Cola has bucked that trend to become the primary follower of the CO2 path, using Gunma-based Sanden as the maker of its compressors. (See “Coke’s Quest to Reinvent Refrigeration,” Accelerate America, March 2015.)
Sanden, through its Sanden Shanghai Thermal Environmental System subsidiary, is gearing up its production of CO2 compressors to not only serve Coke but also expand the market to other companies opting for CO2 to refrigerate their vending machines and coolers.
In so doing, Sanden will stretch its production capacity to more than one million reciprocating CO2 compressors annually, positioning itself as the leading maker of this type of compressor for vending/display applications in the world, the company says.
At present, Sanden has a handful of other domestic and global clients aside from Coke. “Our business is mostly with Coca-Cola for now, but yes, we are strategically marketing our products to attract more customers,” said Mamoru Yajima, general manager of Sanden Shanghai, adding that sales strategies are developed and implemented by “our team in Japan.”
Sanden has already fielded inquiries from a number of end users and has the ability to increase the capacity of its facility to meet new demand, Yajima said.
After starting production in 2010, Sanden Shanghai started selling compressors the next year at a rate of two thousand units annually. Now the company projects that figure to reach more than one million by 2017.
Currently, the company’s 43,056-square-foot facility in Jiading, Shanghai churns out 2,500 CO2 compressors a day (roughly 60,000 a month) and has the capacity to increase production to accommodate any additional demand. Sanden distributes its compressors globally to a number of regions including India, U.S., China and Europe.
Sanden Shanghai’s products cover three main refrigeration applications — open showcases, vending machines and visi-coolers — with its CO2 compressors covering a performance range of 0.2 kW to 1.8 kW. “We have five basic models of different sizes and capacities,” Yajima says. “These models are further adjusted so that they can be used in different countries with different voltages.”
Focus on efficiency
Walking the vast grounds of the company’s Shanghai facility, a short journey northeast of Pudong International Airport, it’s easy to be swept up by the enormity of the operation. The facility includes two production lines, the second of which was installed in 2013. This important step in the company’s history increased production capacity by nearly 300%, from 220,000 units a year to 800,000.
Despite its ambitions, Sanden has no short-term plans to expand the facility with a third production line, Yajima said. “Our efforts are focused on increasing the efficiency and productivity of the existing two lines to achieve our production target. We may, however, need to make some adjustments eventually to upgrade those lines.”
Given the sheer volume of compressors produced by Sanden’s two lines, Yajima expects the cost of manufacturing each unit to fall by around half compared to the first ones rolled out in 2010.
Sanden Shanghai was founded in August 2010 as a joint venture between Sanden Japan and a Chinese partner. Initially the business structure represented a 51-49 percent split (Sanden Japan-Chinese partner) but following Sanden’s increase in capital in 2013 and the addition of the second production line, the ownership ratio changed to the current structure of more than 80-20. Sanden Japan is responsible for sales, customer service, and technology, while the Chinese partner provides production resources, purchasing capacity, and human resources.
Sanden’s and its Chinese partner, which is also its joint venture partner for automobile compressors, “have built trust with each other based on our long-standing relationship,” said Yajima.
Yajima described the Jiading base as “one of the most important in the Sanden Group.” Its focus is on producing 100% of Sanden’s reciprocating compressors, while scroll compressors and core systems are manufactured in the company’s Japanese factories.
Sanden Shanghai employs around 260 people, including employees from both Sanden and its Chinese partner.
Yajima said the company was immensely proud of its status as a leading CO2 compressor manufacturer: “If we weren’t proud of ourselves, we, together with all our employees, would not have become what we are today,” Yajima said. “We take great pride in our work and do our jobs to the best of our abilities.”
History with Coke
Sanden remains steadfast in its view that CO2 is the optimal refrigerant for most marketing and point-of-sales equipment. And no company has helped support Sanden’s business model more than Coca-Cola, which aims to be HFC-free by the end of 2015.
At the ATMOsphere America 2015 conference, held in Atlanta in June, Coke’s global program director Antoine Azar said the company had reached an “inflection point” in the company’s HFC-free system adoption, asserting that CO2 is the refrigerant that best fits Coke’s portfolio of equipment.
As of the first fiscal quarter 2015 Coca-Cola had installed 1.48 million HFC-free units, a large portion of which would not have been possible without Sanden.
To make this happen, Sanden had to overcome some early supply chain and productivity obstacles.
“When we started out, we had a supply agreement with Coca-Cola, but we had a delay for a number of reasons,” Yajima said. “One is that we had some component supply issues, and also the productivity did not increase as we had expected.”
The two problems were related, he explained. “It was our first production here in Shanghai and we needed to find effective solutions for our operation but were basically starting from scratch. Without proper component supplies, it goes without saying that we cannot keep our production lines running.”
Those teething issues are now just a distant memory to Yajima, who has been in his role, with Lin Zhiping as his deputy general manager, for the past two years. Zhiping has overseen the project from the very beginning.
Now the facility can deliver a CO2 compressor for a customer’s showcase and vending machine in one-and-a-half months due to the updates to the supply chain. “Our customers have different time frames for their businesses, and we strive to cater to their specific demands,” Yajima said. “When we talk about quality, it includes not only the quality of the products itself, but also our ability to deliver the products to our customers when they need them by shortening the lead time.”
Sanden’s new automatic quality control system takes a lot of the heartache out of the company’s quality control processes. “We have automatic sensors in place that detect, for example, when components are picked up,” Yajima noted. “These sensors also prevent any possible human errors from going into the production process.”
Yajima understands the critical role the company is playing in commercializing CO2 technology on the largest scale possible and the example it is setting for others to follow. “We are continuously striving to lead the industry with our CO2 technology,” he said.