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Otafuku Foods Inc. was late to dinner.

The Japanese maker of specialty sauces, which does about $220 million in annual sales back home, for 15 years has had a modest toehold in the United States. Its Torrance sales office, catering to regional Japanese restaurants and a handful of retailers, was generating about $4 million in annual sales. Then American tastes for Japanese food began to expand, and Otafuku had a hard time keeping up.

“For a long time, Japanese food was sushi,” said Taka Ozawa, Otafuku’s vice president in charge of U.S. operations. “But maybe since 2005, things changed: ramen, yakitori (grilled chicken) and yakiniku (grilled meat) have expanded little by little. American customers are always thinking about new ideas and they take new ideas and change.”

Otafuku did all of its manufacturing at its base in Hiroshima, Japan, and found its ability to take advantage of the expanding American market was hindered by the time it took to get products across the Pacific. It responded by paying $1.7 million for a 17,000-square-foot building in Sana Fe Springs that will house its first U.S. manufacturing facility, set to open Sept. 16.

The company will initially employ seven people at the small factory, enough to pick up all of the domestic orders that had been shipped from Japan and to position the company to take advantage of the growing market.

Above all, it will speed the company’s response time for orders.

Otafuku, which makes sauces under its own label, also makes private-label products for restaurant customers. Prior to opening the new facility, it could take up to two months from the time an order was placed to its delivery in Los Angeles. Ozawa said he expected that schedule to be cut in half once the company begins manufacturing locally.

With the expansion of American tastes for Japanese cuisine other than sushi, the market for dishes such as okonomiyaki, a savory pancake; yakisoba, fried noodles; and takoyaki, a ball-shaped snack made of flour-based batter, all of which take special sauces, has created opportunity.

Darren Tristano, executive vice president at Chicago market research firm Technomic Inc., said he has seen growing interest in Japanese food across all income groups in the United States. Not only has the number of Japanese restaurants increased, he said, but Japanese flavors in general are becoming more prevalent in American restaurants.

“We’ve had a lot of indication that suppliers, especially in California, have had to increase their manufacturing facility,” he said.

The expectation, Ozawa said, is that the new plant will help the company increase annual U.S. sales to $10 million within four years. If the company meets that goal, it will expand the local operation.

Otafuku Sauce Co. Ltd., Otafuku Foods Inc.’s parent company, was established in 1952 but has its roots in a mom-and-pop store selling sake and soy sauce that opened in 1922. (It draws its name from a popular folk mask in Japan.)

Otafuku started selling products to Japanese restaurants and retail stores in America in 1998, with 70 percent of its revenue coming from restaurants.

Much is riding on the growth of the new operation: Ozawa said Otafuku’s U.S. branch hardly made any money in the last 15 years, and with the $6.5 million it invested in the building and new equipment, the company doesn’t expect to make money soon.

Close to the source

It is not the only Japanese food manufacturer to see an opportunity to expand in the U.S.

Nippon Shokken U.S.A. Inc., headquartered in West Sacramento, is the U.S. branch of Nippon Shokken Holdings Co., one of the world’s biggest seasoning companies. After importing products from Japan for more than 20 years, it opened its first manufacturing facility in the United States last month, hiring 100 people.

Seigo Horiuchi, Nippon Shokken’s chief executive, said in an email that while production costs here are higher than in Japan – especially in California, where labor costs are high – the company still found manufacturing in the states made sense.

According to Japan’s Ministry of Health, Labor and Welfare, the average hourly manufacturing wage in Japan was about $5.62 in July compared to $19.26 an hour here, according to U.S. Bureau of Labor Statistics.

Though labor might be more expensive here, Ozawa said being closer to raw ingredients proved to be a significant savings for the company.

Otafuku uses nearly 70 kinds of fruits and vegetables to make its sauces, including tomatoes, garlic, onions, peaches, oranges and apples, most of which have to be shipped to Japan. By manufacturing in the U.S., Otafuku will be able to source most ingredients locally or from South America. After factoring in shipping costs and customs levies, he said, the cost of manufacturing in Japan and shipping to the United States is about the same as manufacturing here. Tipping the balance in favor of local manufacturing is the time savings.

That quicker response time is appealing to customers for whom Otafuku makes customized sauces.

One of those is Gottsui, a West Los Angeles restaurant serving okonomiyaki, the Japanese “pancake.” The restaurant, which opened two years ago, used to import all its sauces from another company in Japan, said Taichi Ishizuki, its chief executive. But with the opening of the new plant, Ishizuki will be buying locally, in part because it will be easier to work with a local manufacturer when developing custom sauces.

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