Before we dive into your company I would like to start with some macro economical questions. The first question I would like to ask is about the essence of craftsmanship, which is very important in the automotive sector, the flagship of the Nihon economy. Japan revolutionized the sector with management approaches such as Kaizen or total quality control. As the president of an auto car part manufacturer, what differentiates the Japanese manufacturing of automobiles to that of any other country?
One of the distinctive characteristics of the Japanese way of working is lifetime employment. After graduation young professional enroll into companies and stay there until retirement. Also there are labor unions in many companies to support the workers and make sure receive fair treatment and stay motivated. I am mentioning this background because unique craftsmanship cannot be gained rapidly. Real expertise comes through practice and experience and the fact that our employees devote themselves so many years to producing the best helps them learn and teach. This great accumulated knowledge results in the unique qualities of Japanese Monozukuri.
SME´s account for more than 98% of companies, 70% of employment and more than 50% of added value manufacturing output. However they remain unknown to the end consumer even when supplying for companies which products we use on daily basis. What is the role of SME´s in the Japanese economy and the automotive sector?
First of all I believe SME´s are famous for being the main innovators and technology developers. Even if bigger companies have their own R&D departments they tend to outsource if the technology is more specialized.
In 1985 the price of the Yen made it very hard for Japanese companies to export and therefore we started to see companies expanding abroad. In 2002 our share of business overseas and domestic became even, and from there it has just kept on growing. In japan the car production is of about 10 million cars annually and half of that remains inside Japan. The rest is exported. Production overseas is double to domestic with about 20 million cars per year.
In the component business globalization is of greater importance for two main reasons, one being the increasing cost competition and two the fluctuating exchange rates. Light components can be produced locally, but transportation costs from Japan to the manufacturing sites can be great. If we talk about heavier components like engines, for example, there’s no other way than to produce it close to the assembly line or the costs would be impossible to handle.
Since the 90´s we have been approached by the big automotive companies to collaborate when going abroad and bring our manufacturing capabilities overseas. Other countries like the United States prefer to take a more vertical approach and develop their own manufacturing techniques instead of outsourcing it to smaller companies. Big Japanese companies that have a strong presence overseas are now exploring this method, but most still rely on the expertise of SME´s.
In our case we did not follow that wave to expansion to the US and focussed on improving our precision and technology. Nowadays we supply to American companies that see the value of our products from Japan.
We are seeing great policy changes in the United States. There has been a growing tendency for nationalizing meaning that more things need to be produced in the US, similar to the Reagan administration period. Consequently, Toyota made an investment of 1.2 Billion USD to build a factory in Alabama. I know you have a factory in Mexico to supply to the American market. I would like to ask you what are your thoughts on these changes and the effects that these changes are having in your sector and more importantly in your business.
I believe it is still too early to judge. We are getting a lot of RFQ from the US to our factory in Mexico, so for now we have not seen any negative effects to the new administration.
As a multinational company, how do you ensure that the quality of products you create in countries such as Mexico or Indonesia remains very high, regardless of the distance and difference in culture?
Our companies’ first international expansion was in Indonesia. It is impossible to expect the same level of skill of personnel we have in Japan, but what we have been successful in doing is standardizing our process, breaking it down and forming our workers. Now we expect the same quality we produce in Japan. Either way there needs to be supervision from our part on the field to make sure everything runs well. Also we are increasing our investment and relevance of IOT in our company due to the Japanese loss of human capital result of our aging population and shrinking work force. AI is in my opinion the next step in manufacturing evolution.
The automotive industry is experiencing great changes, with the rise of autonomous driving and the shift to electric engines there is a growing demand for different materials and products from manufacturers and suppliers like your company. How do you think these changes will affect your company?
There will be a slight drop of production in traditional combustion engines, but numbers show that the progression will be fairly slow. We are currently working on new technologies and we will be ready to face these challenges. One of the bigger tendencies we are observing is the need for lighter materials and products, which we are currently providing and further developing.
Your company has facilities all over the world. Last year we saw a record year in terms of sales in the US and great results from South East Asia and the Chinese market. Which do you think are the markets with the biggest potential and could you tell us a little more about your international strategy?
China produces 30 million cars per year and we believe it has great potential for the future. The South East Asian market is experiencing growth in nominal GDP and specially GDP per capita, which is very important for the automotive industry. We have expanded from our initial presence in Indonesia to other countries places like Malaysia, Vietnam and Thailand and are intending on keeping growing in that area.
Japanese quality is praised in many countries all over the world and people tend to give preference to our products even if they are more expensive than some of the competition´s. We work alongside Japanese corporations that move overseas and also tend to the demand of local companies. Our standards of production here and abroad attract companies internationally to collaborate.
You are hoping to expand your business into the medical industry with you magnesium pipes. Could you tell us more about this project?
Several years ago we developed magnesium pipes for the automotive sector. Afterwards, we looked for more possible applications to this technology and were approached by a medical company that suggested that we should make them very thin and that they could be very useful for them. We decided to pursue this project and are hoping to successfully launch or first medical product soon. We are still in the development part, but we believe it has great potential.
I would like to ask you one last question. You are now the president of Gohsyu what would you like your legacy to be?
I believe that the most important thing in any business is mutual trust. Trust is to be sincere with yourself and others, sacrifice and work for the community. As long as we have an atmosphere of trust and cooperation we should accomplish every target we set our eyes on.
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