President & CEO Daisuke Murata talks with The Worldfolio about Muratec’s new developments, business philosophy and future goals.
Global Industry Analysts, Inc. predicts the global machine tool market to reach $140.5 billion by 2020 driven by the Asia-Pacific region and the US. The global manufacturing industry is undergoing a deep transformation with the introduction of new and more efficient techniques aimed at producing an industrial rejuvenation. What are the key trends that are underlining this transformation in the logistics and automation sector?
One of the key factors that are shaping the industry is need to produce with less footprint. This means manufacturing with less energy and materials, smaller number of people with less skills, and physically smaller space and simpler process.
The second key factor is safety and security. Japan is aging. We also have a rich menu of natural disasters. Safety and quick recovery from damage are crucial for sustainable society. On the other hand, security against human related disasters including cyber-attack is getting more important.
Automation through appropriate implementation of IT is essential for ourselves to adapt to these trends.
Could you please tell us what are the highlights from your participation in MODEX 2016 (Atlanta, GA, USA), and your expectations about JIMTOF 2016. What is the uniqueness of the products that you will be displaying?
We went to MODEX together with Cimcorp, now a fully owned subsidiary in Finland which has a very good solution for automation of tire manufacturing. We are not so large as our competitors, so we cannot be the best company in all the segments across the automation industry, but we would like to be the best solution provider in any particular fields we select.
What we are showing at JIMTOF is our unique reliable wireless system to connect machine to machine. This system can be applied to other products than machine tools, for instance textile machineries. We have developed this platform in-house at Silex, one of our group companies. As we are heading towards the industry 4.0, we realize that solid communication network can be a good tool to make ourselves different.
The 4th industrial revolution is driven by the Internet. Digital technology is disrupting traditional operations and now every business is a digital business. The impact on supply chain management is particularly great. Businesses cannot unlock the full potential of digital without reinventing their supply chain strategy. How is Muratec leveraging on digital and internet-based technology to match with the ever-changing elements of automation?
We have a Communication Equipment division. It used to be a major supplier of fax machines. You have probably seen the Murata (changed to Muratec in 1991) brand especially in the US where we have a significant market share. Even though we are still supplying unique products in this business, the Internet has almost wiped off the fax. Responding to this change, the proficiency of these people, the engineering skills along with their experience were transferred to another organization named ICT & Control Development Division, which works to help establishing a common platform for the other industrial machineries we make. This is a unique aspect of our company.
According to Accenture’s 2016 report, the greatest barrier to the adoption of advanced automation technologies is a lack of understanding of the benefits combined with an expectation of high implementation costs. What is your personal view of the cost-benefit relation for the adoption of Muratec’s technology?
We focus on automation, the most important market trend, in a simple way, which is to “make the customer happy”. Customer satisfaction is our top priority. We do not offer advanced automation to our customers to get an advantageous position. We are securing all the steps and all the variations and customization according to the needs of the customers and their supply chains.
There is a growing debate in the industry when it comes to the data created on the machines. Who owns that data, the machine manufacturers or the customers? We at Muratec believe that, as customers are the final users, they own the data. This data is very important for their marketing purposes and we know it. So we try to help our customers enhance the experience of the final users and make their life easier.
Chuken Kigyo are Japan’s hidden champions, namely medium-sized companies that thanks to their investment in R&D have been able to conquer large shares of the global market in their respective sectors of activity. Could you please share with us more details about the genesis and key innovative milestones marking 80+ years of history that brought Muratec to become a global leader in machinery manufacturing?
When my grandfather was running the company, we were selling automatic winders for textile industry as our main product. We used to have one hundred competitors in the Japanese market. Now we actually face one competitor out of Germany and one in Italy. Even Chinese manufacturers are undergoing a consolidation process and there are fewer competitors around the world with our capabilities.
Industry concentration is across every segment. Consider for instance the semiconductor industry: in terms of automated material handling system, there are only two suppliers. They used to be five. Therefore, it is imperative for a medium-sized company like us to choose the right markets, grow in our niche, and be competitive.
Technical innovation is not the only factor that had made us competitive. The capacity and the dedication to keep customers happy were really important for us to be competitive in each niche market.
In 2015 Muratec was one of the few companies in the sector to post growth over. What is your plan for the future of the company?
We are a private company. We don’t want to go public. When companies with an industrial background like us go public, they find themselves under a lot of pressure from the shareholders to make profit constantly. As a nature of the machinery business, the gap between good times and bad times is quite large. We prefer to save money during the good times, like now, and when we are facing bad times we like to count on that saved surplus to invest in R&D; very much like other family owned companies do.
We do not believe that focusing too much on short-term gains will be beneficial to the sustainable growth of Muratec.
Hitozukuri is an essential aspect of the Japanese corporate culture, can you explain how Muratec invests in R&D and cultivates the new generation of young talents?
Basic research is conducted in collaboration with public institutions, for example local universities. Young engineers have good experience through collaboration.
Our research is more focused on the application side of our products. Customer’s voice is a vital component in our research activities. Our customers know about machinery; they know our competitors’ machineries with their strengths and weaknesses, and therefore facing the customers and listening to their voice is the best way to cultivate human resources in R&D, too.
As you were saying at the beginning of the interview, technology needs to become more sustainable. What are the major KPIs and objectives achieved so far when it comes to Muratec’s reduction of CO2 emissions and water usage?
It’s becoming a standard for any companies to adapt to the low CO2 emissions and water saving requirements. We are working hard to fulfil these requirements both in the process of making our products and the products’ performance at our customers’ site. Again, automation & IT play key roles here.
But our commitment to the best practices goes beyond even the environment. We have to stress that we are part of a very old industry in which many factors should be considered. For instance, in the machine tool industry, males represent the huge majority of the workforce. We are introducing more women to higher level positions and also in terms of numbers. We want to differentiate ourselves from the competition, to be a step ahead also in this respect.
Japan is the 3rd largest market worldwide. Nonetheless, the country can no longer afford to over rely on its huge-yet-aging domestic market. Prime Minister Abe is pushing forward policies in an effort to open up the country’s economy to the global market. Japan Inc. companies are following suit with an aggressive strategy to expand globally through M&A. The US is Japan’s top foreign investor and second largest trade partner. What is the role of the US market in Muratec’s long-term growth strategy?
The US is one of our largest and most important markets after Japan. We sell approximately 65% of our products overseas and 35% domestically. Within that 65%, the US represents the highest share along with China. Although not as large as they used to be, sales of textile machineries relating to the United States are still significant. We have first class customers in semiconductor industry in the US. We are also participating the project of a huge battery factory in Nevada. We see that manufacturing sites are still productive and important for the United States’ economy.
Aside from the manufacturing sector, we see the United States as the hub for automation technologies as well. The American industry has a lot of potential as well as difficult challenges and in the future will be a very important role model for advanced countries.
As a concluding question, in a country led by visionary leaders, where do you see your country in 30 years? How would you like to imagine the evolution of your country in connection also with the American market?
We are witnessing the collapse of the middle-class. It is a sign of changing times. In Japan people do not want to work in factories. However, I believe that manufacturing is the way Japan can contribute to the world most and thus we make our living. Goods and services made by taking advantage of homogeneous society have been and will be most important engine for this country. When our customers in China or India ask me to move our factory to their countries, I always answer “People in your country are so bright and creative that we may ask your help for R&D or marketing. But please let me keep at least one humble kind of job in my home country. My people here may better manufacture something in collaborating manner than yours.”
Of course we have to seek advanced manufacturing in this changing world. As I mentioned at the previous questions, Japan faces a lot of challenges; aging society, environmental & resource issues, decreasing number of skilled labor, various types of risks and so on. We should see this market as a perfect place to test new technologies against these challenges.
Talking about technologies, what I am also concerned about is the growth of the automation business from the military sector. This is a rapidly emerging trend, growing bigger in countries with large military power. I think that together private and public sectors can create fruitful opportunities to re-create the condition for the rebirth of the manufacturing sector for peaceful purposes that can put Japan again back on the map as a global innovator.
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