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Everloy: The undoubted leader in customized nozzles

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Interview - April 15, 2021

Based on its long-cultivated know-how and industry-leading technology, Everloy develops specialized spray nozzles essential to the manufacturing process, customizing its products to meet each client’s specific needs. In a conversation with president, Keiro Fujiwara, we gain more insight into the company’s technology and products.

MR. KEIRO FUJIWARA, PRESIDENT OF EVERLOY
MR. KEIRO FUJIWARA | PRESIDENT OF EVERLOY

We know that for the last few decades Japan has been facing stiff price competition from similar manufactures in emerging markets. Interestingly this situation was created by Japanese manufacturers when they relocated to such markets in the 80s and 90s, they transferred their monozukuri knowledge. As such manufactures, such as those in China, now have a dominant market position in components and metal products. How can companies such as yours face this stiff price competition?

Basically, we operate in and are targeting niche markets. So even though the scale is small in volume and revenue, we can still be profitable. Since there is less price competition in our niche area, we can continue to be successful. Both the cemented carbide and the spray nozzle areas which we operate in are very niche areas. Our strength is our ability to customize products based on the customer’s requests, and we don’t engage in mass production of any items therefore, we are not facing such a standardized price competition.

One of the examples you can see is our descale nozzle which removes an oxide layer on the steels during the hot rolling and pressing processes. We have been leading in technology for this product. We are trying to sell this product in the Chinese market where the production volume for crude steel is approximately ten times larger than that of Japanese production which is approximately 100 million tonnes. We would like to sell this product there, but unfortunately Chinese buyers put more emphasis on the price rather than the quality, so we haven’t been successful there yet. However, we are adding some values to our products by meeting exact customer’s requests with technology based on our experiences instead of pricing competition.

 

We see in our interviews that Japanese SMEs have been able to become niche leaders either because they have a large market share in a small field or because they are the only ones with the technology, for example, Roku Sangyo, who can manufacture high precision machining centres. Why is it when we analyse the global supply chain, we find that Japanese manufacturers can become technology leaders in certain niche areas and why has your company been able to make these niche descaling nozzles?

The major steel companies also have the capability to develop descale nozzles by themselves. Actually, they don’t dare to do so. If they would like to develop nozzles as we do, they would be able to do so because they have a lot of excellent engineers, but they don’t choose to do so because their labour cost is much higher than SMEs. Therefore, they are reluctant to develop nozzles due to financial reasons. When we talk about descaling, it is a very important process step in hot rolling because if it’s not done properly, it would severely affect the product quality. In saying something in different words, the major steel companies entrust the nozzle development to the SMEs which is capable of manufacturing nozzles based on their requests and the SMEs such as our company can become a niche leader through long-term technological development in a small field.

 

We were interested to see that you produce a variety of nozzles. We know that the nozzle business can vary greatly in functionality, it all depends on the sector and the applications they are needed. Firstly, what are the key nozzle areas that your company covers and how are you able to tailor your product to the specific specifications of your clients?

We are targeting any types of industries as we believe that our nozzles can be applied to them. We have a great relationship with steel companies, but our products are valued also in both electronics and pollution control industries. We can offer our products and technologies to meet the customer’s requirements.

In regard to your second question, we engage in continual trial and error in order to meet our customer demands. For hydraulic nozzles, we create prototypes to test the water volume, angle, shape and force, and by doing so, we can create the product according to the customer’s needs. We have a vast amount of accumulated data, knowledge and know-how because of the amount of time we have been operating in this sector, so we are confident in our ability to meet even the most stringent customer’s requests.

 

For your descaling nozzle the DNX, we know from our research with distributors here in Japan that it is highly valued for the added value it offers in comparison to traditional products. Can you quickly explain why clients are choosing this DNX nozzle in comparison to more traditional based nozzles?

The current model which is DNEX[J5]  is the fourth generation and was developed by continually meeting customer’s requests to strengthen the impact force of the spray. If this is stronger, it will be easier to remove the scale which is an oxide layer on the steel. So, we continued pursuing that technology by changing the way to control the flow of water and the inner structure of the nozzle, and the result is this fourth generation. As we moved through to the next generations of each nozzle, we made a lot of changes in our nozzle. For the first to second generation, a filter was installed inside the nozzle, and then for the second to third one, a straightener was built in a filter to straighten the water flow in the flow pass.

As for the fourth one, DNEX, we have thoroughly reviewed the inner structure to optimize the spray and achieved an excellent improvement of scale removal performance. The improvement in the scale removing performance of the steel sheet greatly reduces the occurrence of defects caused by the scale. As one of our customer’s examples, the advantage of DNEX was successfully reducing the amount of water by approximately 40% and the pump power associated with it by approximately 10 to 15% in their hot rolling process. By reducing the amount of water, it became possible to lower the heating temperature of the steel sheet by about 10 to 20 degrees Celsius, which also contributed to fuel saving in the heating furnace. For the next fifth generation, we are pursuing a higher performance descale nozzle.

 

If we look at your cemented carbide business, we were interested to see that you make specific tools for precision machining like drilling or milling. One interesting aspect with the machine tool sector is the changing materials. Historically, machine tool makers such as yourselves have been catering to mainly the auto and electronic sectors. In the auto sector we see new demand for lighter weight materials as auto makers are trying or reduce the carbon footprint of cars so we see ferrous metals such as steel and iron are decreasing and non-ferrous materials such as aluminium CFRP (Carbon Fibre Reinforced Polymer), magnesium and titanium are increasing in demand. We have seen this has had a big impact on demand for tools made from CBN (Cubic Boron Nitride) diamond and abrasive wheels. How has this material change impacted your specific business and what new applications are you seeing for your business?

First of all, I would like to mention that the cemented carbide business is divided into the cutting tool field and the wear resistance field. The sales amount of the cutting tool field in Japan is about eight times larger than the one of the wear resistance field. Because we belong to the latter of a niche field, we don't make any specific tools such as drilling or milling.

If we look at auto industry, the electrification of autos is increasing. They need large scale motor moulds, in order to produce the moulds they need, large-sized cemented carbide is required. So, we can see the demand for such moulds increasing. In response to this trend, we have developed the material called EW grade for motor moulds in the last five years, and the demand is increasing.  Also, KD grade is also one of our favoured materials which accounts for 50% of our production and has been well-known in the electronic component industry for more than twenty years.

 

If we look at your international strategy, we know that in 2014 you opened an office in China as your first overseas subsidiary. We know that you have distributors in Europe and the US. Can you quickly run us through your international strategy and what are some of the markets you want to tackle in the future?

We opened a subsidiary in Shanghai because we are targeting their steel industry because of the high production volume of Chinese steel. We take up 80% in the domestic market for the descale nozzles here in Japan. However, in China, most of the customers still prefer the standard class product so that the market share of the high-end product doesn’t expand so quickly. If you just focus on the steel market, you will not be successful. So, we are now targeting other sectors such as the environmental market for incinerators because there are a lot of needs in China. Also, the size of our nozzles tip is small, and you need a pipe attached to it. If we assembled here in Japan, it would be very expensive. So, we have a partner company in China which procures the pipe locally and assemble the nozzles we send over there. However, the main target for us is still the steel market. In addition, we are focusing on expanding markets such as Southeast Asian and Indian.

For the US and European market, we cooperate with local distribution agencies because we don’t have our own offices there. In terms of the cemented carbide, we just started expanding the markets. For the nozzle, we have been supplying them internally for more than 35 years. We have the distributors in Europe, the US and Brazil because we associate with the local distributors which are agile SMEs. So, we don’t have to run our own at present since we have such good business partners.

 

From a manufacturing point of view, Covid-19 has created problems but also opportunities. For example, the number of e-commerce events has increased substantially, but on the other hand we see the employees aren’t allowed on the factory line, and this has accelerated the use of automotive technologies. What is your take on the impact of Covid-19 on your business, and how will it change the functioning of Everloy?

I believe that automation will be accelerated, going forward. We would like to increase the amount of automation in our processes. In the future, we would like to create an environment where people can coexist with factory automation. On the other hand, the number of factory workers performing routine work will probably decrease while professions such as engineers and researchers who create some new values will actually increase.

 

If we were to come back in, say four years from now. What would you like to tell us and what goals would you have liked to have accomplished by then?

I would like to make the best of digital and AI technologies in our business field wherever is possible so that we can enhance the productivity. If we can enhance the productivity, then we can raise the salary of our employees and reward them better. I would like us to grow as a team.

Our future management vision is based on the idea that creating values benefits our customers and society by contributing to technological progress, and at the same time, “we will be happy in response to the trust of our customers and society”.

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