Hidden champion of multiple gas sensing innovation

As an integrated manufacturer of industrial gas detectors, alarm equipment, and sensors, what does monozukuri mean to you? What do you believe to be some of the strengths or competitive advantages of Japanese firms that allow them to compete in an increasingly global market?

There are said to be two types of product - one is the integrated type and the other is the modular type. When we say the ‘integrated type’, what we mean is that it's not just that the parts are simply combined, it's actually that each part is mutually linked to the others. As for the module type, the specification of each part is already established, and you can just simply combine the parts.

A good example of an integrated product would be the automobile. Whether or not a car is desirable can depend on various features like the tire or the spring sheet and so on. So all of the functions are integrated. On the other hand a comparable modular type of product would be a TV because any company or workers can actually just combine the parts together to make it work.

Japan in the past has been good at creating the integrated type of products. This is because we have a ‘teamwork culture’ where various manufacturers or technicians come together and consult about a product so that they combine various technologies and parts, and integrate them into one product.

However, when we talk about major Japanese brands and the old types of TV's, they used to be integrated, but now that digitalization is advancing, to create a TV you don't have to have this understanding of how every part is interdependent, you just have to combine the parts and the TV will work.

So in that sense, the countries that can produce mass volume at a lower labor cost will be competitive. What Japan has strength in will be the kind of components that are incorporated into Apple iPhones, for example, like the camera or the CD (ceramic condenser). We can say that these are not the modular type of products. They are the integrated type, so we can utilize the strength of Japan, which is its spirit of teamwork to come up with these integrated type of products.

It's our 83rd year in business this year. With gas detectors, it would be very simple if we could just use one method to detect gas, but it isn't. It doesn't work that way. You have to combine various methods to detect various types of gas. In these 83 years we have always developed the sensors in-house.

These gas sensors that we are creating are integrated type of products. Therefore, although we are in a niche industry, we have been creating these integrated types of sensors for the last 83 years so this is a core competence of ours. We do the in-house development and then we commercialize the product and by providing that to the customers, we have been able to live in these really harsh competitive conditions.

GD-84D-EX Gas detector

The Japanese population has the oldest average life expectancy in the world of 85 years. More than 1/3 of the population is over 65, which means a reduced labor force and a smaller domestic market. How has this declining demographic affected your company and how are you reacting to this particular challenge?

Regarding this problem of the declining population, this isn't just about our company, it is a general problem. First of all, consumption will decline for sure, and due to that the domestic industrial market will gradually shrink.

Let's take the example of petroleum oil. Of course not only due to the declining population, but also the shift towards EVs, there will be less demand for ICE cars and therefore less demand for gasoline. Due to that, we not only face a situation where new factories cannot be established, but old factories have to be closed down. And plastics consumption may also decline, and overall consumption may also decline.

As I said, we're not going to be able to create and launch new plants anymore and the industrial structure will shrink as a result. In these industries, a lot of our gas detectors are being used already so we can say that there's not much possibility of domestic demand going up from here.

We're thinking that demand might go down from here and we foresee this as a risk. As a risk hedge - of course it's not possible to keep on living in this shrinking domestic field - we are looking overseas and right now it is the developing countries which need the organizing of oil, gas, and electricity infrastructure so that is where we see particularly increased demand for our gas detectors so we are trying to get into these foreign markets.

In order to do that, for the past three years we’ve been restructuring and reorganizing our global network of branch offices and distributors. The problem of the declining population probably leads not only to the shrinking market but also to a decrease in the labor force. Due to this, our company is also suffering from the decline in the workforce. We're not able to find sufficiently qualified personnel.

As for employees in the specialized areas like production and maintenance work, we think that utilizing foreign employees would work. However for the R&D strategy, there is that Japanese spirit and culture, so we need to keep looking for talented Japanese personnel who can undertake that integrated type of production, but we don't have a detailed initiative for that. Things like sensors are manufactured using mass production techniques, so we have already implemented automated lines in those areas.

What was your motivation in making the GD84D smart type multi gas detector which consolidates 4 different types of detector? What are your expectations for this product going forward and what role do you foresee it playing in your product lineup for your business?

Just to make clear, this product is a gas detector for semiconductor plants so even though we say that four products are consolidated into one, there are various types of gases that we have to measure, so there are 4 sensors in there.

Until now, there were four separate gas detectors deployed, meaning that for each gas detector there needed to be a power source and network connection. Each of these detectors needed significant pipeline construction to support it, so by combining 4 detectors into one, the space for setting up our detector can be significantly reduced and the installation of power and internet cable only needs to be done once.

In semiconductor plants there are various types of gas to be detected. For example, combustible gas or toxic gas, and so on. The merits of implementing this are that you can just use one cable to detect all those kinds of gases, and the other thing is that a lot of space can be saved. For semiconductor plants, the construction fee per area is really high so there is always an incentive to save space, so our detector can reduce the cost of construction because it is four-in-one.

As I said, this is a suction type of detector, so it uses a pump. It used to use four different pumps, whereas now they are combined into one unit. There's only one pump operating. Pumps will eventually wear down so you have to replace them after a certain period of time. With our detector, you only need to replace one pump instead of four, and using one pump will also consume less electricity. From an SDG perspective as well, you can say that there is a lower environmental burden.

We were able to make the 4-in-1 unit because we reduced the size of each constituent sensor, and there is a self-diagnosis system in the product which monitors the amount of wear, and in some cases we have managed to extend the life of the sensor to 3 years from the original 1 year, so that reduces the running cost for the clients and reduces the amount of waste involved.

Could you please share with us the current focus of your research and product development strategy? Are there any new products or technologies that you can share with us?

We think that the semiconductor market is booming and will continue to boom for at least another three years. On the demand side, customers now also need single-component gas detection instead of four gas monitoring, and that has become a strength for us on top of our single-type gas detection product range, which we are thinking of renewing.

Some major Japanese semiconductor manufacturing equipment manufacturers still use our single gas detectors as a part of their components, so we still need to keep supplying and updating those too. We supply detectors used in the manufacture of lithium ion batteries, which can detect combustible gas in a furnace. We’re selling those detectors right now, and we're thinking of renewing them also. As the EV market expands, we think that the lithium ion battery market is also going to continue expanding.

What role does collaboration or co-creation play in your business model and are you currently looking for partners either in Japan or overseas?

For the past three years we have been restructuring and reorganizing our overseas distribution channel and what we were trying to do is to collaborate from a sales perspective so we were reviewing contracts with such agents and also strengthening our relationships and collaborating with them.

From now on, I think the important thing will be technical co-creation, which can help speed up our processes, so if there are any potential partners in that area, we would be very interested.

Are there any particular markets or regions that you consider key as part of your international business and in those regions what kind of strategy will you employ? Could please elaborate for us a little bit about your international business strategy?

First of all, we foresee increased building of infrastructure in developing countries from now on. There will be more such plants and we think that there will also be an increase in demand for our gas detectors for those plants.

I think there will be a lot of demand particularly in Southeast Asia, but in all these developing countries as a whole there will also be increasing demand.

Right now a lot of countries are going ahead with establishing semiconductor plants in their own territory depending on each political/ economic situation including U.S.-China trade friction, so there is a plan to increase the number of semiconductor plants in the US and the EU as well so we will try to target those countries too. The demand for lithium batteries will increase in those countries as well.

Coronavirus has been devastating for the world economy for a year and a half now. Can you tell us what are some of the mid to long term changes that the coronavirus has accelerated at RIKEN KEIKI and what was the impact of Covid on your company?

The impact of Covid on our company is getting less and less. Due to Covid, we now have more people working remotely and the demand for personal computers and network equipment has shot up. Also, more people are looking for gaming equipment and home appliances, and that's why there's now a lack of semiconductors around the world.

In order to respond to that increased demand, semiconductor companies increased the number of their production lines and as a result of that, demand for gas detectors has increased, pulling up our sales. I’d just like to say that apart from during the burst economic bubble following the Lehman Brothers collapse, we had been improving our sales for decades. It’s just that there’s been a spike in demand over the last few years which will persist into this year also.

GW-3(OX) portable gas monitor

On the other hand, in order to manufacture gas detectors, we need semiconductors to, so this increase in demand for our detectors means we are having difficulties in completely keeping up with all of our orders

Therefore, the risk from Covid would have more effect on parts procurement. It's not only for semiconductors, though. There's also the stagnation of logistics. There could be a lack of copper or plastics, that could prevent us getting connectors and so on. So we’re just trying to keep up with orders and our production division is doing its best.

Let's say we come back to interview you again in a few years' time for your company’s 90th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?

Our management philosophy from the past has been to create safe working environments with peace of mind and this is actually aligned with the SDGs, because in the SDGs it talks about the safety and equality of labor as well as improving the methodology of the work.

We want to go ahead with the SDGs. Right now we are a company that protects the safety of various personnel and we want to become a company that's acknowledged in this way by global society, so that everyone globally thinks of us in this way, and thinks that we are indispensable.

We are thinking of how to utilize our technology in combination with other principles in the process like ‘methanation’ to contribute to de-carbonization, which is important. But we also think that apart from utilizing renewable energy to reduce our carbon emissions, we also need to actually assess and reduce the actual gas coming out of plants. That gas is being emitted, and by using our equipment we want to actually have solid figures on how much gas is coming out. By measuring the gas levels, we can eventually reduce the environmental burden.

In the past 83 years our main pillar of business was basically industrial gas detection and we have conducted business as gas detection professional, but we want to broaden our portfolio to include analytical equipment. There are already competitors in the analytical equipment market so we're going to look at producing equipment for use in between the detection and analysis phases, and in this way we hope to contribute to the reduction of the environmental burden.