Manufacturing large machinery that maximize efficiency

Over the past couple of decades we have seen the rise of manufacturers in Southeast Asia who can replicate certain manufacturing processes and products from Japan at lesser cost with economies of scale. How have Japanese firms been able to remain so competitive in the face of this tough price competition?

Put simply, our competitors cannot produce products of comparable accuracy and precision to ours at the same speed and price. This competitive advantage is bolstered by the Japanese philosophy of ‘monozukuri’ which encourages us to arrive at solutions by listening to customers’ needs over time and gaining expertise through experience. This type of continuous improvement is known in Japanese as ‘kaizen’.

Our machine tools in our industry are considered to be large with the biggest machine length being 60m and our standard machine with 10m length. Even with such large sized machine tools, we can achieve accuracy of 5-10 microns. We need to manufacture core-parts with over 1m length within a couple of microns to achieve this high accuracy. By the way, the thickness of red blood cells is approximately 2 microns. We have to manufacture and assemble parts over 1m in length with the equivalent accuracy of red blood cells. As an example of the difficulty we are facing, 1m of steel varies 0.1mm in size when its temperature varies 10 degree Celsius. Therefore, we have to be mindful of not only the temperature control of the factory but also the body temperature of workers.

This level of attention to detail comes from the ‘monozukuri’ philosophy and the pursuit of perfection. Other companies, for example from Taiwan, may be able to produce similar products but their lifespan is 3-5 years whereas ours will last 30 years because of the perfect precision with which every part is made. This is why we have been successful in serving our customers for such a long time.

Your machines require trained operators who increase the cost of using your machines. Your company has developed software to make the machines easier to operate and you also offer training for operators. Can you tell us a little bit more about how your firm is able to lower the cost of utilization of the machines that you produce?

The biggest characteristic of our software is to maximize an operator’s efficiency and support with his control over the machine tool. Now, manufacturers all over the world are trying to achieve automation but manufacturing with large-sized machine tools and the components they produce, we are dealing with impossible obstacles to make with complete automation. In other words, we must have humans present. Needless to say, we have realized automation of measuring and machine control, preventive maintenance software and their automation is expanding. However, the most important thing to improve productivity is to expedite worker training. To do that, we have developed and proposed our software solutions which are based on parts or applications by listening to our customer’s inputs. We make our customer’s more effective in the use of our machine tools so they are achieving higher productivity to beat their competitors.

It's estimated that every ten years the weight of airplanes goes down by approximately 15 to 20% due to changes such as the replacement of certain metals such as nickel alloy 718 with newer materials such as titanium, CFRP (Carbon Fiber Reinforced Polymer) and other composites and resins. How do these changes affect your company and the machines that you make?

We can divide airplanes into two categories, airplane body and engine. Regarding the airplane body, aluminum was a major material used in the past, but today more CFRP is used and titanium parts are also increasing as the use of CFRP parts increases. We have been developing our machine tools to accommodate the changes. For example, 15 years ago, we developed a special machine to process window frames for airplane bodies made from CFRP. Not only machining capability but also fixtures and dust collecting are important factors for processing CFRP. We have also developed a large size and high torque machine to enable machining over 6m titanium parts.

We have continuous partnerships with leading aerospace companies. We occasionally dispatch our engineers to be resident at customers' sites and discuss their demands for future airplane design manufacturing. We develop our machines based on the needs we obtain. In fact, since the leading companies often face severe competition, they cannot get ahead with the standard machines shown in the brochure. Therefore, we fulfill customer needs by listening to them and developing machines that provide the best solutions for the production of their parts.

I just talked about airplane bodies but the situation is the same for aircraft engines. Hard metals like titanium and inconel alloy are typical materials for engine parts. We have installed special machines that enable machining hard metals with demanding shapes, high accuracy and productivity for customers all over the world.

One of the reasons why we are chosen by our clients is that they know our machines can last up to thirty years and that once we have delivered the machines it is not the end of our relationship because we will continue to maintain and improve their performance by working together with the clients. For example, we continue to provide after-sale support over the life of a machine to maximize the capacity of a machine or to deliver software to make it easier to operate a particular machine.

And since we spend so much time with our customers throughout the lifetime of the machines, we are able to ascertain what kinds of machines they may need in future and in that way we continue to develop our innovation cycle.

Given that your machines have a lifespan of 30 years and are so durable, clients will not need to make repeat purchases for long periods so how do you ensure constant revenue streams from your customers?

We have a different business model to our competitors. They produce more general-purpose products without having close relationships with their customers, and they just try to sell the products that are in their catalogue. This works for them since they are able to produce products in large numbers.

Our approach is more customer-centric which enables us to provide tailor made solutions to unique client requirements. We have about 800 to 900 employees around the world so we are a more tightly structured organization and this enables us to respond to detailed requests, visit client sites, understand their needs and make decisions faster. I visit over a hundred customers worldwide every year in person.

This is how a company of our relatively small size can supply machines to top tier manufacturers as part of their core manufacturing processes. No other company can provide this kind of solution to their customers. And since we supply machines to top manufacturers, other tier 1 or tier 2 manufacturers also become interested in using our machines so we can expand our customer base and build a more stable income stream that way without having to spend many resources on marketing activities. We also learn a lot from our clients, who tend to use cutting-edge technology, so we also gain expertise as a natural consequence of working with them.

In the automotive sector the introduction of EV (Electric Vehicles) and hybrid cars are presenting a challenge to manufacturers of traditional engines and drive systems. How is this trend towards electrification affecting your business and how are you responding to it?

Fortunately, we manufacture machine tools not for car engines but for car bodies. In particular, we manufacture machines to process car design models and machines to process dies and molds for shaping body panels. Even as the EV trend develops further, car design and car body won’t disappear. We think our chances will increase by having more new designs or materials.

Materials for cars are becoming diverse. Even let’s say steel, there is high tension steel or hot stamp. Aluminum, plastic, CFRP, etc. are used recently besides steel. While materials vary, issues of making dies and molds have increased. With such a situation, we have been proposing not only the machining application but also simulation technology to support our customers. In fact, most issues on how to improve the method of existing manufacturing hasn’t drastically changed where we can call it innovation.

On the other hand, start-up car manufacturers make cars with ideas that are free from existing car manufacturing processes. Elon Musk replied in an interview the other day that he could drastically reduce amounts of parts and couple hundreds of machines to be installed for the manufacturing process by applying a large aluminum diecast to the car body. I get a feeling that his manufacturing is based on a simple fundamental rule, which is a smaller number of parts and shorter manufacturing process.

Start-up companies like Tesla are going to construct new factories. Furthermore, they try to build production lines with higher productivity after researching the existing big manufacturers. As you can imagine, it is not an easy task for the existing big manufacturers to change their current established production lines. So, between startups and big established companies with very different approaches to innovation, we are able to learn from both in order to provide optimal solutions for them and I think it would be hard to find any other company that can meet the requirements of such diverse manufacturing environments.

Japanese machine tool manufacturers grew with the Japanese manufacturing industry. We developed new machines and made innovations with leading companies of Automotive, Construction, Shipbuilding, Energy, etc. But we often hear from our customers that machine tool manufacturers who can correspond with individual requirements have decreased recently.

In the past, machine tool makers like us used to work closely with Japanese leading companies and try to provide them with solutions. At times when we couldn’t come up with a new solution, we’d work with the clients to make improvements to existing machines and in this way were able to continue the improvement of our products. If we were not able to achieve the level of precision that the customer expected, they would accept the level of precision we could achieve, and the price would be altered accordingly. That was how things worked in the past and that is why Japanese manufacturers were very competitive.

However, there was an unwritten rule that machine tool manufacturers and their customers cooperate together in this manufacturing technology field in this business model. We cannot forget the ‘unwritten rule’ while we are dealing with overseas customers to work as a global business.

Nowadays it is important to clarify what kind of service we are going to provide to the client and negotiate a contract whereby we share the risk until the processing is done to the customer’s satisfaction. This is the only way we can export the essence of the manufacturing spirit in Japan to the global market, but some SMEs are not able to adjust their business model accordingly and as a result a lot of them are now disappearing.

In the 1980s you opened your first overseas base in the United States of America. Since then you also established a presence in Europe and all around Asia. Could you tell us a little bit more about your international strategy and how you're able to cater for the demands of both advanced and emerging economies, where the manufacturing practices vary widely?

Our fundamental approach is the same in all markets and that is to listen to the customer, understand their needs and provide the machines to solve their problem. This applies to all our clients from cutting edge giants in the West to small factories in emerging countries. I’ve been to see both.

In fact, we have installed a lot of machines for growing companies who supply products and parts machining for local companies in China and India. I also visit these companies in person and exchange opinions with their top executives to build a relationship of trust. We have a direct business relationship with them but you won’t find other companies prepared to do this because it’s very difficult to maintain the relationship with them. The contract document is exhausting and they often change things.

However, we will maintain relationships with top clients and also we will focus on emerging markets, especially China and India where capital investment is increasing. As for the differences between China, India and the Southeast Asian countries, in China or India, they have a very rigid industrial structure where there is an OEM company that produces finished products and that is followed by tier one and tier two companies. On the other hand, the Southeastern Asian countries are like the suppliers for Japanese makers so that means there aren’t so many local manufacturers.

The manufacturers in emerging countries are very much interested in what manufacturers in industrialized countries are doing and they would like to replicate what such companies are doing. However, we cannot bring in the same solutions of leading manufacturers for them. We propose the best solution for them through dialogue with engineers and the shop floor of each company. No matter the size of the company, we respect all of our customers and are building partnerships.

We would like to also target the tier one and tier two companies in emerging markets and have direct relationships with them so that we can expand. When I talk to local small companies in India or China, they often complain that suppliers don't listen to their requests, and don't want to deal with their requirements. Such suppliers are not able to cater to small companies, so we are trying to sincerely listen to their needs and have direct relationships with them.

With the emergence of Industry 4.0 which stipulates the importance of the IoT (Internet of Things) in manufacturing processes, how will the requirements of an operator change in the future, and when you deliver machines to your client how do you ensure that the machine, the software, the environment control and the operator are all in place and ready to go?

In the large scale machine tools industry it is impossible to fully automate everything. Of course we get some clients saying they want to implement IoT in their production line so they can visualize its operating capability or visualize the defect rate and so on. My response to such requests is that when using a PC they can already visualize how long they spend writing emails or browsing websites per day and how long they are actually working down to the last minute, but does this ability to visualize actually improve work efficiency for a manager?

For machine tools, there definitely needs to be human involvement, so we are trying to implement IoT technology for information that operators need to know, rather than for the managers. So for example in the production line, the operators listen to the sound of the machine and make adjustments when they hear an unusual sound. We can now enable them to visualize the internal mechanism to find out why the unusual noise is being made, and this ability to quickly ascertain and troubleshoot potential problems gives operators more empowerment and motivation to successfully maintain and improve operations in line with the ‘kaizen’ philosophy of continuous improvement.

We want to be able to visualize all aspects of the production process partly in order to make it as transparent as possible so we have an in-house software development team which can quickly respond to customer requirements. Our software can also be used by us to perform remote operations and maintenance at overseas plants from here in Japan so we can support overseas operators in that way also in the future.

Over the next five years, what dreams do you have for this company and what goals would you like to have accomplished by then?

Our company needs to continue to grow because we produce machines that have a lifetime of thirty years so in order for our clients to continue to use our machines we need to maintain our presence for thirty years at least, and in order to do so we need to foster human resources who have management sense.

I assumed the President & COO role in April last year. Ever since then my primary focus has been to foster the next management team. I'm still 40 years old, so I plan to stay with this company for the coming decade. Of course I do have a lot of dreams and solutions that I want to provide to our clients, but the most important thing is to develop our workforce. By doing this we will be able to maintain good relationships with existing clients and create a business model conducive to continuous growth.