Monday, Dec 10, 2018
Industry & Trade | Asia-Pacific | Japan

Shipbuilding Industry, Japan

Makita: 100 years devoted better marine engine manufacturing


3 months ago

Yu Makita, Makita Corporation
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Yu Makita

Makita Corporation

Japan is the leading shipbuilder in Asia and Makita is one of its best ship engine manufacturers. In this interview, Yu Makita discusses the superiority of Japanese manufacturing and operations and activities of Makita, which, with its small bore two-stroke engine with 300-500mm diameter cylinders, has earned the top share of the world's market.

 

Since the rise of Japan’s private sector in the post-war period, Japanese Monozukuri (craftsmanship) has been widely spoken about, but often misunderstood. In recent years, we have seen regional peers copying and replicating the manufacturing processes of Monozukuri at a lower cost. How can Japanese manufacturers compete against its regional peers like China and Korea? Could you explain to us what the essence of Monozukuri means to you?

Personally, I believe that the essence of monozukuri lies in providing the customer with more than they could have ever imagined. One of the issues we are having when comparing our products with China or Korea is that because our main emphasis is on quality, we are often not able to mass produce like they are. China and Korea are much better than we are at producing the quantity and adapting the price to what the customers are willing to pay, whereas Japan over-focuses on quality.

Aesthetically speaking, Japan is always in pursuit of perfection, and that has undeniably been a strength of Japanese products over the years. In addition, it is undeniable that Japanese manufacturers have always focused on the domestic market, and this has lead to an inadaptability towards outside markets, as we fail to understand the true needs of foreign customers.

 

The Japanese private sector has been hit by scandals, where Kobe Steel and Mitsubishi Material have allegedly engaged in data-falsification. This is hugely damaging for a country that brands itself as a provider of quality. As a manufacturer, what is your opinion on the Kobe Steel scandal? What are the measures that Makita Corp. takes to ensure that its quality remains top class?

In my opinion, the Kobe Steel Scandal was not a problem of quality. The real problem lies in the organisational structure, or rather the management. In today’s world, companies are constantly pushing their employees to meet certain standards, and these standards have been getting tougher and tougher to meet throughout the years. Inevitably, this leads to some employees taking shortcuts in order to meet their monthly objectives.

Here at Makita Corporation, we always make sure that every employee understands the importance of quality. We are always actively seeking to improve working conditions, to reduce any inconvenience for our employees. As we buy many parts from other companies, we always insist on visiting these partners in order to give them tips on how they can improve their quality. We realise that their quality automatically influences ours, as buying the best quality parts is an essential part of our business.

 

In the Asian region, Japan holds the second largest market share for the ship building industry, with an estimated 25% of market, second only to China. What are some of the main trends experienced in the shipbuilding industry? How is your company adjusting to these trends?

First of all, one big trend in the shipbuilding industry is how companies such as ours can adapt to the environmental standards. These environmental standards are a big concern for companies all around the planet because they automatically influence costs. For example, it is important to improve the quality of the fuel, but this will result in costs going up. Therefore, we work on ways to reduce fuel consumption in order to balance the cost issues.

Today, China, Japan and Korea hold 90% of the shipbuilding industry, and from 1956 to 2000, Japan was the leader in the industry, with comprehensive heavy industrial systems dominating the world. Slowly, their portfolio started to shrink, and as a result of this, Chinese and Korean companies started to rise. In addition, as these huge companies started to lose their worldwide influence, smaller family businesses and specialized manufacturers increased in size and in influence.

However, I am slowly starting to realise that many companies who chose Chinese ships in the past are starting to come back towards Japanese ships, as they realise that the quality is undeniably higher with our ships. A ship is very complex, and the quality is a whole: the engine, the propeller, the metal used. Japan is known to be able to produce quality products, but also deliver impeccable after service and maintenance, which will therefore reduce running cost.

Finally, the type of people buying the ships is very different in China and Japan. In China, it is mostly investors, or people interested in short-term profit that will buy the ships. In Japan however, it is mostly entrepreneurs, and people who are actually going to use the ships that will buy them. And that is where quality makes all the difference.

 

How do you pursue revenue growth, when you have products that have such a long lifecycle? What other services do you offer in order to ensure steady income, and what is your expansion strategy in order to sell these products that last 20 to 30 years?

First of all, we work a lot with family businesses, which means that we have a long relationship with them. Our main objective is to be able to reduce their running costs. I understand your question, and the effect of the technical shrinking, however, in our business, we cannot play that game. It is essential to provide high quality, in order to save costs to our customers.

Concerning our diversification strategy, and how we ensure steady revenue, that would have to be through our maintenance and after-care services. Our industry isn’t a massive industry. To illustrate my point, let me share a few numbers with you: the shipbuilding industry combined with the engine makers represents around 20 trillion yen, whereas a company such as Toyota represents 20 trillion yen in sales. The most important for us is to be recognised as a quality maker, and to push our competitors out by increasing our market shares year on year. 

 

Both domestically and abroad, your company faces tough market competition, with industrial giants and local competitors also wanting to get their slice of the pie. What will be your international strategy to pursue further growth?

In 2006, we produced between 30 and 60 engines, meaning the total amount of engines we had was anywhere between 600 and 800 engines. Today that has grown, and represents between 1,200 and 1,600 ships. We really put a lot of emphasis on the aftercare service, and this is our main international strategy. We hope to create strongholds in Southeast Asia in countries such as Vietnam and Singapore, but also in Europe. Currently, we hold the top market share for small boats engines such as our L35MC engines.

 

How did you manage to get the top market share? What are the competitive advantages of your engines, and how would you like the MAKITA brand to be perceived around the world?

Here at MAKITA, we are very attentive to details, and every single part is carefully studied to make sure it is perfect. We study each part down to the last millimetre, and polish them to make sure they are flawless. In addition, one of our competitive advantages lies in our location: in the heart of the Kagawa Prefecture, facing the inland sea. It represents a perfect location as we are surrounded by other shipbuilders such as Mitsui Shipbuilding. If we combine MAKITA and MITSUI, we represent 60% of the market share. We can therefore buy good parts from local partners and save on transportation costs, and sell them for cheaper.

An engine is made out of 30,000 parts. Without the cooperation of other firms, it becomes impossible to provide customers with quality products. Finally, we are a family business, and this is a strength. Shipbuilding is a very volatile market, and when the market is down, we are able to lower our prices in order to help our customers. This also applies to when the market is up: we can increase our prices, and our customers will understand. However, this is only possible by building strong, long-lasting relationships with our partners.

 

What would you like to see MAKITA achieve in the next 10 years?

Currently our domestic shares are approximately 50%. Hopefully, we can achieve the 75% mark in this period of time. As engine makers, we are producing irreplaceable products, and the only way we can continue growth is by knocking down our competitors and increasing our shares. Therefore, our first goal is to achieve the 75% market share, and also to diversify our activities. I personally believe that we need to find a new business activity, related to shipbuilding which will support the growth of our company in the future. Finally, I want to create a company where employees are proud to work for the MAKITA. Without my employees, MAKITA would not be the company it is today.

 

 


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