New technologies and new opportunities for Meidensha

The electric heavy machinery sector accounted for 10% of Japan’s shares in terms of market capitalization 2015. However, only a handful of players that are adapting to the rapidly changing markets have been able to perform well. What is your personal opinion about trends in the sector?

Looking at the bigger picture, electric infrastructures are the foundation for all social and industrial infrastructure. Nothing would be properly functioning if you take out electric infrastructure from the equation. Customers are demanding something they can use in the long-term. At Meidensha, we meet these demands by customizing systems for the industry and delivering durable products.

There are four main global trends we need to take into account: first, globalization. A lot of companies are moving abroad; they are delocalizing or expanding their own factories and production lines in other countries. We supply all electric infrastructure in demand, thereby not only tapping into profitable operations, but also contributing to society.

Two, environment. Global warming is leading to new regulations and policies that open up new opportunities for our business. Three, ICT. Societies are increasingly digital. Meidensha is competing on the global market to develop new technologies suited for the emerging trends and we are growing well in this segment as well.

Four, aging population and low birth rate. It is also a factor that has been affecting our work and we must change infrastructure to adapt to this phenomenon.

Could you please give us hints about the history of the foundation of Meidensha?

We started in 1897, and the reason for our establishment is that we found how important for the society the electric industry is. When we look at the history of Japan, we have always faced problems with low supply of coal, thus using hydro power became paramount as there was lot of water resources in Japan, and that was one motivation for us to work in this area.

120 years ago, our founder started his business in imported motor repairing industry and started a factory in the belief that one day Japan would build its own electric machinery. In 1901, our founder successfully developed a three-phase induction motor which became the first domestic production motor. He then diversified the technology into the sector of electric equipment. Currently, we have three main business segments, namely social infrastructure, industrial systems, and maintenance and servicing.

In the railway sector, we started working on electric current transformation devices, which are necessary for railway operations.

Looking at the water industry, it’s a sector with great opportunities where we started to supply power equipment for sewage treatment plants as it requires huge amount of power in the water treatment procedure.

Another business segment we operate is the evaluation and testing systems in the automotive industry. Japan’s motor manufacturing industry is globally renowned. We developed dynamometers that have the capability of testing and evaluating the efficiency of cars and machines. Meidensha boasts more than 50% shares domestically in this segment.

The business model is well represented by a cycle consisting of products, systems, and maintenance services. The provision of all three aspects at the same time is what lets us build good relationship with our customers.

Over the last 120 years you have diversified into many sectors. What are, in your opinion, the business segments that have the highest growth potential over the coming years?

I do believe that we have a lot to gain from globalization. Power station businesses and power equipment business to Asia, India and Middle-East are showing great growth. That will probably be one important business segment for us.

Next is the automotive industry. We have a long history of motor development and manufacturing. Motors and inverters have tremendous potential in the future as well. We have been supplying motors and invertors for electronic vehicles. I believe this will be another significant driver of our growth, as we have a unique know-how and experience in the segment.

We are looking at the developments in the new US government and how it will influence the scenario in the automotive sector, with changes in policies. For instance, by 2020 in California, all the manufacturers and automakers must have a certain percentage of electric vehicles, which is definitely an opportunity for our business.

What are your strategies and ambitions under your mid-term management plan V120?

In 2016, we had to make a downward revision. However, we have achieved certain growth. For Meidensha, it’s important to have domestic businesses alongside the development of infrastructure overseas, in particular in developing countries. Keeping our business cycle in place, namely integrating products to systems and provide maintenance services is crucial for the future growth of the company.

Businesses from abroad will remain relatively high, while the domestic business structure is somewhat changing but we can generate profit as well.

In this changing domestic industry, what is the role Internet of Things (IoT)? How can Meidensha leverage on this technology to create innovative solutions?

The power of IoT stems from the increasing affordability of the internet. The cost of telecommunications is amazingly inexpensive nowadays. Computing power has grown dramatically. Portal software companies are dominating, especially in the B2C market. Japanese takuhai delivery service companies are a great example of the business opportunities in this context.

However, I also believe that IoT is becoming more and more important in B2B networks, especially when it comes to develop infrastructure. B2C relies on the concentrated power of very few portals. The customized network for B2B is way to go now. An example in this context is the connected and distributed power generation systems that include hydro, biomass, solar, wind and other renewables.

In case of Meidensha, customization is essential. Every customer has its own specific requirements. Connected manufacturing systems need to respond to a variety of customization requests. Therefore, we take advantage of this technology in order to tailor make solutions for our clients.

Japan is still one of the biggest providers of cars to the US. What kind of services and products do you develop in the automotive segment that can be supplied to the American market?

The test system for automotive is one area we can supply to big manufacturers in the US. We have not only Japanese companies located in the US, but we are also supplying the Big Three. I’m interested in deepening the synergies and application of EVs, dynamometers, and software development. It’s a win-win situation.

In terms of power equipment, we have been supplying vacuum interrupters, namely simple switches to handle high voltage and high current made to shut down hazardous circuits. Competing technologies use SF6 gas. Our vacuum interrupters are a good solution taking in consideration efforts to improve the impact on the environment. We are further investing in this technology and we have already been supplying over 3 million pieces globally.

In the water business, we have developed ceramic flat-sheet membrane that has been accepted by Siemens Water Solutions for wastewater treatment filtering and purification in the oil refinery and petrochemical industries.

Water, transport, power and IoT are the segments we are focusing on developing through partnerships. We hope to find good partners and customers and create a good relationship with them.

We are a 120 years old very traditional corporation, but we are eager to collaborate with the new generation companies. The US is a very important platform not only in terms of technological advancement, but also for the development of innovative business models.

What do you think is the best asset you can provide to the American market in order to strengthen business relationships?

The US has a fairly strong industrial structure. The B2C relations are growing stronger, but in terms of B2B there is still a great potential on which we can develop fruitful synergies. The Japanese industry has great expertise in material refining, machine manufacturing, and chemicals. Japan’s know-how is a very strong asset on which we can build further partnerships.