NJT: The power behind copper

Your company has three main business domains: refrigeration and air conditioning; plumbing for construction; and energy. Among these three divisions which is your main focus and what is your best selling product?

We have an abundance of different kinds of products but the ones that bring the most profit are the inner grooved copper tubes because they are used in various high performance heat exchangers. The business has been performing well and still has good prospects because heat exchangers are utilized in most of the air conditioning systems and household electricity. It is a growing market right now and we have the heat exchangers-related business for that reason.

Furthermore, an excellent line up of new products is coming up, including our DANT (Defend Ant’s Nest Tube) copper tubes which have excellent resistance to refrigerant  leakage, thanks to the addition of optimized phosphorus content. Currently DANT has already been used in about 30% of room air conditioners in Japan. DANT reduces the possibility for refrigerant leakage and extends the lifespan of the heat exchangers in air conditioning systems and many air conditioner manufacturers are now considering using this product. DANT prevents refrigerant leakage from air conditioners and is an environmentally friendly product, so it can contribute to SDGs activities.

This provides a solution to air conditioning manufacturers even when the cost for the raw material - which is copper - is higher because this product is excellent and there is demand in the market. However, there is a possibility that they will replace the raw materials from copper to aluminium due to rising copper prices. As such, we have already added a department in our company that focuses on aluminium. We have to weigh the situation especially since copper has great features such as electrical and heat conductivity, workability, and corrosion resistance. On the other hand, aluminium might not have these great features, but it is cheaper. We believe that our clients will still be using copper because as we know Japanese companies will always choose high quality. 

It is clear that you have a big focus on the air conditioning market but we see you are a company that diversifies and uses their products in other applications. For example, you are using your technology for medical devices, automobiles, and for desalination purposes. Can you tell us more about your diversification?

We see the possibility of using our special products for refrigerant-to-refrigerant heat exchangers. There are manufacturers here in Japan that use copper smooth tubes for these various industrial products. The automotive industry is another prospect, especially since there are big changes in the market, such as shifting from traditional combustion engines to electric vehicles, and aluminium is a key component. We are currently working on this in our R&D division.

Since 1970 you have had your research laboratory and have come up with new innovative products such as DANT and the RG Press. Can you tell us more about your R&D strategy? Do you have any particular product that you would like to share with our readers?

Our R&D strategy is to be responsive to the needs of the customers and to find solutions to their problems. We do not prefer creating new products and then commercializing them. RG press was introduced as a tool to be used as mechanical fittings. The personnel in a construction site had to use fire for brazing. We came up with a simple product that does not require any brazing which implies shortening of time for installation and can be done using some piping tools and the segments can be connected without using fire. Before introducing this product, the operators had to have plenty of work experience with brazing to complete the task, but now the work can be done by anyone with only basic understanding on how fittings work.

We focus on R&D of new products that can provide solutions to our customers' challenges. Currently we are working on how to utilize aluminium for tubes. We are confident of the quality of inner grooved aluminium tubes, which we developed recently, and we are confident that it is the best in the world in terms of quality. We did a successful test and the result was that this product has the same features as its copper counterpart in terms of heat transfer efficiency, furthermore this product is 40% cheaper. Currently the Japanese market price for aluminium is ¥300 per kilogram and copper is ¥1,100 per kilogram. 

Aluminium grooved tubes

You mentioned that you are responding to customers’ requests and you are not commercializing your products. Are you developing these products in house or through co-creation? Do you have other companies you are working with?

With regards to the process of developing products, we combine our efforts with our customers because from a technological point of view, most aspects of the production is done here in our company in Japan. Our customers come up with solutions such as enhancing their technology and they work closely with our company to produce better products. We see a fluctuation of copper and aluminium prices most especially with copper, which is becoming increasingly expensive. Nowadays we see a lot of companies shifting or thinking about using other materials such as aluminium, and perhaps five years from now more companies will be using aluminum for their products. Copper tubes are currently used in vast amounts of different kinds of heat exchanging products such as refrigerators or air conditioners, but it is becoming more likely that aluminium will replace the copper materials used in these products. A lot of companies are now introducing aluminium-based products. Another splendid feature of aluminium is it is easily recyclable. Some heat exchangers are sophisticated in terms of shape and design. For example, heat exchangers where the tubes are round or cylindrical, by using aluminium, it is easier to recycle. Our company focuses on three aspects: RG Press, DANT, and aluminium-based tubes. The market has been expanding and we see more potential applications of our products.

We know that all your domestic companies were reabsorbed into one company, can you tell us the reason behind this? How do you still remain close to your customers after this consolidation?

One main reason for having those five affiliate companies merged as one is to simplify and improve the overall efficiency of each affiliate’s respective features. Obviously before the merger, each company had its own purchasing and accounting departments. There was a steady growth rate even before the merger, then the Covid-19 occurred, and many business activities changed. Because of the pandemic, there was a decline in the domestic demand for the copper tubes especially because the cost is quite high. Our factory in Malaysia had to adapt to these changes, from using copper to aluminium materials. Furthermore, early retirement plans also had to be implemented due to Covid-19. However, these are the steps necessary to ensure the sustainability of our company.

As Japan’s population continues to decline, so does the demand for Japanese made products in the domestic market. For this reason, many Japanese companies are looking to expand overseas to maintain their competitive edge. You have been established in Malaysia since 1990 and you are restructuring there and adopting aluminium tube manufacturing. Can you tell us about your international strategy and the benefits brought by your operations in Malaysia?

It is true that expanding overseas is inevitable for many Japanese companies, especially since the labour costs here in Japan are high. As a copper tube manufacturer, it is not ideal to introduce the same products that we have here in Japan to other countries. As I have mentioned already, we have started producing aluminium-based products in Malaysia, and this is going to be our starting point as we plan for further expansion in Asia, for example in China and Thailand. A lot of Japanese companies that produce air conditioners have already established subsidiaries in China and Thailand, thus, it might be easier for us to capture these markets as well.

In order to expand to other countries such as Thailand, what strategies will you be implementing? Will you open up another factory, look for an M&A, joint ventures, or establish another sales office?

In the domestic market, the air conditioner manufacturers or any manufacturer that utilizes heat exchangers in their products already have business activities with our company. If these companies have problems in their sites overseas, we can help them through our existing business relationships. In this way there is a lot of potential for us to penetrate that overseas market. 

Imagine we come back to interview you again in two or three years, what would you like to tell us? What are your dreams for the company and what would you like to have accomplished by then?

My ultimate goal is for my employees to experience high levels of happiness working for this company and to establish a friendly-working environment. On the business side, one of my goals is to increase the market share of our product DANT to at least 50% market share. We are blessed because of the overwhelming demand that we are seeing currently. In the near future, after we launch the mass production of our aluminium-based tubes in Malaysia, we are hopeful that there is going to be a positive response in the market. If that happens, we might build another plant. The RG press compared to DANT is not as profitable, but we will continue to improve this part of our business and find new ways to sell this product to our customers. Our company is already widely known to have high-quality copper-based products. In a couple of years, perhaps five to ten years, we are expecting that our aluminium-based products will also receive high demands and become highly profitable for this company.