JNC Filter is answering an ever-changing contemporary world with chemistry.
Many Japanese firms are facing the dual challenges of navigating supply chain bottlenecks and rising input costs. However, Japan’s reputation internationally for quality and technology favors its products. Along with the record low price of the yen against the US dollar, it’s never been more cost-effective to buy Japanese products. Do you believe that this is the case, and how do you believe the Japanese firms can try to leverage these current conditions?
With inflation, the costs of logistics, labor, and materials are rising, and more efforts made by individual companies are needed to adapt to this environment. In order to combat the situation, our strategy is to strengthen the competitiveness of our existing products. For filter production, we first make the shape with machinery, and then the second process, adding an attachment and inspection, is done by people. Since this secondary process is done mostly by hand, if production volume increases, the labor cost also tends to increase, so for the past few years we have productivity through efforts such as automation, employing multi-skilled workers, and reducing takt time. We have made improvements, but there are still areas where we can increase productivity, so we are currently working on that. Japanese products are known for high quality, so once we establish high productivity, we are sure that we can compete globally with Japanese quality.
40% of our products are exported overseas, so the JPY’s depreciation is actually in favor of us in terms of those exports, but imported material costs have risen. It’s important that we organize ourselves so the exterior environment does not affect our business.
Another major challenge facing Japanese firms is a declining population, which is leading to a shortage of labor and a shrinking domestic market. To what extent do you have to look overseas to solve these challenges of hiring staff and securing new markets?
Implementing automation technologies to improve production efficiency I mentioned earlier also serves as a measure to compensate for the shortage of labor. At the same time, we are interested in overseas markets, but we understand that our core market is in Japan, so we have to establish a sturdy domestic foundation. We are a B2B business, so it doesn’t necessarily mean that a population decline will lead to a shrinking market, but it’s important for us to be highly competitive so we can compete against our competitors.
As for the overseas workforce, our Moriyama factory is experimenting with implementing a high-caliber foreign workforce. We also have a production facility in Vietnam, so it is our goal to have a personnel exchange between our Japan and Vietnam factories. Since our global market share is still small, it’s important that we explore overseas markets to find new opportunities.
Talking about the domestic market, one of the positive signs that we’ve seen in the yen’s devaluation is that Japan has attracted foreign manufacturers, especially for the semiconductor sector. Do you expect this to have a big effect on your business, and are there opportunities that you’re considering because of this relocation of production domestically?
I hear in the news that many companies have stopped overseas production and come back to Japan to mitigate risk, and with the depreciation of the JPY, many foreign firms are coming to Japan. This is a positive trend for our company. On the other hand, as a Japan-based company, we do business with other Japanese companies in a variety of industries, and when they expand their business into other countries, they use our products in their overseas factories. As our products have been adopted by high-quality Japanese clients that have a high competitive edge, we have grown as well. I’m sure that our products will be competitive enough in overseas markets.
Your business has moved into the EV automotive sector. It’s recently been announced that the government wants all new vehicles to either be EVs or hybrids by 2035. Your AS filters are specifically designed to increase battery performance. Is the automotive sector something that you see as holding potential for your business given this expected growth?
The automotive field is a growing segment, and since it needs such a wide variety of filters, our strategy is to focus and concentrate our resources. Our AS filter can filter out high viscosity, high concentration liquid, thus increasing the quality and productivity of batteries, but the automotive industry has become multipolarized, with the strategy towards electrification differing by nation and company. Some focus on hybrids or plug-in hybrids, and there is a new technological development with solid-state batteries and fuel cells. In this situation, it is very hard to foresee the future, but nevertheless, the automotive industry is a new market for filters.
The advantage we have is that we can have direct discussions with automotive manufacturers and battery manufacturers, listen to their needs, and provide the most suitable filters.Our strength is depth filters, and providing the best type of filter to meet the needs of each company is the strategy that we will take.
AS Filter
Your company has a wide range of different filters going all the way to the sub-micron level in certain filters. This allows you to cater to a variety of different industries, including automotive, chemical, pharmaceutical, and semiconductor applications. Looking at the future, which of these different applications will you be focused on?
Our core business is with the automotive industry, specifically depth filters used for paint. Although we also make pleated filters, that has been our core strength, so elevating that and reaching new markets is important. We currently rely heavily on the automotive and chemical industries, but we want to diversify and enter the semiconductor industry as well as other industries that would support our growth.
We provide a variety of filters for various industries, including CP and BM filters. CP filters are mainly used for paint. BM filters are melt-blown filters, and we have also recently developed a sub-micron filter. We are not aiming for the highest end of the market, but we are targeting a high-end market with our product development. Our newly developed filter is a 0.3 micron filter, and we have sampled it out. We plan to leverage our strengths to expand our fields of business with technology that is based on this newly developed filter.
Your filter uses a unique media structure made of composite fibers that have a sheath-core and a low melting point. This is something that creates a durable mesh structure that can resist compression. Could you tell us about your R&D process and how you were able to achieve this unique filtration method?
ES fibers, which we base our technology on, were developed over 50 years ago, and based on this technology, we launched our CP filter to the market in 1977. At the very early stage, polypropylene (PP) was considered a dream material development, but people soon realized that having this dream material is not good enough. That’s why we developed ES fiber.
At first, it was used in things like paper diapers, but our engineers realized that the strong bonds of this fiber were well suited to filter applications, and that led us to develop newer filtration products based on this core ES fiber technology.
JNC Filter was established in 1995 as an independent company. Before that, it was the fiber department of the JNC company, so working from upstream to downstream was the strength in finding the best application for this ES fiber.
Our core advantage is an integrated manufacturing process, from material procurement and development to the production shaping of the filters. We also have a close relationship with JNC, which is a comprehensive chemical company, so we can develop or co-develop new products in-house or via a wide network. A high level of quality control and stable production is another strength of our company.
The CP filter was developed 50 years ago, and that is still our core product, but it is important that we develop new products to create new pillars for the business. Currently, we are concentrating efforts on developing BN filters that focus on filtration at the submicron level and AS filters that work well with lithium-ion batteries.
Your BN filter is a new technology that came out in 2022 and can filter at the sub-micron level. One challenge these types of filters have is the product lifespan. They need to be replaced quickly. This is especially true for industries that use a lot of corrosive and toxic materials. How have you been able to expand the product lifespan?
The development of the BN filter has been progressive. We started our development with a 0.7-micron mesh, upgraded to 0.5-micron, and this year we achieved 0.3 micron. The uniqueness of the BN filter is that it’s composed of multiple filter layers, and each layer has its own uniqueness. We use our group company’s materials and work together in the development and manufacturing of fine mesh that combines longevity and high filtration capability. As with our CP filters, we use a specific type of material for our BN filters where the fiber linkage is attached, and since our group has deep expertise in resin, that is an advantage.
Besides your core filters, you also offer customized products for customers. This would seem to pose a challenge of moving from mass production and a range of issues around minimum quantities of orders. How do you overcome these challenges?
Actually, if we create a new upgraded filtration, with multiple grades, like one micron through ten microns, we have to not only provide the different grades but also the size or length of filtration. Therefore, one new filter category means creating a wide range of products for that category, and sometimes that leads to excessive inventory. By providing custom-made products, that does not happen.
Meeting customization needs and ensuring delivery is always on time are important factors in making customers feel at ease. Especially during the COVID-19 pandemic, this was a key selling point that gained attention.
In order to pursue this challenge further, we established a cross-functional team of sales and production professionals.The purpose is to shorten the lead time to meet customer needs and sometimes to change the business processes to make things more efficient. Not limiting ourselves to past traditions but rather finding new ways for more efficient production, sales, and inventory management is what we are seeking now.
You mentioned the benefits of your group company, from finding materials to development. These kinds of partnerships are valuable. Are you currently seeking new partnerships outside your group?
Our Vietnam factory is a joint venture with the local Vietnam sales agent, and we are actively seeking to open up similar new agencies and sales partnerships to expand our sales channels. Currently, we are working with over 40 sales agents outside Japan.
During COVID, remote communications helped improve ties with sales agents, and since last year we have been able to make business trips overseas, so we want to continuously strengthen our overseas sales channels.
Are there any specific markets that you’ve targeted to expand into?
Filter technology evolved in Western countries, in Europe and the US, so when we developed our CP filter, our goal was to sell it to Western markets, but it’s quite a long distance. As a result, for the past few years, we’ve been focusing more on the Asian market and China, which are evolving markets requiring new filtration technology in various industries, so our overseas strategy is to continue focusing on the major regions globally: Europe, the US, Asia, China, and Japan. Thanks to our efforts, overseas and domestic sales are becoming a well-balanced ratio.
Overall, our global share is still very small, so there’s a lot of room for us to grow. Working together with local sales agents, we want to carry out our mission to provide the best filtration solutions to any industries requiring improved production efficiency.
Imagine that we will come back to interview you again in five years. What ambitions or objectives would you like to have achieved by then?
Our business started in 1977, and our company was created in 1995, so the production facility has become old and updating it is important. I’m over 60 years old, so I don’t know if I’ll be able to see you in five years, but it’s important that we leave an indispensable asset to the next generation, and to do so, we plan to establish a new factory in Moriyama. I hope that in five years, we can meet in the new Moriyama factory and have another interview.
For more information, visit their website at: https://jncfilter.co.jp/en.html
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