Since their foundation in 1971, Denka Consultant & Engineering has tackled technical challenges in the pneumatic conveyance of powder and granular materials. We sat down with President Keiichiro Miyagawa to learn more about how they are handling granulation for the next generation of industrial transportation.
Japan has got an excellent reputation for quality and reliability. In the last 20 to 30 years Japan has been subject to intense regional competition with Chinese, Taiwanese and Korean makers who have replicated Japanese monozukuri but at a much cheaper labor cost, providing the world with cheaper, but often inferior products. At the same time, Japan has dominated in niche business-to-business (B2B) fields. Could you explain why you think Japan has been so successful in these B2B fields, despite this regional competition?
I understand the biggest difference between Chinese and other Asian companies comes down to customer satisfaction. Chinese companies can manufacture and sell the products; however Japanese companies are more focused on meeting customer needs and working hand in hand with their customers to find where the satisfaction lies. Japanese companies work together with the client to not only provide the items or things but the solutions too. I feel we have been able to survive through this stiff competition due to the attitude of Japanese companies. There is a Japanese expression that says to “stick your knees together with your client,” basically to work closely together to achieve the best results. We are a specialist company working in plant engineering, so we value communication with our customers very highly.
Statistics show there will be less than 100 million people in Japan by 2050 with 33% over 65 years of age. Essentially will create two problems, first the shrinking domestic market, second, in terms of recruitment, it is harder to get talented staff. What opportunities and challenges are these population changes bringing to your company?
We can’t seem to hire enough engineers. I feel we don’t have enough time to educate young people, often young people must get into employment as soon as possible. It felt like when I joined the company, there was an abundance of time and willing people to train. Nowadays, not so much. To combat this problem, we are trying to develop an education program to enable young engineers to gain the knowledge and skills of their seniors. I think this pressure is only on my company. I think this is a Japan-wide problem. Training periods used to be much longer, and unfortunately these days there is a shortage of young people that must be educated in a very short period of time.
It is true that Japanese people are aging, but at the same time, their lifespan is increasing. We feel that some of our employees that are over 65 are still very energetic and willing to contribute as active company members. The continuation of hiring older, skilled engineers is still very important to us. On the other hand, we think that this situation is good opportunity for us to develop our business, because our products are very useful for customers to achieve automation and maintenance-free process that will solve the problems such as the shortage of working generation that Japan is currently facing.
The integration of digital solutions has been slow to take off in Japan and the country currently ranks 28th in the world when it comes to digital competitiveness. Could you give us your assessment of the tools that digitalization could be integrated into your business and what benefits they could bring?
Digitalization is actually a big hurdle that we are currently tackling. Automation, digital transformation, internet of things (IoT) integration, and incorporation of AI, are all things we feel we are still behind when we compare ourselves to global standards. We are actively trying to educate younger engineers to incorporate and enhance the technology here. I became the president three years ago, and at that time people would gather with folders full of thick paper. We would joke that we are a Shōwa era company, Shōwa actually means old fashioned or uncool. Luckily our work environment has changed, we are more of a paperless company now, however, we still need to work on digitalization.
Your company has three different product divisions. Which is the main focus? Which of these divisions brings in the most revenue?
Our company was originally based on the powder-based handling system. We pride ourselves as one of the top companies in the Japanese industry regarding this powder handling technology. Our focus initially was on the heavy-duty industry. However, this market has been shrinking, so we have found ourselves shifting towards cutting edge materials used in electric vehicles (EVs), 5G and eco-business. We see that we started as a powder handling company that has transitioned first into a chemical plant company and now into a fine chemical engineering company. We value all three divisions we have. We cannot run our business with only one of them. It's the combination of this chemical plant engineering technology with the powder handling system technology and the testing capabilities. By combining all three, we provide the best solution to our customers.
When you mention powder handling; granulation is the process that takes place. It is the process that changes a powder or a solid into a grain-based form. This is valued by several industries, pharmaceuticals being one. Can you tell us more about, how for example the High Flow Pneuma works and how you are catering it to different industry needs?
When we try to transport the granules by pneumatic conveyor, the most important thing is how to avoid re-powdering through pipes. We have unique technology and product named “Thrust flow system” or as I like to call it “ Baby Conveyor” to solve the problem. This conveyor can carry brittle and delicate granules at very slow speed like less than 10mps whereas a usual conveyor is at more than 25mps. I think you agree it’s a gentle flow like a “baby’s cradle”
Could you tell us more about the difference between the high-pressure and low-pressure conveyance systems? What are the advantages of the high-pressure system?
Flow type uses an air pressure blower as a source and is designed for low-pressure conveyance systems. If you use low pressure to transport powder, you must in turn use a lot of air and therefore has a very high cost. However, high air pressure uses canned air and is cheaper in terms of electricity consumption.
You’ve been a part of the Denka group since 1971. What advantages do you have as a subsidiary under the Denka Group umbrella? What kind of synergies are you able to draw from it?
Denka has 41 subsidiary companies, and we are all one big family, trying to do business together. We often share information and will help each other out. As you know, in 1971 we separated from Denka, and at that time the economic status of Denka was very bad. Top management made a decision at that time to separate the engineering section from the mother company. We attempted to get outside funding from other entities other than Denka and that is where we developed our unique technologies, such as our granulate transportation. Fast forward to today, and Denka has a lot of investments, maybe three times as much as ten years ago. We received a call to action, to help Denka with their investments. We changed our previous stance to go ahead and help our mother company again. Currently, the amount of business we do for Denka equates to 50% of our total business. If you had asked me five years ago, I would have said around 5%
How is your company reacting to these new regional pushes for the development of cars, and EV related components?
The collaboration with our parent company Denka has been expedited with the process of going forward in the chemical industry. Denka was initiated in 1915 as a calcium carbide company which is used for fertilizer. It’s evolved into a manufacturing company with a focus on cutting edge, advanced and functional materials. With Denka we are discussing together entering into new markets and acquiring new customers. We are determining the needs and how we can provide them with our technology and what specific market will they be, whether that be EVs or other beneficial markets.
To create the Gravity Blender product, you worked with an American company called Semico Flowtronix. This product blends different powders together using gravity and therefore saves energy. What is the role of co-creation in your business? Are you looking for foreign co-creation partners in the future to help you enter the carbon-neutral green technology field?
Currently, with COVID-19, we are not actively seeking overseas business. However, we have our market there, so together with Denka and other clients, we would like to go and conduct business overseas. We mustn't forget the mindset to always seek new challenges, new industries, and new areas. We are interested in collaborating with new partners. Our business works by providing the essential technology and equipment required to make that plant. The clients are the ones that have the design and the process in mind. High performance and technology are required, and we are the ones providing those in a collaboration.
Despite COVID-19, your company has done over 103 projects worldwide and you operate internationally through your branch in Singapore. As we move out of lockdown, which countries do you see as priorities to grow your international business further?
We don’t exactly have any specific target countries, however working with Denka, they are focused on Southeast Asia. Especially Singapore, Thailand and Malaysia. We are not confined to any specific area and are open to any recommendations or proposals from our customers. If they want us to go to Europe, we are happy to do that. We already have records of working in these areas. That gives us an advantage. A lot of engineers are scared to go abroad because they feel their English, or Chinese skills aren’t good enough. I always like to remind them not to worry. Remember it’s only communication, and language is just one form of that. There are many ways to communicate with each other. I think after only a year or two, the engineers can begin to speak other languages very well.
Imagine that we come back to do this interview again on the last day of your presidency. What would you like to tell us? What are your goals for the future?
As I said, this company was a Shōwa era company, old fashioned and a little behind the times. We are looking to transform out of tradition. In 2020 the company formulated a mid-term strategy - That was for three years, however by year two we revised it and it is now known as TEAM 50 +. Its purpose is to create and establish management and business footing that can provide profitable schemes and earning potential in a stable manner. TEAM-50+is targeting 2024 as a completion date. As a president, it is my duty to fulfill this mid-term plan and make our company JPY 5 billion in stable annual sales. The only way to get out of the old ways is to diversify and challenge ourselves. If you were to interview me again, my success as a president will be based on the success of this TEAM-50+ project.