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Aichi Sangyo: a leading industrial solution provider for metal processing industries

Interview - September 28, 2023

Combining forward-thinking solutions, strong networking capabilities, and comprehensive support, Aichi Sangyo stands out by offering a holistic approach to advancing industries


Can you please introduce us to your company?

Aichi contributes to improving Japanese manufacturing, customer value, and constructing a prosperous future by providing the world's leading technology as a solution. We also contribute our resources to energy conservation and initiatives.

This is our head office, and we also have sales branches in Kobe, Nagoya, Hiroshima, and Koka. In addition, we have a factory in Sagamihara which is an hour's drive from here and a design facility in Hitachi.

My grandfather established the company in 1927, which makes our company 86 years old. I am a third-generation President, and I took over the business from my father. The company has about 150 employees. We are focused on welding technology, metallurgical technology, and machine tool-related products. We import cutting-edge technology from around the world and develop, design, manufacture, and sell our products. We are an engineering trading company that provides technology to major automotive, shipbuilding, and nuclear manufacturers and supports Japan's manufacturing industry. We can make our designs and manufacture welding-related equipment. In addition, we do real estate management.

We can meet the demands of the whole Japanese market. One of our advantages is delivering thousands of goods to the domestic market. We have our agents and distributors in the local market, so we have a strong network in the metal field industry. Our company has a sales team, technical support, and design team. We can provide after-sales service and maintenance repairs as a technical trading company.

Before COVID, we invited many overseas special guests like GE and Rolls-Royce and university professors. We asked our existing and potential customers to show them our technologies and products.

We also invite many people to our yearly open house. We have participated in many famous exhibitions in Japan with our partners. Our head office and our factory have showrooms which we can use to show our technologies and products to our customers.

This is our factory, where we create automated systems to make products. We can design special machines to meet customers' specific demands. We have an integrated system where we can deliver and provide after-sales service.

Our primary customers are in heavy industries such as aviation and aerospace, automotive, construction, steelmakers, shipbuilders, and many others. We work with both global companies and other SMEs.

We now have 70 partners overseas, such as Lincoln, Fronius in Austria, and ARO in France, with whom we have worked for about 50 years.

In engineering, we design and develop robotic and automation systems for customers. Occasionally, we create new products for construction and metal industry companies. Before the great earthquake in Japan in 2011, our main customers were in nuclear heavy industries. We installed many automated rotating welding machines in nuclear power plants. Nowadays, we install many robotic systems in Toshiba for the ITA project. We also install many welding machines for automotive or specialized vehicle companies, shipbuilders, metal companies, and plant & bridge builders. We have received many inquiries from the sites where they polish and grind.

Most sites have aging technicians and have difficulty securing manpower, so companies are changing to robotic systems. About 14 years ago, we imported 5-axis machines from Germany. We installed machines for IHI for their turbine blades and sent them equipment with 5-Axis, such as vises, robotic systems, or software.

Eight years ago, we started our Additive Manufacturing Business and handled powder bed fusion, electron beam, metal deposition, wire additive manufacturing, and many other processes with our partners. Two years ago, we started wind power generation. We are importing special machines for EV battery manufacturers such as Toyota.


For the past 20 years, Japanese firms have faced stiff price competition from regional manufacturers. Nevertheless, in particular niche B2B fields, Japanese industries still dominate a significant market share in specific crucial segments. How do Japanese companies remain competitive despite stiff price competition?

Japanese companies have always been focused on improving and revolutionizing their technologies. The period between 1955–1973 was Japan's most rapid economic growth. It was a time when Japanese companies imported advanced technologies from overseas to learn and make improvements from them. These unique technologies they developed have been passed on to the next generations of major companies and SMEs. Right now, Japan still has the technology that can cater to the changing needs of society.

Japanese companies take regulation changes seriously and adjust to provide high-quality and reliable products. They make tremendous efforts to meet the high-quality requirements of customers and can provide high-quality control and assurance of their products. This mindset has pushed Japanese companies forward.

Japan's high-quality and reliable products have gained the trust of customers across the globe. As an island nation, Japan has established a very efficient supply chain management system with a comprehensive ecosystem in each industry. Logistics and transportation systems have been established to achieve the "just in time" policy. Other sectors also provide support so that companies can offer speed and flexibility. This overall efficiency reduces cost. In this domestic ecosystem, there is an interdependence between major companies and SMEs. This network is based on trust, allowing companies to take on more long-term development projects.


The strength of Japan is in its supply chain management and being trustworthy. This is more important today than it has ever been. With America's interest rates increasing, the value of the JPY against the USD has decreased, making Japanese exports more competitive. Do you think we are living at the start of the Japanese industry's revival?

I heard that many Japanese companies are taking their manufacturing back to Japan. I am also hearing that many SMEs are launching new factories within Japan. There are differing opinions, but most Japanese companies are looking more into domestic production. I think this is the last opportunity for the resurgence of Japanese manufacturing because Japan's engineers are aging. We have a limited time to preserve their expertise and experience through AI and robotics to pass it on to the next generation. Once we establish this system, Japanese manufacturers will have many opportunities.

Japan is famous for its traders. However, this is a concept that is unique to Japan. About 20 years ago, Japanese traders were mainly in charge of providing products and financing projects. However, companies are adding value services in engineering and fine-tuning, among many others. How do you think your company's role will evolve in the next 10 years?

Specialized trading firms play a vital role in the current period, where innovation is required. The Japanese government is now giving green and digital funding to SMEs and providing subsidies to diversify and branch out into new businesses. We act as traders and advisors to support SMEs to diversify and evolve in their industries.

Our target for the next 10 years is to provide solutions and focus on being a consultant and providing our clients with long-term visions. Often, SMEs have short-term visions, and that is to see a return on investment. However, we want to give them a perspective and a mindset to see a more extended future and survive the market by providing added-value schemes. We not only want to supply equipment, but we also want to offer lifetime maintenance and support. This approach of providing a holistic service helps us create long-term trust with our customers and expand our business.


Can you explain how you help SMEs overcome their labor shortages with your technologies?

We have a partner in Germany that I often visit. A welding job that takes 12 people in Japan only takes two workers in Germany. Germany has two to three times more robotic welding machines installed in their facility. Japan still has a lot of room to introduce robotics and automated machinery in manufacturing, especially in SMEs which are behind when it comes to digital transformation. By converting and introducing these automated systems, we can compensate for the lack of human resources. Retired engineers of major companies have extensive knowledge, and having them train the younger generation would be a very practical approach to improving Japan's overall manufacturing level. We have recruited previous employees of major companies and are now creating a training scheme for the younger generation. We are going to offer this as a service.

Japanese companies are often reluctant to make big decisions because whoever makes the decision has to take responsibility for it. To help them overcome their reluctance to make the big decision to move forward with digital technologies, we try to take them to our partner companies in Germany and have them see what an advanced factory environment can accomplish with their own eyes.


Recently, you have made investments through partnerships in three new fields. The first is additive manufacturing, where you are focusing on 3D metallurgy. The second is lithium-ion batteries through a partnership with a company in Germany. The third is renewables, where you provide solutions for wind generation. Why did you choose these three sectors, and what strategy will you employ in these business expansions?

We have an extensive overseas partnership network. We learn about cutting-edge technologies through them and other related parties. Observing the Western overseas market trend can help us see the potential path that Japan will take in the future. If we carefully follow and analyze the approach of the Japanese government and observe which fields they are focusing on and providing subsidies to, we will know which companies and manufacturers we should approach. We can act as a bridge and introduce overseas companies with high potential for growth to the Japanese market. We can assist them in entering Japan's market, which often is very hard due to language and cultural boundaries. We learned many lessons from our experiences dealing with various businesses. We are now focusing on specific fields we have strengthened, such as metallurgy.


What are your expectations in the next 12 months regarding the Japanese lithium-ion battery industry?

We try not to rely solely on the lithium-ion battery field because we have many other options, including solid-state batteries. In Japan, apart from EVs, there is also a movement to utilize existing engines by developing new types of environmentally friendly fuels. We are pursuing a balanced and comprehensive approach regarding new sources of energy.


Are you currently looking for new partnerships? If so, in what particular fields will you be looking for these partners?

We are looking for new partners in 3D printing and software. We have already established partnerships with many startups and are focused on supporting their growth. In production, Japan has advanced machinery, but we lack the expertise in digitalization and the use of AI sensors and cameras, so we are looking for partners that can provide these. We are constantly looking for new partners.


Why is it better for foreign firms to partner with you instead of directly entering the Japanese market?

To have business transactions with a major Japanese company, you need to have an account with them. We already have established accounts with many Japanese companies, so we can readily provide sales channels to overseas companies. Furthermore, after-service and maintenance are crucial to delivering and acquiring the trust of Japanese clients. Rather than flying people from overseas, they can utilize our maintenance base to reduce transport costs while providing a complete support system. Many major companies request quick response maintenance when their equipment breaks down. We can provide 24/7 maintenance. Doing this reduces the frustration and increases the satisfaction of our customers and provides business opportunities through acquiring the trust of our customers. Translating and localizing the manuals is also essential. This will help meet the demands of Japanese clients. By providing comprehensive services to overseas companies who want to enter the Japanese market, we are giving them a higher chance of success in their endeavor. We can also provide fine-tuning and customizing products according to Japanese standards and regulations. During COVID, we worked with a foreign company that had a branch in Japan, but the Japanese branch could not provide the customization. We were able to do that for them. Our fine-tuning and integration abilities allow us to help Western companies to have long-term businesses in Japan.

In the Japanese industry, we are a member of many associations and groups, including the Chamber of Commerce. We have direct connections with other companies that are also a part of these associations. I can easily approach and talk directly to them. This domestic network is our advantage as a Japanese company over other overseas firms. Our company can provide from downstream to upstream. As companies become bigger in Japan, one has to understand the Japanese nuances of what is beneath the surface and what they actually mean.


Looking into the future, are there new applications that you would like to expand into and create new partnerships?

We are focusing on the field of robotics. I believe that fully automating and introducing full robotics in the production line would stagnate production. However, if we can introduce a good balance of human labor with collaborating robots, it would be the most ideal. We are currently working on this balance. We are also very much interested in developing communication between robots and humans.

The growth of Japanese SMEs depends on whether they can produce highly additive value in manufacturing and also if they can find high-profit margin products. We want to be available to support the SMEs in achieving these two things. I am helping them realize sustainable growth.


Your company has made quite a headway in additive manufacturing, and you were focusing on metals. As a result, you worked with various metal and alloy materials. Can you give us a specific example of such a development and explain more about your expansion into additive manufacturing?

Japanese additive manufacturing is slightly delayed compared to Europe and the US because we do not have the military and aerospace market that they have. We started working with the automotive and energy sectors. They are our top two markets. We installed about 30 systems, half of which are in the automotive industry. At the time, they were working on lightweight automobiles and dealing with aluminum alloys.

The other market we are interested in is copper alloys. Copper can be challenging to handle due to electricity and temperature problems, but we are willing to work with it because it is highly reflective. One of our successes was in the area of Aichi, where Toyota is. They were looking for tested technologies that can be used for bending coils because their engineers are getting old, and it is difficult to find new employees. At the time, we had some successful results with our copper technologies, so they started working with us and also developed their own. They installed four of our systems for induction coils.


The technology for additive manufacturing has been around for some time now. In the beginning, people said that it would revolutionize industries. However, it has not yet done so. In countries like the US, we see that it is utilized to manufacture low-volume specific components on the same day. What do you think will be the role of additive manufacturing in Japan's supply chain?

The problem is often in qualifications. Global additive manufacturing qualification similar to ASTM or TM does not exist. They are probably making it right now. I heard that 70% is from ASTM (American Society for Testing and Materials) and 20 % from DIN (Deutsches Institut für Normung/German Institute for Standardization). Japan is just waiting for it.

Only Japan has middleman companies. As an island company, we are isolated and limited in our foreign language skills. Finding an engineer in Japan who can speak English is very difficult. Engineers from Germany or Finland can come alone to Japan and communicate in English. However, we have to send our engineers with translators. This is a challenge for Japan. If overseas companies want to know more about additive manufacturing in Japan, only very few people can communicate in English.

The cost of living today has not changed since when I was a child. When I went to China 20 years ago, the prices seemed cheap, but now they are the same as Japan. This was a result of our challenging situation.


If we come back for your 100th anniversary, what goals and personal ambitions would you like to have achieved by then?

I wish to give additional bonuses to our employees. As a company, we would have been working and supporting our partners for 100 years! We would like to continue doing it. Moreover, we view Japan's future as very important, so we want to provide a bright future for our children. We want to actively take part in fortifying the Japanese monozukuri and strengthening our technologies. I believe that our technological advancements can meet the challenges of our resource-poor country, and this is what we would like to focus our energies on moving forward.