From smartphones, ICT devices to automobiles and the energy sector, President Kuriyama’s gives us a better understanding of the Japanese input in the electronics field
What are the main competitive advantages of Japanese electronic manufacturing compared to its competitors (China, Korea)? Could you explain to us what the essence of Monozukuri means to you?
Japan's electronics industry dominated the sector on a global level for two decades producing such things as TV's, video cassettes and semi-conductors. This is sometimes overlooked, with focus being placed on the reduction of Japan's market share in the 1990s. Although Japan has experienced a decline in the electronics market, the country is still in a position of strength and owns 40% of the electric components market share.
China and Korea have grown in strength in the production of semi-conductors, but Japan has also grown in strength in other areas such as capacitors, exceling at manufacturing the small and customized components.
ALPS Electric was established 69 years ago. In the 1990s the industry changed with the introduction of digital electronics. To adapt to it, we changed to a B-to-B business and changed our customer base from Japanese customers to global giants that allow us to challenge ourselves. Today we continue to grow in the electronic component industry.
The Monozukuri philosophy is important and does not only mean manufacturing. It is related to everything that surrounds it: design, material control and manufacturing. The semi-conductor and electric component industry are different in their nature. The semi-conductor industry is a huge sector but the process is standardized, anyone can buy that matching system. As a matter of fact, China and Korea have become quite strong in this area. The electric component industry is the smaller market out of the two, however, Japan has fifty years of experience of manufacturing equipment for this industry. We have the knowledge to make and customize the machines which make the products and therefore are able to develop the machines alongside product elaboration, continuously making an improvement. In other words, we put the know-how into the production machines as a “Black-box”. This is an example of the Japanese way of doing business.
Many high end smart-phones use components such as tiny switches, which have been produced in Japan. It is not possible to make these in huge volume with such high quality and Japan’s advantage is in having the knowledge and experience to make the machinery in our own factories.
What project or end product are you the proudest for manufacturing? Is there something that we use in our daily life that you are proud of making?
We are proud that many of the components used in the manufacturing of smartphones are made in Japan. Although most companies can produce larger components with cheap labor, the smaller the component the more difficult it is to make. One of Japan’s advantages is in that it excels at making tiny, quality, components. The quality of components is essential, because if just one fails the whole product fails.
The automotive industry is an area where the use of components is growing. Many components produced in Japan are already being used in the automotive industry, which is an industry which demands high quality and reliability. ALPS Electric produces consumer electronics and automotive components equally, the automotive sector has grown in our business and it is an area of strength for Japan. ALPS produces for both consumer and automotive components. In the consumer area, the product life is very short, such as a year, and the cutting-edge technologies are adopted aggressively. On the other hand, automotive requires from us proven technologies and high reliability products. ALPS can transfer the new technologies and products from the consumer area to automotive, because we do both and there are very few companies like us.
How well positioned are Japanese corporations to leverage on the advancements of the 4th industrial revolution? Which are the key trends (R&D) ALPS is looking at from the point of view of the sector in the upcoming three years?
Japanese electronics companies are very flexible and able to adapt to changes in the market and customer requirement. At ALPS, we also target different markets, but our strategy is to focus and keep to the same core technology, targeting essential technologies rather than markets.
As a key player in the development of the automotive industry, could you explain to us what the car of the future will be like?
Today’s electric cars like Tesla’s are indicating the future for the car industry. Autonomous vehicles will inevitably be seen in the near future. Sensors will be the key technology in autonomous vehicles, with sensors needed for both inside and outside the car in order to indentufy the cars surroundings and actions of the driver. IoT and communications is a big opportunity for our sector.
Both domestically and abroad, your company faces tough market competition, with industrial giants such as Murata or TDK that are also battling to create the next best seller. What are the competitive advantages of ALPS?
At ALPS, we focus on core technology whilst moving and adapting to market changes. We are unique in that, and half of our business is derived from smart technology and consumer components and the other from the automotive industry. Our advantage is that we can develop a new technology device for smartphones or consumer electronics which can be integrated into the automotive industry. Quantity wise the automotive industry is not sufficient to support the production of such components. Ninety million cars are sold each year worldwide versus hundred million smart-phone components each year. The larger market sustains the development of such components, which is an advantage for the automotive industry and ALPS.
Japan has a multi-industry infrastructure and at ALPS by expanding our automotive business we work with manufacturers in Japan, the US Big Three and EU Customers.
Your company is a true international player, with around 80% of sales coming from the overseas market. America and Europe represent around 20% of your group’s sales, as Japan and Asia account for approximately 18% and 34%. For ALPS, which market has the highest growth potential? What are the main differences between the American and the Asian market? What are the main challenges you faced when internationalizing, and how did you overcome them?
We are a B-to-B component company. Our strategy is to sell our products to companies who then market the product on a global level, thereby we have the advantages of additional sales from any country experiencing growth without the difficulties/time of selling to these countries directly.
With regards to the United States, the “America First” policies of President Donald Trump, wanting to bring back manufacturing to the USA, have thrown a wave of skepticism on the world’s manufacturers. However, many international corporations see that as an advantage, for they expect an increase demand in electronic components and manufacturing equipment. For ALPS Electric, do you see this as a challenge or as an opportunity?
The US is important for the electronics industry not just because of its large market but also because it is at the forefront of technological development. We have a manufacturing company in Mexico and an engineering company in Texas, and our R&D department is in the US.
Texas is our preferred place in which to develop any new key device, with its advantage of low cost electricity. One issue we have yet to resolve is how we can get workers into Texas to work in the factory. Our strategy is accurately based on customer demand and requirements. If feedback from customers is that they do not need us to have a factory in Mexico then we will change our strategy but as we speak, customer demand is not requiring any change.
In the automotive industry, many people strive for JIT (Just In Time). Any supplier should have a factory near to the Automotive factory, for logistics and inventory. The customer is key and as such we cannot change any manufacturing process by ourselves. For example, if global brand makers have a big operation in China we will build a factory in China. We always follow our customers strategy.
From FY 2011 to FY 2016, your sales experienced sustained growth. Looking at the future, your company is estimated to reach 890 billion Yen in sales by 2020. What were the reasons behind the impressive growth from 2011-2016? What will be your strategy to sustain this growth up to 2020?
I became President of ALPS in 2012. Along with many other Japanese companies our finances were adversely effected by the disaster and finances dramatically dropped by 75%. It was necessary for many Japanese companies to restructure. We also restructured and reduced our MD cost, but we realized profits could not be made by cost reductions. When I took my position as President, I enforced a strategy of reducing and restructuring our fixed cost BP in equal relation to expanding the business.