With the rise of cold forging in recent years, Asahi Forge is showcasing the advantages of hot forging technology, proven with the production of their high-quality products
In recent years, Japan has seen the rise of regional manufacturing who have replicated Japanese monozukuri processes by taking advantage of cheaper labor costs and pushing Japan out of mass industrial markets. However, Japan is still a leader when it comes to niche B2B fields. How have Japanese firms been able to maintain their leadership despite the stiff price competition?
In fact, almost 100% of our customers are Japanese affiliated companies. That is because we do not have a language barrier. Domestically, we provide services and we are able to understand people’s needs and cater to them fully. At the same time, with our overseas bases, we work together with Japanese affiliated companies and communicate in Japanese so we can fully share the same understanding. Recently however, there have been a number of non-Japanese clients, from the US as an example, and that is opening up new opportunities for us.
Why should a customer from overseas choose your company instead of a Chinese one? What is the strength of your monozukuri?
Actually, we are incomparable to Chinese companies. The only advantage the Chinese may have are costs - they could provide the product at a lower price – but in terms of providing a stable supply, high quality and reliability, companies do not have any other option than working with Japanese companies.
In the next 15 years, more than one third of the Japanese population will be over over 65, which means a reduced labor force and a shrinking domestic market. What are some of the challenges and opportunities this demographic shift is presenting for Asahi Forge?
To combat this shortage in human labor, it is important that we provide a comfortable working environment and introduce automation to replace manpower. Also, our industry has been male dominated, but by changing the working environment, we want to diversify the workforce, including women and the elderly.
To transfer knowledge of our accumulated knowhow, we are taking advantage of digital transformation. We have hired high level engineers to generate a system where production is automatically managed.
As part of your DX strategy, you plan on opening a smart factory in 2023. Can you tell us a little bit more about your planned smart factory?
Our smart factory plan for 2023 is actually lagging behind due to the current global situation. The objective is to create a factory that is energy saving as well as human labor saving, providing a safe and sound production environment with high production capability. We are also developing autonomous transportation robots in-house.
Asahi Forge has set a goal to change from a “3K” (Kitanai - dirty, Kurai - dark, Kiken - dangerous) workplace to a “3C” workplace - cool, clean and comfortable. How is this transition going so far?
The transition is an endless process, so it is hard to tell at which point we are at now, but we are introducing robotics and autonomous methods so people can monitor the production. The worker’s role is to monitor the production of the automated machinery. Furthermore, people are not transferring products by hand. It is automatically done, so it is creating a safer and more comfortable working environment.
When it comes to making parts and machine components, among the things that you need are the best materials, advanced CAD/CAM software and a using IoT and AI. Within such a controlled environment, what role does the engineer play?
The role of engineers has now shifted to the production of new products. They are now responsible for the development of the automated production process as well as the monitoring of it. Now we have engineers not only from Japan, but from Nepal too. With the COVID pandemic, they are not able to come here, but we have secured high level human resources from the Philippines, so we want to continue pursuing our R&D with our double pillars – two locations in Japan and the US - where we now have over 20 years of experience.
Now is a time of great change in the automotive sector with the switch to EVs and as a result, many components of gas vehicles will one day no longer be needed, such as the internal combustion engine (ICE) as well as traditional components related to it, such as transmission parts and components. What are some of the threats that the switch to EVs poses for your firm and how are you overcoming them?
There is nothing much we can do about the trend towards EV, but there has been contact from our clients about new products that could potentially be used for EVs. However we still feel that the customers are indecisive about what the EV outcome will be, so we are trying to find a field where we can compete and propose new ideas.
Have you identified a field?
We make various gears for ICE cars. The EV side is still indecisive about the type of gears that will be utilized, so we are proposing to them an appropriate type of gear. Our products are not used for engines or any engine related components. Our products will still remain, even though there may be a shift towards EVs.
The automotive industry is seeing a shift from heavier materials to lighter ones like aluminum and CFRP. How are you adapting to this material change in the automotive industry?
At this moment, we have not had any requests to change to the lighter materials but do get requests to change the shape of components so that they use less material.
The president of a cold forging company recently said that hot forging is not very efficient compared to cold forging because the materials used can warp easily, become uneven and require further heat treatment, which can lengthen the entire process. Many of your products are actually made using hot forging methods. What is your take on their comments, and can you give us the merits of hot forging?
It is true what they say in terms of cold forging, but the advantage of hot forging is there is more flexibility when you are making various shapes. Also, with cold forging, it is hard to treat and hard to form shapes. With heat treatment, it becomes more flexible in making complex and diverse shapes. We produced cold forged products in the past but it was not that successful. The hot forging method provides us with more advantages in terms of making the products we make.
A hot forging shop floor
You mentioned that when it comes to R&D, you have a two-pillar strategy. Could you give us a breakdown of both pillars?
The core development is done in Japan, and in the US, it is more about improvement and the modification process.
What role do collaboration and co-creation play in your business model, and are you looking for any overseas partnerships?
No, we are not seeking any overseas partners. There were talks, but we refused.
You have overseas operations in the United States and Indonesia. America is a developed nation while Indonesia is still developing, and both have different equipment, engineers and skills. How are you able to ensure the quality of your products across international operations?
We use exactly the same type of facility and machinery to produce things either in Japan, Indonesia or the US, so we provide the same high quality and assure that quality regardless of the area or region. Customers demand the same quality everywhere.
Our components are critical to the driving, stopping and turning of cars. The products on top of these basic components may differ by country, but all the key elements of automotive production are the same.
Can you share with us some of your environmental initiatives that you are employing?
This is a very difficult and sensitive issue. What we could do at the moment is use renewable energy. What more we could do to be more environmentally friendly is sure to be a question in the future.
The industry itself, our company included, is highly aware of the importance of conducting environmentally friendly production. I am the vice president of the Japan Forging Association and we are currently engaged in a study group with METI (Ministry of Economy, Trade and Industry) about what kind of approach the industry can take.
Can you tell us what are some of the themes you are trying to promote during your tenure as vice-president of the Japan Forging Association?
The objective of the Japan Forging Association is to bring together all the forging companies to discuss how to train and nurture engineers and exchange information. Since we have a connection with METI, we can present our ideas and requests to the government.
Are there any key milestones in the history of your company that you would like to share?
This company was founded in 1938. I joined the company about 30 years ago, and at the time, the main business was manual transmissions for motorcycles, but that has since shifted and now we are no longer in that sector. We focus on automatic transmission and manufacturing parts such as bearings and constant velocity joints. With these technologies, we were able to expand into the US and that was a trigger for the growth of our company.
Are you looking to balance your customer portfolio by increasing the amount of your foreign clients?
We prioritize Japanese customers. Our factory in the US was established 20 years ago and at the time, we started with two production lines for one automotive manufacturer. Now we have handled 16 lines for three companies, and another will be added soon, so it will be a total of 17.
We were able to expand quite quickly and that is thanks to the Japanese customers that we have, so we will continue to work together them, but hopefully we can diversify.
Our US factory makes products for the European and the US markets, the Indonesian factory is for Southeast Asia, and the Japanese factory is for across the globe. We also provide parts for Tesla. Some parts cannot be procured in the US, so Tesla cannot operate without Japanese companies.
Moving forward, have you identified any other countries or regions that you would like to further expand into, and what strategies would you employ?
We are pretty much focused on the expansion of The US and Indonesia and we do not actually have much leeway to focus on other countries. We did receive some contacts regarding a joint venture, but we did not find any synergistic effects on our end so we declined the proposal.
What strategies are you implementing to continue your corporate growth?
The primary focus of our midterm strategy is to fortify our US factory and production. At the same time, the Japanese facilities have been aging. It has been over 85 years for some facilities, so we are renovating and refurbishing them. Rather than focusing on expansion, we are focusing on fortifying and strengthening ourselves.
Let's say we come back to interview you again in a few years' time. What would you like to have achieved by then?
The working environment in a forging factory is quite tough and, in the past, engineers and their staff had to bear this harsh environment. My biggest objective is to change that so young people can work comfortably in the factory.