Japan’s ATEX is developing automated machines that improve the efficiency and capabilities of farms of all sizes.
There is a perception that Japanese firms have been pushed out of mass markets and that they've lost their edge in innovation. From your point of view, what are your strengths that allow you to compete effectively in the market?
The fundamentals of monozukuri are quality and customer satisfaction. What's important is to first grasp and analyze the gemba - the manufacturing field - then itself and the situation in the market.
We believe that what satisfies the customer is quality and cost. By achieving customer satisfaction, we can continue to serve the customer and they will continue to choose our product.
Japan’s aging population means that there is a departure of skilled workers due to age, and the associated loss of that expertise. How have you been navigating the decline in Japan's population and preserving the quality edge that you have that makes your customers satisfied?
In the past, the Japanese industrial trend was to focus on using less power consumption in producing items. Now with a declining population, Japan is focusing on using High – mix & low - volume production and labor saving in manufacturing. Introducing and developing automated machinery is the key here, and unless we are able to automate our manufacturing, we won't be able to survive.
Lots of small lot farms in Japan are being consolidated and as a result we're seeing new demand for larger agricultural machinery. What impact has the consolidation of agriculture in Japan had on your business? How are you adapting these changes?
Currently, Japanese agriculture is being polarized. One is the consolidation of smaller farms into bigger farms which is happening around urban areas, and the other is in the smaller farms which are in very rural and mountainous areas.
Before, our best sellers were middle-sized machines, but with the change in the agricultural situation there's now more demand for either the bigger sized or the smaller sized machinery. As a company catering to this changing market, we are developing new products that are specifically focusing on each of these needs.
With the aging and declining population in Japan, it's inevitable that we move towards smart agriculture as well, that will help with labor saving.
One of your products is the Kamigari, which is the first hybrid remote controlled mower that features smartphone connectivity. In the case of battery loss it can be operated remotely. Can you tell us more about this product, the motivation for developing it and some of its advantages compared to conventional models?
The uniqueness of the Kamigari is that it's a hybrid type and it runs on electrical power but uses an engine to actually cut the grass. Conventional models which run on oil or gas will eventually run out of fuel and require a person to actually go and fill it up, whereas with the Kamigari, it can return after work without using oil or gas when refueling is needed. And it can run for an hour by battery with fully charged.
Actually, the biggest strength of this product is that it can mow grass and brush on sloped areas that people wouldn’t otherwise be able to cut. For example, it can operate at a 45 degree steep slope.
We are able to achieve a 45 degree angle whilst mowing by adopting our original automatically engine adjustment.. A normal machine with a gas-fueled engine can work on slopes of 25_degrees or less. This is because if the engine tilts more than 25_degrees, the fuel will not go into the engine. However, Kamigari can work on a steep slope of up to 45 degrees. Because Kamigari tilts the engine automatically up to 20 degrees to the L & R depending on the slope.
Our strength is with our out-of-the-box innovation. We are able to continuously mow sloped areas of 45 degrees. And since this mower is remotely controlled, it has contributed to increased worker safety.
The remote control function can be accessed from a smartphone. Can you tell us more about how you developed that service?
We developed this smartphone app so it could work on behalf of the controller. Fully charged, the controller has around three hours of battery life, so by introducing this smartphone app we cannot mow, but we can direct the machinery to run and come back.
Another aspect of the smartphone app is that it can be used for maintenance and troubleshooting. For example, it can determine whether the belt needs to be replaced or if any other maintenance work needs to be done.
In terms of your international customers and clients, has this app and these services been localized and do you have other language options, or is it only for the Japanese market?
Currently, the smartphone app is only in Japanese for Japanese customers. We haven't exported our product yet. That's a future plan. The reason why we haven’t used the app in overseas markets yet is because each market has its own set of regulations.
What impact do you perceive or anticipate digital technologies will have on the agricultural sector?
In fact the Kamigari is currently in the development phase. Our goal is to make it autonomous by using ICT and navigation.
Can you tell us more about that development process? You’re a development oriented company in many respects. Would you say that making the Kamigari autonomous is the current focus of your research and development strategy, and if not, what would you say is your current focus?
Regarding the Kamigari autonomous development process, we can’t actually give you the details or the exact date that we aim to release it as it is confidential. Actually, standards for digital communication are rapidly changing in today's world, so we are still trying to catch up with the changes, and determine whether we will go with GPS or 5G to control our product and machinery.
You began with agricultural machinery and later diversified into these welfare machines like the Mypia for example. Can you tell us more about how your background in manufacturing agriculture machinery has informed or been a benefit to the other sector of welfare machines?
We started producing electric scooter because I entered the company in 1983- 84 and I was the one who suggested developing such a product to the president at that time. The reason why I came up with the idea was that even at that time, the aging of agricultural workers had become significant.
On Japanese farms, you usually have three generations living in the farmhouse, from the grandfather to the grandchild, and taking care of the elderly has been a big issue that has put a lot of pressure on the younger generations.
In the U.S. and European markets there already existed an electrical wheelchair and when I saw that, I was convinced that in Japan there would also soon be a growing need for electric scooter for the elderly, so we started the development of the electric scooter and in 1988 we were able to launch it onto the market.
Why do you believe you’ll be able to maintain such high market share for the Mypia product? What are the strengths of the Mypia that make it such an appealing product for such a sustained period of time?
Our own sales channels focus on agricultural workers and farmers, but we also have an OEM business where we make products on behalf of well-known companies, and these companies are targeting different markets, so by having our own sales channel and OEM, we are able to cater to a wide variety of fields or industries.
Do you ever work with international companies and provide OEM services for them as well, or is it only companies here in Japan?
Only here in Japan.
Is that something you're interested in pursuing in the future, if that opportunity presented itself?
We feel that it's difficult to export. We have actually tried in the past, but there are two hindrances. The first is the difference in voltage between regions, and the second is the difference of laws concerning speed limit.
Road usage is very different in each country. For example, in Europe the maximum speed for an electric wheelchair is 10 kilometers per hour, whereas in Japan it's 6 kilometers per hour, so we have to make changes and adapt the product to each market. We therefore need to balance out the investment required for those adaptations with the level of demand in overseas markets. In the past we have not been able to do this.
Can you tell us more about how you're going to overcome the obstacles that prevented your exports and international expansion, and more about the clients that develop your international business?
We have already exported some of our products before. One is the Kariba-O, which is a ride-on type of brush cutter and another is the agricultural and construction carrier, and with the Kamigari we hope to expand our overseas business in the near future.
What is your strategy going to be to help introduce the Kamigari to these and other markets? Are you looking for distribution partners, sales offices, or joint ventures? Are there any other countries or regions that you are targeting or are of particular interest?
We are targeting all five continents with our products, and we will be very flexible in the channels and means of exporting. Currently we have a direct contract with local agents to sell our branded products, and we also do OEM so we will continue to look for new markets and find good partners.
You established your Chinese operation in 2007. Can you tell us more about your relationship with the Chinese operation and what benefits that location brings?
We first established a factory - which we run directly - in China because our leading client went to China so we went with them. However, we no longer have any relationship with them now, so our factory is used mainly to produce our branded products and export them back to Japan so we can lower the cost of production. We are not utilizing or thinking of using the Chinese factory as an export base at this moment.
Many Japanese firms with manufacturing centers in China have experienced recent disruptions in logistics caused by covid and the Shanghai lockdown for about 3 months until June, for example. Are you looking to replicate the success of your Chinese operation in any other countries in Southeast Asia to mitigate the risk of such disruption in future?
We are not thinking of moving out of China anytime soon since we are very dependent on Chinese companies which manufacture materials and parts for us. Working with Chinese and Korean companies is an important part of our business.
Having said that, there are geopolitical issues, especially in China. We procure our parts from China, Korea and Taiwan but as you have mentioned there has been a covid lockdown and we had to temporarily close the factory.
In terms of the BCP (business continuity plan), it is necessary to maintain relationships with overseas parts providers, but at the same time look for secondary parts providers in Japan so we can continue to do business if problems happen with Chinese suppliers.
In terms of your business continuity plan, have you already established a network of secondary component parts suppliers outside of Korea and China, or is that something you're looking to do?
We are prioritizing the search for a domestic company to make them a secondary supplier. Due to the big depreciation of the Yen, there has been an approximately 30% increase in the cost of importing, so working with domestic companies would be more sustainable for us.
Let's say we come back to interview you again on the last day as president. What would you like to tell us about your goals and dreams for the company by that time, and what would you like to have achieved by then?
First and foremost, enhancing employee satisfaction is very important to achieve. We want an increasing the number of employees that are satisfied working with us and for us. It's something that I want to pursue.
At the same time, we also want to expand overseas but in my generation, achieving all five continents may be difficult, so I would like to keep it as an exciting challenge for the next generation to keep pursuing.
Also, it's important as president to determine when would be the best time for me to retire and pass the company down to the next generations. When I feel my ideas are out of date, and when the situation is right, I’ll pass it down to the next generation.