Sensors and sensing technology will be at the core of the Industry 4.0 era, an area in which Optex Group is a global leader. We speak with president, Isamu Oguni, to learn more about the company and its technology, as well as gather Mr. Oguni’s valuable insight into the industry.
Kindly give us a short introduction to your Company.
Optex Group Co., Ltd. is a holding company that consists of several operating companies such as Optex Co., Ltd., which deals with security sensors and automatic door sensors, Optex FA Co., Ltd., which deals with factory automation sensors, and CCS Inc., which deals with LED lighting for image inspection. We are developing our business globally with eighty-four bases around the world. In the security sensor business, our products are used in security systems for homes, commercial facilities, and large-scale critical facilities. The Outdoor Intrusion Detection Sensor has a 40% share of the global market due to its highly reliable technology that can accurately detect intruders even outdoors where there are many factors that can cause malfunction. We were also the first to develop the world’s first automatic door sensor that uses far-infrared rays. In the automatic door sensor business, we currently have a 50% share of the Japanese market and a 20% share of overseas markets.
In the factory automation sensor business, we are developing sensors that are indispensable in the production process of factories. We develop and sell "displacement sensors" that measure the height and thickness of semiconductors and electronic components in microns, and "image sensors" that inspect the printing of expiration dates and other information on foods such as lunch boxes and side dishes.
The LED lighting for the image inspection business is lighting used in the inspection process of factories. This inspection lighting is used to improve accuracy when inspecting something with a camera that could otherwise not be done visually. We have unique expertise in the frequency and color of light and have a 30% share of the global market.
Traditionally Japanese manufacturing involves the relentless pursuit for perfection and this was defined as monozukuri, but nowadays the modern version of monozukuri is responding to customers’ demands. For example, in a factory inspection we see a shift from 2D to 3D, to X-ray based inspections. How do you define monozukuri and what is the essence behind it?
Regarding monozukuri, what makes Japan strong and outstanding compared to the rest of the world is its QCD - Quality, Cost, & Delivery. These three qualities are much more evident in the electronic components and semiconductor manufacturing industries which make them highly competitive around the world. Unfortunately, despite the high quality of Japan’s products, we have been facing price competitions for the last twenty to thirty years. At some point, Japanese companies started manufacturing their products at a lower cost in China. We established a factory in China and brought our manufacturing process with us, but it was difficult to keep the quality of our products because the Chinese workers were not used to our idea on monozukuri and also we did not know how to convey this way of thinking to them. However, the quality of the products we are producing in China has now significantly improved compared to twenty years ago. One contributing factor to this quality improvement is the establishment of the same environment and system in the plants in China as we have here in Japan.
In Japan, we combine our best knowledge and efforts as we develop our products. We provide information regarding the purpose of the products, the target consumers, and how the products can be used. Initially, our local workers in China found our Japanese ways of manufacturing challenging due to cultural differences, especially in terms of detailed engineering work. Our company did our best to show them our way of doing things as well as increase their motivation, such as by awarding them with extra compensation as an incentive. It can be a long process, but once this way of thinking becomes rooted into the work culture, senior workers will eventually transfer their knowledge and work ethic to the younger generations. I believe our philosophy on monozukuri has permeated into the Chinese factory. We have seen many Japanese companies that have established factories in China that export goods of high quality. It is possible to apply the same set of standards of QCD whether in Japan or in China, though it may take some time. Recently, the labor cost in China has been rising, so to address this we are enhancing automation in our production line and shifting the production of some of our parts to Vietnam.
Japan is still leading in high end technologies, some examples include the most advanced silicon wafers in the semiconductor industry, sensor technology, touchless elevators, and face recognition software. Can you tell us why Japan remains a leader for such high end, niche technologies?
I believe that each company has different strengths. For example, in Shiga Prefecture, there is an old saying, “sanpo yoshi,” made known by Omi merchants. This saying, meaning "good for the seller, good for the buyer, and good for the world", means not only is the price good, but also that the product is of good quality. In our business, whenever we find problems with inconvenience or insufficiency, we have always considered these problems thoroughly. When you reflect deeply and repeatedly on these issues, you begin to understand the needs of society. Companies who have this type of thinking are extremely capable as this is not a superficial way of handling problems.
I believe the strength of Japanese companies is that many of them think deeply about things in this way and have continuity in their fields of expertise for the solving of customer problems.
You are a pioneer in infrared detection systems for automatic door sensors and then expanded in security sensor and FA (Factory Automation). You also have a machine vision lighting business now. You have obviously used synergies as you developed your various lines of business where you become a global niche market leader. Moving forward, how are you going to leverage those synergies to create new business divisions? What areas are you looking to develop your business into based on your sensor technology?
Our company started as a manufacturer for far-infrared technology and then shifted to near-infrared technology. Over time we were able to expand the applications of this technology even further, which include automatic door sensors and security sensors. We then continued to develop our technology so that it could be used in photoelectric sensors for factory automations. We soon became advanced in terms of security sensors, automatic door sensors, and industrial automation areas. Only six years after our company was established, we had built these three foundational businesses. Currently we are focusing on these three main areas and then we will expand the range of our business. Ever since our company was established we have not expected to reach a huge market share, but rather our goal has always been to be number one globally in terms of the niche area. The target of our business is around ¥30 billion.
I have mentioned above that we have a 40% global share for our Outdoor Intrusion Detection Sensor. We entered this market because there are few competitors. Unlike indoor sensors, outdoor sensors are prone to errors due to a number of factors that could cause the alarm system to malfunction. We believed that producing high quality products for outdoor sensors had good market potential. Our goal is to increase our market share. We see a large growth in factory automations, that is why we plan to put most of our focus in this area. Monozukuri will be automated in the near future and the amount of investment will be increased moving forward. This year our target is ¥ 40 billion which is 10% more than last year’s revenue. Half of this will be achieved by factory automation and machine vision lighting. Due to Covid-19 a lot of people have been working from home, which caused a shortage in computers. The computer manufacturers needed a lot of electronic components and to produce these they had to use sensors, cameras, etc.
Since 2017 your company has reformed as a holding company. What would be your strategies to expand further globally? Are you planning to engage in joint-venture or are you looking to open a new factory or sales office overseas? What locations or regions are you looking to expand into?
We reorganized as a holding company in 2017, but before that Optex Co., Ltd. was our holding company. Optex FA and CCS were subsidiary companies. With that kind of business organization the priorities are different. We changed that system and made the parent company the decision-maker for everything - they decide the direction of the company as well as the financial resources. In the future, we look forward to engaging in business alliances and M&A. In addition, we would also like to put more focus on Asia and North America, both of which are regions that we do not have as large a share compared to our presence in Europe. Lastly, as our company continues to evolve, we will continue to devote ourselves to providing more satisfaction to our clients and become number one in the niche area. Our goal is to become a big fish in a small pond.