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Driving Japanese manufacturing leadership in the automotive sector

Interview - July 6, 2023

An exclusive interview with Kanto Manufacturing Corporation, highlighting their strategies for success in the competitive automotive manufacturing industry.

AKIRA WATANABE, PRESIDENT OF KANTO MANUFACTURING CORPORATION
AKIRA WATANABE | PRESIDENT OF KANTO MANUFACTURING CORPORATION

Over the past 25-30 years the Japanese economy hasn’t been that strong, and at the same time, we’ve seen the rise of regional manufacturing competitors from countries like Korea, China, and Taiwan, who have replicated Japanese manufacturing processes and taken advantage of cheaper labor costs, thus pushing Japan out of mass industrial markets. Yet we still see many Japanese firms, especially SMEs, maintain their leadership in niche B2B. In your opinion, how have Japanese firms maintained this leadership despite the stiff regional competition?  

The Japanese economy has not been in a good position recently and over the past several decades the GDP has not grown. Everything has more or less stagnated on the same level, and that is why several Japanese companies have thought about going abroad to localize production. It is also why our company specifically has placed importance on internationalization and we have made an effort to have our homepage in English. We also recently released our brochure in English just to capture some foreign customers and allow affiliates and stakeholders to better understand our company activities.

You can’t compare Japanese companies to other foreign affiliates, rather we would like to talk about the situation domestically in the Japanese market. When you talk about injection molding and injection molded products such as mold manufacturing it is not a particularly growing market domestically, so for that sake, many companies have pushed beyond the boundaries of sheer manufacturing. If you just introduce injection molding products themselves you wouldn’t profit a lot. It is not an approach that promotes healthy business because of many aspects including the poor Japanese economy.

As a company, we decided to rethink and revise our company’s philosophy.  We are no longer just an integrated manufacturer of molds and injection molding products, rather we are everything that is related to that business. From a wider perspective, we are fulfilling the role of a consulting firm, basically following the whole process with our customers from the prototyping all the way to the final product. Currently, we are trying to position ourselves as a one-stop company; one that is reliable in the production of injection molding products.

This approach is not only fundamental but at this stage in time it is necessary for the domestic market. Without the addition of value-added services for customers, we would simply lose the market and not be able to sustain a healthy business in the long run.

Currently, we are trying to accumulate all possible means and methods for process automation and manufacturing techniques related to injection molds and molded products. We are sourcing this information from many places including the internet. The internet itself is a vast sea of knowledge. We are taking the methods of top-notch companies as a reference in terms of injection molding and trying to catch up, then the next step is to put this information on our homepage and spread this information around. This information sharing has brought us a lot of customers, and when they come to our homepage they can see that we are a reliable company that can do almost anything related to injection molding.

We have to stand out from all of the conventional mold and injection mold manufacturing companies out there to create added-value prices. Essentially we are looking to walk the extra mile and be capable of introducing something else beyond just a product. It isn’t enough to just provide a product and then wash your hands with the customer because customers like to sit at the negotiation table. This traction we have is the result of utilizing digital marketing alongside companies related to the automotive industry in the domestic market.

We have foreign companies coming our way too such as a jewelry company. It might sound strange to say, but we want customers to have trouble or not understand the design point of view. Mold manufacturing is a long path and we want to be working with these companies, holding their hand through the process. Through this, we can create a unique business platform for the customers, and this concept itself has brought a lot of attention to our company. Currently, I would say the company is in a good position after these awards and the attention we have received.

 

You alluded to automotive companies there, which as you and I both know is an industry that is seeing a once-in-a-lifetime shift with the switch to EVs. Former prime minister Suga has stated that by 2035 all cars sold in Japan must be EVs or hybrids, and because of this switch we are seeing a unique change in materials as well. To offset the weight of heavy lithium-ion batteries there is an industry-wide need for lightweight materials such as carbon-fiber-reinforced-polymers (CFRP) as well as other resin-based composites for manufacturing cars. How has this switch in materials impacted your business and how is Kanto Manufacturing adapting to this change?

Of course, we see what is happening in the industry and we are keenly observing those changes because we are so closely related to the automotive industry. We have to find a compromise to fit our expectations. Our products, to be frank, aren’t too affected by the automation and electrification of the cars, those products being related to seats and other plastic products inside and outside of the car seats and the automobile itself.

One product we do produce is a mold of the gas tank for cars, and obviously, with the way the industry is heading right now, we are looking to eliminate this product at some point in the future. It is a balancing act because we need to be on top of what products are needed and what products are not. Batteries are one area we see increasing needs from, and in that sector in particular you will find several plastic products.

Another important aspect to mention is the awareness of bioplastics. Various needed materials are being used that are derived from biomass and are much more environmentally friendly than some conventional plastics and resins. Right now we can’t say too much because things aren’t set in stone, but in the future, we believe that Kanto Manufacturing will be working with a raw material procurement company on tending to the needs of automotive companies. Researching, procuring, and supplying environmentally friendly materials for the next generation of cars.

We’ve taken a new approach with plastic being used in sake distilleries, with the plastic not being plastic but rather derived from rice grains. The industry as a whole is looking into different kinds of biomass-derived plastics such as corn or rice, and this itself is a movement inside plastic manufacturing.

This approach is very new to us and honestly, we haven’t finalized our methodology, with the company still at the prototyping stage. When you go to our production lines you might smell rice crackers coming from alternative biomass-derived plastics. We would like to take these ideas further and introduce them to our customers.

 

You’ve got close relationships with automotive companies, but you’ve also mentioned your relationship with jewelry makers. Is this area one of interest for Kanto Manufacturing, and are you looking to further diversify into other industries?

Diversification is a natural component of growth and that is especially true for our business. We don’t know exactly where we are going to be standing 5-10 years from now, so for that reason, it is a bit of an unbalanced situation for any supply-related manufacturing company like ourselves. The diversification into jewelry is a way out of this shaky situation and in our opinion the solution to maintaining our business for the long term.

At this point, the company isn’t just doing injection molding, an example of diversification is in semiconductors which have been getting a lot of traction in Kyushu with the new plant being established there. We already have a business in that segment producing plastic filters for water purification. That process of water purification is vital in semiconductor manufacturing and we are proud to produce these products for our customers in this segment.

Another industry that we haven’t solidified our presence in just yet is cooling ducts used during the semiconductor manufacturing process. Additionally, we would like to see ourselves in the medical industry because there are a lot of plastic products being utilized in this sector.

 

A lot of companies we interview talk about partnerships as a way of entering fields that they are not particularly familiar with. Is finding partnerships in the medical field as an example, an area of interest for your company whether that be domestically or internationally?

Affiliate companies or partners would help penetrate different markets, but of course, this process is a long one. We would like to see more companies looking to help us in this regard, even in the domestic market. Even domestically we see how much trouble affiliated companies are having with injection molded products from a design point of view. While we can help them solve their problems domestically, it is safe to assume that other companies abroad are having the same issues. We would like to use the power of the internet to spread our name, proposing solutions to companies that need our help. Acting as an affiliated solution-based company.

Penetrating markets overseas is not an easy task, and the path to full penetration is a long one. If we cannot do something by ourselves then we will look to some of our affiliates for guidance and help, creating a bond between companies.



Internationally Kanto Manufacturing has a presence in Indonesia, a developing country where the level of engineering skills and equipment vastly differs from that here in Japan, which can affect the outcome of the products produced. How are you able to ensure high-quality Japanese standards in your Indonesian operations?

We do have a high market share in Indonesia with our blow mold products for automobiles, which exceeds 90%. This is because we keep the same quality standards that we have here in Japan. We established our presence in Indonesia 20 years ago and during that period, we have constantly allowed Indonesian engineers to come to Japan and gain the knowledge needed to maintain high standards and learn valuable injection molding techniques. That process starts here in Japan and goes back to Indonesia. Currently, we have 70 employees in Indonesia, 15 of whom are actually in Japan right now, so that figure itself proves how much freedom it is for employees to travel back and forth. 50% of all employees from our Indonesian operation are Japanese literate, meaning they can speak, read, and write Japanese. This is key to eliminating the communication gap between local recruits and our Japanese headquarters. To sum all things up and answer your question, there are no gaps in quality between Indonesia and Japan, and thanks to this Indonesia has become a cornerstone and vital strength of Kanto Manufacturing.

 

One common defect with molds is burrs, and when they do occur they can be very costly to remove. How do you overcome this burr challenge within your production lines?

You are right that burrs are a frequent issue in mold manufacturing, and designing companies are also facing this kind of issue. The way to avoid them is to have a good combination of high-precision quality and highly skilled craftsmen. In some ways, machines cannot remove all of the responsibilities of humans in the process of manufacturing. Without the correct adjustments and setting these machines can pump out error-filled products, so the keen eyes of master craftsmen are crucial. All these elements need to be properly balanced to successfully put out high-quality products that are defect free.

 

You’ve talked today about how Kanto Manufacturing has been present in Indonesia since 2003, but we also know that you just opened another Indonesian base in 2022. Moving forward, are there any other countries or regions that you have identified for further expansion into, and what strategies will you employ to do so?

We are not thinking about full-scale production beyond our Indonesian factories because it’s just too hard for us at this point. However, we do have customers coming up from North America and Europe, so for that sake, we would like to provide services for these customers. With the marketing we have done on the Internet, we would like our excellent name to spread even further around the globe. I would say that although we don’t want to expand our production facilities further, we would rather like to expand our client portfolio instead.

 

Imagine that we come back in 5 years and have this interview all over again. What are your goals and dreams for Kanto Manufacturing for those 5 years?

Fiscally, we would like to reach the level of JPY 10 billion, with the eventual goal of launching an initial public offering (IPO), which would mean that we would be listed on the stock exchange. Reaching this goal may be difficult, but at least we have a clear target to aim for.

In 2021 we opened a new plant in Fukuoka which is 3000 square meters in size, and that came with certain risks because at the time we didn’t have any orders coming from the area but we felt that in the future a lot of manufacturing might accumulate in Fukuoka. Now we have been successful and there are a lot of orders coming from the area. We have full-capacity production in that plant. As this gamble paid off we feel that we can take similar risks in the years to come. All of our activities are designed with the customer in mind, so on their behalf we would like to continue to take these risks so that we can better serve their needs and further gain their trust.

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