Since their foundation, Furukawa Electric Power Systems (FEPS) has been ensuring the safe and stable supply of electricity to national power grids. In this interview, Representative Director Kazuya Ono discusses FEPS' role in providing society with electricity, highlighting his firm's strengths and goals for future growth.
Since World War II ended, Japan has built an excellent international reputation for the quality and reliability of its manufacturing capabilities, also known as monozukuri. As a company specializing in designing, developing, and manufacturing electricity accessories for power distribution and transmission, critical energy infrastructure that requires safety and reliability, what are your monozukuri principles?
I want to first mention the general strengths of Japanese monozukuri, which are relevant to our company’s strong points. The power of the gemba or the field is a crucial foundation of Japanese monozukuri, where blue-collared workers are as active as white-collared workers in willingly pursuing kaizen activities and making necessary improvements. They are more than the operators; they are the driving force in production and quality control. In addition, Japanese manufacturing is based upon intently listening to customers’ requests in product development. The emphasis on quality is reflected not only in the hardware such as the machinery and facilities but also in the software used in designing and workforce. The high quality is attributed to the raw ingredients.
Our company was established in 2012 by the consolidation of several companies, Furukawa Electric and three other companies. Asahi Denki makes power transmission equipment, Inoue Seisakusho does underground power transmission equipment and metal processing, and Furukawa Power Components has the distribution technologies. With the synergy and combination of the experiences and technologies acquired by each company, we were able to have seven basic techniques that include casting, cutting, coating, plastic forming, bend, compression and welding. We have established a high-processing capability with these methods that enable us to produce high-quality products that cater to any needs and requests of our customers and increase our share in electric power transmission and distribution systems. Moreover, we are diversifying our business by working with railway companies, introducing industrial devices such as the “Drykeeper(High-performance desiccant sheet)” and entering the semiconductor field.
In the United States, state-owned electric and gas enterprises are switching to private ownership; this change is fostering more competition as users get cheaper prices for their energy. However, poor service, like the state blackouts in California in 2001, is often the result of the lack of uniformity in standards and types of infrastructure. What opportunities does this deregulation play for your company?
The liberalization of energy refers to the new types of generators are entering the market. With renewable energy required for carbon neutrality, we believe that there is even more opportunity for us since we are a strong supplier in the power grid market that offers wire and cable accessories for transmission and distribution lines. The more renewable energy generators that emerge, the more business opportunities we will have.
Japan is an island nation that lacks natural resources, and it is said that only 6% of energy can be created domestically. With the nation taking the lead in the transition to carbon neutrality with non-fossil fuel-based energy sources, do you think Japanese companies have an advantage over regional competitors like South Korea, China, and Taiwan? What is your take on the difference in technology between Japanese makers and those regional competitors?
Japan does not have an advantage in generators as the majority of the solar and wind generators are not made in Japan but from overseas, particularly in Europe. We have connected the generators to the power grid provided by major Japanese electricity providers like TEPCO. It is the technology required to convert and connect overseas power generators to the Japanese power grid. As an island nation, solar panels and offshore wind farms are not enough to cater to all the needs domestically. It comes down to making power generators in Japan.
Your company's products are broken into three main categories, which are components for transmission and transforming, components for distribution, and advanced products. Among these three divisions, which is your main focus? And where do you see the most future growth potential?
Electricity-related equipment constitutes 60% of our sales, and our main customers are power generators, specifically on the transmission and distribution of electricity. 20% is from the wiring and related equipment we provide for buildings, and the 20% is from overhead distribution and maintenance for railways.
Because Japan has set up a double power grid, we are protected from major blackouts like the one that occurred in the US. The electric-related market is in fact saturated. There is a demand for replacement and maintenance, but it is a not growing market. On the other hand, connecting renewable energy generators to the main power grid is a great prospect for us. In the long term, we need to expand our product line-up and the field we work in by continuing to introduce new products and searching for new applications for our existing products. Besides transmission, distribution, railways, and construction, we are interested in data centers because these require plug-in connectors. Considering the frequent occurrence of earthquakes and natural disasters in Japan, we want our emergency generators to be easily connected by anyone. We will focus on industrial products like the Drykeeper, and provide parts to the niche field. In 2030, our goal is to increase our sales by 1.5 times our current sales volume.
When we interviewed another company, they spoke of how 5% of all energy in Japan is lost during the final delivery phase. How are you helping other clients ensure that their minimize energy loss or energy usage?
Engineer speaking: Our high current plug-in connector is not for the purpose of reducing the electricity lost, but it indirectly minimizes energy usage. In general, it is harder to connect direct current data centers than alternating current data centers, but our connectors make that easier. We are concentrating on direct current data centers.
High current plug-in connector
Despite the Suga administration announcing that there would be a digital agency to accelerate digital adoption, Japan is still relatively far behind, ranking at 27th in the world. In October 2021, you have partnered with Ampacimon, the world’s largest smart grid energy company. Can you tell us what this partnership with Ampacimon helps for your business?
Since our partnership with Ampacimon has just begun, we have yet to get results and develop our vision for that collaboration. We would like to learn from their substantial experience with smart grids and introduce that to the Japanese market in order to find the needs in the market. Our testing facility for electricity transmission is the only one in Japan and enables us to gather valuable data. Through those data and cooperating with other companies, we are hoping to diversify our business from only selling products to providing solutions. Having the only test center in Japan is very advantageous. It is called the Mogami test center with 40 years of history and over 130 meters of powered transmission line set up in a windy location to determine the vibration and the effect of strong winds.
Mogami test center
What other technologies are you looking to develop with this facility, and what is your R&D strategy? Are there any new products that you would like to introduce and showcase to our international readers?
We are devoting our R&D resources to the development of new types of spacers that are effective and can withstand various natural phenomena, such as wind and snow. With the help of the data we gather from the many different tests we perform at our facility, we can develop new types of products, especially for the overhead power transmission. TEPCO has introduced us to an American electric company named AEP that wanted to build a simple overhead power grid because they were experiencing galloping issues and their dampers were not enough to solve their problem. We communicated and worked with them for three years in creating a custom-made spacer based on our existing technology, which we successfully launched last year. That joint development proves that our spacers and technology can cater to global demands, so expanding our export business is one of the things we want to attain.
We are not thinking about collaborating with any overseas companies at this stage since we have the adequate capability in-house domestically and within Furukawa Electric group. We are aiming to provide components for a niche market instead of a mass-market, and exporting comparatively small items from Japan is easy. Unless there is a great demand for our products in a specific region, we are not planning on establishing a local factory. We are looking for customers like AEP, where we can listen to our customers’ demands and requests to integrate into our design and make custom-made products, and we want to build a relationship with more electric companies.
Which geographic region do you believe has the most potential for your company?
We are principally focused on enlarging our market in Japan, specifically with regard to disaster prevention and cable connection. However, we are trying to expand to the US for our spacers because other than AEP, there are several electricity providers there. AEP told us that they would introduce our products to other electric companies that could help us to grow our market in America. Also, we want to find areas where galloping power lines are a concern and offer our spacers as a solution. Our connectors and “Drykeeper” are already being exported to Asian markets like China and Taiwan, as well as our “TM Sheet” to all the semiconductor manufacturing companies.
Imagine we come back in five years for your 15th anniversary and have this interview all over again. What would you like to tell us? What are your dreams and goals for the company that you would like to have achieved by then?
I want to diversify our company’s business lineup. I plan to designate 40% for electricity generators from 60% to increase the share of catering to diverse fields and industries. Another area that we would like to explore is EV-related peripherals like batteries. In order to bring about a safe and reliable society, Furukawa Electric Group developed “vision 2030,” in which we aim to create solutions for the new generation of global infrastructure combining information, energy and mobility. . Our goal is to continue developing our technologies to cater to our customers and contribute to society.