For over 100 years, Furukawa Co., Ltd has played a crucial role in Japanese various industrial sectors. First beginning as a mining company, today it provides crucial machinery and materials to its clients. In this interview, President of Furukawa, Mr. Minoru Nakatogawa, explains the strengths of his firm, the company’s history of success and his plans for the future of Furukawa.
Over the past several decades, Japan has witnessed the rise of regional manufacturers who have successfully replicated Japanese products by taking advantage of cheaper labour costs. However, many Japanese firms maintain high global market shares in B2B markets and niche sectors, often characterized by high-mix, low-volume production. As an integrated manufacturer of machinery and materials, what are your thoughts on the competitive advantages of Japanese manufacturing?
It is a well-known fact that productivity in the Japanese manufacturing industry is declining. However, this decline is a natural consequence of the fact that Japanese companies have moved away from the mass production model. China and other Asian countries are more competitive than Japan in terms of production volume because they can produce at lower costs. Therefore, in order to maintain their competitiveness, Japanese companies have been moving out of the mass production field and focusing on manufacturing value-added products.
But what is a "value-added product?" One important consideration to answer this question revolves around the achievement of the SDGs (Sustainable Development Goals). Japan has declared that it will achieve a carbon-neutral society by 2050. To achieve this ambitious goal, the manufacturing industry must develop products that contribute to carbon neutrality. In order for manufacturing to contribute to the reduction of CO2 emissions, it is necessary to create efficient and environmentally friendly products and design processes. This added value must encompass both the economic and social values. Innovation to achieve our goals is still in its infancy, but it is important to enhance this added value in order to increase our competitiveness.
By 2035, more than one-third of Japan's population will be over 65 years old. With a birth rate of 1.37, Japan's population continues to decline. This demographic trend will lead to shrinking domestic demand and at the same time, intensify competition among companies in the labor market to hire talented new graduates. How does this population decline affect your company and how are you responding to this challenge?
A decrease in the number of young people means a decrease in the workforce in the future, and we must develop strategies based on this assumption. Japan's demographics affect two aspects of our business: the first is our factory operations. The second is our sales activities.
With regard to the former, we have been aggressively investing in factory automation. This will allow us to save manpower in our production processes and address the decline in our workforce.
Another issue that arises from the aging of our workforce is the "passing on of technology”. Before experienced employees retire and leave the company, their knowledge must be passed on to a new generation of employees. For this reason, we are putting particular emphasis on training the next generation.
In terms of sales, there was a period of steady growth in the past. However, the current domestic market is saturated and long-term growth is not expected. Therefore, we are strengthening our life cycle support function. We will expand our business through machine maintenance and services, which will lead to profits.
How do you incorporate ICT technology into your products?
For example, we have begun installing operation management device for the operation on hydraulic crawler drills in our Rock Drill Machinery segment. Data is collected and analysed from that device remotely, and its contents are used for maintenance services. Other companies, such as Komatsu, are marketing similar services for construction equipment. Currently, this operation monitoring device is being installed more and more in Europe and the United States. We expect to start seeing the benefits of these life cycle support functions from next year onward.
Hydraulic crawler drill
In 2020, FURUKAWA CO., LTD. launched the J32RX-Hi ROBOROCK®, a fully automatic drill jumbo. What are the advantages of this product?
At a mountain tunnel construction site, workers drill a hole in the mountain with a tunnel drill jumbo. The tunnel is then loaded with explosives and blasted to create the tunnel. Tunnel construction relies on the experience and intuition of skilled workers to align the tunnel drill jumbo boom to the hole and to set the drilling angle and depth, which greatly affects work efficiency. We have fully automated this drilling process by adding control system technology to the drilling and hydraulic control technologies we have accumulated over the years. This ICT technology compares data from past drilling sites with data from the current tunnel drilling site to enable the boom of the tunnel drill jumbo to move automatically to the optimum position using an electrical control system. This is our fully automated drill jumbo.
Fully Automatic Drill Jumbo "J32RX-Hi ROBOROCK®
Normally, construction company workers perform this type of work, but as the workforce ages and there is a shortage of experienced workers, fully automated drill jumbos utilizing ICT technology can be used to drill holes to reduce the workload of workers and improve construction safety, accuracy, and efficiency.
FURUKAWA CO., LTD. is developing its business in a variety of fields, including industrial machinery, rock drilling machinery, construction machinery, and materials-related businesses. What businesses and products will you prioritize in the future?
Our main focus is on the Industrial Machinery, Rock Drill Machinery, and UNIC Machinery of the Machinery business. In the Industrial Machinery segment, the domestic market is our focus, and projects such as belt conveyors are being re-evaluated for decarbonisation and disaster prevention/mitigation, and inquiries are increasing. The domestic market for the UNIC Machinery segment is stable, so the main focus of future growth will be overseas. We will further strengthen the overseas development of the Rock Drill Machinery segment. In 1914, we developed Japan's first domestically produced rock drill. Since then, we have gradually made improvements, leading to our current hydraulic breakers, hydraulic crawler drills, tunnel drill jumbos, and other products. The hydraulic crawler drill and tunnel drill jumbo are machines that drill holes for explosives for blasting at quarries and tunnel drilling sites. Much know-how has been accumulated and world-class technology has been developed. Currently, hydraulic breakers and hydraulic crawler drills are sold overseas, and the overseas sales ratio of the Rock Drill Machinery segment is approximately 60%.
Founded in 1875, FURUKAWA CO., LTD. started as a mining company. How did being a mining company affect the company's development?
It is often said that the life span of a company is 20 to 30 years. However, this theory does not apply to our company, which has been in existence for over 100 years. The company began with mine development and then shifted to copper smelting. In the process, we actively developed various types of machinery for use in the mines.
In the process of mining and smelting, impurities are mixed in with the mined copper. Making effective use of these impurities, we developed high-purity metallic arsenic, a material for gallium arsenide semiconductors used in cell phones and LEDs. Today, the high-purity metallic arsenic sold by the company accounts for 60% of the global market share.
As the copper smelting business has reached maturity, we have taken our business in a new direction, which has resulted in our current business structure. In terms of future business development, we must leverage our past achievements while taking on the challenges of new fields. That is my major challenge as president.
FURUKAWA CO., LTD. will celebrate the 150th anniversary of its founding in 2025. What kind of products and businesses will you introduce to the world by then?
We hope to show further growth in our business by 2025. The company's goal is growth and expansion. Generally speaking, it is often said that to "increase sales more," but that may be difficult given that the Japanese economy as a whole is no longer rising steadily. Therefore, we believe that we need to focus on increasing profits rather than sales. We must create and provide products that contribute to society. We are exploring various ways to reach 2025, and we want to be able to show new technologies and business models that contribute to society.
In the automotive sector, there is a shift from traditional internal combustion engines to electric vehicles (EVs). What opportunities does this present for your company?
We manufacture high-purity metallic arsenic, aluminum nitride, and other items related to semiconductor manufacturing, and we expect demand to increase as semiconductors are used in EVs. In addition, our rock drill and UNIC’s products, which were previously powered by engines, will also be adapted to EVs.
High-purity metallic arsenic and Aluminum nitride
FURUKAWA CO., LTD. provides electronic materials that are essential for semiconductor manufacturing. What is the potential of these materials in your business?
Materials for semiconductors will continue to be an important source of revenue and business in this area is expected to grow. Our high-purity metallic arsenic is used as a material for high-capacity and high-speed semiconductors, and we have the largest share of this market in the world. We will continue to strive for a stable supply of high-purity metallic arsenic. Aluminum nitride is a heat-dissipating material with high thermal conductivity and is used as a component for semiconductor manufacturing equipment, and demand for this material is increasing as electronic devices become more sophisticated. In the future, along with the expansion of 5G services, we expect that high-performance semiconductors and electronic devices will be applied in aerospace and other advanced fields. To prepare for these growing demands for semiconductors, we are investing in more efficient mass production of aluminum nitride.
FURUKAWA CO., LTD. has more than 10 overseas subsidiaries covering Europe, South and East Asia, and North and Central America. Which markets will you prioritize in the future and why?
Two important markets for the products of our Rock Drill Machinery segment and UNIC Machinery segment are North America & Europe and Southeast Asia. For Europe & North America, we provide high-quality, high-performance products.
For the Southeast Asian markets, the machinery business offers high cost performance products which match market needs. In this way, we maintain our competitiveness around the world by tailoring our business strategies and pricing to the characteristics of each region.
What goals do you hope to achieve during your tenure as president?
When I became president, I told our employees that I wanted to make our company a great place to work at. I believe that our company provides a good working environment for each and every one of our employees. To maintain a healthy business, the company's performance is of course important, but the happiness of our employees is paramount. We want each and every one of our employees to feel that they are truly happy working for our company. I would like to hear such words from our employees on the day they leave our company.