Hikari Kikai Seisakusho is leading the industry thanks to a wide range of technologies from machine tools technology or cutting tool technology, to laser technology in order to cater their services for a wide range of industries.
We would like to begin by getting your opinion on the premise of this report. It is our view that it is a very exciting and very critical time for Japanese manufacturers. After three years of supply chain disruptions and ongoing tensions between the United States and China, we are seeing an exodus of manufacturers from the Chinese sphere of influence. At the same time, we are seeing multinationals around the world diversifying their supply chains with a focus on reliability. Here we believe is an opportunity for Japanese manufacturers. Considering their long history of advanced technology and high quality, their reputation for being highly reliable and trustworthy business partners, and now with a severely depreciated JPY, Japanese manufacturers have a perfect chance to re-establish themselves as major players on the international stage, especially in B2B niche markets. We would like to hear your view. Do you agree with this premise? Why or why not?
I agree with you that this is a great opportunity for Japanese manufacturers. Change is an opportunity. Companies need to take active actions to seize this opportunity and use it to their advantage. Talks on economic security are also becoming a driving force for pushing Japanese companies forward. In the past, conventionally the cost of production was the main feature that determined the production of products. However, now, economic security needs to be considered. Rising tensions between the US and China have created risks linked to the Taiwan Strait. Due to the combination of all these factors, companies are trying to hedge the risks. Another aspect to consider is global inflation. This is especially the case with rising labor costs in China. It has presented new opportunities to Japanese manufacturing companies. These are the advantages. However, there is also a downside to it. SMEs account 99.7% of Japanese companies, with 87% being small-sized companies. Although there may be big opportunities right now, whether these small-sized companies can seize these opportunities or not is another matter.
It is safe to say that Japan has a conservative business culture. As you mentioned, SMEs account for 99.7% of Japanese companies. These SMEs can often be a little hesitant when it comes to making big decisions. As somebody with a very international profile and international experience, how has your approach to seizing this opportunity differed from other SMEs? What actions have you taken since the Covid-19 pandemic eased up to take advantage of the current macroeconomic environment?
We are currently putting our emphasis on the communication and promotion of our products in English as this will help us to expand our supply chain. Conventionally, we were included mainly within the Asian supply chain. However, we want to expand our supply chain to Western countries to take advantage of the depreciation of the JPY. To do so, it is necessary to have unique and high-quality products.
Your company has fantastic technology and plays a very important role in manufacturing unique grinding machines to produce high precision parts for indispensable products. One of your technologies that we are particularly interested in is your ultra-fine processing laser cutting technology which has a variety of different niche applications from semiconductor manufacturing tools to display manufacturing, as well as the automotive sector for components and medical equipment. Which of these markets is the most promising for this technology and the one that you are putting the most emphasis on?
Our main focus right now is on developing our ultra-fine laser-cutting technology which has many applications as you mentioned. One of its main applications is in the growing EV field. In the past, our machinery was used for iPhone shutter manufacturing. Today, we are seeing new emerging fields such as glass panels as well as film and glass composite types of materials. We are currently developing the world’s fastest laser cutting technology that caters to these new types of materials. We are also engaged in a national research project "R&D Support Program for Growth-Oriented Technology SMEs: Go-Tech Research Project ” which started this year.
We know that sometimes you cannot give away too many details, but we would like to press a little bit, as it is very interesting. Could you tell us a little more about your role in this national project for new materials?
Go-Tech Research Project that we are involved in is focused on developing a new type of glass material. With the advent of EVs, the glass display needs to be thinner and deformed/irregular shaped. As it is used for automobiles, it also needs to be robust and resistant to environmental change. We are currently carrying out research to achieve this. The thinner the glass, the more difficult it is to process with conventional tools. As laser processing is conducted with optical energy, i.e. non-contact processinng, the physical load on the glass material is minimal, which comes down to laser processing as the suitable processing method for thin fortified glass.
This laser-cutting technology uses a ultrashort pulse laser, which allows it to work with thin materials. However, since the laser needs to absorb the light when it is cutting, it becomes harder to control due to the transparency and thinness of the glass. Oftentimes resin film is coated on the surface of the glass. The resin and the glass require different cutting conditions which makes the laser cutting control even more difficult. The key is to develop improved laser control as well as machine control technology. We have accumulated extensive know-how when it comes to machine tool production and we have engineers in-house who specialize in a ultrashort pulse laser cutting technology for glass and resin film. This has allowed us to create a synergetic effect within our company and this was one of the reasons why our company was selected for the national project.
You mentioned having synergy within the company and having engineers who specialize in laser cutting technology for both glass and resin film. One of the key challenges that Japan is currently facing is the preservation of human resources. This is especially the case with engineers getting older and retiring, as companies are having difficulties recruiting, especially if they operate in a rural area of Japan. As the president of a chusho kigyo, what has been your approach to maintaining this expertise in your workforce as well as recruiting new motivated engineers?
Labor force shortages are an issue not only in Japan but across the globe too. While I may sound philosophical, there is always a negative and a positive aspect to each situation. In terms of Japan’s demographic decline, all of the discussions have already been put on the table. The shortage of manpower will cause big problems in the logistics sector for instance, as they will not be able to take care of all the courier packages. However, there are also advantages to this situation.
With the decline of the population, the working generation is decreasing. As a result, many SMEs are struggling to continue their business. However, from a microscopic perspective, this may not actually be a bad thing, since Japan’s industrial and economic realm has not had a good metabolism within. If I may speak without worrying about being misunderstood, I believe that if companies with future potential become more dynamic and survive, and if they grow, there is a possibility that it will lead to positive outcomes for the Japanese economy.
As for our company securing our labor force, for the past 20 years, we have been focusing on diversity, inclusion, and engagement. By having these tenets as the basis of our company culture, we have been blessed with many employees from the younger generations wanting to work for us. At the same time, I think that many Japanese companies have not made sufficient efforts or innovations to enhance employee engagement in the past. I try to stress the importance of our corporate mission and value to our employees.
Keeping employee motivation high is key. Greta Thunberg is a good example of, an SDG activist from the younger generation. We want our younger generation to learn about the importance of SDGs and social contributions through our business. Understanding social values is as important as understanding economic values when it comes to keeping our employees’ motivation high. It is very simple but it is also very important.
Before, you talked about how in the past, your international business was very Asia-centric, but now you have expressed some ambitions to enter into Western markets such as Europe and the US. By and large, companies in those markets put a much greater emphasis on social and corporate responsibility (CSR), more environmental responsibility, and respecting SDGs. Could you elaborate a little more on what your strategy and vision are for developing the company as a more global brand and entering into these new markets?
Our company is small in scale which means that we do not have a big PR budget, nor can we expand and enlarge our business so rapidly. It may be a small step, but I make an active effort myself. I understand that you have interviewed many machine tool companies, so you already know about this, but the direction that machine tools are going in right now is toward full automation. Before, it was for labor-saving and increasing business efficiency. However now it is moving toward full automation without the involvement of manpower. Data utilization and IoT is another key aspect of this development. That is the direction our company is also heading in. In addition, we have been committed to pursue Japan quality.
Our current focus is the domestic market and Nikkei-affiliated companies in overseas market. We are a member of two industrial associations which helps us to understand the market trends and promote ourselves. One is Japan Cutting & Wear-resistant Tool Association (JTA), while the other is Japan Precision Machine Association. Japan Cutting & Wear-resistant Tool Association (JAPMA) has a global conference every few years where we make a presentation on our products and services as well as stance and direction.
Do you also participate in exhibitions? I know that Metalex is coming up in Thailand. Have you ever participated in these kinds of exhibitions?
We once attended Metalex in Thailand in 2018 and other exhibitions in India, China and Korea. However, Covid-19 caused us to cancel our activities.
You mentioned that most of your clients are either companies in Japan or Nikkei-affiliated companies.
Some of our key customers are excellent South Korean companies. We also do business with other Asian companies from China, Taiwan, Indonesia, the Philippines, and Thailand.
For you what would the ideal ratio be, and where would you say you are approximately at this moment?
The ideal ratio for us is 50:50. Right now, we are around that figure. Sometimes it can be 60:40 or 40:60.
Before, when you were talking about the national project for using laser technology to cut glass, it hit on one of the most important themes of this report which is the importance of collaboration for SMEs, not just in a vertical sense as it has been done traditionally, but also horizontally across different industries, sectors, and borders. As part of your international expansion, are you interested in cross-border collaborations, and in what area are you looking for these kinds of partners?
We are interested in collaborating when it comes to our overseas sales and distribution.
Would that be still focused on Asia, or also North America, or Europe?
We entered a business alliance with Siron, a Chinese company in 2015 and have been working in a good partnership since then. We also collaborate with companies in Korea, Taiwan and Vietnam. Based on these activities, we would like to enhance our presence in Asia as the distance is not so far. Distance means time. Then, we would like to look at North America and Europe.
Japan has a very high R&D standing. However, the total amount of investment done in R&D is quite low when compared to other countries. Japanese companies tend to be more of a lone wolf and in the past, they did not collaborate enough. Collaboration is key to advancing the Japanese industry. However, both private and public collaboration is lacking in Japan compared to countries such as Germany for example. To seize the opportunities that have been presented to Japanese companies, Japan needs to take active steps in overcoming the challenges that the industry experienced in the past and be flexible in meeting the global standard. I am also the vice president and director of Mie University so I am very much concerned about what steps the country should take to overcome social issues from the perspective of both industry and academia.
I have an awareness of the problem of solving the problem.
Something that we have heard about in our interviews over the course of this report is the changes in the machine tools industry, from being semi-automated and manually automated to now embracing full automation. You spoke earlier about silver linings, the use of digital tools and automating production lines has been one of the big silver linings. Could you go into a little more detail about how your product lineup is changing to embrace this trend of automated manufacturing?
We have been implementing methods that are now commonly taken by machine tools manufacturers in fully automating the process. Embedding sensors is one of those means. For example, monitoring the vibration and the heat and being able to give immediate feedback allows us to respond to the changes in the process as necessary. We also produce cutting tools. Embedding sensors in the tools is a new approach in the industry. Having sensors in the servo motors and spindles allows you to immediately monitor the situation as well as use the data for preventative maintenance. Inspections are currently performed externally (unloaded from the machine and inspected in a different machine). However, having inspection capabilities in the machine further contributes to lessening the need for humans to be involved and when combined with the use of robotics and sensors, operation efficiency and machining accuracy is increased. Using cameras to monitor the process is another approach we are taking. In the near future, generative AI will be making the program itself. We are preparing ourselves to incorporate upcoming technology into our machinery.
We have manufactured a machine that caters to the grinding of the blade that is found on the tip of the pipe cutting tools that are used by workers in construction sites for example. A client of ours was looking around Japan to find a company that could design and manufacture a fully automated machine to grind and finish the cutting blade very precisely. They could not find a company with the technology they required until they spoke to us. We were able to provide the solution to their needs.
The fully automated blade grinding & finishing machine that we have developed has been highly appreciated by our customers. Our unique technology has embedded a camera and robots that can recognize the workpiece and automatically carry out the processing accurately. However, the accuracy of the robot arm's movements is not very high due to backlash. Therefore, by controlling it with software and adding correction values, we ensure repeatability and absolute accuracy. This technology is one of our significant strengths. The know-how and expertise that we have accumulated allow us to provide a holistic combination when it comes to our equipment. We have added an in-machine inspection feature to our machine so the inspection of the end result is done without human involvement. If it does not match the criteria, it is returned to be grinded again.
When you think of robots, the image you have is of an accurate and high-tech machine. However, contrary to the image, the accuracy of the robot arm's movements is not particularly high and they need to be closely controlled for precision. We are one of the few companies that can create a fully automatic machine using robots and sensors for tasks that have traditionally been carried out with the feeling of human hands and the use of all five senses.
Imagine that we return to interview you again in five years. What goals and milestones would you like to have achieved for the company by then?
It is my goal to elevate and combine the technologies that we have. I want to combine our machine tools technology, our cutting tool technology, and our laser technology to create a synergy that will allow us to produce new machinery and provide new solutions to our customers. Adding a Japanese monozukuri taste is very important as is the “made in Japan” concept and spirit. For example, Steve Jobs appreciated the Zen mindset, which focuses on simplicity. Simplicity is very important when it comes to the functioning of machinery and we want to ensure that our machines are easy to use. I want to grow the company not in terms of expanding the business in size but rather by focusing on enriching the technologies and solutions that we have. We plan to construct a new plant soon in an industrial park where we have already acquired land. In five years’ time, we expect you to witness our employees working energetically to achieve the aforementioned goals at the new plant.