When it comes to high technology and innovation, perhaps the sewing industry would not be the first that springs to mind. Matsuya R&D, however, has pioneered automation and AI in the industry, with its high-tech machinery used to develop textile products such as airbags and medical devices, where safety is of the utmost importance. In this interview, Matsuya president and CEO, Hidetaka Goto, explains how the company is blazing a trail with cutting-edge automated sewing machines and robotics with built-in AI and efficient production at its core.
Can you please briefly introduce your company to our audience?
We are Matsuya R&D, located in Fukui prefecture. We have around 1,500 employees globally including our overseas factories. We are proud to be the only company promoting a number of production lines in the sewing industry by developing fully automated sewing machines with AI technologies. Unlike other automated sewing machine makers like Juki, Brothers and Shima Seiki, we are a fully integrated manufacturer. Not only do we have sewing machines, but we also do the welding, quality chips, cutting, and automatic transfer of materials. Our target is to return the sewing industry to Japan.
In years gone by, the sewing industry transferred to China, Vietnam, Indonesia, India, and Bangladesh. But even before this, electronic companies like Toshiba and Sony had already transferred production overseas so our goal today is to return these industries to Japan by using the rise of full automation and then later take it to other developed countries like Europe or the USA. Despite Covid-19, we were listed on the Tokyo Stock Exchange (TSE) two years ago, and the only company listed in TSE because all the other companies canceled due to the pandemic.
You might want to know our history and how we developed our business? Our core DNA is the automatic sewing machine. Using all our sewing technologies, we produce sewn products such as blood pressure manometer cuffs, car seat covers, airbags, and seat belts. At first, we were just selling our machines until our customers realized that Matsuya could do everything for them from stock control all the way to shipment. They then asked us to produce their products. Once something stops with automatic lines which can go as long as twenty meters, everything stops. Quick maintenance is essential if any of the machines break down. If customers do not have their own engineers, they often must wait until an engineer comes to repair, but since we provided the machines, we can fix those problems immediately. This is the reason why customers like Omron and Toyota Group work with us. The advantage of our machine products is that the cost of fixing them is very limited. We now produce foreign designed machines here in Japan. Because we are in the automotive and medical industry, we deal with saving human lives and know that reliability in necessary. Quality and performance are essential. This is why the Japanese monozukuri is being used in the car and medical industry. A simple mistake can cost a human life, so we produce most of the machines here and our overseas factories produce just some products. We have one factory in Myanmar operating in spite of the coup d'état.
Our main business lines started in the safety area with front panel car seats, aerospace, also drone airbags which will be used soon to deliver packages, maybe this year. But the parachute is only one safety device, and it is not enough. The parachute can reduce the falling speed, but it is not enough to protect the product and the people. We might be the only company that has this technology, but drones are not yet being used in Japan. Hopefully soon. Another is flying cars which is a possibility within the next three years. Toyota is developing the SkyDrive. Our seat belt can be potentially used but it still would not be enough. Thus, several drone producers are contacting us and requesting us to produce and mount airbags on their drones.
Our next target is the medical field. We used to only have the blood pressure manometer cuffs, but now we have started developing other products. One is a machine that sews tissue onto the stent of artificial heart valves. It is a very technical product; it takes a lot of time to make. We are contacting Japanese and American companies in these fields as smart wear which takes vitals is now becoming popular. Manual blood pressure manometers and thermometers are good but limited so wearable sensors were developed to monitor vital signs for 24 hours. But the perfect product does not exist yet due to issues such as pricing and issues with machine washing the products. Hokuriku is very famous for its thriving textile industry, we are now using our original technologies and working with some domestic weaving companies to develop special wear sensors. During Covid-19, our rehabilitation robot was found to be very useful in ICUs. Covid-19 patients who cannot move need special massages every day to help prevent their bodies from getting weak. Because it is dangerous for people to go to the ICU, the robots can be sent in.
We are very proud to have sold something to most of the airbag makers. We have sold many different automated sewing machines to most of the world’s leading airbag companies and solved their various needs for reliable production. In baseball, it takes three strikes before you are out. But with airbags, one strike and you are out. Our automatic sewing machine for the curtain era (see picture below) is probably the first sewing machine in the world with two heads. The sewing head moves instead of the workpiece. This is technically very difficult, even with sewing machines that use double thread, there is an upper thread and a bobbin thread, and they must be synchronized. If both two heads move this way and the under thread moves another way, it can affect the fabric. Protecting the fabric from curving and keeping it flat is very difficult. We sold twelve of these machines already and we will continue to sell them. We are using the head parts of other sewing machine companies, but all of our machines are completely modified by us.
We are now developing driver airbags. The driver is in the handles, and we put every sewing part in automatically with cameras and a robot arm. This is the first machine of its kind because it can do everything in 24 hours without any person and with just a push of a button.
The next machine is the one we sold for military aerospace in West Virginia USA. It is for de-icing aeroplane wings. With high-altitude planes, the wings’ movements can be restricted when it is iced (frozen) which is dangerous. De-icing rubber bags which are about seven meters long on both sides get inflated like a balloon, which then pushes the ice right off of the wing. This is the biggest sewing machine because the sewing line length is more than seven meters. We sewed it and it worked.
This is a car seat sewing machine, several companies have a similar machine, but we are the first company that developed the turning head sewing machine to sew like manual sewing. We sold sewing machines for car seat decorations to a famous American luxury boat maker. We have everything from packing, sewing, inspecting, and transporting. We have cutting machines, sewing machines, folding machine products, and camera inspections to reduce workers. Our target is to have fully automatic smart factories. It is an absolutely huge investment for customers at the start so they can progressively work on it, and if they want, we can do everything for them.
Our company has a unique business model. We were first just selling our sewing and cutting machines, but customers later realized that Matsuya could produce their products instead of producing them in-house. They will install machines purchased from Matsuya at our factories, so all the equipment in our factory is the clients’ machinery. We only need to provide the workplace and the workers. In our Vietnam factories, most of the machines are our customers’ assets. We also sell them the finished sewn products from the machines they buy from us. For customers, the first investment is relatively huge against manual production but nowadays, the salary increase is huge in developing countries with an up to 8-10% increase annually. There is no concern about these salaries when they work with us. After the amortization of the investment, most customers can amortize within two to three years easily. It is a win-win for us and our customers.
The blood pressure manometers are selling very quickly. Omron projects that this year, our production output for blood pressure nanometer cuffs will reach about 20 million units. Now, we are very busy increasing our production capacity in Vietnam. While most businesses are impacted negatively by the pandemic, our company has seen an increase because our products are in healthcare and safety systems that are necessary for patient care. The market for blood pressure monitors is growing due to a growing hypertensive population.
Our other market in the automotive industry has been stagnant recently, but because of electric cars, that has changed. Even electric cars need car seats, airbags, and safe seat belts. Nothing much has changed for our business in this area. The demand for airbags is increasing. There are a lot of airbags now including the driver airbag, side airbag and passenger airbag. Car seat demand is also growing. We are seeing continual growth in these two areas.
Fortunately, the workers’ salary in Vietnam is very stable even though the cost of living increased two points within the past 16 years. In comparison to Beijing and Thailand, Vietnam is still lower among other Asian countries.
Now we are focusing on medical health care safety systems. We have the robot that we just started this year which will be approved by the Japanese government soon. This machine was originally developed in Poland, but we have the robot technology that allows us to produce the machine in Japan.
Our rehabilitation robot has a lot of advantages. It includes games and options to provide every kind of rehabilitation needed for the patient. It is relatively smooth and has a good price too. There are other similar rehabilitation machines that are specifically trained based on the direct signal within the muscle. This is more of a rapid solution for people who just had a stroke. Although we have no experience with medical products, maintenance is very important with robot technologies and hospitals cannot do it. This is the reason they contact us.
In the Hokuriku area, there is a joint development on making very strong special wearable device clothes that can withstand washing. Two years ago, we started making personal protective equipment (PPEs) with gowns and nurse's caps with our machines.
This is the system that we are developing together with Omron. The target is changing human workers with this robot and developing a fully automatic smart factory in Japan. Now, we are discussing this goal with major Japanese car seat makers to return this industry to Japan. Smart factories for car seats are very difficult because most of the seat parts are 3D.
Our drone airbag is used for delivery drones not only to protect but also to act as a flotation device in water. Acting as a flotation device is an advantage for drone airbags because drone parachutes cannot protect parcels from sinking in water. We are also developing protection for flying cars. Two years ago, we founded our Innovation Centers in Vietnam factories and employed top-notch students with expertise in software and hardware systems. We have now around seventeen young employees who are developing the robot with us. In Japan, the number of system integrators is limited so we are now educating system integrators in Vietnam and dispatching them worldwide. This is our new business. We have sustainable growth because we have the know-how and our factories in Vietnam. Now, the medical safety market is growing, and the Japanese government is also encouraging makers to return production to Japan by giving ample financial support.
Japan's kaizen philosophy and monozukuri manufacturing have become world-famous, this is obvious in the textile industry. We have Marusan with their Miracle cotton or in retail Uniqlo with their heat-tech products. What are the advantages of Japanese monozukuri that allows companies to develop such unique technologies sought after worldwide?
The Japanese mindset is about creating aesthetically pleasing products. It is important for every stitch done by the sewing machine to be precise and flawless, and for each person to take their work seriously to avoid causing a nuisance to the next person taking over. Since Japanese companies are very particular in keeping everything clean, beautiful, safe, and reliable, they are able to take their manufacturing skills to the next level. We are focused on the medical and safety fields. For instance, airbags can pose a threat to people's lives if we fall short in assuring the safety and quality of the product. It is our sole responsibility to be thorough and exact in our production. The automation process must be free from any errors for high-quality production; yet can be operated by anyone. That is the basic monozukuri philosophy of Matsuya R&D, which I believe to be practiced throughout Japan.
The textile industry is famous for being very labor-intensive. The sewing machine is a technology that has not really changed since its invention; we still see foot-operated machines being used in Vietnam, Bangladesh, and India. You are providing automated solutions that are both labor and cost-saving solutions in order to produce locally in developed countries. Do you forecast a return of textiles to developed countries throughout the world?
The reason manufacturing has shifted to emerging countries is due to production costs. The garment industry went to China and Thailand, then moved to Vietnam and Bangladesh. Due to the increase in labor costs, it is inevitable to replace human labor with automation, which is becoming a predominant trend. Germany, the US, and China are also heading towards an aging society.
There is an increasing demand not only for safety-related automotive components products like airbags and seatbelts, but also furniture, food, bed, and apparel. These industries are driven to take back the production to Japan and their own countries. It can be realized with automation which makes up for the shortage of manpower and removes the need for experienced workers or engineers.
Another major field that we are turning our attention to is the medical or healthcare industry focusing on preventive medicine. Considering the aging population, the market for the treatment of organs in the circulatory system is expected to be ¥ 120 trillion. Without a doubt, there will be an increase in demand for blood pressure monitors from 15 million to be 30 million soon. Therefore, we are concentrating on creating machinery for producing products/implants related to circulation, such as heart valves. Because of the higher risk of brain stroke among older people, rehabilitation is required. Our efforts are put into developing a robot that can help in the rehabilitation process and assist patients regain their ability to walk. We are planning to develop business partnerships with high-class resort-type rehabilitation facilities in Tokyo, Kanagawa, and Nagoya, where elderly people can come and stay for a month. Their rehabilitation program will involve walking by the poolside, enjoying French food, and spending time around the luxurious facility.
For this new project, we will be working in collaboration with the existing resort hotels by providing medical centers within the compound for our clients to fully experience a resort-style rehabilitation.
We cannot directly work with IPS or DNA, but we can constantly monitor human vital signs through wearable devices that can track blood pressure, pulse, and temperature to be digitally sent to the doctors. We now have 17 researchers at our Matsuya Innovation Center in Vietnam, and we hope to grow that team to 30 or 50 personnel to continue our research on AI, robotics, and metaverse sensors.
Are you also looking to partner up with overseas companies in order to pass regulations in Asian or American markets?
We are expanding to Asian countries with the double-layered business model that we have established. We directly sell our machinery and automated robotics to our customers. The other business, OEM business, is renting and installing the machinery they have purchased at our factory to make products on their behalf. Eventually, we want to expand our business in Mexico and countries in Central Europe like Romania, Poland. We are looking to partner with an engineering company that can provide some technical and engineering support to our customers. We have already hired a direct agents in Poland, and we will be establishing our subsidiary there early this year. Local and immediate maintenance and modification are essential, especially because once something stops, everything will stop. We absolutely need local engineering support, and someone who speaks the local language. The US and Mexico are attractive markets as well. With North American and Mexican markets, we have partnered with Henderson Sewing Machine, which has active personnel in Mexico. Of course, Japan will remain our base, but our next focus is Romania and Poland.
Since April 2020, you have been listed on the Tokyo Stock Exchange in order to do more mergers and acquisitions and perhaps joint ventures. In addition to that, you are targeting industries or sectors that require automation. What are those sectors? What type of companies are you looking to do M&As with?
In fact, 80% of the reason for becoming a listed company is to make our company and our technologies become known to the world. We are not looking to increase our production capacity, but we want to raise the value of our company. AI-sewing robots and automated sewing systems are still not well known. As pioneers in this field, we want to inform the world about the significance of our technology. If we do not do that, it will negatively impact the Japanese economy.
Many SMEs possess advanced and high-quality technologies closely related to our field. By combining the expertise of smaller companies through M&As, we hope to establish a bigger entity that can provide more services. We have been working with a good company in Kyoto that will soon become a part of our company. It would be a waste if we would just let SMEs discontinue their already established technologies and operations, so through M&As, we hope to retain their technologies in Japan and make that evolve as a new business model. We must do that now; otherwise, it can cause serious damage to Japan's economy.
Big capital, foreign companies are aiming at acquiring good local monozukuri companies in Japan. So, if the Japanese government will not protect our industries, there is a possibility of monozukuri ceasing to exist.
Your two different solutions are the OEM contract manufacturing and supplying the actual equipment. In terms of your midterm strategy, which one do you foresee as having the most future growth potential for your business?
We plan to continue with our present business model. We will be a two-way player like Ohtani; one hand will be automation and the other is consulting along with our OEM business. The OEM business is one of the pillars of our income, which is a stable and increasing source of profit. Therefore, we will keep this for a while, and use the profit for the development of new products. In the long future, this OEM division will be our subsidiary and a separate company. As the outcome of our long-term strategy, I envision the company having four different divisions with three main divisions. The first will be research and development focused on safety, medical and diverse fields, especially the metaverse technology. Secondly, the division that provides IT solutions, including AI. The third division will be human personnel dispatching business. We have an R&D center in Vietnam where labor cost is fairly low and can attract talented engineers. By providing training and improving human capabilities, we are looking to dispatch our engineers for IT, AI, and metaverse technology all over the world.
Imagine we come back five years from now for your 45th anniversary and have this interview with you all over again. What would you like to tell us? What are your dreams for this company? And what goals would you like to have accomplished by then?
Ideally, I would like to have realized the things that I have talked about as to how I envision the future of the company will be in Japan, in the Tohoku area, and in Vietnam.