Kurashiki Boring specializes in surface modification and thermal spraying that creates lightweight components and restores worn parts to their former glory.
Japanese manufacturing is at a very exciting time. The past three years have seen large supply chain disruptions due to COVID and the US-China decoupling situation. As a result, many corporate groups are looking to diversify suppliers for reliability. Known for their reliability and advanced technology, Japanese firms are in an interesting position. Due to the weakened yen, observers argue that this is a unique opportunity. Do you agree with this sentiment? What are the advantages of Japanese companies in this current macro environment?
The manufacturing process begins with the raw materials & technology and then the components. Once the completed components are assembled, we have the final product. Due to COVID-19 and the strained relationship between China and the US, I started to see some structural changes in overall manufacturing. We deal with surface modification and thermal spraying. Any customer can request to modify a surface for which we possess the unique technology - one component of the element technologies. We accept orders from Japanese companies as well as international clients. Our customers could be end-users, OEMs or assembly manufacturers. One of our notable strengths is being able to respond to any orders from all sorts of customers. In general, our way of doing business has not changed. More Japanese companies are bringing their factories and offices back to Japan, and other companies outside Japan are paying more attention to Japan. I think these create a big opportunity for us.
Japan has the world's oldest society and a rapidly shrinking population. In February of this year, Prime Minister Kishida stressed the severity of this demographic shift. The problems that arise include a labor crisis and a shrinking domestic market. What have been some of the challenges this demographic shift has presented to your company? How have you been adapting and overcoming them?
One of the approaches we have started employing is a different strategy from what we had in the last 20 years. Instead of hiring more people to increase the number of workers in our company, we tried to establish a sophisticated technology for our current workforce in response to the declining number of newcomers. Moreover, we are trying to establish a network of small, specialized companies. Although we specialize in thermal spraying, we are working on creating a network with companies specializing in high precision machining or special materials and other surface modification.
Thermal spraying is a process that applies wear-resistance, anti-corrosion properties or thermal insulation to components. However, one of the disadvantages of thermal spraying is that it requires high temperatures to bond properly with the underlying surface. Moreover, thermal spraying processes are often unsuitable to certain types of substrates due to their thermochemical properties or tendency to react negatively to exposure to heat and pressure. How is Kurashiki Boring addressing or overcoming this challenge that we see with its thermal spraying services?
We have six members of the R&D team in our company. They are specialists in thermal spraying but not in the property of materials or the operating environment of the items to which thermal spray coatings are provided. Our services or products are used not only in normal temperature environments, but also temperatures that exceed 1,000 degrees Celsius, under seawater, under high pressure or in harsh environments. We have a network of experts in those fields, such as retired or former employees of listed companies or researchers of national research institutes. We get their feedback or opinions to develop a new coating.
Could you share with us what new coatings you have in the works?
We cannot claim that we have made a particular item because we only take care of a single part of the process. Our coating can play a role if people want lightweight products with the same functions, such as machine components. For example, we can provide the element coating for CFRP or aluminum. Some environments do not accept hard chrome plating, so we are trying to provide thermal spraying as a replacement for it. We aim to have higher functionality.
You cater to various fields such as petrochemicals, petroleum refining, aerospace, semiconductors, nuclear power and even batteries. Can you give us a brief overview of the main fields you currently serve? Are there any new industries to which you are looking to cater and introduce your services?
Honestly, it is hard to tell. In the petrochemical industry, our thermal spray coatings are used to provide a coating for the parts of pumps. Pumps are utilized in the nuclear industries, and seawater pumps are used in west Asia to supply water in harsh environments. Japan also uses pumps for emergency preparedness. Therefore, we provide our thermal spray and coatings to items that need our coating functions.
We want to expand more in the aerospace field, especially the engine parts that include rotating parts like combustion chamber, compressors and turbines. Since these parts are also used in other industries, it is difficult to identify specifically which industry we are aiming at for expansion and growth. We deal with the general industry to high-end areas like aerospace. We are seeking more opportunities in the sanitation sector as well.
About 40 years ago, the petrochemicals, ship making, textiles and all power industries were the star industries. However, paper-making, printing, filming, aerospace and semiconductors have become the star industries. Industries that have technical advancement offer opportunities for our business.
Aircraft jet engines with a maximum engine operating temperature of about 1,600 degrees have been put into practical use. The demand for precision in thermal barrier coatings has increased to protect the components from harsher environments and ensure component life. How are you reacting to this trend in the aerospace division?
This essential requirement has not changed since people began flying airplanes, but they are seeking higher efficiency for combustion. The required material has changed today, and more specialized materials are needed for coating. Our mission is to ensure that our coatings do not detach from any materials and can withstand harsh environments to which a particular industry has to cater. Our R&D activities are restricted because the aerospace industry is quite unique. It is an industry that carries people, so there are usually stringent requirements and specifications set by companies like Airbus or Boeing which we have to meet. We are cooperating with some material and thermal spraying equipment manufacturers.
As a result of increased inventories and a drop in demand due to tightening monetary policy, the semiconductor industry has experienced a significant downturn over the last few months. Nevertheless, all major companies expect a rebound in the second half of the year. The expected drop in inventories combined with consumption over the recovery in China, a pause in interest hikes and a spike in demand for microchips for new applications such as AI or EV give reasons for optimism. How will these developments affect your business? What challenges or opportunities do you see for your business as it relates to semiconductors?
We pay attention to the semiconductor industry, especially in relation to worn items. In the past, chips were simply contained in computer games. The demand for chips dropped when the economy worsened, but I think that has changed. The demand for memory continues to rise for smartphones and data centers. For example, unlike before, when we used films to take pictures, using our smartphones means that data is increasingly piling up. Thus, the demand for memory is rising. Even with the current oversupply of semiconductors, the demand for a bigger memory remains. Despite the expected downturn and some rise & fall, I think there will be an increase in demand for the next 20 to 30 years. We specialize in our coatings for worn or damaged parts. For example, plasma etching is used in the harshest environments. Our coatings and services can extend the life of manufacturers' equipment, which I believe creates a better value than a piece of new equipment.
In addition to your thermal spraying services, Kurashiki Boring also offers restoration to worn items, making them as good as new or even better, ensuring accurate roundness and cylindricity, leading to improved performance. Can you give us a specific example of an item you restored?
We work with Ebara, a famous pump maker, and we are the qualified maintenance factory for them in Western Japan. With the nation's declining population, purchasing new equipment for plants other than the semiconductor industry is difficult. Equipment manufacturers focus on selling new equipment and providing maintenance services, including dimensional restoration. When we receive Ebara's worn components that have been used for many years, we check them and perform dimensional restoration to make sure that the parts are restored well. Moreover, we have been doing this for the last seven years.
As a female president involved in the monozukuri sector, what has your experience been like?
My grandfather started this company. I am the third-generation president after my father. This company happens to be my family's business. There are so many family-run companies in Japan, but there might not be any sons in those families' third or fourth generation. In some cases, the daughter's husband could take over the business. However, I became the president. My background is in engineering, so I am familiar with this industry. Since I joined the company, I have started to learn about and focus on management. I asked our members as experts to concentrate on taking care of monozukuri and sales.
Can you tell us a bit more about the nature of your partnerships in Australia, Indonesia and Korea? Are you currently looking for more overseas partners?
Instead of a specific product, we provide the coating. Hence, we do not need to build a factory or a sales office outside Japan. We provide our thermal spraying services as a solution to customers. We work with representatives of particular countries rather than distributors. As a company that serves as a solution provider using our thermal spraying capabilities, we have been receiving an increasing number of emails and inquiries from our website more than before. To that end, we are looking for a key person who can serve as the contact outside Japan. I think in the last two decades, our manufacturing has not been doing great. Still, Japanese manufacturers are detail-oriented. More important than making money, the culture of Japanese manufacturers is to strive to make the three sides happy: the company, users and the people around them. This differentiates us from China and South Korea, where big companies dominate the market. If this practice continues, Japanese manufacturers can remain the leader of niche markets while putting forth an effort to expand their territory.
Japan's demographic situation and its shrinking domestic market are forcing companies to establish new operations in overseas countries as a way to ensure the longevity of their business. Is that one aspect you are considering as well? If so, have you identified any countries or regions where you would like to expand?
Our employees also want to expand our business outside Japan, but I have to ask myself, “If we were to do so, would we be successful?” It is necessary to have a local partner in order to make our coating business successful outside Japan. We think it would be difficult to communicate well with countries that are geographically far from us, like the US and France. Hence, we are eyeing closer countries such as Taiwan, South Korea, Indonesia and Thailand because these are relatively easy to start with. The possible first step would be sales; if the demand is high, we might consider establishing a factory.
Imagine we come back in four years and have this interview with you all over again: What are your dreams for this company, and how would you like to be seen globally?
My number one dream is to make sure that our employees can remain energetic. I think management must see that the employees do what they want passionately. I believe that achieving that would mean the quality of the products would be better. Our slogan states passion for people and precision in our products. Monozukuri can only be realized through the joint effort of all the members and colleagues. We passionately discuss ways to provide better products for our customers. We do not make compromises, and we should be detail-oriented. Furthermore, we seek traditional craftsmanship styles, but with Japan’s declining population, we must take advantage of AI. I also want to increase the number of female workers at our manufacturing site. Although we are not forcing them, more female workers have started doing so. We want to create a site for those who want to do monozukuri, regardless of their age, gender or nationality, through which we can make excellent products that our customers can highly evaluate.
Interview conducted by Karune Walker & Sasha Lauture