Through its lightweight, high-performance parts, Japanese manufacturer Akashi-Kikai is not only ready for the EV revolution, but is helping drive the construction industry forward as well.
What is Akashi Kikai’s monozukuri? What are the strengths of your firm that allow you to continue to compete in the global marketplace?
I believe the core strength of Japanese monozukuri lies in two aspects. One is the structure and mechanisms embedded with Japanese manufacturing, such as the Toyota Production System (TPS). Secondly, I think that Japanese firms really care about nurturing human resources.
Manufacturing equals monozukuri, but hitozukuri is the art of making people rather than things. I like to think of it as building human capability. If you have good engineers and good personnel, you can evolve them and at the same time evolve the monozukuri, as well as create flexibility to face environmental changes.
By having good human resources we are able to pass down technologies and techniques from one generation to another. This is how Japanese monozukuri has been evolving. I myself lived in Germany for five years, acting as a sales agent for Daihatsu. During my time there I learned that the European style and the Japanese style are very different in terms of human capacity. The Japanese style is very unique and focuses on human resource building. Recently Southeast Asia is trying to replicate this Japanese style, and they have learned the importance of raising people.
The strengths of Japanese manufacturing lie in hitozukuri, and so it applies to our company as well. The reason we are able to have international competitiveness is because of our hitozukuri mindset, our focus on human resources.
A common problem of SMEs in Japan is the transfer of technical expertise from departing skilled workers. What are some of the challenges and opportunities presented to Akashi Kikai given Japan’s unique demographic decline and aging society?
This population issue is actually quite pressing and very serious not only to Japanese society but to our company as well. Currently, we are welcoming foreign trainees into our workforce. Unfortunately, however, they only stay for a while and then go back to their countries.
As a countermeasure, it is inevitable for us to be less dependent on a human workforce, thus shifting ourselves into automation and manufacturing through automation. We are also looking at AI and digitalization.
Looking back at the impact of COVID-19, white-collar workers could work from home, and working from home became a common lifestyle. Despite this, manufacturing needs to be onsite, and through automation, we were able to reduce the number of people working on-site and control processes remotely.
I personally feel that Japanese manufacturing is at a standstill by relying only on Japanese manpower. It is crucial that we depend on foreign workers as well. The Japanese government still makes it difficult for foreign workers to reside here and work, so I think as a country we must open up more, in order to retain the manufacturing capabilities of Japan, within Japan.
Would you say that attracting overseas talent on a more permanent basis is part of your strategy to face these challenges?
After WWII Germany lacked the manpower for its workforce and therefore asked Turkish people to move and locate themselves within Germany. Turkish people currently make up Germany's largest immigrant group. Looking at the history of Germany, this immigrant group helped develop the country to where it is today. Likewise, in my opinion, Japan needs to open up more and welcome more overseas workers.
The automotive industry is right now living a time of great change, with the shift to EVs and the emergence of newer, more lightweight materials. How are these changes impacting your business? How have your offerings changed or developed in order to respond or cater to the new demands of the CASE era?
The pursuit of making materials lightweight and parts small has always been on our agenda. With this CASE revolution, electrification has had the greatest impact. We are a subsidiary of Daihatsu, and they are a top manufacturer of small-sized vehicles. We will continue to strive and develop technologies that make our components lightweight, small and cost-effective.
We actually feel EVs have a great impact on Daihatsu’s business. Many of our key components, such as the steering gear, will continue to be used in EVs. The function of a car is to run, turn and stop, and the steering gear will remain an essential piece.
We also make the components for the gears used in the transmission. Despite EVs not requiring a transmission, the decelerator part of that transmission is still in demand. With EV trucks there is a discussion to keep the transmission. We need to determine what will remain and what will be removed in the electrification process of vehicles.
In 2019, envisioning this huge change, we created a five-year plan to change our business and meet the market demands. Currently, we are in the process of sending engineers out to Daihatsu to learn more about EVs.
In 2020 the Japanese government declared that by 2035 all cars will be EVs, and our parent company Daihatsu said that by 2030, all the cars they produce will be EVs. In order to not be left behind, in 2021 we came up with our EV basic strategy. It is also crucial to talk to our clients and to make sure our plans don’t stray too far from their needs.
You talked earlier about the importance of nurturing human resources as a way to create flexibility. With flexibility, you can take on new challenges, not just in construction machinery, but also in industrial machinery and agricultural shipbuilding. How have you applied this expertise from the automotive industry to new ventures and what importance do you place on new businesses?
In 2022 we received a Gold Award from Kubota for our camshaft which is used in construction machinery. This camshaft is basically the same as the camshaft used in automotive vehicles. Another business we have is in hydrologic components. Although we have a small division we tried to fortify this division. We sent out our engineers to our clients, major companies such as Caterpillar and Kawasaki Heavy Industry, to learn about the machinery itself so that they may come back to our company and develop hydrologic components.
With these technologies we are able to diversify into other fields, however, our major product would be our gears. With EVs, there would be no engine itself and the vehicle would be very quiet. I think drivers will become very aware of the noise of components in that case. We are currently developing a noiseless gear that is high functioning and provides high performance. By completing such a product, its application can stretch out beyond the automotive industry into construction.
Can you tell us a little bit about the role that collaboration and local partnerships play in your company and if you are currently looking for partnership opportunities overseas?
Currently, we have overseas businesses in Malaysia and Indonesia. In those markets, we have a joint venture with local partners. We are combining our strengths with their strengths to create a synergistic effect. Our strengths lie in our manufacturing, but we don’t have a lot of experience in terms of operating a company in Indonesia. For business, you must learn about the culture of the region, as well as manage the people there.
Are you looking to replicate this model of success in other markets?
Currently, we are very focused and occupied on meeting the changing environmental situation of the automotive industry. We don’t have a definitive international strategy. We are a subsidiary of Daihatsu and 85% of our manufacturing is delivered to them. However, Daihatsu has expressed interest in diversifying our sales channels by finding other companies and customers. Currently, we are focusing domestically in Japan to expand our sales channels. Managing an international business in Malaysia and Indonesia is a lot of work itself, so we are not thinking about going to a third or fourth country yet.
Imagine we come back five years from now and conduct this interview all over again. What are your goals and dreams for the next five years of Akashi Kikai?
As the company’s president, it is important to think about the company’s sustainability and growth. However, my own personal goals and dreams lie in hitozukuri and making an environment where employees can enjoy and be satisfied with their work. Having a work environment that employees can enjoy and grow, itself will lead to the evolution of the company.