With its unique CUPLA products, Nitto Kohki has made itself indispensable to some of the world’s largest firms and industries.
In the last 25 years, Japan has seen the rise of regional manufacturing competitors who have replicated Japanese monozukuri processes by taking advantage of cheaper labor costs, pushing Japan out of mass production markets. However, the country is still a leader in niche B2B fields. Can you tell us how Japanese firms have been able to maintain their leadership despite the stiff price competition?
I am not sure if this is going to apply to every Japanese company, so let me just talk about my company’s case. Nitto Kohki has placed importance on energy and labor saving, and also on producing good products. Based on that philosophy, we are going ahead with R&D and it is all about winning the trust of customers.
With regard to our quick connect couplings “CUPLA” for fluid lines, we are enjoying very high market share in Japan.. Overseas, CUPLA is a trademark of Nitto Kohki, but there are companies, for example in China, utilizing our trademark for pirated versions, so it is not theirs and it is not only happening in China, but other countries too.
There were times when local coupling manufacturers and other companies were coming in with cheaper labor costs and they were about to take over. However, our manufacturers really place importance on quality, so in the end, customers actually came back to us and that is why our market share is expanding.
From here onwards, it is going to be a bit confidential, but for example, we have also developed couplings for hydrogen purposes, and globally, there are only two companies, including us, who can supply that, so it is a niche market.
As you know, Nitto Kohki’s couplings are being used in various fields, for example water, air, oil and gas, and we can say that most of the top manufacturers in Japan are utilizing our couplings. As an example, Toyota is coming up with their hydrogen powered vehicles right now, and their main requirement is to go longer distances. As hydrogen needs to be highly compressed when it is filled to a tank to enable longer distances driving, the pressure required for hydrogen is 70 times that of conventional fuel so the couplings must withstand that degree of pressure.
We have also been having meetings with a major supplier of semiconductor manufacturing devices because we have semiconductor couplings, and for them, it is really important to make semiconductors as small as possible. Right now, Nitto Kohki would be the only supplier that has the kind of technology to make couplings that meet their requirements, but they want to go even stricter. They are coming to us and saying, “would you be able to go ahead with smaller couplings?”. For them to be able to expand their semiconductors into the market, they would need our couplings. That is what we are most proud of.
It is a niche world, but the customers are requiring a higher level right now and in order to respond to that and meet their expectations, we have to deliver high quality, and based on that, we are going ahead with our R&D.
Since we are a component manufacturer, we are always behind the scenes. We cannot really say “this is our product”, because it will be a part of our client’s semiconductors device, or our client’s cars. Our pumps are equipped in many endoscopes. In this case, it is all about safety because it goes into the human body, and customers’ requirements are becoming stricter and stricter to create better products and we have to respond to that through R&D.
Our air massager, MEDOMER, was designed and developed as medical equipment in cooperation with several medical institutions, such as university hospitals. It is mainly used for promoting blood circulation, as well as eliminating swelling after breast or uterine cancer surgery.
Initially, it was used for rehabilitation in hospital and welfare facilities to promote blood circulation. Recently, the fatigue relieved by the MEDOMER has been focused and it has also been used in the field of sports. MEDOMER has been highly evaluated in various sports such as soccer, rugby, baseball, gymnastics, swimming, etc., and has been used on the grand stage of various international sports competitions.
In the sports field, there are cases where equipment is carried on expeditions. Because of that, we had many requests for miniaturization of the equipment and battery operated and we are conducting research and development in order to meet those requests.
Again, it is all about coming up with good things and the manufacturers want better products so their requirements will become stricter and we have to respond to that. That is why we are putting in so much money and time towards R&D. It is a hard job, but we think it is necessary. Other companies around the world can look at our products and copy them, but it is our continuing challenge to keep our quality at high level, which would differentiate our products from copied ones with similar looks and with different long-term quality.
Our couplings are also being utilized in the oil and gas industry and in nuclear plants as well, where they place a lot of importance on quality in case they handle flammable fluid or radioactive material. Our users are confident that if they use Nitto Kohki products, there definitely will be no leaks.
Two years ago, one of the most famous amusement parks in the US selected our AUTO-HINGE to be installed on entrance doors for attraction buildings. I went to convey our gratitude to the R&D team there, but what they said is they checked 200 companies’ worth of products and came to us because of our safety standards. I felt very glad and proud to hear their comments.
We were able to differentiate our products from our other competitors, but again, we cannot really say this openly because we are a component manufacturer and our clients are the people on the front end that can boast about this. We are hidden, but we are in this niche B2B field and as a top manufacturer, it is our mission to keep on creating good products.
If we can contribute to making semiconductors more efficient by minimization, then we can contribute to society. If we can contribute to improve the efficiency of hydrogen powered vehicles and electric vehicles, we can also contribute to building a carbon-free society, because many manufacturers are using our couplings for handling the electrolysis liquid to be filled in lithium batteries. If electric or hydrogen powered vehicles can become more widespread, our couplings will contribute to that. We are collaborating in R&D with leading companies in these fields.
I talked about our market share in Japan already and it is also high in Asia, but in the USA and Europe, there are major manufacturers present. You were saying that 60% of your readers are in the West, which is good for us because in the US and Germany, they have these high quality manufacturers, but in that market, if customers can use Nitto Kohki products once, they will probably realize that we have really good quality products.
I think right now our recognition is still a bit low in those markets and that is the only barrier, so we would really want to have people in Europe and the US know how good our products are, and also of course, we think that we can contribute to Asia as well.
There are a lot of developing countries, so we can contribute there, for example with our
electric screwdrivers “delvo”. In those kinds of countries, there are construction sites where sometimes it is dangerous for people or there is a lack of personnel. We are collaborating with major robot and automation suppliers to attach “delvo” or tools to robotic arms. Now - we launched this already in the market - we combine “delvo” with robotics to save labor and energy.
I think there is a huge benefit when we can discuss issues among top manufacturers, engineers and people involved in technology.
Sometimes when we do that, one plus one becomes three. We want to promote these kinds of discussions with various manufacturers. It is an honor that these kinds of top manufacturers need our Nitto Kohki products, and we have to respond to that. We have to meet and go beyond their expectations.
In 2020, the president of Tokyo Electron predicted that the semiconductor market would grow to be worth one trillion U.S. dollars by the year 2030. However, many things have happened since then. There has been the COVID pandemic and the worldwide semiconductor shortage, and as a result, regional leaders are pushing to expand their semiconductor production capacity domestically so that they do not have to rely on pureplay foundries. Could you tell us what opportunities these regional pushes present for your firm?
Currently, we are trying to respond to Tokyo Electron’s requirements as much as possible and we are exerting our fullest capabilities in order to do that because right now, Tokyo Electron is the most advanced company in the field.
There are various government policies happening right now regarding the semiconductor field. For example, I am not sure if I can talk about this, but the US government has asked Tokyo Electron to launch a factory in the US, and in Japan, we have asked a Taiwanese semiconductor company to come to Kumamoto. These kinds of policies are going ahead, and we are not really sure at this point what we can do towards that, but whether semiconductors are being created in Japan or the US, if those firms have requirements of us, we want to respond to that.
Confidentiality is most important, of course. Each government has their own policies, for example, in the US, they have stopped Huawei. I believe it is because they are afraid of the technology flowing down to China. In Japan, we are a Japanese company, so we will abide by the Japanese government’s policy, but basically, if there is Japanese government approval and there are any requirements for the export of our products to different countries, we want to respond to that too.
You have mentioned that your company works closely with other Japanese firms, particularly in the field of R&D. Are you also looking to find partners in overseas locations?
If there is a chance, we would want to proceed with collaborating with overseas companies. If any overseas firms have an interest in our new technology and want to have a discussion with us, we are willing to be open and engage in technical discussions with any kind of overseas company.
We have talked a lot about conducting R&D with other companies and that is all confidential. We have a policy of Nitto Kohki’s name not being made public in relation to these projects. However, as I said, we have a lot of requests from Japanese manufacturers that want to go ahead with joint development projects with us.
As for overseas companies, we have had requests from some major firms, but not a lot. If there were more of these requests, we would like to respond to them and take action.
Many companies are looking towards automation as a way to replace their aging workforce in the face of Japan’s demographic shift. Your electric screwdriver “delvo” series can be used with universal robots and has over 30 torque and fastening settings. Can you tell us the benefits “delvo” series brings to your clients?
As an example, when digital cameras were popular a while ago, “delvo” was utilized to a large extent. However, these cameras were replaced by smartphones and now we think that “delvo” can be adopted in assembly applications. Rather than being utilized by human workers, we are strengthening our development and integrating “delvo” into universal robots in order to add value to our product.
We are working with major robotic and factory automation makers on this collaboration. Currently, there is a requirement to fasten things in multiple directions, so we have to meet those kinds of requirements. Also for deburring, which is a process that takes place after welding to smooth the surface of a component, we are going ahead with that as well.
Actually, it is not only in Japan, but we are also doing this in Thailand. We are testing robot arms combined with “delvo”. Again, this is quite confidential, but we just want to say that we are collaborating with multiple robot manufacturers.
Increased digitization and automation has reduced the need for workers in manufacturing processes. In such automated and controlled environments, can you tell us what the role of the engineer is today?
With regard to Nitto Kohki engineers, we have a corporate motto: “development provides corporate insurance”. The “development” in the corporate motto includes four important meanings: Firstly, development of products that contribute to society. Secondly, development of the sales market. Thirdly, development of human resources. Fourthly, development of a system for organization management. Every engineer is aiming to realize the corporate motto through the development of the product which would contribute to society.
As you said, we are going ahead with more automation and machining in our factories and that is all about better safety. In these plants and factories, we still have quite old equipment or facilities, and some dangerous tasks that involve environments that include tall heights or high temperatures need to be done. In these kinds of places, we are trying to improve safety and efficiency by having the machines do the job.
From now on, I think it is going to be important for engineers to engage more in process management. To come up with better-quality products with less wastage, automation and machining would be absolutely indispensable and we have to go ahead with that, however we need to place importance on safety, security and quality.
In order to come up with products that meet those standards, process management is going to be extremely important, so the engineers’ role will be more centered around fixing things and focusing on R&D and processing management.
Quality is extremely important for us. Until now, there were processes which involved visual inspections done by human workers to ascertain quality standards, but now it would be more important for engineers to utilize AI, which can be integrated into the inspection process.
Regarding the process management, we would have to have uniform standards across the various processes, so we would have to utilize DX and digitalization more in order to have an even standard of quality per process. By doing that, we think we can improve that quality too.
Imagine we come back to interview you again for your company’s 70th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?
A person called Mr. Mikiya founded this company 66 years ago together with his wife and it was only the two of them that set up this company in Ota ward. The most important thing for Nitto Kohki is to contribute to society, and the second most important thing is the well-being of the employees. Third most important would be the development of the company, so these are the three pillars upon which we have been developing unique products to meet the energy-saving needs, as well as labor-saving needs from the market. We have always been basing our “Monozukuri” spirit on people.
We want our energy- and labor-saving products to play a role in society not just for 70 years. I want Nitto Kohki to be a company that continues for 100 years or maybe beyond, but in order to do that, we have to keep on creating products that can contribute to society.
Allow me to talk a bit about what we did during the COVID pandemic these past two years. In our showroom, there are a lot of gratitude certificates hanging there. Due to COVID, many people, not only in Japan, but across the world, died. 80% of those were due to pneumonia, and out of that, 80% was due to blood becoming stuck in the lungs and another 10% was due to sputum.
This is not confidential because this is our medical equipment, not involving other companies, but we developed equipment to suck the sputum. There were many hospitals in Japan that were looking after patients in severe condition, and we got requests from over 200 hospitals, and University Hospitals, for this equipment. We donated over 400 of them to every hospital that asked. It did not matter what kind of hospital it was; our mission was to save lives. This was a complete donation and they were very appreciative of what we did.
In Japan, we had a massive office vaccination program happening in every company. In Ota ward, there are around 1,000,000 people and we have big companies like Canon, Alps Alpine, and Isuzu in the ward, but we also have smaller companies which only have 10-20 employees and they were not part of the office vaccination programs going on. We bore the cost of the COVID-19 vaccination program for over 100 such companies in our neighborhood. As you can imagine, they were appreciative of what we did, but it was all about contributing to society and the region.
Also in Ota ward, we have a women’s basketball team under our sponsorship. Last year we collaborated with the ward and the city, inviting 100 disabled people in the ward to come to our sponsored game. For us, it is all about contributing to society and our region, and I want this company to continue to be like this.
In the latter half of the 1990s, we had the Asia crisis. In 2008, we had the Lehman shock. In 2011, we had the Great East Japan earthquake and even in those kinds of difficult situations when the economy was sluggish, we effectively protected the salary and the labor of our employees. This is one thing that we are very confident about.
Even during COVID, in April 2020 when the former late Prime Minister Shinzo Abe declared a state of emergency, stating that only 20% of personnel are supposed to go to their offices. At that point, we had already accomplished that. With the cooperation of executives and employees, we told everyone that they should telework from home if possible, but if they had to come in, they should use their cars as much as possible and we would bear the cost of the parking fees and gasoline.
During COVID, a lot of SMEs suffered from dropping sales due to the economic slump. There is a Trust Bank here in Ota ward and with them, we supported companies that had a certain technical level by giving them drawings and a purchase order. We did this even last month, so it is all about supporting the smaller companies, protecting their employees and, as a result, contributing to the broader society.
Of course the most important thing is to contribute to society through our products, but there are actions that can be taken as well. We want our employees that are working here to feel happy about this. Even if I am the president then, or if there is another president and another and so on, I want this company philosophy and management policy to be passed on. It is very important for us. Even if it is 70 or 80 years, we want this to continue and, in the end, I believe we will be evaluated highly by society. In that way, we can have our company develop further. I guess this is the future I want.