Founded in 1938, NITTOSEIKO has been a respected manufacturer of industrial machinery, fasteners and screws for over 80 years with established bases all over the world.
Over the past 25-30 years, Japan has seen the rise of regional competitors who can replicate Japanese processes and products at a cheaper cost. However, we still see that many Japanese firms are leaders when it comes to niche B2B fields. How have Japanese firms been able to maintain their leadership despite the stiff price competition?
As you may know, we are based in Taiwan, Hong Kong, China, Indonesia, Thailand, Malaysia, the US and we also have an office in South Korea. It is true that we cannot continue to produce in Japan because of the cost. In order to meet the demands of cost efficiency, we cannot continue production in Japan.
That is why we shifted to production of value-added, or special, screws. We are not producing any standard screws anymore, as they can be produced in countries like Indonesia or Thailand.
However, in order to survive in Japan, we have to add value to our products. We have to improve our technology and make a profit out of it. That is why we produce patented as well as special products. All of the products and screws we produce in the domestic market are order-made.
We are also a listed company, so there are a lot of associated costs regarding marketing and information, as well as environmental costs, but our purpose is to become a top niche company, so we cannot just produce cheap products.
We are pursuing new technology and special products that our competitors do not have, and we are trying to cater to the clients’ needs. That is why we are pursuing the production of special products.
Our business is not to produce the screws themselves, but to provide a solutions business where we propose solutions to the customers’ problems using technology, so we are trying to find out the needs of customers and trying to propose ideas to enhance their performance and productivity.
By doing so, we are trying to generate an advantage for our customers and we can then receive compensation for that. We are always working together with clients and we would like to compete through technology, not the products themselves.
Your cold heading technology includes the AKROSE, a new technology of tightly joined dissimilar materials. What are some of the applications of the AKROSE?
One such example is the development of AKROSE, a patented cold-heading technology that attaches different kinds of metals like aluminum and copper,and is currently generating a lot of business opportunities in the battery industry.
You manufacture many products through cold forging and cold heading. What are some of the merits of cold forging as opposed to traditional methods like hot forging?
Significant energy savings can be achieved by using cold heading technology. We perform simulations during the design phase to confirm how the final product will be formed.
As for hot forging, that also requires a lot of pressure. Here at NITTOSEIKO, we do not do that anymore. One feature of this company is that all of the machine tools are made in-house. The machine tools, the fastening machines, all of them are made in-house.
If you purchase any of them in the market, then you can only produce standard type products, but we have our own division for production and technology which develops our own machines for production. That is why we are able to produce something special.
For example, a 0.6mm diameter screw. If you try to make such a thing, you would use a cutting machine, but we are the only company that can make it using heading and rolling technology.
With the header (rolling mill) we developed in-house, we can mass-produce such items with high precision, thus providing more stable quality, and we can supply this part to the watch industry. We are trying to produce something unprecedented. That way, we can provide advantages to our clients. We are able to mass produce high precision components at a stable quality.
Japan has the world’s oldest society and a rapidly shrinking population, presenting two major challenges for Japanese firms. The first is a labor crisis and the second is a shrinking domestic market. How has this demographic shift affected your company and how are you reacting?
It is true that Japan is now suffering from an aging and declining population, and because of this, the working population is also declining. We have fewer people working at our plants as well.
I think this is a common phenomenon in many other countries except for India or Indonesia. We cannot just continue the traditional way of production, so we are trying to reduce the weight that one man needs to carry, or we are trying to introduce an unmanned production system which can operate overnight. If we are able to reduce the weight that our employees need to carry, then we can do that process with fewer people or even older employees. Unless we introduce that technology or equipment, we cannot continue production as we have been doing.
At NITTOSEIKO, we are now focusing on the production of robots. Even in countries like Indonesia or Thailand, we are seeing increased labor costs, and countries like Singapore or the US are also experiencing a shortage in their labor force. We need to introduce robots into our production sites.
Even in Southeast Asia, which used to be famous for its cheap labor costs, we are suffering from rising costs. That is why we are collaborating with many companies to create robots which can be installed in a production site at a reasonable price. Even the automotive industry is now introducing such robots so that they can offset these costs.
On robots, earlier this month you released the FM514VZ product which helps with robotics. It is a lightweight single access automatic screwdriver that can be mounted onto these robots, and compared to your existing products, the weight of the screw tightening unit has been reduced by 30% and you are also expecting CO2 reductions of about 23%. How does the FM514VZ improve upon its predecessors, and what challenges did you have to overcome in its production?
As I mentioned several times, we are trying to provide something needed by our clients and we would like to bring about benefits for them. To do so, we need to communicate with them so that we can understand the problems that they have and propose solutions using our technology.
One of those problems is CO2 reduction, which is a common goal throughout industries, not least automotive, where they are trying to make their products more lightweight so that they can reduce CO2 emissions.
Speaking about Taptite, for example, we are thinking about how to reduce CO2 emissions in the production process and looking into the production steps so that we can reduce emissions at, for example, the cleaning step of the process. We would replace the existing method with robots to save energy used in the overall production process.
We are also trying to make our own machines more lightweight to save energy. A product that we released recently is one such product. Everyone wants to be environmentally friendly.
However, even though you may try to produce something good, if it is not needed by the client, it does not mean anything. We have recently heard a lot of problems related to the shrinking of the labor force, as well as environmental issues. There are a lot of things that we cannot disclose yet, but development in the direction of solving these issues is ongoing.
You have your own unique microbubble technology and trials are being conducted in the agriculture as well as the aquaculture sectors. Can you tell us a little bit more about your microbubble technology and what your expectations are for it in the future?
When you produce industrial components, you always need oil, and because of that, you also have to have a cleaning process to remove that oil. With traditional processes, you need a chemical agent to wipe and clean it out, but with microbubble technology, you only need water and air. In Southeast Asia, in order to use such a chemical agent, you needed permission from the regulators. So, utilizing this technology, which requires only water and air, we set out to develop a microbubble cleaning device called Bubb Remo, a microbubble cleaning device, utilizing this technology that requires only water and air.
Our microbubble generator has been recognized for its microbubble generating performance and was the first product in Japan to be certified as a product utilizing fine bubble technology. We are also planning to launch new products based on this technology.
We put a lot of focus on obtaining a patent. If we obtain a patent, that means we would be able to produce something unprecedented. That is how we are trying to put added value into our products and trying to be more eco-friendly.
This technology is applied both for agriculture and aquaculture. We are now looking for the next target industry, and I would like to repeat this, our technology is way better than our competitors’. Although we may not have the marketing capability, our technology is verified by universities and the technology is proven by data. That is how we are producing technology that can last for a long time in the market.
Our aim is to contribute to society and we would like to expand this technology to the world. Based on last year’s data, 30% of our revenue came from the international market.
Are you looking to further add to your overseas partners portfolio?
In the beginning, when I assumed the role of president, for the first three years, we tried to do everything on our own, including the development of technology, intellectual property and R&D. However, we realized that it was quite slow, so in the fourth year, we started collaborating with other firms with good technology and then we produced something good and shared the profit.
That is what we are going to do going forward. We would like to continue to find companies to collaborate with. Our business philosophy is to distribute our profits to everyone related to this company and bring well-being to everyone in wider society.
We would like to make everyone related to this company happy. To achieve this goal, we need to continue to grow together with our employees and everyone relevant to the company. That is why we are keeping up our growth strategy.
Moving forward, what countries or regions have you identified for further expansion into, and what strategies would you employ to do so?
We exhibited at an exhibition in Germany in May this year. We would like to increase our presence in Europe in the future. Europe is likely to be our next target. We are rather cautious though, and unless we receive a certain number of orders, we cannot be profitable.
To be profitable, we need to receive orders for about 100 million screws per month. If we start receiving such orders, then we may think about establishing a plant there.
We also want to contribute to society. That is how we produce value for the client, and if we have a trusting relationship with them, then I believe we can continue to grow. We are using almost all of our profits every year as investment into things like capital investment, R&D and M&As. That way, I believe we are able to continue to grow and be better next year.
We are not a large company, but we want to win in the industry. We would like to be a top niche leader and we cannot be that if we are all-rounders. For example, in earthquake-prone Japan, ground inspection is required before construction of single-family houses. We have a 90% share of the domestic market for ground inspection equipment that automatically performs such inspections.
Speaking about fasteners, we are releasing about 50 new products every month. We are doing so because we want to continue to be profitable and, in the case of the GIZATITE, if you fasten it, it does not loosen. It is also resistant to heat and vibrations, so it can be applied to mobile phones and cars too. We believe we can contribute to any market in the world.
Now we have good fastening technology because we always think about the machines that are made with our screws, and we also produce machines for production because we always think about the screws.
Let's say we come back to interview you again in six years' time. What would you like to have achieved by then?
One of our goals is to enhance our revenue. I am sure we can do that, but I would like to tell you that our revenue improved by that time and I would like you to call this company an excellent one. We are putting a lot of focus on taking care of people, like the education of our employees, so when you come back here six years from now, I would like you to see our employees working enthusiastically and energetically, and also I would like you to see the growth of our revenue.