Sunday, May 19, 2024
Update At 14:00    USD/EUR 0,92  ↓-0.0002        USD/JPY 155,62  ↑+0.312        USD/KRW 1.351,82  ↑+4.4        EUR/JPY 169,23  ↑+0.42        Crude Oil 83,96  ↑+0.69        Asia Dow 4.014,64  ↑+5.79        TSE 1.821,50  ↓-7        Japan: Nikkei 225 38.787,38  ↓-132.88        S. Korea: KOSPI 2.724,62  ↓-28.38        China: Shanghai Composite 3.154,03  ↑+31.625        Hong Kong: Hang Seng 19.553,61  ↑+177.08        Singapore: Straits Times 3,39  ↑+0.005        DJIA 22,50  ↑+0.0593        Nasdaq Composite 16.685,97  ↓-12.353        S&P 500 5.303,27  ↑+6.17        Russell 2000 2.095,72  ↓-0.5318        Stoxx Euro 50 5.064,14  ↓-8.31        Stoxx Europe 600 522,94  ↓-0.68        Germany: DAX 18.704,42  ↓-34.39        UK: FTSE 100 8.420,26  ↓-18.39        Spain: IBEX 35 11.327,70  ↑+28.4        France: CAC 40 8.167,50  ↓-20.99        

NPR: at the core of the automotive supply chain

Interview - December 15, 2020

Integral to the automotive production chain is Nippon Piston Ring (NPR), which manufactures piston rings, valve seat inserts and other engine parts for major automobile makers in Japan and overseas. In this interview, NPR president Teruo Takahashi discusses the company’s proprietary technology based around tribology, as well as his views on the automotive industry’s shift towards electronic vehicles and what that means for NPR.


Competitors like China, Taiwan, South Korea are replicating the Japanese monozukuri process, but at a cheaper price. How would you define the essence of monozukuri for such a high-quality product, like yours?

Core strengths of Japanese companies are material technology and suriawase, or integral architecture. The Japanese monozukuri has been advancing together with the automotive industry which requires these technologies. By integral architecture, we mean technology to optimize parts and material for products through subtly adjusting them mutually, which realizes high quality and function.

The tribology, the technology our company possess, is for reducing friction and wear of parts and machines, and it is exactly integral architecture. But for EV, the need for such pieces disappears which could be disastrous for Japanese manufacturers. The stories of survival and innovation for companies like ours that have enjoyed success from these optimized parts, but face the innovation of EV, is key to understanding the story of Japanese manufacturing and watching the industry as a whole progress.


How do you ensure the quality of your products when producing overseas is the same as here in Japan?

Even when we manufacture in other countries, we use the same facilities in almost all respects. We have a manual and standard procedure for our manufacturers, so we are very consistent in how our products are built. Our customers, automobile manufacturers, desire this type of consistency and so we have been serious about implementing and maintaining this as a core characteristic of our business. 


How are you adapting to electric vehicles (EV) and the CASE trend?

If electrification of the vehicle increases more, our business will be eliminated as the need for our parts in engines will be gone. But, this change to electrification of all vehicles will not happen in the next few years. The media talks greatly and excitedly about electric cars, but I believe their takeover will not be immediate. I dont imagine the widespread use of these vehicles over that of gasoline-powered cars including hybrid cars for the next 20 years. In the meantime, we will continue to make parts for engines that the world is currently using.

One reason why we are not on the brink of electrification of all vehicles is that the thermal efficiency of a current engine is about 43%, at its highest. For motors, the efficiency has reached 90% of the full scale, leaving little room for improvement. Another factor is that global power policies, especially regarding nuclear energy, would not allow for all cars to become electric tomorrow. Those who want clean, green cars, want clean, green energy to power them and this would require a cleaner source. But many countries are hesitant about expanding nuclear power, so nuclear power probably has to improve and increase for further adoption of electric cars. The same goes for renewables. At the moment, renewable energy only accounts for about 15% of the energy consumed, but if we could ramp up the use of renewables, then electric cars could be easily adopted into our lives. Well to Wheelis how we compare the efficiency of different energy solutions towards greenhouse gas emissions. Thermal power generation that uses coal emits a large amount of CO2, therefore, using that power to drive EVs does little to help the environment.

For us, to achieve thermal efficiency of 50% or more, we continue to strive to produce products which meet functional requirements for reducing the weight of the engine, wear resistant, high thermal conductivity, high toughness, etc. at a competitive price. For example, our DLC (Diamond-like Carbon) coating technology reduces friction between cylinder and piston rings and contributes to improvement of fuel efficiency. At the same time, in preparation for the era of EVs, we have been focusing on development of new products outside of the automobile engine parts realm by utilizing our core technologies. Carried forward by these two mainstay businesses, we are preparing for the CASE era.


What has and continues to be your main competitive advantage?

The German company was the first to develop the piston ring, an essential part of a cars engine and our core product. Our company was founded on the demand to produce piston rings domestically. None of the Japanese companies wanted to depend on other countries for piston rings and so just before big Japanese car companies that are so well-known today were founded, we were founded.

Our character and strengths can be compared to the big parts manufacturers. We have been working on products utilizing tribology which is one of our core technologies. That makes sure that parts do not rub together while they interact and therefore can last longer. We apply our technology in the initial stages of development which helps the product, in general, go further and last longer. To spread our technologies, weve been diverse in our creations. We also engage in M&A with the metal injection molding business and with dental implants. Although dental implants are medical equipment, they require the same technological precision to build that any engine would and they require similar material and surface treatment technologies.


Are you planning to tackle any new fields, or have any new products?

Our core technologies such as material technology, coating technology, etc. are what we utilize to expand to other business fields. For example, for our dental implants, weve been able to use the technology we already have. If we lack something, we either buy that or do an M&A to obtain that missing link. That is how we can and plan to expand into new fields.

Going forward, wed like to get more into medical equipment, motor parts, heat dissipators and insulators. One product we have underway is a new type of motor core. The current type of motor cores were built layer upon layer, making them very thick. With a new technology of ours, we make motor cores by powder press, and this leads to downsizing, high power and so on. This is still a project we are working on and it has yet to be mass-produced but we are hopeful for all the possible applications it will have. 


What is the role of R&D in your company and how do partners play into this?

The first role of R&D in our company is to improve our products for  high thermal efficiency of automobile engines. We always look to improve this technology because we dont believe the need for them will be going anywhere anytime soon. Many of the big companies are already laser-focused on new EV technology, therefore theyll be needing us even more in engine development. We want to be the ‘last man standing’ and we hope to be the suppliers up until the end of the use of these types of engines. The second is to create new businesses for the future so we can survive the trends towards electric vehicles. For medical field business, we developed “Titanium-Tantalum Alloy”. It does not only have high biocompatibility, but also are suitable for magnetic resonance imaging (MRI) diagnosis as they are nonmagnetic and have good X-ray visibility. We are considering its application as medical equipment residing inside the body for a long time. Lastly, as for co-creation, we are conducting an open innovation initiative where we can start a new product or business. This happens domestically but we are looking to go abroad eventually.


What is your midterm business plan to continue corporate growth?

We are currently in our 7th midterm plan. This is a three-year plan, starting in 2018, and this year marks the end of this phase for this term. Up until now, weve been making our new midterm plans based on our last midterm plans. The goal for this was to build on top of what progress weve already made and then make minor tweaks. The midterm plans up until now havent consisted of major drastic changes, but we are changing this style. We are trying to set up “The Next NPR in 2030” plan with a project team consisting of the members who will lead the next generation of our company.

We want to set our 10-year future goal and work backward, from now until then to ensure we make it to that goal. For our 8th midterm plan, the next plan, we will continue working backward from that 10-year goal. There are three key principles for the Next NPR 2030. To be the last man standingin the engine field, to set up new businesses in earnest that separate us from our engine business while still utilizing our core technologies, and to seek partners through M&A, capital alliances or technology partnership to help us to achieve our goals. But one principle that is constantly a part of us is sustainability. We look to cooperate with stakeholders to achieve this. 


What is your international strategy?

We very much hope to expand, but due to COVID-19, our efforts have been suspended. For our engine business, we are looking to enter India more deeply. As for medical, we have some potential partners in the United States.