Since its foundation in 1963, Okita Iron Works has developed core strengths that set it apart from competitors in the global market, both in products and its customer-centric approach.
What do you believe to be the core strengths or competencies that set the products you create apart from your competitors in the global market?
Setting this company aside, if I speak about the strengths of the Japanese industry in general I think it can be summarized by the capabilities of gemba, which is a Japanese word for a worksite and literally translates to the “place where action happens.” This combines quality control, customer satisfaction, and corporate culture into a melting pot symbolizing Japanese workplaces. Regarding the capabilities of gembas, I think that the Japanese people are very good at pursuing improvements, and I’m sure you know the kaizen philosophy of continual improvement. In terms of quality control, Japanese people tend to raise the hurdle for quality further than any other country on the planet, beyond any standard criteria required. That kind of awareness raised the level of the technology here a great deal. Regarding customer satisfaction, we always try to ask the customers if they have any problems or if they have any suggestions for improvements. We’ve never turned around to a customer and told them that we can’t do something for them, and I think this attitude has set Japan apart from other countries. This describes the general corporate culture in Japan and speaks to the team spirit that many Japanese people possess. We are very good at working together as a team, and nowhere do I think this is more prevalent than in Toyota.
Toyota set the standards for kaizen and the togetherness that exemplifies so many Japanese companies these days. These elements demonstrate Japan’s strengths and set us apart from other countries significantly.
Speaking about my own company now, we are learning a lot from the relationships we have with our customers. We also aim to make progress up to certain level, and the company as a whole has to make concerted efforts to catch up with the trends of the times.
I think the real treasure of SMEs like yourselves is the massive amount of expertise that you’ve been able to accumulate over many years, however, a big issue is that this expertise tends to only be preserved with a few individuals. On the one hand, you have the challenge of preserving that expertise for the sake of business continuity and sustainability, and on the other, young people in Japan today aren’t as excited about a monozukuri career as they would have been in the past. Can you talk to us about how you are approaching these two challenges and more generally about how Japan’s aging population is affecting your business?
This declining and aging population shift right now is the biggest problem facing Japan, and in this context, I believe that automation is indispensable. We have to think about ways to reduce labor, and that could be by investing in equipment or capital investment. No matter the method, the key is kaizen again; looking into the processes or the equipment itself and preparing a work environment where aged employees can continue to work. This will require the removal of elements that are dangerous, for example reducing the amount of heavy lifting that employees need to do. By doing so we can secure employees' health and allow them to work past the official retirement age of 60.
Diversity and SDGs have become very trendy topics in recent years, however, this company has demonstrated those for over 20 years now. For example, the company is proud to have a woman as our managing director and management is actually filled with a lot of female employees as well as non-Japanese.
As a SME we are not able to compete against larger companies if we just follow straightforward hiring processes. We have to look for really talented individuals that we have in our HR bank, and to be completely honest if we only consider new graduates we are simply not going to be able to gather the kind of talent we need. We have about 70 foreign employees at our Japanese operations from 15 different countries.
We know that one of the key sectors you service is the automotive sector. How is this switch to hybrid and EVs impacting Okita Iron Works?
This is a really difficult situation to address for any relevant company, and from what I can see everyone is working very hard to address it. We don’t yet have enough clarity on what the actual components are that will be required by EVs. Right now we are supplying components for hybrid vehicles, but from what I understand, EVs are a completely different beast. To tackle this some companies are changing their materials, but for us, we cannot change our materials at our own discretion because the requirements come from the makers and our customers.
The way we are tackling this issue instead is by making improvements to our processes for forging. The topic may change, but there are some parts that we have been producing for 20 years now and over the course of those 20 years, those parts have become general commodities. The price goes down and down, but once you introduce new steps or new models the pricing resets. Of course, clients give us very stringent standards, but we feel that we have been able to survive by introducing new processing methods. This cycle unfortunately is doomed to repeat as each new product becomes a general commodity. With this cycle in mind, I believe that the change to EVs gives us an opportunity to catch the tailwind.
You talked about new forging processes as a way to reset the price and reduce the weight of components. As much as you are able and willing, can you talk to us a little bit about this new forging process and how it can improve components as well as finished products?
For an example, Okita has been specializing in a method called cold roll forming. At this point, it is a standard method for producing rings, but although it is a standard in the bearing industry doesn’t mean that it is a standard in the automotive industry. There the main method is still hot rolling to produce the same kinds of components, however, when you use the hot rolling method there is a large amount of CO2 emitted. The finishing tolerance is also different from that of cold rolling.
We are specialized in cold rolling and I think we have the most amount of equipment for cold roll forming globally. When we imagine how we can apply these technologies to other areas the customers also get excited because of the yield. It produces less scrap and our customers appreciate that fact. We are now applying this method to many other components. As you can imagine, generating less scrap leads to cost savings and less CO2 emissions.
One impact of the population change we’ve yet to talk about today is how it has affected the market in Japan. We’re seeing the domestic market shrink progressively year-on-year and more and more manufacturing taking place outside of Japan. Many SMEs are now exporting or physically going and establishing overseas locations in order to support this newfound overseas manufacturing. Could you tell us more about your experience in this regard?
We have already established our production sites in China and Mexico. In China, we mostly interacted with Japanese companies. We are now preparing there to address any new types of demands that are coming from these clients. In Mexico, we are actually getting a lot of offers or proposals from the local market to do some joint projects for the development of EV components as well as conventional internal combustion engines (ICE). Once we go out to a foreign market we learn a lot there so we can bring that knowledge back to Japan and use it for future improvements for the Japanese market.
Would you say that you are actively seeking new partners in overseas markets?
There are so many ideas and conversations going on right now with many different companies, but one specific project is with a Japanese partner in Mexico to come up with an end-to-end processing method that combines our processing with post-processing.
You’ve already talked about China being an area of focus with a lot of history, and just now you mentioned Mexico. How would you describe the company’s international expansion strategy?
We are focusing on both existing markets and new markets in China, and we feel that our members there have grown up so much over recent years to the point where we consider them fully-fledged members of our family. In Mexico, we have introduced new equipment that has never been used before in Japan. The intention here is to test out this business model and should it work out well it will continue to be our main business model moving forward. By achieving certain goals there we can take this model to new locations and markets such as India or Africa. Establishing the foundation of this business model in Mexico is our top priority for us now, but of course, that doesn’t mean that we are going to reduce our work in Japan. We need to find out ways to address the declining population and the shrinking market. Right now we are trying to address it by producing more value-added products and finding ways of reducing the burden on our labor force.
The company is actually investing in a new plant in Japan. International expansion isn’t at the expense of Japanese operations, and we are still trying to expand in the domestic market.
Imagine that we come back in 5 years and have this interview all over again. What goals or dreams would you like to have achieved by the time we come back for that new interview?
We would like to make plans to further expand our global business. In 5 years we would also like to prepare an environment where aged employees can continue to work within the forging process. Enhancing satisfaction in the workplace is key to survival in the future for us.