Kamo Seiko is taking full advantage of its strengths to become a manufacturing company that paves the way to the future.
In the current landscape, Japanese manufacturers are facing several challenges, including navigating supply chain bottlenecks and rising input costs. However, Japanese manufacturers have a reputation internationally for their high quality, and with the weakened status of the JPY against the USD, buying Japanese products has never been more cost-effective. Do you agree with this sentiment, and to what extent do you believe that Japanese companies can leverage these current conditions to their advantage?
Yes, I agree with this sentiment regarding the cost-effectiveness of Japanese products. As you mentioned, the JPY is currently very weak against the USD, which means that from the price perspective, ‘Made in Japan’ products are more affordable and, therefore, in a great position in the overseas market.
We have seen post-COVID that there has been a move away from single-country risks like China as Western governments are looking to diversify their supply chains. For example, Apple is now opening up new operations in India. Do you see business opportunities, especially when it comes to Western-based or Asian manufacturing companies that are looking to diversify with new suppliers from Japan?
Our products are unique, and there are no alternatives to our products in the market. That is why we know that we have received inquiries from companies that are looking to shift away from China to our products above reasons.
However we have Chinese and Korean subsidiary and US partner company, these inquiries are received to theirs basically.
One of the major challenges facing the Japanese industry is Japan’s declining population. Japan has the oldest population in the world, and this is posing dual challenges. The first is the declining domestic market, and the second is difficulties in hiring staff. How has your company been reacting to these challenges, and to what extent do Japanese companies need to look overseas to secure new markets for their goods and new talent for their operations?
We would not be able to survive if we only sold our products in the domestic market. Going forward, we would like 50% of our business to come from exports with the remaining 50% coming from the domestic market. That is our goal. Currently, our exports account for 35% of our business. In addition to that, we deliver our components to Japanese companies, who assemble the components into machines, which are then exported. That means that about 50% of our overall business comes from exports, and we aim to maintain that ratio going forward.
In addition to our business in South Korea and China, we would like to expand to Southeast Asia and India. As I mentioned, we want to maintain 50% of our business in the Japanese domestic market. We will continue to produce our unique products and provide them to our customers. Many of our users are prevalent hi-tech companies that operate overseas. As they buy our components for the products that they export, we are doing global business indirectly through them.
Could you explain to our readers what makes your products so unique and hard to replicate? What are the unique technologies that your company possesses?
The TCG (Trochoid Cam Gear) is our main product. It is a non-backlash gear with roller pins and precise teeth that mesh with it. These meshes are a rolling contact different from normal gears and achieve very low wear and low dust generation so that they can be used in cleanrooms. In addition, since there is no backlash, high-precision positioning is possible, and the rack type can be extended to any length by connecting them, and the ring type can be divided to achieve very large outer diameters and hollow diameters. To achieve this, precise structural design and precision part processing are required, which makes it difficult to imitate. Our TCG products are used in high-tech industries such as the semiconductor industry and flat panel manufacturing industry and are also used in many production lines.
When we spoke to Mr. Kawai, he told us that cleanrooms were a huge challenge for his business. He used the analogy of trying to sweep a baseball field with a toothbrush to describe how difficult it is to get rid of the microscopic dirt that can still exist. When it comes to your technology, what are the aspects that allow it to be operated in such a clean environment? What characteristics have you developed to make it as clean as possible?
The shaft is inserted into fasteners in the pinion and each roller pins are supported on bearings on both sides. This allows for smooth rotation, and when the pinion is rotating, it always makes multi-point and rolling contact with the rack teeth, resulting in less friction and less dust generation. Also, these products can be subjected to a precision cleaning process to remove minute particles of dirt, enabling us to provide products suitable for use in clean environments.
We saw that in 2020, for your company’s 40th anniversary, you set forward a new medium-term vision toward your 50th anniversary in 2030. As part of this vision, you highlighted the goal of generating new business pillars, and you set a sales target of JPY 3 billion. Could you give us an overview of some of the goals you have set as part of this vision, and what initiatives are you putting in place to achieve them?
We want to introduce new products to our Ball Reducer and TCG product lineups. However, it is difficult for us to develop totally new products, so we are considering combining our Ball Reducers with something new. Our R&D department is currently working on new products. However, we have yet to commercialize them.
When it comes to increasing our sales, we have three strategies in place. The first is to create a new business pillar for our products. The second is to expand the market for our existing products, while the third is conducting M&As. Last year, we acquired one company. We plan to increase the scale of our company and our sales volume through further M&As.
In terms of increasing sales volume, to what extent do you see your overseas pillar as being part of this? Are you looking for M&As and partnerships in the overseas market?
We currently have a licensed contract with the US company Nexen for our TCG products. We plan to continue this partnership going forward. In terms of the overseas markets in which we operate, we have been very successful in the South Korean and Chinese markets, and our next target will be to develop the Indian market.
Will that involve new sales partnerships, for example, or do you see some opportunities for M&As? How do you plan to further develop the Indian market?
We would like to establish a local subsidiary in India as we were successful in establishing local subsidiaries in South Korea and China. There are no Japanese expats at our overseas subsidiaries, so those companies are operated solely by our local staff, who do an excellent job. We are very experienced in developing a business from scratch in foreign countries, and the local people are best suited to handle the local business. They know the culture and the situation in the country. That is the approach we would like to take with the Indian market.
Earlier, you mentioned that you are working on developing products based on your Ball Reducer. This technology was the world's first when it was introduced back in 1985 and used ball bearings instead of traditional gears. What are the main benefits of using these ball bearings, and how do they improve energy transmission compared to traditional gears?
The main advantage of using the Ball Reducer is that it is non-backlash. The biggest challenge when it comes to gears is backlash. However, by developing the Ball Reducer, we successfully eliminated the backlash. The Ball Reducer is also very efficient. One other way that this product is different from gears is that the use of steel balls in the reduction mechanism reduces friction at the inner meshing points and results in smoother operation.
We are seeing many companies both in Japan and abroad trying to automate their processes to not only overcome the challenges associated with labor shortages but also to enhance efficiency and precision scalability. It also allows real-time knowledge and maintenance as well. How is your company reacting to the increased demand for automation, and what role do you see it playing in your products in the future?
Our products do not directly contribute to the increased demand for automation. However, we believe that our products can contribute to this increase in demand by being used by customers who manufacture a variety of automation-related devices and equipment. By incorporating our high-precision products into equipment, we can contribute to improving the performance of the equipment manufactured by our customers, which will ultimately lead to improved productivity for the customers who use that equipment. Also, we are introducing robots in our factories as this will allow us to operate with fewer people. When it comes to office work, we have introduced AI a little, but we will have to be more proactive so in the future. However, we are currently introducing DX in our sales activities to reduce the number of sales reps we need to cover the Japanese market. In addition, we are planning to hire more aged workers by reviewing work processes and roles.
When it comes to hiring engineers, I am considering hiring foreign engineers from our local subsidiaries in South Korea and China. In addition to hiring new staff, we must also retain our existing employees. To do so, we are preparing a better working environment for them. We would like them to work at our company until they reach 60, 65 or even 70 years of age.
One of the other main trends that we are seeing is the move towards seeking more sustainable operations. This is being done through an increasing focus on energy-efficient designs using sustainable materials as well as the utilization of advanced technologies to create lightweight components, optimize resources, and lower energy consumption. What are some of the initiatives or product features that your company is implementing to improve your sustainability performance?
As a business, there is a limit to the ways we can contribute to society in terms of sustainability. However, we have installed PV panels on the rooftops of our premises. That is one example of our sustainability initiatives. Furthermore, if we can improve the driving efficiency of our products, power consumption will be reduced by our customers. That is how we can contribute to society.
If we were to return to interview you again in 2030, what would you like to have achieved by then? What would be your personal goal for Kamo Seiko by that date?
In the next five years, I would like to establish a holding company. Before doing so, I plan to conduct two further M&As. Currently, our company is a machine elements company. Going forward, we would like Kamo Seiko to be a machine elements company plus something else. In terms of our sales, my goal is to increase our sales to JPY 5 billion in the next five years. After we successfully establish a holding company, I would like to move our headquarters to Nagoya. So, hopefully, we can have the next interview in Nagoya.
For more information, visit their website at: https://kamo.co.jp/
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