Precision Tools that Deliver Quality

We would like to begin by asking you about the spirit of monozukuri. We know that monozukuri has been and is about seeking product perfection through craftsmanship with extreme attention to detail. Today, that also involves responding to diverse customer requests and providing added value. In your opinion, how do you define the strengths of Japanese monozukuri, and how do you channel that into your business?

Monozukuri can be related to any country in the world. It does not have to only be related to Japan. It is the art of manufacturing. Of course, there are many manufacturing companies abroad that make good products and provide good services when satisfying their customers’ needs. The difference between Japanese monozukuri and the other types of monozukuri is that we pursue product perfection through unparalleled attention to detail. It is a step above the other manufacturing companies. Japanese companies are precise in what they do, and they produce high-quality products that are both reliable and long-lasting. Product perfection is the area that can be judged. For example, a company may produce 10,000 pieces with a defect rate of 0.001. Some companies would be OK with that. However, that is unforgivable in Japan, as even a small defect rate can affect a company’s image. That is how we define quality and flexibility for our customers. We refer to this as customer-centric innovation, and we ensure that the products we release are of the highest quality.

Japanese companies also have suppliers from other countries. In our case, we have suppliers from China and Taiwan mainly. We sometimes receive products from these countries with a defect rate of 2% on average. The answer these companies give us is that this is the worldwide standard defect rate and is normal when they deal with companies from other countries. However, that is not acceptable in Japan. We strive to have the defect rate as close to zero as possible. While the defect rate may seem small at an industrial level, it still makes a big difference. Ultimately, monozukuri in Japan is not only about making products but also about making products with purpose and pride. The vision involves customer satisfaction as we are creating long-lasting relationships with our customers and want to serve their needs for as long as possible. Reliability is, therefore, key.

In the current landscape, Japanese manufacturers are trying to navigate supply chain bottlenecks and rising input costs. However, there is a chain of thought that the situation is positive for Japanese manufacturers. Some people point to their reputation for reliability and advanced technologies, while the weakened JPY is making Japanese products more cost-effective and appealing globally. At least, this is the premise. Do you agree with this premise, and how can Japanese companies strategically leverage the current situation to enhance their competitive advantage?

The strategic approach of Japanese companies has recently received a lot of good feedback from overseas customers. However, I would not say that this is only due to the depreciation of the JPY. The average consumer may think that the JPY has reached rock bottom and buying products from Japan has become cheaper than before. However, in our case, the weakened JPY has not boosted our exports. Overall, the demands of customers from both overseas and here in Japan are first and foremost drawn to the reliability and high quality of the products, regardless of the price. I do agree with your premise. However, we do not rely solely on the prices. Rather, the customers' needs are another important factor, especially when it comes to measuring tools. They are required to be as precise as possible. People are attracted to the reliability and efficiency of Japanese products, and Japan has a lot to offer the world.

The times have also changed. People can now search online for better options and more reliable products and services. Finding such products and services has become a lot easier than it was 30 or 40 years ago. Japan accumulated a lot of wealth during the bubble economy, and people bought a lot of land, assets, and products overseas. However, it did not work out in the long term. The current situation involving the real-estate bubble in China can be viewed as history repeating itself. We are currently living in uncertain times, and it is, therefore, very important to choose your path and see what works well for you. Through market research and due diligence, you can find better products. Japan currently has a lot to offer in streamed quality control measuring tools. If it works well for you, then why not buy it from Japan?

Right now, Japan’s population is 125 million. However, that is expected to fall to 100 million by 2050, and by the end of the century, it is predicted to stand at 65 million. This presents dual challenges. The first is a diminishing domestic market, and the second challenge is the increasing competition for a smaller labor pool. For example, by 2040, there is expected to be a deficit of 11 million workers. Different companies are reacting in different ways. Some are using M&A, joint ventures, and international partnerships. How is your company responding to these challenges, and to what extent must Japanese companies like yours look overseas?

Japan’s demographic decline and subsequent manpower deficit in Japanese manufacturing are some of the problems that many companies are struggling with. We are no different. As you mentioned, to overcome this challenge, many companies have adopted different strategies. One solution is to attract a foreign workforce from Southeast Asia that can be integrated into the Japanese system. However, attracting people to work in Japan is not that simple. You cannot just offer them good wages. For example. Workers can decide to move to other countries offers higher wages than Japan at this moment. Japanese companies must also prolong people’s presence in the company and make them happy to work here, as they are going to be living far away from their home countries.

This can also be an issue for Japanese people moving from one part of Japan to work in another. While some people may decide to come and work here in Sanjo, Niigata, they may be offered better wages in other areas, such as Tokyo, for example, and then decide to relocate. The most important factor is not just employing people. It is trying to make their lives easier by offering incentives to sustain them.

To mitigate labor shortages, some Japanese companies are implementing automation. AI and robots have become very popular. Unfortunately, the rural areas of Japan have not been so quick to adopt these new technologies. For example, if you speak to companies in Niigata, you will see that, in most cases, they are very conventional and use traditional methods to make things. Many prefer to handcraft their products rather than use machinery. Our company has already adopted automation to some extent in our processes, as some workflows can be replaced by machinery. We have been integrating machinery into our production line and would like to introduce to other companies in our local area. I believe that gradually, this technological integration will happen faster in this area, and I want our company to be a good support for others. For that reason, we have already begun investing in M&A activity, and this year, we successfully carried out an M&A with a Japanese company that manufactures automation machinery. That has helped us to address the labor force shortages that we were experiencing and reduce our reliance on human labor.

What was the added value of that M&A, and what synergies have you been able to generate between that company and yours? One successful partnership of yours was your spiral tape measure, which was developed in partnership with Taisei. Are you currently looking for any future partnerships domestically or abroad in terms of sales, distribution, or product development?

Yes, we are open to future partnerships both domestically and abroad. Everyone is welcome to join us on our path, as we are interested in combining our efforts with others to make better-quality products. However, any future collaborations or partnerships must share the same vision as ours. We do not first make products and then find customers to sell those products to. Rather, it is the customers who approach us and explain what types of tools they require at their production site. For example, it was Taisei who contacted us, as many of their customers required the measurement tool that we were able to provide. As a manufacturing company, we want to apply all of our efforts towards making tools that cater to the needs of our customers.

Your company was founded in 1960, and you have developed into a comprehensive provider of measuring instruments. We know that you are involved in the manufacturing and sale of not only measuring instruments but also DIY materials and tools. You also have a wide variety of certifications, including being the first in the Pin Gauge industry to be registered as a JCSS collaboration business in the length category. How would you define the core strengths of your company?

We have a very strong product lineup. As you mentioned, it goes beyond just measuring tools and encompasses DIY tools and Pin Gauge itself, which is qualified into JCSS categories. However, before speaking about our products, we must consider the philosophy of our company. Our vision is for the products we make to be based on a customer-centric approach. Everything we produce is designed to meet the needs of our customers. We have been there for our customers for many years, and this has allowed us to develop a deep understanding of their needs and tailor our solutions to meet their exact expectations and specifications. This customer-oriented approach has been at the core of our company since our establishment, and we have built long-lasting relationships with our customers.

Which of your core product segments do you believe has the greatest market potential for growth, and is there any chance of you expanding to different product segments in the future? If so, could you tell us about it?

It is difficult to point to one specific product that could have a better rate of meeting our customers’ needs in the future in terms of application or sales. I would define it by usage. Level measurement tools are, therefore, a good category as there is always a high demand from customers. One of the reasons for this is that it is very hard to copy level measurement tools. Most machine manufacturing companies in Japan use our level measurement tools. We are trusted by all of the big players in the industry.

One of your most popular products is the Levelnic Series, a high-precision digital level that boasts the industry’s top market share and applies to a wide variety of industries. It can digitally measure the inclination relative to the Earth’s level. It also has a partner measuring instrument in terms of communication integration software, the SK-LOG, which can simultaneously manage multiple measuring instruments. What are the main advantages of this line that have allowed it to capture such a large market share?

The reason behind the success of the Levelnic Series is the fact that it is digital. Companies used to use hand measurements as the bubble level required the human eye to observe the measurement. People also used to input the data in writing, which took up a lot of time. Digitalizing this process and upgrading it to the level of exceptional precision is what defines our Levelnic Series. Our SK-LOG communication integration software is embedded into the devices, which makes the data collection side more efficient and precise. Also, the fact that it can manage multiple measuring instruments simultaneously drew a lot of attention from the customers.

The Levelnic unit can be used on its own. However, SK-LOG improves it greatly as it involves the synchronization of the data for the measurement results that you conduct on your site. It can tell if the surface is straight or has some bubbles or declinations. Everything can be observed and accumulated simultaneously in real-time data synchronization. Combining the Levelnic devices with the SK-LOG software is improving the results for our customers.

Could you explain how the SK-LOG manages real-time data synchronization with such high accuracy and latency specifications?

Using our SK-LOG software with the Levelnic Series was something that was demanded by our customers. They told us that the Levelnic was working well for them, but they required measurement data from real-time accumulative software. Some customers were still using Excel files to input the data. They required software that would improve the operation of the tools. We were not a software-providing company back then, so we adapted to meet the needs of our customers.

Your R&D is a key part of your business as it allows you to respond to the needs of your customers. One great example is your Spiral Measurement measuring tape, which won the Good Design 100 award. Could you tell us more about your R&D process?

Our R&D activity is one of the most crucial aspects of our business. Our mission is to deliver high-precision measurement instruments to serve the needs of different industries. These needs can change over time. It is not enough to just listen to the customers and come up with a conventional solution. Rather, it is a long process that takes several months, if not years, and involves discussions and the creation of prototypes for our customers to provide us feedback on. If the prototypes do not meet their needs, we must return to our R&D offices to come up with better solutions. Our R&D engineers play a crucial role in creating the products that satisfy the needs of our customers.

It took us two years to produce our Spiral Measure measuring tape. It required 50 prototypes and involved negotiations throughout the two years to come up with the best solution. Time is money. If we take too long, our customers may disappoint with us. Also, in two years, we would not make any profit. It is, therefore, a big commitment.

When it comes to internationalization, your company’s first overseas expansion was in Taiwan in 1986. Since then, you have entered China, Vietnam, and Indonesia. What are the main benefits for your business in these strategic overseas bases, and are you currently looking to expand your overseas bases? If so, what countries or products are you targeting for further expansion?

We have four overseas hubs that we have divided into two categories. The first category is Taiwan and China. Up until now, we have been using those countries to procure materials and parts for our production in Japan. The other categories are Vietnam and Indonesia. Many Japanese companies have expanded their businesses to these countries. That is why we have entities in those areas. We procure locally or from Japan for our Japanese customers with bases in Vietnam and Indonesia. Looking to the future, the next country we target could be India, as it has a vast population and, therefore, a high demand for measuring tools. However, we are located in a rural area here in Niigata. While we can proclaim that we would like to go to India, realistically, it will be difficult to implement. Expanding from Niigata to India is a big step, but one that we would like to take in the future.

Companies that face similar obstacles when expanding abroad usually try to find partners, distributors, or agents to help facilitate the expansion. Are you looking for distributors or partners in markets such as India to help you expand?

The ideal scenario would be to find a distributor. However, we tend to do things by ourselves. Before I became president, the company was supplying products overseas through trading companies. I changed that system, and providing products directly to our overseas customers became my mission. If we were to expand to India, ideally, I would go to India directly and not use a trading company to do so. Finding a local distributor and sending our products directly to the area is the strategy I would employ.

This year your company is celebrating its 64^th anniversary. Please imagine that we come back six years from now for your 70^th anniversary and have this interview all over again. What would you like to tell us?  What dreams and goals would you like to have achieved by then for the company, and how would you like your company to be seen in the eyes of the global market?

First of all, my goal for the next six years and beyond is for our customers to feel that their job was made so much easier through the use of Niigata Seiki’s products and production sites. Our mission is to make our customers’ lives easier. That is my ultimate goal, and it relates to all of our business areas and products. Everything we make is designed to meet the needs of our customers. If we can make them happy, that will rebound to us.

It may be easier to see what is good about Japan from an overseas perspective such as yours, as you have more of a global vision, whereas many Japanese tend to focus domestically. It is very important for us to receive feedback from our customers both domestically and overseas. I travel to many countries. However, my staff travel less than I do. They do not have the chance to listen to the opinions of overseas customers and learn what they think about our products or about Japan itself. While we are proud of the products we make, it can be difficult to deliver that message overseas. I believe that today’s meeting could be a good chance to do that. Perhaps we could trace the feedback from your readers.

For more information, please visit their website at: https://www.niigataseiki.co.jp/