While the market is being overshadowed by the impact of COVID-19, the SWCC Group continues to steadily move forward, taking advantage of the strengths of its business. “Electrical wires and cables provide the critical social infrastructure that keep our economies powered, with SWCC delivering the latest technologies to meet the needs of our times,” says Takayo Hasegawa, President and CEO of SWCC Showa Holdings Ltd., who gives more information on her company and its products in this interview for The Worldfolio.
This article covers the following topics.
I would like to get your take on the regional manufacturing landscape. In recent decades Japan and Japanese firms have seen the rise of regional manufacturing competitors such as China, South Korea, and Taiwan. Yet we still see small and large Japanese SMEs maintaining a large global market share especially in B2B markets and niche fields. As a manufacturer of many indispensable components and products such as wires, cables, and electrical equipment, what does monozukuri mean to you and your firm? What do you believe to be some of the strengths of the Japanese manufacturers that allow them to remain competitive in this environment?
Your question is quite unique, especially given your position as a member of western media; this is a question I do not often get from the Japanese media. I come from an engineering background and as an engineer myself I was very happy to receive technical questions from you. As you have mentioned our competitors such as China have taken on mass production and Japan has taken this as an opportunity to move in a unique direction. One example that I can give you is Dip-forming technology which is our Oxygen-free copper wire so-called MiDIP®. Originally this was a type of copper wire-rod manufacturing technology we imported from General Electric Company in the United States. However, moving from there we saw the inefficiency of this copper wire technology. We were looking to see how to minimize the amount of oxygen to less than 5ppm and hydrogen in the whole process as well as how to enhance its processing capacity. The questions on how to improve it actually came from our clients. As regards to the technology behind MiDIP®, our clients in the automotive sector, who were working with materials related to motors and car components, asked us how we could improve the wires by removing as much oxygen and hydrogen gas as possible. We took this to heart and continued importing these technologies from General Electric Company. We tirelessly worked over ten years at improving the performance of this product. I think this is something that is quite representative of the Japanese manufacturing sector as a whole. This is where we were able to put our emphasis and focus on a single technology. Our engineers displayed a kind of endurance and tenacity to actually bring about new products as a result.
It is through such hard work and having a deep focus in our R&D that really brings about highly efficient products such as MiDIP® being good examples. With this attitude we were able to respond to our clients’ needs by putting an immense amount of focus and effort into our R&D. This great endurance and fortitude is definitely a special feature of Japanese firms and something that is very present, alive, and thriving here in Japan. I believe this distinguishes us from our competitors such as China that are still on the mass production model.
This DIP-forming process that we have for our copper production is used for copper forming. This system is not exclusive to Japan, there are three other companies that have this technology: one in China, another in Malaysia, and in Taiwan. Despite this, our clients still see that our DIP-forming process is the most superior and still choose us over our regional counterparts.
I have a quick follow up about your MiDIP®. An oxygen-free copper wire used in electronic and automotive components. Automotive is a sector that is going through quite a transformative time, especially in regard to EVs. We saw that your IR materials that the demand for your MiDIP® is increasing given this EV push. What is the impact this transformation has brought your business, and how are you capitalizing on the changing demand for electronic automotive components?
With regards to the applications of our MiDIP® technology in the automotive sector, the core technology involved is unchanging and the same material is required for all applications whether they be the motors, industrial use, or magnetic wires. Actually any copper would be enough for these applications, however, what we are doing is seeing how we can create even less gas-contents, higher workability and higher performance of our MiDIP® as well as optimizing its efficiency especially for the automotive sector. One of the qualities of MiDIP® is being oxygen-free (less than 5 parts per million), therefore, it can be utilized for motors and electric components. To what extent we can use MiDIP® is a continuous challenge on how we could continuously upgrade our technology to meet the demands of the automotive sector.
We are starting to see that with this shift towards EV and change in materials there are a lot of interesting applications when it comes to heater-related cables. For example, nowadays there is practically zero conversion, even the batteries are going to be heated. For these cars to move we are starting to see heated handles, basically more and more heater-related technologies will be required. What is interesting is that copper is at the base of these technologies. We could enhance the technology involving copper by minimizing the oxygen and by enhancing its welding performance where it can be combined with different alloys. The enhancement of its durability and workability is something that is quite interesting and there is a lot of room to grow there. Lastly, with regards to electronic devices and components, we are able to produce a technology that is really thin for the usage in the electronic components. This is another example of new materials that are being explored through enhancing and upgrading our MiDIP® technology.
My field of expertise is in metals and high conductivity, in that sense it’s great for me to elaborate on this topic and how our company itself has really continued to grow by always enhancing the performance of the copper. We’re constantly seeing and exploring new kinds of applications as well as maximizing their performance.
We have a technology that can utilize AI to produce many kinds of simulations and testing. We actually have a lot of testing and analyzing facilities in-house. This kind of work is something that we are very capable of. I think this is something that also distinguishes us. It enables us to do business our own way, as opposed to larger firms or many firms in China that are still reliant on a mass production model in order to be profitable enough to survive as a company. We have this unique position as a medium-sized company that does not necessarily seek massive amounts of sales in order to continue our business. We have been able to take on a different type of business model and continue to be successful.
The volume of copper being utilized for copper wires and cables in Japan is approximately 600,000 tons. Despite this huge amount of volume only 4 to 5% of that is used for the MiDIP® copper wires. It is actually a very small share of the overall volume of copper wires. Our specific strategy focuses on what extent we can derive added value and sell our products in this particular segment. I believe our greatest strength with regards to why our customers must choose MiDIP® is they can have full control over the amount of oxygen. Another reason is that it has an incredible level of workability and processing capacity. This is very beneficial for the clients as they can utilize the application of magnetic wires for motors.
You have developed a tri-axial superconducting cable alongside NEDO and BASF Japan that can reduce power transmission energy loss by more than 95%. Can you tell us more about this project and your expectations for this technology as well as other initiatives you are developing for the sake of sustainable development?
This superconducting technology has been utilized in a number of technical applications throughout the years, a big example of this being for MRI machines in the medical field. This is also utilized in the Maglev train here in Japan. Right now fusion technology is something in the limelight and these superconducting cables are a hot topic. Up until now liquid helium is required for superconducting cables and will only function at -270 degree Celsius. It is quite expensive to create this product and to make it widely applicable to various technologies. However, the kind of superconducting cables that we have been able to develop utilizes liquid nitrogen. Because of this, it is much more affordable and has been studied since around 2000 in a wide number of areas.
The greatest strength of this cable is that conductor itself has no electrical resistivity, so large energy can be carried with minimum energy loss. On the other hand, since conventional metal cables have electrical resistivity, much energy loss is generated, much energy is transmitted. Our developed “tri axial superconducting cable” is thought to greatly contribute to reducing CO2 emission. With regards to the way in which electricity is delivered from power plants to everyone’s homes, in Japan there is a 5% annual loss that comes about as a result of utilizing conventional metal cables. This 5% of energy loss is lower than the global standard of energy loss which is around 10%. I truly believe that while 5% may seem small, it is actually equivalent to the annual energy production of five nuclear power plants. To reduce from 5% to zero means a great contribution to not needing to produce extra energy. I believe that achieving this is an extremely important contribution to the environment.
Speaking about superconductivity cables that utilize liquid nitrogen, this technology is not something to be considered cutting edge as it is something that has been around for a long time. I feel that Japan could do better in being proactive when it comes to discovering new technologies. Oftentimes there are not a lot of opportunities in Japan to test out new technologies, companies here tend to not be as proactive compared to their global counterparts. It is interesting to note that recently a German company decided to collaborate with NEDO for a test site. They have been able to provide this opportunity through partnership in order to move in the direction of making this R&D into reality. I do believe that moving into a carbon-neutral world through the different policies and goals that Japan has set for 2050, you are going to start to see more and more policies put in place such as a carbon credit system. There will be additional requirements for the testing of technologies. Furthermore, efforts are to be made in order to respond and meet the standards set by countries. With this perspective I believe that these kinds of goals and issues will become of greater importance here in Japan. I believe that our superconductivity technology is going to play a big role.
You mentioned this collaboration with NEDO and this German company as a fruitful example of collaboration for SWCC. How would you describe the role or importance that collaboration plays in your company? Are you currently looking for new collaborative partners, especially with overseas companies?
As an engineer myself I am into R&D, in fact I have participated in a number of international conferences with regards to R&D and I am very much open to collaboration. I have also participated in a number of innovative projects and platforms with universities and research institutions in Japan, the US, and other countries. From my perspective I believe that new technologies are something that cannot be created alone. That is, no single company can innovate new technologies. To come up with a new technology it requires a combination of different players that come together. In a sense these players have different roles to play, that is, there is going to be a sort of division of labour in coming up with an innovation system without any specific restrictions, policies, or standards that would limit the ability to explore new technologies. This is something that is not only applicable to superconductivity technology, but should also be promoted in all types of fields. In other words we should be more proactive as a country in general to promote collaboration. With regards to potential collaboration it does not matter whether the partner is from Japan or overseas. If there is a company that is suitable for us and is committed to pursuing research and development, then no matter where their location, we would be willing to enter into a collaborative project with them.
One of your products is the SICONEX® which is mostly used in power distribution facilities. We had a very interesting conversation with Mr. Kobayashi from Aichi Denki in which we discussed how connectors typically suffer from two major drawbacks: first, the difficulty in installation, maintenance, and inspection; and secondly, power loss. Can you tell us in more detail how the SICONEX® line helps overcome these two particular challenges?
SICONEX® is one of the original technologies that we developed as a result of looking into responding to the clients’ concerns and needs and providing solutions to the issues that they’ve had. Our clients required us to produce something that was compact, made of plastic, and easy to assemble. We were looking to develop a technology that would meet all of these needs. It was something that we came up with 20 years ago. From there we expanded it to the scale of production and usage that you see today.
Conventional termination joints are assembled using ceramics and oil. The diagram that you see is our SICONEX® terminal joint made of all plastic which is much more compact. This transports the same amount of high voltage currents that are required and is calculated in a way that is possible even at a smaller scale. The conventional system that is made of porcelain requires it to be assembled onsite and once it is assembled onsite it is injected with insulating oil. With our product that is made of plastic, we were able to assemble it off site, and then when it is installed it is immediately ready for use. It does not require a secondary step of assembly onsite which is then followed by injection of the insulating oil. One great strength of using our product is it is capable of shortening the onsite labour that is required for the assembly of the termination joints, thus, we are able to enhance your productivity. Another great strength that is worth mentioning is since it is made of plastic, it is much lighter. The fact that it is lightweight is something very valuable, especially here in Japan, when it comes to responding to disaster-prone areas such as places that experience a lot of earthquakes. If there is an earthquake or natural disaster, the lighter product will be much safer. The conventional termination joint that is heavier such as ones that are made of porcelain and that requires insulating oil, is actually much less resistant when it comes to earthquakes. Additionally, if there is an oil leakage then this can lead to fires.
SICONEX® is not only lightweight and easy to assemble but also has the added value of being incredibly earthquake resistant. This is valuable for Japan especially when you consider that electricity is a key utility in times of disasters. Although SICONEX® was developed 20 years ago, the true value of it came to be highly appraised by our clients after the earthquake and tsunami in the Tohoku area on March 11, 2011. At that time our clients were using this in the electricity field and they saw a great value in it. Slowly our sales increased to the scale that we see today after that incident.
You already have a diverse international profile. Can you tell us how you plan to further develop your international business both in terms of the markets or regions that you consider key and also in terms of your strategies? Would it be finding new collaborative partners, establishing new sales offices, or joint ventures?
We have a Chinese partner in our copper business and in our SICONEX® business in the electrical field. With regards to the wires used in home appliances we have affiliated companies in China and Vietnam. Through these partnerships we have come to truly understand the circumstances that we are in today. It is important to be able to shorten the supply chain as much as possible and be as close to where our clients are located as possible.
With regards to our other businesses such as the optical fiber network cables there is a lot of demand in the US, but we do not have a stronghold and office for this market yet. Looking forward, we are going to look for business partners as we want to expand in the North American and European markets, but we are not at that stage yet. This is our strategy to capture these markets especially when it comes to the communications and 5G network fields. It is a fact that the communications and network fields are markets that will experience growth and there are lots of opportunities there. For example, communication towers need to be built, new types of cab need to be installed, and everything has to be upgraded to create that kind of network in North America.
One such product that can help in that respect is our Rollable Ribbon (e-Ribbon®) which enables high-capacity communication and efficient installation. Moore's law is an observation that the number of transistors in a dense integrated circuit doubles about every two years and with this increased capability data centers processing speeds are evolving very fast. Optical fiber cables serve as the infrastructure for these centers and are installed in large numbers and must be capable of withstanding for many generations to come. Given that optical fibers are a key determinant of communication performance, they must be small diameter, lightweight and as dense as possible. e-Ribbon® meets these demands and is attracting a great deal of attention because of its ability to accommodate a large number of fiber installations. Hyperscale data centers with high processing power and enormous storage will be the norm in years to come and like any other business they will be subject to stiff price competition and thus there will be a need to reduce operating costs. e-Ribbon® meets this challenge because it allows for more optical fibers to be installed in a fast and efficient manner, all while reducing construction costs.
This year your company is celebrating its 86th anniversary. Imagine we will come back to interview you again in four years, what would you like to tell us? What are your dreams for the company and what would you like to have accomplished by then?
All over the world we see problems in humanity such as disasters, infectious diseases, and environmental issues through digital transformation. The SWCC Group is working towards building a better future. We have set three targets as our Sustainable Development Goals.
Firstly, to enrich our lives we will continue to make advancements in our technology while stimulating job satisfaction in the economy. Secondly, to protect the cities from disasters through infrastructure development. We will contribute to building cities for people to live safely. And lastly, to protect the global environment. We will provide new technologies to ensure a stable supply of renewable energy. Through digital transformation we will achieve these three goals and create a new concept and value for the future. We will create a new business model by combining digital transformations and SWCC’s core technologies.
Our wiring and cable technologies have been supporting the world’s infrastructure for years. We will continue to use our technologies to create new streams that will help build a better world. Our core technology and main line-up, SICONEX®, compact and environmentally-friendly equipment brand is mainly used for power transmissions and distribution equipment transformers’ power plants and substations. SICOPLUS™, a new revolutionary business model that brings together SICONEX® and digital transformation technologies. It is a system that has evolved by adding efficient labor saving and personnel training programs for installation technology on the cable connection system using SICONEX®, creating a new solution by combining Japan’s leading technology of well-trained high voltage cable connections with cutting edge digital technologies. This is SWCC’s digital innovation. By introducing DX tools we will make the transition from the education stage to onsite operations. Effective training can be achieved by combining real work with virtual simulations. We will develop human resources that will play an active role on sites by completing the acquisition of special skills in the short time which used to take years. We will use smart glasses to support operations and avoid potential troubles onsite. By referring to an electronic manual, even unfamiliar equipment can be operated precisely. With remote support from experienced engineers even the complex tasks can be handled smoothly. We are closely connected to society through cables’ public utilities that are indispensable to people’s lives and networks that transmit information. It is SWCC’s mission to support those essential infrastructure. We value the connections and create streams that create a new future.
The statements above are the summary of the things that I am looking forward to accomplish moving forward. We are really interested in combining our core technologies with these new cutting edge technologies that are coming about as the result of digital transformation, cloud servicing, and all of the new virtual and digital technologies. We would like to see the applications of these combined technologies in new fields.
Our direction within the next four years is to see how we can maximize our core technology and continue to draw the strengths of our monozukuri spirit which brought us to where we are today. We will combine our core technologies with the new ones through digital transformation in this new era. We will bring new services and find a new arena for business in these new fields that are opening up. I have been the CEO in this company for four years but being a researcher is the core of my career. Engineering is at the core of my being. I am always looking forward to the challenges and opening up new fields of enterprise, all of these are driven by my ambition. During these past four years that I have assumed this position I really focused on enhancing the corporate management of the company. The next four years is where we can start digging in and getting to where we would like to go in regards to our technologies. We are looking forward to welcoming you again in four years.