Founded in 1918, Sannohashi has consistently innovated when it comes to fastening systems that meet the demanding needs of the automotive, aerospace and other industry needs
Many Japanese manufacturers today are competing with regional competitors. QCD (quality, cost, delivery) need to be all taken into account. With more than 100 years of accumulated experience in the manufacturing industry, can you highlight for us some of the key milestones of your history that allowed you to survive so long and compete to this day with regional manufacturers?
Our company's global expansion started in 2014. Before that, we only had one base for Nissan in Tennessee, USA. Surviving WWII allowed us to accumulate more knowledge and experience in our field.
On January 1st this year, the population dropped to 126 million, which is the first time in recorded history. Thirty percent of Japan’s population is over 65. Can you tell us how your firm is reacting to these population changes, and what steps are you taking to ensure the longevity of your business?
It is very important to have a positive viewpoint. We are the front-runners on an aging population, which many other countries will soon face. Fifty percent of the world's 100-year-old companies are in Japan (2022). Our target is to become a 200-year-old company, and 65% of all 200-year-old companies are also located in Japan. There is a work philosophy embedded in Japanese culture that allows companies to exist for a very long time.
SMEs represent more than 97% of the total companies, more than 75% of total employees, and more than 55% of added value manufacturing. Can you share with us their main competitive advantages, and what makes you different from your global competitors?
Our biggest strength is our management philosophy. We have not massively expanded our company. If a company grows, its impact on society also increases. However, bigger companies also require more resources to manage. Japanese companies are not focused on short-term profits. They want long-term, sustainable company management for their employees and their families. Japanese companies tend to avoid expansion, drastic changes, or massive sales targets. My company philosophy is to run the company in a compact style where my ideas and the company philosophies are conveyed fully all the way to all employees including with the part-time staff. Having a sense of teamwork in the company might not result in a big turnover, but we can also avoid taking big risks. It is embedded in the Japanese work philosophy to think in a holistic way instead of focusing on a self-centered short-term turnover. This is the spirit and mindset that drives the wellness of the company. Our company philosophy is for the mind to focus on truth, goodness, and beauty. These three values are altered according to the three essential needs of the human being – water, air, and soil. This is a philosophy shared among all the employees, so all the decisions made are based on it.
The automotive industry is transitioning into EVs. Here in Japan, 2035 is the date. In the European Union, it is going even faster, where 25% of cars sold are already EV-based cars. As a precision parts manufacturer, what opportunities have this transition presented to your firm, and how will you adapt your product lineup to cater to electric cars?
It is a bit difficult to explain our EV initiative and perspective in simple terms because it is quite complex. EV is becoming mainstream globally so we have to take steps to move in that direction. Forty-three percent of our current products are for ICE cars, so one of our strategies to expand our business lineup is to find new applications for our current products. In the aerospace industry, planes and rockets will continue to use engines where our products are applicable. Forty percent of our products are for chassis. With EVs, the weight of the vehicle will increase, and a sturdier base would be required, which means there will be continued demand for our products. We provide screws, pins and complex-shaped fastening systems. The demand for these products will continue to grow. You mentioned earlier about Japanese companies being at the forefront of QCD. However, I think that they often go overboard, which can be seen with major companies being involved in data falsification of part malfunctions. Japanese companies seek efficiency so much that technology is neglected. Efficiency means making technologies simpler, faster, and easy to use, which is the opposite of what we are pursuing. EV is related to electric appliances, so there are new companies entering the field that are not originally in automotive. Home appliance manufacturers are now entering the automotive field and they are trying to design EVs simply. However, vehicles can run up to around 200 km/h. It is critical to protect human life and safety is a priority. If a refrigerator door breaks, it does not endanger a person's life. On the other hand, if a car door breaks, it can put someone's life in danger. A simple approach does not guarantee safety. So these manufacturing companies collaborate with fastening companies to ensure safety. Our competitors were pursuing efficiency and simplified designs, so they were not able to cater to the new emerging EV safety critical components. This gives us an advantage because we have been accumulating our technologies in the engine ICE field in terms of complex screws, bolts and fastening systems. This allows us to provide critical safety components for EVs. With the shift to EV, we have been contacted by many new companies who can only do simple designs and are now in need of complex components, fastening systems or critical safety components. They want our existing products, or sometimes they ask for custom manufacturing.
We talked about diversifying the use of your existing products in aerospace and safety-critical components being the key to ensuring the rigidity of next-generation cars as they try to offset the heavy lithium-ion batteries. I want to ask about the use of materials in your manufacturing process. Non-ferrous based materials are being adopted such as magnesium, aluminum, titanium, and resins like CFRP. How are you adopting your processes in hot-cold forging and cold forging to these new materials? Can you share with us some insight into your product development?
Screws are used to connect or attach different parts, which makes them an essential component. When I first entered the industry, I thought of steel as something heavy and sturdy. Later on, I learned that steel can be even softer than candy and it can be flexible and malleable. Steel is such a good material that even though manufacturers are incorporating new materials, it will continue to be mainstream. CFRP, titanium, aluminum, and other types of materials have been used but only partially. Screws, as a connecting component, are often still made of steel. Steel cannot be used in rockets, so this is where technology has evolved. We were the first company to develop a hard aluminum screw 20 years ago, but Japanese automotive manufacturers were not able to utilize it. We have discontinued the product because other companies have been producing it. Sannohashi products are mainly safety-critical components, so safety is our priority.
Safety critical components need to go through a series of tests to ensure quality consistency. How to ensure that each product is defect-free?
Japanese pursue ultimate perfection through monozukuri. If there is a set regulation, Japanese companies try to go beyond what is required. It is both a strength and weakness. In WWII, due to a shortage of materials, the Japanese made fighter planes out of bamboo. Meanwhile, the Americans are using steel and engines in their aircraft. This shows the Japanese have the ingenuity to make and produce bamboo planes that can fly despite having limited specifications. Japanese automobiles have high performance and are highly efficient. As an article of recent Japanese newspaper published, Nissan’s vehicle (Privately owned) had reached on 1 million kilometers. It seems it is a great thing, but it also means Japanese product often has over-spec. They add specifications that are not necessarily needed in the market. Not having an awareness of this can be considered a weakness.
I would like to ask more about your company forming alliances, open innovation and partnering up with companies to create new products. Are you looking for partnerships in the aerospace and rocket industry to help you further expand in that industry?
With our previous overseas partnership experiences, we feel that overseas partnerships are very difficult. We are a technology-driven company, so having technical alliances and partnerships often means technology transfer to others. In the past, there have been Chinese companies that have used our rights to produce the products. There was also a Korean company that applied for a patent before we did. The Japanese are not very good at doing business with overseas partners because of the differences in business cultures. Another reason is that most Japanese are not good at English. Language is important in expediting business processes. The inability to communicate thoroughly and quickly can hinder the business. Thirdly, I think that manufacturing is the culture of the country itself, and in many cases the culture is greatly influenced by the language used there. Therefore, when manufacturing in an environment other than Japanese, I feel that there is a possibility that the identity as a Japanese product will be diluted. I think this is one of the reasons why it is difficult to partner with overseas companies.
Communication is the key to finding partners and entering overseas markets. When we interviewed the president of Mazda, he mentioned the importance for SMEs to force themselves to grow despite the communication barrier, which they all face, when they expand abroad in order to find new customers and expand their client portfolio and not rely only on the Japanese market. What are your thoughts on this? Are you looking to expand your client portfolio overseas?
I understand with president Matsuda that the Japanese need to go overseas and learn from European and American products and merge them with existing Japanese technologies. The Japanese are not very flexible in catering to the rule changes, whereas American and European companies take the initiative in setting new rules and making changes. The Japanese are very good at staying within the rules and regulations and finding ultimate perfection within those regulations. In order to expand, we are looking into working together with US and European companies.
In the next 5 years, where do you see the most growth potential for your business? Is there a new country where you are looking to expand your operations to?
We are seeking to enter a country that has an affiliation with Japanese culture and has respect for the Japanese monozukuri. We are looking into expanding into aerospace, environmental-related business, and EV automotive and motorcycles.
This year, your company is celebrating its 104-year anniversary. If we come back in 6 years, what dreams do you have for this company and what goals would you like to have accomplished by then?
I am very particular about having good relationships with employees. I don't want to be the king who has no clothes on. I belong to the baby boom generation, so we were the ones who have been driving the economy forward. The idea of monozukuri has always been not to say anything if your product is good. The product will speak for itself. But things have changed. If you look at the younger generation, they are actively seeking information on social media. We have to consider the younger generation's perspective in our business and pioneer, opening up new perspectives and approaches in our business. We were able to succeed in this in Mexico. The Mexican factory was built to provide parts for Nissan. Nevertheless, what makes the employees prouder is providing products to one of their local companies. We are providing our products to Italika, which is a major Mexican motorcycle company. The employees are very motivated and it had a positive impact on our business. Our target is to solve or mitigate the issues present in the locality where our businesses are and also give hope to the local people. We want to take our Mexico model and apply it to other Sannohashi overseas businesses.
We believe that it is important not only to make good products, but also to make our products approach what the times, the environment, and stakeholders are looking for.