70 years of excellence in forming and surface treatment for metals and plastics

In the last 25 years, Japanese manufacturers have been put under pressure from regional competitors in China, South Korea, and Taiwan that have replicated Japanese monozukuri processes, but at a cheaper cost and with economies of scale. How can Japanese enterprises face this stiff price competition?

The reason why our regional peers in China, South Korea and Taiwan have been able to produce products at a lower price is due to lower labour costs. Naturally, lower labour costs often translate into lower raw material, machinery and logistics costs. In order for us to compete, there are different strategies that we can use: first, is to create manufacturing sites in the emerging countries in which our competitors are located; second, is to lessen our reliance on human labour by creating and incorporating different automatized processes within our manufacturing chain. In certain instances, automation technology can allow us to design a cost-structure that is even lower than that of our competitors’.

Another strategy is to differentiate ourselves by engineering value-added products and services. If we were to work on the same blueprint and design as our competitors, then they would definitely have the advantage with their cheaper costs. What we can do in this respect, for example, is to make our products lighter by 100 grams, while ensuring their durability and functionality. For us to create superior value, we have to develop original processing techniques and we have to design materials that are more functionally appealing.

Another way to differentiate ourselves is by shortening manufacturing processes. For example, if a given component involves manufacturing three parts that are then joined together, what we can do is create that component in a single mould, thereby eliminating the need for assembly.

We can also compete thanks to our ‘Made-In-Japan’ recognition, superior design and quality. This allows us to cater to consumers that are not necessarily searching for cheaper options. For example, our stainless-steel thermos bottles are much more expensive than our competitor’s. Despite this price difference, they are still widely popular with overseas clients and enjoy robust sales on the international market.

Another strategy to differentiate ourselves can be summarized in one word: quality. This is especially relevant in the automotive sector, where a single defect can lead to a life-endangering catastrophe and where ensuring safety is of paramount importance.

Five years ago, one of our clients was looking to buy parts that were more cost-effective and started sourcing certain components from a regional competitor operating from low cost countries. It was unfortunate that they stopped conducting business with us. However, the parts that they purchased from such competitors experienced various defects. Eventually,  they came back to us for their new models of cars. In the long-term, both enterprises and production engineers eventually come to realize the importance of quality.

Driven by Government-led regulations to lower CO2 emissions, automotive manufacturers have embarked on a quest to produce lighter-weight vehicles. This demand has changed material consumption. Heavy metals, such as austenitic steels, are increasingly being replaced by lighter weight materials, including aluminium, titanium and functional resins. As a company which has developed aluminium and titanium forging technologies, how are you helping automotive makers address environmental regulations?

We are able to forge and process different materials, including aluminum and titanium, because of our long history and track-record in producing motorcycle mufflers. In the motorcycle field, improving and experimenting with materials is constant because the appearance of mufflers are crucial. Furthermore, motorcycle production utilizes a greater ratio of aluminium and titanium than automotive production does. The reason being that as cars are larger, it is more costly to apply these materials. In the production of exhaust systems for automobiles, the first challenge is to make the exhaust system lighter while still utilizing traditional materials, such as stainless steel. The second challenge is to reduce air resistance while increasing fuel efficiency. The mufflers that we manufacture today are different from what we produced some years ago. Through years of development, we can now create products that are lighter and less resistant to air. A simple way to understand this progress is to observe the change in shape and design of mufflers.

Technological advancements in metal deformation processing and welding, together with new design ideas, changed the shape of mufflers. These changes can be seen from left (oldest design) to right (newest design).

The changes that we have implemented to make cars and motorcycles more fuel-efficient, and we have been proposing these types of new ideas to our clients.

One of the challenges when using lighter weight materials for automotive applications is linked to noise and vibration increase. What technology are you using to minimize these inconveniences?

The demand for lightweight materials, and by association, the increase in vibration and noise, also poses problems with regards to durability. To address such issues, engineers must develop superior welding processes. As a part of our manufacturing process, we conduct stringent vibration testing in-house before sending our proposals to our clients.

Actually, we are currently researching further ways to produce mufflers by using different materials, but that information is currently confidential. While we encountered many technical issues in the development, most of them are now cleared. If we are able to overcome these challenges – vibration, noise and also heat – I am positive that our proposal will please our clients and change the market.

In 2025, it is estimated that annual sales of EVs will surpass 11 million units. Full-EVs are forcing manufacturers to re-design how cars function while deleting the need for various components and systems, including exhaust systems or the combustion engine. How is your company reacting to car electrification?

This is the type of transformation that happens only once in a century. If you were to ask what our flagship product is, it would historically be our exhaust systems. Forty years ago, we mainly dealt with exhaust systems. Since then, however, we have diversified and grown into an integrated manufacturer of body and plastic parts, such as door frames and front grilles. Through R&D, we have been able to expand our activities.

We do not believe, however, that car exhaust systems will just disappear from the market right away. One of our strategies is to enhance the products that we already have – that is,  evolving existing products through added functionality by using different materials, technologies and ideas. Consequently, we are currently placing a great emphasis on strengthening our plastic components. A large part of our business now stems from the production of exterior elements that require plastic. As such, we have strengthened our moulding and painting technologies. Our three key technologies are: moulding, painting, and plating. While many companies possess these three techniques, we have the unique ability to significantly enhance the functionality and performance of plastic-based products.

To provide you with an example of this high functionality, consider that modern cars are significantly more silent than previous models. Today, when one drives a newly manufactured car, he hears less noise from the outside. This was achieved thanks to the utilization of noise-reducing materials. As a producer of highly functional plastic parts, we are creating a special type of plastic sheet that significantly ameliorates noise reduction. The cost for this product is low and it can be utilized in various car components, including inside doors. We believe that this product will give us a lot of business opportunities. Plastic raisins are chemical based, so they are quite exciting materials to work with because all kinds of transformations and modifications are possible. Moving forward, the development of highly-functional plastics will remain a pillar of our strategy.

What new sectors or applications do you wish to develop?

Our aim is to expand the functionality and performance of our base technologies. As such, we do not limit ourselves to any sector, and we are willing to enter all industries. It just so happens that our technology can be applied to the automotive, internal lifestyle and even the aerospace field.

Recently, a very interesting project utilized our technology: we developed a capsule that was launched from the International Space Station into the Ocean! Because there was an experiment sample in this capsule, we were required to make a design that could withstand extreme temperatures so that the sample would not change. To add to this complexity, the capsule also had to be durable and shock-resistant, as it would land in the ocean. This kind of project is quite uncommon and cannot be considered a large business segment. However, projects that require you to launch something into space are extremely exciting and technically fun.

The technology used to create that space capsule stemmed from our research in exhaust parts. As a matter of fact, we use similar processes and materials to produce lifestyle products, such as thermos bottles. As an inside joke, we like to say that we created the largest, toughest and first thermos bottle launched into space.

Sankei Giken’s technology is used to produce high-quality thermos

You have presence in the US, India, Taiwan, China, Indonesia and Thailand. What is your international strategy? In the future, what country holds the key for the future growth of your company?

We were one of the first car parts manufacturers to expand overseas. In the 1980’s, one of our major clients was aggressively expanding overseas. Because we are dealing with large parts such as door frames and exhaust parts, it would be too costly with regards to logistics if we were to manufacture our products in Japan and then ship them overseas. Therefore, we had to go where our clients built their factories. Decades later, our overseas expansion has created a series of advantages. With Japan’s shrinking population and labour force, the domestic market has matured and various Japanese companies are being forced to expand internationally. Fortunately, we expanded abroad before this became a reality, thereby giving us a clear competitive edge.

Another benefit of having sales and marketing offices overseas is finding new business opportunities  with  local customers. For example, a leading fitness company passed an order requiring us to manufacture exercise bicycles in Taiwan. We currently create a significant volume of frames for these bicycles. Having these sites overseas enables us to receive many requests from other companies and other industries. This would not happen if we were only in Japan.

The US has a huge population of 300 million, and although there are other  large markets such as China, India, and other countries, I believe that the US market still has huge purchasing power. In the case of the exercise bike, despite the fact that each unit costs over $2,000, it was rapidly accepted by the market.. As no other country has such a huge purchasing power, and as many new business concepts stem from the US,  we believe in putting more effort into the North American market.

In the distant future you will eventually retire and hand over the company to the next generation of executives. When that happens, what vision would you like to have achieved?

One thing that I am deeply grateful to my predecessors for - my grandfather and father - is that they did not publicly list our company. I think companies that go public have to cater to their stakeholders and have to show results on a short-term basis; plus there is a lot of profit-related pressure involved. While I understand that going public has its advantages, remaining privately held allows executives to articulate long-term visions and strategies that prioritize sustainability over short-term profit margins.  Even during difficult times due to the Corona Virus, we still encourage R&D and Investment for our future.

If I were to share a message to my successors, perhaps it would be the following: “behind every success are many major mistakes and failures.” As such, I hope that this company will maintain an environment that does not fear failure. To give you an example of a failure: back in the 80’s, our company ventured into bathtub-production. We even created a factory dedicated to bathtub manufacturing. Unfortunately, we were not successful at all, and lost a $20 million investment! Experiences like this can happen and they serve to give lessons. Having a mindset of not fearing failure is a corporate culture that I would definitely like to pass on.

At last, I hope that the future generations of SANKEI’s  employees and executives will remain proactive in creating changes and modifications. We must always strive to provide innovative proposals to our clients. For example, if our proposals to create  products with new functionalities  were to go through, it would mean that the majority of our facilities would have to be completely redone because of the need to install new manufacturing methods. Financially speaking, this would represent an enormous investment from our end; techinicall speaking, applying existing technologies would be much more easier.. However, we know that such new products will be appealing to our clients; if these products could contribute to better fuel efficiency and to the creation of a cleaner environment for future generation, it is an investment we would enthusiastically welcome!