Shimoda Iron Works, established in 1946, has grown into a pivotal player in the global manufacturing landscape, specializing in forged flanges and fittings.
Can you provide us with a brief introduction to your company?
Shimoda Iron Works was founded in 1946, and our main products are forged flanges and fittings. Our annual sales last year were 34 million US dollars. Our head office and main plant are both located in Aioi City, Hyogo Prefecture, and we have around 100 employees in total. Our group company is Shimoda Manufacturing Technology Centre Co., Ltd. and our business partners are Yamashita Forging Co., Ltd. We have three plants in total and they are all located in Hyogo Prefecture.
Our standard manufacturing processes involve different types of forging such as ring rolling, stamp forging, and open-die forging. Heat treatment, machining, and final machining are also standard processes of ours. Our product lineup includes flanges and forged fittings. Our forged fittings are used for connecting pipes and valves and are used in many industries such as oil and gas, chemical plants, and power generation facilities. We also supply industries ranging from semiconductor manufacturing to aviation, construction, and civil engineering. Over the years, the technologies that we developed enabled our evolution into a global company that can meet ever more diverse customer needs. These technologies include closed-die forging which uses enclosed dies to shape material parts, ring rolling mill forging where the material is rolled out on specialized machines, and advanced machining technologies especially for 3D machining. These three technologies powered the growth of our company and contributed significantly to Japan’s industrial development.
Our flanges and our technology contribute to SDGs and carbon neutrality. Our three new processes are HIP processing, cold drawing, and WAAM 3D printing, HIP (Hot Isostatic Pressing) is something that you know well. We received subsidies from METI for its development. The products that we produce using HIP have many applications such as for oil and gas. When it comes to our near-net cold-drawing technology, our target is small quantities with a high variety using special materials. Its applications include nuclear power, semiconductors, and defense units. The third process is WAAM (Wire Arc Additive Manufacturing) systems. Last year, two new machines were introduced, one from the Netherlands, and one from Germany. Our targets going forward are buildings, architecture, oil and gas, nuclear power, and defense. We want to use special materials for new applications. This year, our company received many subsidies and we have been working with Osaka University. Our next plan is to introduce a large-sized 3D printer at our plant next year.
What new applications or developments will it allow for?
Its applications will be for large parts used in architecture, aviation and other industries. It will have a 6-axis robot and a 2-axis positioner.
Hot isostatic pressing (HIP) processing is a process to densify the powder charged into a capsule by HIP equipment at high temperatures and high pressure and you worked in cooperation with Metal Technology Co. Ltd., in a trial construction for valve bodies made from Grade 91 materials. Can you tell us in a little more detail about this HIP processing and the advantages it brings?
This HIP project involved the utilization of subsidies from METI and was conducted in collaboration with Metal Technology (MTC) and it was certified by NORSOK. Its main application is oil and gas ocean plants in the upstream process. The barriers to entry into oil and gas upstream are very high. Firstly, there are no upstream companies in Japan. Secondly, the oil and gas players in Japan do not use HIP, and thirdly, we have no track record in that field. The customers require records. Therefore, the barriers are quite high. As a result, we are seeing competitors developing jointly with their customers.
Grade 91 steel is used for nuclear power plants. However, in Japan, the nuclear power plants were stopped. MTC acquired a European HIP manufacturer in 2020. This meant that there was a possibility that new development would begin in Japan. We were waiting for MTC's next step after they acquired the European company. We have just passed the process with MTC of acquiring European HIP manufacturing certification. We are currently waiting for the results to come out and we plan to take the next step in January of next year. In Japan, we will apply this technology to nuclear power plants. The sophisticated near-net shaping of the materials can be applied in nuclear power plant manufacturing here in Japan.
Are you also looking to partner with overseas companies to leverage their expertise to develop new products or new initiatives as well?
As part of our R&D strategy, we are collaborating with steel makers and overseas forging companies. Partnerships require trust. Our history of joint development with large companies proves that our company is highly valued. The utilization of METI subsidies from the government allows us to collaborate with Japanese universities and large companies for special processes. Some examples of our collaborative efforts include a special material that was developed by Nippon Steel. Our company manufactures flanges and fittings using this material. Another example of our collaboration is a special flange for transmission towers developed by Kobelco. The manufacturing was done by our company. We also collaborated with Euskal Forging, a Spanish company, for offshore wind turbine products. Our company and Euskal Forging will receive METI certification next year.
How did you start to collaborate with Euskal Forging? How did that relationship come about?
The Spanish government invited me to work with Spanish manufacturers. One of those companies was Euskal Forging. They specialize in offshore wind turbines. This relationship is crucial for companies such as ours as the offshore wind turbines industry is growing rapidly in Japan right now. Without the technologies that exist in Europe, Japanese companies would not be able to proceed. It is a win-win situation for both companies. We can combine European technologies with our manufacturing. One problematic point for companies outside of Japan is that it is difficult for them to get Japanese certification. The process is quite long. Therefore, cooperation with a Japanese company is important. Having a manufacturing base located in Japan is helpful for technology-based companies from outside Japan. Both companies can benefit from each other.
Another example of our collaborative efforts is a special mechanical joint that was developed by JFE Steel and manufactured by our company. As you can see, there is quite a long list of big names in the industry such as Kobelco, JFE Steel, and Nippon Steel that we have collaborated with. That is important for us in terms of credibility but also in terms of the volume of products we produce. Being able to introduce our products to such outstanding companies shows our credibility and the trust that companies place in us. We have been building strong relationships with such companies throughout our history. There are no other Japanese companies that can produce the unique products that we produce for these companies. We produce small quantities of a large variety of products. We are a niche company that caters to the needs of the big companies.
About 30 years ago, we directly exported many products to countries such as Singapore, Iran, and the US. However, today we are under the patronage of big companies and we follow them in exporting our products. We have a great track record of combining our efforts with those companies, and this allows us to export our products to new markets alongside those big names.
As I mentioned earlier, we collaborated with MTC for HIP processing. We also collaborated with a mold company, as well as an oil company for cold drawing. Our 3D printer was jointly developed with Osaka University and MX3D from the Netherlands. We have also collaborated with Takenaka Corporation, Daido Steel, and IHI. Collaboration plays a very important role in our business.
Over the last 30 years, even though Japan has been historically good at manufacturing, we have seen the rise of regional manufacturing competitors who have replicated the Japanese model of success, but doing so at cheaper costs, pushing Japan out of certain mass markets. However, Japanese firms are still leaders when it comes to niche B2B fields. How have Japanese firms been able to maintain this leadership despite the regional competition that we have seen?
The reason for this is that Japanese companies are very trustworthy and reliable, and this has allowed them to maintain their leadership position when it comes to niche B2B fields.
At the beginning of November, your products that were produced using your 3D metal printers were exhibited at the Arch Engineering Design Exhibition. Even though it has only been roughly two weeks since then, how do you think the event went? Do you think it was a success, and are you also looking to participate in international events going forward as well?
Yes, we are. The next event we want to participate in will be the Stainless Steel World Asia Expo which will be held in Singapore next year. We will exhibit our products that are produced using our 3D metal printer that we developed in collaboration with MX3D from the Netherlands.
Could you tell us a little more about how your collaboration with MX3D functions? What is your role, and how do they benefit from collaborating with you?
First of all, there are not so many WAAM printer manufacturing companies in the world. There is a selective amount. We have been helping MX3D to promote themselves and step up on a global scale rather than just sell their products. Of course, we want to use their products to the maximum extent possible. However, we also want to take their products to the next level and co-develop some new large-scale applications for both the Japanese and overseas markets. Representatives from MX3D are actually visiting our plant today. They are going to install a new system.
In 2011 after the Fukushima disaster, Japan had 54 nuclear reactors. Only 10 have been restarted since 2022, with 21 being decommissioned. However, despite this, the government has plans to have nuclear power form 20% of Japan’s energy mix by the year 2030. As this nuclear mix is set to increase in Japan, what opportunities do you see for your firm?
We are very optimistic about the reopening of the nuclear power plants in Japan. The extent of its reopening will depend on the policies that the government introduces. However, it is a great business opportunity for us to provide our products. The forged material and products that we manufacture are widely used in contamination areas for the storage of the radioactive impurities that are a byproduct of nuclear power plants. Safety issues will need to be addressed when the power plants are reopened. We believe that our company will be able to provide solutions. It is only a matter of the scale of the work that will be available.
We are currently in the process of making special fittings to protect pipes from earthquakes. If an earthquake does occur, nothing will happen to the pipes. Safety is our main concern. Forged material is widely used in nuclear power plants and we are keenly developing more and more new products to meet the expectations of the safety regulations. You probably heard on the news that contaminated water from the Fukushima power plant is now being disposed of in the ocean. The container that was storing the contaminated water used flanges and pipes that were made by our company. That itself proves that we already have a presence in the industry, and we are looking forward to providing our products to the industry in the years to come.
Your products are used in different harsh environments from high temperatures and high pressures to handling materials such as oil and gas, all of which can cause wear, erosion and corrosion for example. This can lead to a reduction in performance and even cause potential failures. How are you able to ensure that the products that you produce can handle these harsh environments?
The first thing you need to consider is the raw material that is used. It must be strong and reliable for the products to be able to withstand those harsh environments. There are many steel making and forging companies here in Japan that possess the technologies to ensure that the materials are reliable. However, accessibility to materials that can perform well in those harsh environments is very limited in Japan. Therefore, to be successful, Japanese companies need to build connections with raw material procurement companies. Certification is also required. The most complex and difficult to obtain certification related to duplex stainless steel is NORSOK, and we are the only company in Japan that has acquired this certification for the products that we produce.
In the 1980s, your firm was involved in supplying flanges for use in the Alaska pipeline. Could you tell us a little more about your involvement in that particular project?
The main reason for us getting involved in that project was the exchange rate. Back then, the JPY was even lower than it is today. That was why the Alaskan companies started buying our products at that time. It was cheaper for them to procure from Japan than procuring from local companies or companies in other countries. At that time, we were manufacturing nickel stainless products and we were actually aiming to enter the oil and gas field. Before that, our products were mostly used for shipbuilding-related applications. The opportunity in Alaska arrived at a good time for us. Kobe Steel approached us and we decided to cooperate with them. We were successful in producing products that met the expectations of the Alaskan pipeline companies. We have carried on this experience of working with big companies and we are still doing business in nickel stainless manufacturing products today.
Japan is the oldest society in the world with a rapidly shrinking population. The shrinking demographic line means that there is a labor crisis and a shrinking domestic market in Japan. What have been some of the challenges that this demographic shift has presented to your firm, and how have you been adapting and reacting to them?
The first way in which we have been reacting to these challenges is by becoming an attractive company that people want to work for. The second way has been hiring people who have retired at large companies, and the third is finding partners. We want to increase the interest of young people and have been doing so with the introduction of new technologies such as HIP and 3D printers which we spoke about earlier. These technologies can act as an attractive point for young people to join our company. A healthy work-life balance is important. DX itself is a complex phrase and it has been difficult for some Japanese SMEs to clearly understand what it means and utilize it on a wide scale in their processing. However, we believe that we need to gradually embed DX technologies and ideas to create a healthy work-life balance. We believe this will help us employ more people and increase the interest in our company.
Next month we plan to set up an information management committee. We are also opening a new office. “Connect” is the keyword for our company. We want to connect industries, connect dreams, connect the earth through our SDGs, connect the future, connect businesses, and connect technologies.
Can you speak to us about the cost performance of your products, and how it compares to your Chinese or Korean counterparts who manufacture similar products?
When it comes to pipe couplings, they are required in large quantities. The quantities required also depend on the project. When it comes to flanges and fittings for overseas oil and gas projects, the pipe and fittings are already set before being shipped overseas. There are pros and cons. If you procure raw materials and produce large quantities of couplings for example, it will result in a better cost performance and you may win the bid for local governments to use them for their project. However, in Japan, we have our own strengths. We produce high-quality products that are very niche and require lower quantities. These unique products are a result of our technological background, and while their cost may be high initially, in the long run, the cost performance is better.
The R&D enhancements of Japanese companies are greater than foreign companies, and when it comes to oil and gas projects for example, Japanese companies are starting to develop unique products that are tailor-made for oil and gas projects in any part of the world. We understand that there is no way to win the market using standardized products.
Moving forward, which countries or regions do you believe to be key for the growth of your firm, and what strategies will you employ in order to achieve that?
As a parts manufacturer for large companies such as Mitsubishi and IHI, it was a must for us to have all the standard certifications that have been granted to us. Our partners required that of us. Obtaining so many different certifications allows us to apply our products to the manufacturing safety standards of those kinds of companies.
We are not considering building a plant overseas or manufacturing locally in other countries outside of Japan. We want to preserve and improve our current operations here in Japan. We will continue procuring through our supply chain and producing domestically here in Japan to serve the needs of our partner companies. Our target is to continue producing tailor-made products with added-value prices. We also want to maintain our long-lasting partnerships with the big companies in the industry.
The competition in our field is very high. There are many coupling, flange, and connector manufacturing companies out there, so it is quite difficult for us to try to penetrate new markets and introduce something new that we have produced. Cooperating with our partners and producing finalized products that meet the needs of our customers is the way to go. It has always been like this for our company and we want to continue operating in this way in the future.
I spoke earlier about our cooperation with MX3D for 3D printing technology. We want to continue working with this company to increase the levels of 3D printing overseas. The main supplier of raw materials for making products using 3D printers is a company from the US.
If we fast forward to 2028, your company will be 80 years old. If we were to come back to interview you again, do you have a goal that you would like to achieve for the business by that date?
My dream as the president is to make our business more sustainable. Earlier this year, we trademarked the word “susterial” which is a combination of the words “sustainable” and “material”. I want our company to be a “susterial” company by being more sustainable and using sustainable materials. That is my goal for the future.
For more information, visit: https://shimoda-flg.co.jp/en/
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