An industry-leading presence for almost 75 years, Shoei Kogyo continues to thrive in the face of geopolitical and global health challenges, offering a diverse portfolio of solutions to a wide range of companies.
Since the end of WWII Japan has had an excellent international reputation for the quality of its craftsmanship and the kaizen philosophy has become famous worldwide for manufacturing. Today, Japan is challenged by regional competitors in China, Korea and Taiwan who have replicated Japanese monozukuri techniques. As the president of a company manufacturing automobile and electrical components, what would you highlight as the advantages of Japanese monozukuri, especially over these regional competitors?
Japan takes a lot of time and effort in developing techniques and skills to pass on to the next generation. Master craftsmen also take the time to teach the younger generation. Recently though, this transfer of skill and knowledge has proved to be a challenge. Japan emphasizes knowledge and skill transfer, and we pursue both with so much more passion compared to other countries. Other Asian countries start to lose their passion for monozukuri as their standard of living improves and as they enjoy a better life whereas we maintain our passion for monozukuri and hunger for learning and teaching the new generation. Japan does not consider China and other Asian countries as competitors.
We share and teach them our skills and techniques to use. We share with them our knowledge and expertise and they in turn teach other countries such as Mexico. Our good relationship with them is an advantage for Japanese companies.
Japan is an aging nation with 28% percent of the population over 65. It also has a declining population, with a fertility rate of 1.37 it is expected to have less than 100 million people by 2060. How has your company responded to these population changes? What opportunities or challenges has it presented you?
The conventional way of technology transfer to the new generation is for younger people to learn by watching and imitating. The senpai (experienced worker) will not teach in detail how to do it, the younger people have to learn as they do it. The companies are forced to change this method of transfer. The method has to be standardized so everyone entering the field can learn how to run the operation. This is both a challenge and an opportunity. Our choice to standardize the teaching for the younger generation is a good opportunity because we can also train younger people in other countries. Standardization will help Japan expand to other countries.
We have been living with the Covid virus for the past two years. There are also huge disruptions caused by the Russian invasion of Ukraine with sanctions imposed on Russia affecting logistical supply chains. What adjustments has your company had to make and how have you adapted to them?
Covid greatly affected us. We shifted to local production for local consumption. The trade conflict between China and the US also has impacted our business. The China and US relationship is affecting many other countries. Localization around the US became active. We have experienced mixed impacts of having both challenges and opportunities from these world events. At the time that we invested in Mexico, many competitors also invested. After President Trump's election, most of the competitors pulled out of Mexico which was a good thing for us.
You have a completely integrated process for the manufacturing of precision parts and components, offering either mass production and/or prototyping services to potential clients together with secondary processing. What type of products have you developed your reputation on and in the future which products do you foresee having the greatest growth potential?
Our strength is in providing solutions, not specific products. We are not just translating the designs into products, but we develop the design in collaboration with the customer. We propose ideas that increase productivity and reduce costs to help customers excel over other competitors in their field. We help customers be competitive in terms of quality and price.
Normally, the R&D department makes the drawings of the product designs. Then prototype companies are asked to make the product. The R&D department will also ask the purchasing department to source materials and look for companies that can provide materials. They will mail the drawings and ask for material quotations from suppliers. R&D and sourcing departments do not work together much. The R&D department might be able to find the cheapest supplier of the prototype and the sourcing department might be able to find the cheapest material from suppliers, but the question is if the design is competitive for mass production.
What we did was integrate all these departments. When clients ask us for a prototype, we propose to see if there is a better design in mass production. We can modify the designs and submit a prototype that is best for mass production. We might not be the cheapest prototype or mass production supplier, but the clients can save a lot of time and resources because of our capability to consolidate different aspects of production.
What digital technologies are you using to make your manufacturing and design processes more efficient?
We use 3D modeling for tool making. Based on the analysis results when we create molds, there is still a huge gap between the analysis software results and what we ideally need as a product. We are still working on improving the product. When the analysis software becomes more accurate, we can start relying on it. Right now, reliability is still a little low.
Your services are not limited to the automotive field but you also offer your services in other fields. We have met die casting companies who are using their traditional technology used for automotive to create artificial bones for the medical industry. In your company, what new fields do you see your technology being applied to?
We are not focused on any specific industry. In the auto industry, we work on safety equipment such as devices for ADAS, ABS and ECU. In the medical field, we provide many products and services. The solution we provide is the most important, so we work in many fields. We would like to deliver better services and products from end to end to all customers in all industries.
What kind of partners are you looking for?
I do not have specific requirements right now but any company that we can pursue future developments with is welcome.
Your company is adept at adapting to the changes. In the automotive field, you are not just catering to the combustion engine-based engineering solutions. With the EV change, there are huge opportunities and challenges for companies and tier 1&2 suppliers. There are going to be new types of cars with fewer components but significantly more electronic-based components. What opportunity is this change in the automotive field presenting for you?
Our business has been very diverse including automobiles, electronic products, precision machines and mobile phones. I think that the automotive industry has been a very closed society with only a limited number of suppliers providing products and services to major carmakers. The situation is now changing. Many different players are joining the auto industry which presents an opportunity for us. We can bring in new methods and ways of doing business and new products. Diverse players like ourselves can bring in new opportunities.
Japan is famous worldwide for its level of R&D spending. Up to 3.15% of its GDP is spent on R&D. What is your company's R&D strategy? What things are you focusing on and what new products would you like to share with our audience?
Our strategy is not developing new products but developing methodologies to manufacture products such as welding different steels together or mixing and welding different materials. We keep trying to improve our different methods. If the R&D sectors of our customers face challenges, we seek them out and make proposals based on our methods.
You have expanded beyond Japanese borders since 1995 when you established in China where you have two operations now. You also have had a factory in Mexico since 2014. What are the advantages of these international locations for your business? Moving forward, which countries or markets are you looking to target with your production?
China is a big market and producing products in China can respond to the demands in China and other ASEAN countries. Production in Mexico can respond to the demands in North America. We can cover the production base in each continent and provide the same quality product in Japan, China and North America. In the development phase, we can talk to engineers in Japan even though we are providing products in other countries. We can use the technical expertise we have in Japan. This is an advantage for us.
Before we invested in Mexico, we visited many countries such as Thailand, India, Malaysia, Singapore and other ASEAN countries. Right now, we want to expand in Mexico. We do not have any specific target right now but maybe we can consider expanding in Africa.
If we come back on the last day of your presidency, what dreams and goals would you like to have achieved by then?
My grandfather founded the company and I was the successor to my father. We were just doing our best to keep the company alive. And we will continue to do our best to keep the company alive for 100, 200 and 300 years, but also I hope SHOEI KOGYO is a place where the dreams of the younger generation can be realized and we can support it. My goal is to be like that.