Manufacturing the highest quality car parts exceeding customer expectations

Could you give us your interpretation of monozukuri and what is the essence of it for you?

Put simply, monozukuri is about delivering a level of quality that meets the customers’ requirements by empathizing with them and making products that are durable and easy to use. The quality and stability of the manufacturing process and the supply chain are also key factors in determining the product and its pricing.

However, I believe that the most important aspect of monozukuri is the human component because no matter how sophisticated IT systems get there must always be a craftsman involved to ensure that a product or machine is created that perfectly satisfies a particular demand. It is therefore important to nurture such talent by providing an environment where workers can create products to the best of their ability.

What is the role of the worker in a manufacturing process that has become almost fully automated?

The main role of our workers is to maintain optimal conditions concerning both the machinery and its environment so that the manufacturing process can work most efficiently and reliably in producing high-quality parts.

Your product line-up includes car components, body parts, partitions and fuel filler doors. Can you tell us about the synergies that you've been able to create between these products, and also what is your best-selling product and which product are you focusing most of your efforts on?

It's difficult for us to say if there's a synergy effect by having a diverse product line. Our company started off by making hinges in 1933 so we then focused on creating parts that use hinges such as door hinges, hood hinges, trunk lid hinges and fuel filler doors. We can’t really say what our best-selling item is because it depends on what the manufacturer requires at any given time.

As for synergies, you could say that our press production technology, which we initially developed for producing hinge components, is one since it is now also being used to make several other products. The development of door hinge automation machines is an example of how we are using our accumulated knowledge of these diverse products to come up with versatile machinery that can be used in the manufacture of them all.

Can you tell us what Japanese companies should do in order to overcome stiff price competition from regional competitors?

The reason that companies from countries such as China, Korea and Taiwan are more competitively priced is because they don’t have the same costs as we do and this is because we use higher quality materials, more dependable machinery and more highly skilled maintenance workers. If they were to offer similar standards of excellence to our products, their pricing would be similar to ours.

To illustrate this, we started operations in India twenty years ago but only began making car parts ourselves seven or eight years ago in that factory because initially there was only demand for not-so-high quality, not-so-high-cost products. Our monozukuri principles made it impossible for us to produce less than high-quality items so we didn’t actually start making our own products there until more recently when the Indian market changed to require higher quality products which we are now able to produce and sell there.

Can you tell us how the trend in the automobile industry from ferrous metals to lighter materials such as aluminium has impacted your business and what changes have you made to adapt to it?

Aluminium is very expensive in Japan since it requires electricity to produce, and the price of electricity is high. Procurement prices of aluminium are lower in Europe and I believe that some European models have been built using an entire body made of aluminium, but this would not be cost effective in Japan, and in fact it is difficult to join aluminium to steel within part assemblies. So instead of aluminium, Japanese steel makers are developing a super high tensile material, as well as looking at improvements to steel itself.

As regards the possible use of CFRP (carbon fiber-reinforced polymer), there would be issues regarding the recycling of the car and furthermore we’ve never had any of our clients request the use of CFRP in our parts.

Could you tell us how you will take advantage of the new market growth in the auto parts industry triggered by the digitization of sales in emerging markets such as South East Asia?

Actually, our strategy is to mainly focus on India. This is because as I mentioned before, we have developed our business there over a long period and are able to partner with a wider variety of companies and clients than before. The shipment of large consignments of our products can be expensive so it is strategically sensible to locate our factory near our clients. However, we’ve been getting significant interest from potential client companies inside India which are nevertheless far away from our factory so we will be looking to address this issue in future.

We also have interests in China and other ASEAN countries. We have a factory in China, but with the political situation and the many restrictions imposed on our activities we feel it's difficult to expand our business there. And as for ASEAN countries, Thailand is a big market, but it is heavily saturated, and we also have our group company there so we’re not thinking of setting up any manufacturing there. We once looked at ways of moving into Indonesia, but we felt it was difficult, so really our main focus currently is India.

Could you tell us what strategies you will be employing in order to expand your business overseas?

We currently have two companies in India. One specializes in die casting and is called Nagata India Pvt. Ltd. (NAIL). Suzuki required this company to create a factory there, so it is a joint venture between us and the vendors of the Suzuki subsidiary, Maruti Suzuki India Limited.  Initially, NAIL had produced small and mid-sized dies. However, their product line up has now increased to dies for body parts such as roofs, side doors and furthermore to hemming dies for hoods and hood inners.  Recently, they have also began production and sale of dies for high-tensile steel applications and this has been very successful.

The other company we have is Nagata Auto Engineering India Pvt. Ltd. (NAEIPL) which is a company for the mass production of parts and is wholly owned by us.

At first, we had a contract to transfer technology to a local Indian company that would then produce parts for us, but we found it difficult to instil certain monozukuri concepts in their work and as a result we weren't able to get the high-quality products that we required. So, we finally decided to have a factory owned directly by us in order to achieve that standard using monozukuri principles.

We find it difficult to target new markets overseas unless there are clear official orders placed from companies in those countries.

How do you want to be perceived as a Japanese OEM by companies such as Chrysler, GM, and Ford and what role does America play in your international expansion plans?

When Suzuki had a joint venture with GM, we had an operation in Canada where we tried to open up a pathway into the US market, but we felt it was very difficult and the business did not go well. This was partly due to our factory being located close only to Suzuki GM. We were too far away from the assembly lines of other car makers, which is actually a problem that we have largely avoided and continue to try and avoid in India.

If we look at South East Asia, we are seeing a huge increase in demand for automobiles. Indonesia, for example, is expected to have 21 million new consumers in the coming years, each of whom will be looking to have the independence of owning their own car. Could you tell us more about your strategy to expand in Indonesia, what products do you see as being in demand in that market?

Suzuki is our main client, and they did ask us to set up a manufacturing site in Indonesia because they have production sites in Indonesia as well as India, but at that time we were focused on the Indian market and since we are not that big a company, we wanted to focus all our resources in one market so despite India being further away we found more business possibilities there so we are concentrating on the Indian market and not directly working with Indonesia.

What makes you the go-to partner for large auto companies such as Suzuki and Honda? What is the technology that differentiates your auto parts from those of other companies?

First and foremost, we are striving to be the best in all our production processes and products and this is part of our company philosophy, but our aim is to provide the best quality products at lower prices than similar products from other companies. Although we may not always achieve the perfection we pursue, we nevertheless continue to work towards that goal.

We can provide the best possible solutions for our customers because we can make all our machines, such as robotic automated systems in-house and therefore we can come up with custom-made solutions that fit customer requirements exactly. Quality is therefore built into every step of the production process resulting in the highest quality products with low prices.

What are your dreams for the company and what would you like to accomplish in the next few years? What legacy would you like to leave for the next generation?

The Japanese market is saturated, and we don't have high expectations for the growth here, so we are more focused on developing the Indian market. In fact, in terms of the number of staff employed, our Indian operations are bigger than those in Japan. I don’t feel the need to leave a major legacy but instead I just want to maintain the company that my grandfather established. As long as our workers and affiliates have happier and more secure lives because of working with us in a stable environment then the next generation of workers will continue to be prosperous.