Supporting Japan's Manufacturing Resurgence through Welding Technology

It is a pivotal time for Japanese manufacturing. The past three years have seen large supply chain disruptions due to COVID as well as the US-China decoupling situation, and as a result, corporate groups are looking to diversify their suppliers for reliability reasons. Known for their reliability as well as their advanced technology, Japanese firms are in an interesting position. Combined with a weak JPY, many observers argue this is a unique opportunity. Do you agree with this sentiment, and what are the advantages of Japanese firms in this current macro environment?

First of all, I do agree with your sentiment and the premise you presented has merits, specifically when you talk about Japanese companies and their position in the global arena. They are trying to introduce their services or products on a global scale right now which has never been reached before. There are a lot of activities bouncing off of China and therefore companies are scrambling to avoid the country risk currently associated with business in China. This is where other countries can present new opportunities, and in that sense, Japan has a lot of things to offer the world.

My mind instantly goes to quality, but we must include innovation, reliability, precision, and advanced technology. Honestly speaking, these characteristics are just at the top of the list, and there are so many excellent points that the world could benefit from by working with Japanese firms.

Japan is the world’s oldest society with a rapidly declining population. This creates several issues including a labor crisis, a shrinking domestic market, and problems with skill inheritance. What have been some of the challenges your firm has seen as a result of this demographic shift and how have you been reacting to them?

The demographic shift is driving a lot of challenges to the domestic market. There are a lot of ways to preempt and perhaps overcome these problematic issues. With this in mind, some companies have already got a head start expanding to overseas markets to get themselves in a more beneficial position.

Our company, like many others, is trying to overcome this issue of labor shortages, and to that end, we are trying to acquire talent and diversify our headcount. We are looking to retain talent from diverse backgrounds. However, this really does not offer the ultimate solution, and even if you can sustain good human resource channels from other countries there is no guarantee that they will be able to perform at the same level as Japanese personnel. This means that proper on-the-job (OTJ) training is required.

In our company, 64 is the age of retirement officially, but we do try to allow workers who are willing and able to continue working as long as they wish. This kind of dedication is something that we promote in our company. Frankly speaking, expansion overseas is almost essential these days, and working with local companies and partners would be the ideal situation. Our company has a track record of dealing with distribution networks all across the globe. Australia is one example, but additionally, we have worked in 14 countries to export our products.

Expanding overseas is quite important, and you can achieve this through sales and distribution networks. Are you also looking to establish a physical presence in some of the countries you have distribution in?

Currently, our international expansion policy is focused on the expansion of our distribution networks across the world and we would like to escalate such activities. In many cases, we do rely on these distributors heavily.

You mentioned exporting to 14 countries worldwide, and Australia is one of them. Moving forward, are there any new countries or regions that you would like to introduce your products to and which of your current lineup of 14 countries do you believe has the greatest growth potential?

We are currently developing a strategy to go to the United States with our product called the Hydrogen Capsule. We believe that this market has potential so to that end we are looking to increase our distribution there.

Your product is the world’s first hydrogen capsule which you began developing in 2016 which built upon your pre-existing oxygen capsules. You possess the only device in the world that can simultaneously absorb oxygen and hydrogen in a hyperbaric environment, generating fresh hydrogen on the spot and pumping it into the capsule with a concentration of between 17,000 parts per million (PPM) to 20,000 PPM. What led you to develop your hydrogen capsules in the first place and what benefits does this technology bring to users?

In 2012 we developed our oxygen capsules which was before the development of the hydrogen capsules. The reason we did so was that a manufacturing company approached us with the idea and asked if AIM Corporation was capable of producing it.

Oxygen capsules at that time posed significant challenges and now the materials for the system have shifted to more lightweight ones such as aluminum. The material aluminum is hard to maintain in a good environment, especially in places where the welding is happening.

Our company has a track record with laser welding machinery, in particular with aluminum. We provided a solution to that company to produce oxygen capsules with the major part of the body made from aluminum. This became essentially the forebearer for what became known as the hydrogen capsule.

In terms of the transition from oxygen to hydrogen happened in 2017 and before that time, we were acting on an OEM basis, producing capsules for the company that initially came up with this idea. From that production, we then moved on to producing our own hydrogen capsules.

Oxygen capsules aim to increase the body’s oxygen levels for the promotion of various health benefits, however, as with any medical treatment, there are still safety concerns and risks. As a provider of oxygen capsules, how are you able to ensure the safety of customers who use your products?

ISO 13485 is a certification for quality management systems for medical devices and in vitro diagnostics in the US. This is a compliance we follow and I think it proves our safety and reliability. Of course, we also comply with local regulations for safety, meaning things need to be introduced properly to end users.

We’ve introduced interlocks with the capsules and this prevents the malfunction of the capsule whilst in use. We are proud to say that since 2012 we haven’t had a single accident. Additionally, we provide users with training and guidance since several safety concerns are being introduced to the customers.

We also need to consider regulations per country since distribution goes further than just the domestic market. Legislation and regulations vary wildly from country to country and complying with local regulations is vital to reach the ultimate level of safety measures and a satisfaction level we are happy with among our customers.

Finally, I believe that a simple and robust design is something that reassures customers that the products are 100% stable and without malfunctions.

Aside from the capsules you provide you also provide process machinery. If we look at the semiconductor industry in particular, precision control on a nanometer level is critical as is the use of specialized materials like low-thermal expansion cast steels. AIM is no exception to this since you provide high-precision semiconductor components through your metal processing business. How are you able to ensure that you can consistently achieve the precision levels required by the semiconductor industry of today?

I would say that the key to this is learning through doing. We started early in 1962 and since then we have accumulated considerable experience in the field. We were lucky enough to have a partner who was already leading the semiconductor equipment manufacturing business.

Honestly speaking a lot of our experience is based on practical and physical activities rather than assumptions and theories. In that sense, we try to rely on our experience when proposing new products and solutions for the semiconductor industry. Almost all cases come from a customer approaching our firm with a proposition for a product and together we work to realize that vision. From the customer's point of view, it always comes down to sustaining quality and making sure that manufacturing is precise. As I’m sure you understand, the semiconductor industry is extremely demanding these days, requiring the highest quality standards so we are trying to fulfill those expectations with our customers.

Being a Japanese company we are committed to our customers, and as is the case with many other Japanese firms, when we say we will develop something we work until the end. This is very much a trait of the national character of Japan.

Having first made your foray into semiconductors in 1972 makes you well-versed and experienced in the field. In the past few months in particular Japan is seeing a revival as a semiconductor powerhouse with the establishment of TSMC’s Kumamoto plant as well as Rapidus’s new plant as well. The government is seeking a JPY 2 trillion budget funding to support the industry going forward. As a firm that is involved in this sector, what opportunities do you foresee as Japan continues to reestablish itself in the semiconductor industry?

We see a lot of good points here. First of all, what is good about Japan is that although we are an Asian country, we are still separated from mainland Asian countries. This means that there is less country risk and we are a more stable country in that way. Additionally, these days Japan is pro-America, and you cannot say the same about China. Some clients may not consider local production in China or even Korea because of geopolitical issues.

Japan has a reputation for reliability as you talked about earlier. Foreign enterprises understand this and it is a huge beneficial point when they are considering where to localize production for semiconductors and semiconductor-related products. Of course, our firm is looking at this situation and seeing great opportunities for us.

Despite all of these great elements, the picture isn’t all sunshine and rainbows. Many social problems are weighing down Japan, especially in terms of fostering human capital. If a big plant is going to be built in Japan there is going to be an increased need for a proper headcount. We aren’t just talking about enough people, but rather enough educated people with the correct skills to support the production of semiconductors. To alleviate some of those issues factory automation is key. There are a lot of things that Japan has been struggling with and these are factors investors need to consider before jumping head-first into Japan.

Japan is a renowned leader when it comes to automation, but is often criticized for its slow adoption of digital tools. Last year it was ranked 29th in IMD’s digital competitiveness rankings. To reverse this trend the Japanese government has created a digital agency to provide incentives to private firms to increase the adoption of IoT and cloud-based solutions. What DX technologies are you attempting to integrate into your business model and how do you believe they will benefit your business?

Factory automation isn’t something we utilize within our company, instead, we focus more on production efficiency. What I mean by this is applying new methods of welding as well as finding more advanced processes. Welding has existed in so many industries for many decades now, and we are simply trying to improve and reiterate the techniques that have been developed in the past.

Imagine that we come back in 13 years and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

One target I have as a CEO of the company is to position our company more as a manufacturing firm. Ultimately right now we are not a 100% manufacturing company and in many cases, we are acting on a commissioning basis for specialized processing and precision sheet metal manufacturing. We would like to position ourselves more in the manufacturing sector, acting on a purely volume basis. 

For more details, explore their website at https://aimcorp.co.jp/