Takahashi Metal – whose business segments include parts processing and environmental solutions – makes a range of unique products serving diverse industries, including rolled screws and ionized water.
Since the end of World War II, Japan has developed an excellent international reputation for its attention to detail and the ingenuity of its manufacturing. Today, Japanese manufacturers are responding to international demand, market changes and customized customer requests. As a metal processing and manufacturing company, what is your interpretation of monozukuri?
Our basic function is developing products according to the requests of our customers. More than meeting quality and delivery time requirements, we also ensure that our products are guided by high standards. However, we do not manufacture based on what our customers dictate because we aspire to improve and optimize their products by providing proposals with the view of making their products lighter, cheaper or stronger. Through that, we go beyond the expectations of our customers. Even more than acting as a contractor, we serve as a partner for our customers and work unitedly to optimize their products. The basic flow of monozukuri is planning, development, manufacturing, sales & promotion and then service & maintenance. We used to be a subcontractor, and it was very tough to generate profit by only being in the manufacturing area. Later, we became more involved in the planning and development stage, like our major customer in order to add more value. We have been incorporating our know-how in our proposal and development of items and parts. While major manufacturers invite different partners to work on every stage, we maximize our efforts to benefit our customers through a one-stop service activity.
Many commentators say that Japanese monozukuri is being put in jeopardy by Japan's aging population, with 28% of people already over 65. Furthermore, and with a fertility rate of only 1.37, by 2060, it is expected that there will be less than 100 million people in Japan. Firms are embracing automation technologies, even AI, to do routine tasks, but many firms are still struggling to recruit talented engineers. In the case of your company, what opportunities and challenges are you facing related to this population change?
We think that the declining population, with a lower birth rate and Japan as an aging society with a decreasing workforce, is a great opportunity. Because most of the craftsmen or experts before were old, their skills were quite biased. Currently, about 27% of our employees are female, some are older than 60 or 70, and we also hire people with disabilities. I want diversity in our workforce because I believe that it will lead us to further growth. It is great to have women as craftsmen, and we welcome foreigners who offer new values to make strides toward a new monozukuri and elevated creativity. We held the 38th Kaizen Team, and every year, a female employee wins the competition. We are ready to accommodate workers with diverse backgrounds, meaning having distinct levels of knowledge and skills as well. The monozukuri dojo provides nine groups to learn skills to train workers from diverse backgrounds and be able to perform the right monozukuri. We also hire employees in coordination with universities, but we place high importance on connections. If our employees want their children or neighbors to join our company, that speaks for the company's performance and good reputation.
China's zero-tolerance policy due to the Coronavirus pandemic has led to huge disruptions in supply chains, and companies have been forced to rethink their factory and supply chain logistics. On the other hand, there has been significant growth in e-commerce, for example, in the automotive field Tesla has pioneered the online showroom model of selling cars. What has been the impact of Corona on your business? What long to midterm changes did you make as a result?
The pandemic has caused a slight reduction in our sales, and we had to deal with procurement issues. This kind of pandemic or disaster used to happen every 100 years, but now they occur every 10 years. If we do not take this situation as an opportunity for growth, we will have no chance. Hence, I asked my employees to think about ways to take advantage of this challenging situation. Another thing that I have asked of them is not just to focus on protecting themselves, but more importantly, the people around them. The pandemic has brought all our employees together in unity and they are ready to face difficulties together. We were able to launch our monozukuri research center site so that even with the pandemic, our customers could easily contact us, and more people will know more about our company. There were 1,000 unique clicks in just a month. We are hopeful that through this site, we can increase our sales as well through our online exhibitions and factory tours. Before the pandemic, we were not active in selling to new customers. However, with the new site, we are able to receive more inquiries and make our sales activities more efficient by appealing to new customers. After posting the video of our factory tour on YouTube, more people accessed our website.
The automotive sector is experiencing a great transformation. Other than the transition from combustion engines to electric vehicles and battery-powered cars, there is also a change in materials utilized due to environmental regulations. Therefore, the consumption of ferrous metals like iron or steel is decreasing in favor of lightweight materials such as aluminum or CFRP. How are these two changes of electrification and the use of lighter materials impacting your business?
We have not yet experienced a critical impact of these changes in the car market. However, if there is a drastic change in the materials used for our products, we recognize its possible and considerable impact on our business. We work with different available materials like high-tensile steel plates, non-ferrous metal and other types of steel. We know that at some point, we may have to utilize other materials, but for now, we are still actively working in other fields like medical, social care or food. The importance of the material in those fields is lower than that of the automotive field, which requires several functions. Even so, we want to increase our sales in the car industry, which currently make up only 10% of our total sales. In view of the future, we have started to discover new processing or bonding of materials that we have never used before.
Your business segments include parts processing, environmental products and amphibious vehicles. Could you tell us about the synergies that you are able to create between these three seemingly very differing businesses? What advantages does having these three distinctive lines present for your company?
All industries require cleaning processes, which at times can cause damage to the environment or human health. Nevertheless, they were accepted up to a certain point because they were a necessary evil. Nowadays, however, those methods are no longer tolerated. We produce the electrolyzed ionized water for university hospitals to remove bacteria using electrolytes alkaline ionized water from tap water.
Instead of classifying alkaline water as waste, we discovered that it could remove oil and prevent rust. It is a good and saleable product which is uniquely developed by our company. Also, it helps deal with the progressing environmental concerns. Alkaline water is produced by SMEs like us, and big international companies have started to contact us for our products. Companies that have been using our environmental products started to learn about our parts processing business as well, thereby, increasing our sales. Processing companies usually follow their customers in order to launch an international business. However, if those customers' business activities stop, they cut off subcontractors such as the processing companies. Though that was a problem at that time, we were still able to launch our international business because we had our own products.
Our affiliated companies utilize trucks, transporting and amphibious vehicles because Lake Biwa logistics companies are nearby engaged in tourism, and working with them led us to expand to amphibious vehicles. Our affiliated companies used other companies' amphibious vehicles, but the American companies that used to produce them decided to end their business. Therefore, since there were no Japanese companies that produced or sold amphibious vehicles, businesses were heavily affected whenever a vehicle broke down. Our excellent designers and welders support our motto of seeking growth in top niche business segments and not markets with very stiff competition. We stepped up to the plate when no one was able to respond to the need for amphibious vehicles. Everyone was shocked, and some joined our company because they wanted to work on amphibious vehicles. Our customers consider our technology to be of high quality.
It may not be easy to manufacture and export amphibious vehicles considering the varying regulations of every country. How do you match the regulations of each country in your manufacturing processes? Do you have international plans for your amphibious vehicle business?
I do not think Japan has stringent rules when it comes to amphibious vehicles. We have received inquiries from international customers for tourism, emergency preparedness and transportation between islands. The purpose of our current amphibious vehicles and the customers' needs are slightly different. Without our environmental products and amphibious vehicles, we would not have been able to achieve the level of success we have now in our metal processing division.
Many Japanese companies have very unique technologies with highly dominant market shares. Your company has unique technologies, like your rolled screw, produced through a one-stroke process which combines pressing technology with in-mold screw rolling technology, avoiding the need for further machining. Can you tell us more about the advantages this gives to your customers?
Conventional screw products only utilize press technology, but our mirror surface processing is a one-stroke process. Takahashi Metal is the only one in the world that has this capability. Its unique name is reflector. Some customers may not know about our company's name, but they still come to us for our technologies.
It is used by our customers in the automotive sector, it also has applications in X-ray machines or LED reflectors. Companies were uncertain of the available applications for these parts, yet we have been trying to develop products that can revolutionize the industry and the world. We are up to the challenge.
In Japan, up to 3.5% of annual GDP goes to research and development. Could you talk to us about your R&D strategy? What is your current focus, and what are you hoping to achieve in the near future?
It is quite unique for subcontractors like us to do R&D, but we have R&D divisions. The first division is called Advanced Core Technology, where we attempt to create ingenious technologies. Our R&D activities rely on subsidies, and we team up with many stakeholders, including universities, public technology or resource centers and manufacturers. The purpose of such a strategy is to improve the branding of our monozukuri. Another unique feature is our tie-up developments with our customers. The one-stop service plus we offer is one of our efforts to increase our competitive capabilities and our three distinctive divisions. The company's environmental products are the original developments of our employees.
Are you looking for co-creation partners domestically and overseas?
We have already expanded to China and Thailand, which has allowed us to have a head start in competing in the international market. I also worked as an expatriate in our Chinese corporation, which made me realize that continuing the existing monozukuri practices could cause Takahashi Metal to be pushed out of the market. I came back to Japan in a predicament, and I wanted to make it my mission for international customers to choose Takahashi Metal. We work with large-scale international customers, automotive parts and agricultural equipment manufacturing companies. We will continue to move forward with these companies with our unique technologies.
Are you interested in more M&As to expand your business internationally? Would you be interested in a joint venture or a new office or factory? How would you continue your growth internationally?
Our focus for the last few years was the one-stop service and broadening the field of our activities. We tried to expand our field, including press items and spring products. It is nothing special if we supply the parts, and it is convenient for our customers if we supply several parts together. Nevertheless, supplying the finished product puts us on the same stage as our customers. The next stage of our expansion, however, involves building strategic partnerships. Hence, we are actively looking for partners to achieve our goals, improve our services and launch new services. During the pandemic, we launched a new business model which is quite ambitious for an SME. It is now time to seek strong partners and work on something strategic.
Imagine we come back to interview you again on the last day of your presidency. What ambitions or objectives would you like to have achieved during your time as president?
A whole division of our business is dedicated to environmental products and affiliate companies like global automotive parts suppliers. We have accelerated monozukuri for our environmental products, including batteries, items for EVs and solar panels. In addition, I have launched an economic consortium in this area for different companies to join. Through that, we can welcome a wide range of businesses, products and monozukuri, which contribute to the environment. Our company growth is directed toward providing a global contribution. One of my goals is to ensure that our people are proud of our efforts of truly contributing to the environment, a concept that I want to pass down to the next generations.
The strength of the Takahashi Metals Group is that it has a system that can provide similar manufacturing, sales, and services not only to Japan but also to China and Thailand.