With its high-quality fasteners for multiple applications, Unytite is supporting the reinforcement of historical buildings and driving construction forward.
Over the last 25-30 years, Japan has seen the rise of regional manufacturing competitors who have replicated Japanese monozukuri processes by taking advantage of cheaper labor costs and pushing Japan out of mass industrial markets. However, Japan is still a leader when it comes to niche B2B fields. How have Japanese firms been able to maintain their leadership despite the stiff price competition?
It is true that in the past 10-20 years Japan has been pushed by regional competitors like Taiwan, South Korea, China and India in mass production and price competition. You can say that they have already caught up or almost caught up with Japan in terms of the production of standard products. We have changed our attitude within the business a bit so that we can focus on the problems of our customers and provide solutions to them.
As a manufacturer, it is not just about manufacturing the product itself, it is also about trying to figure out what the customer needs. For us, it is not just selling the bolts, nuts and washers, it is also about selling the fastening solutions. That is our philosophy. We are a manufacturer, but we are also a service company, where we try to hear our customers’ requirements more clearly. The customers’ requirement might not always end up with us selling bolts and nuts even though they might think selling those items is our thing, but there might be another way to upsell fastening solutions.
In the past, you were able to run a business just by producing good products at a reasonable price. However, now countries like China, South Korea, and Taiwan are able to produce good products and they are actually as good as Japanese ones. How can we survive in this context? If you are just pursuing the production of good products then you will not be able to survive, so we have shifted our focus to looking into customers’ problems – what they want, what they are suffering, what they need – and we try to address those not only with our products, but also with the additional value of services or anything else that we can supply to them.
What differentiates us from our competitors is that we have a number of methods of production and processes. Typically, companies in this industry have only one or two technologies or methods of manufacturing, like cold forging, or the process to manufacture bolts or nuts only, however, we have wide-ranging production methods like hot forging, cold forging, machining, grinding, heat treatment and so on. We could actually combine one or two of these processes to address the customer’s issues and supply those solutions to meet their demands. Having a wide range of manufacturing capabilities also differentiates us from our competitors in certain cases.
We use what we call a ‘compound approach’, where we combine different types of components such as bolts, nuts and other components. In the past, there were certain requirements given by customers, including the mechanical properties of the bolts, and those were given as drawings together with the size and accuracy, and we received that as an order for manufacturing. However, recently, our approach is to not just produce the bolts as they are designed in the drawing. We combine it with peripheral components such as nuts to add value to the product. We produce those components using different technologies such as the ones that I explained. In addition to that, we also add functionality to it, such as torque, so that we can enhance the overall value of the solution we are providing to the customer.
You’ve been involved in developing many industry standard products, including the UNY Torisia, high-strength bolts utilized for structures, or hexagonal bolts for friction joining. How are Unytite’s products superior to more conventional ones?
For bolts and nuts used in components and fastening, the tension should not be too strong and or too weak. There is an optimal torque for fastening. When you are fastening on a construction site, for example, you need to manually fasten the bolts or nuts, and when the pintail at the edge of the bolt is removed, that means the fastening is completed. However, this particular component, the UNY Torsia or tension control bolts, can do the fastening automatically. It can complete it by itself so it can be used effectively on construction sites.
Specifically, the tension control bolt, or TC bolt, has become increasingly popular for use in structural connections. TC bolts feature a pintail that shears off when proper torque is achieved, ensuring dependable and repeatable tension levels upon connection.
Let me go back to my answer to the previous question. For example, this is a drive shaft and one customer, for example, gives us an order for a part of that drive shaft. Of course, we are able to produce that and, in the past, we just produced that part as ordered. However, recently, we try to add some value because we are able to produce peripheral components as well, including the joints. By proposing a combination of these components to the customer, we are trying to enhance the value of the total solution, and by accumulating these businesses, we are also trying to enhance the overall technology we have. From the customer’s perspective, it is easier if they can perceive the total solution rather than only a part of the component. That is how we are approaching customers now.
This is an example of automotive, but for let's say construction, we might just supply the bolts and nuts. How, or what, the bolts and nuts are fastened to might be an H-bar, it might be a concrete segment or something like that. We would then ask, “Can we supply the concrete segment also?” and then look into ways of manufacturing it to provide an overall solution. Sometimes we end up having to look for new manufacturing methods, which is why we do cold forging, hot forging and all these other processes. Sometimes it comes from looking at the customer’s needs. We may identify something which we want to try and create a manufacturing process for. This is how our compound components are related to our manufacturing approach. The product itself is a compound type of product, but to produce it, we also combine different types of methods or processes, and that is how we have approached customers for the past 5-10 years.
The advantage of making everything in one group is that we know our products the best, so if something is wrong with the assembly, we will know right away. We could put a counter measurement in our process to improve the quality of our products right away. That is the advantage of having these production capabilities under one roof. Unytite fasteners are manufactured entirely at our plants, using the highest quality raw materials. Here we hot form, cold form, heat treat, inspect and assemble all of our products to ISO 9001, ISO 14,001 registered standards.
You provide products like driveshafts to the automotive sector, which is undergoing a time of great change with the switch to EVs. A lithium-ion battery is extremely heavy, so a lot of car manufacturers are moving to lighter, newer materials such as magnesium, CFRP and aluminum. What are the effects that this change in materials has had on Unytite?
The world is changing rapidly, and we do not know what is going to happen next. We had the COVID-19 pandemic, and we are seeing the Ukraine war as well, so we need to constantly respond to these changes.
What is important is that I want my employees to think about what is required in society, what is going to happen next and what we are producing here and how it is functioning in which place. I want my employees to be more aware of these questions when they manufacture, design or develop the products. If we are able to do that, I think that we could flexibly respond to these changes, and I am putting a lot of effort into that kind of training to improve the employees’ business mindset.
In the automotive industry, we do see changes to lighter materials, and we see changes related to batteries. It is an advantage to us that we are in many markets, so we do not rely 100% on what is going to happen in automotives. Whatever is going to happen is going to happen. Of course, from a technical manufacturing point of view, we do have a lot of manufacturing processes but it is more about the people involved, not just the products we make.
We are making bolts for certain kinds of buildings, or it might be a car, and if our employees continue to think that way, whatever the automotive market might turn into – whether everything might be Tesla or something else – identifying the need or the new gap is what small and medium companies can do. In order to do that as a manufacturer, we have to have multiple ways of manufacturing, but also of course, we have to have a lot of our employees think “OK, what kind of combinations can we provide as a company?”. We might bring something from the shipping industry and the automotive industry to provide a solution for the construction industry, for example.
Small and medium sized companies are more flexible to provide the best solutions. This mindset is not only for top management, as the most important thing is for employees to also have this clear mindset. That is my philosophy.
In our last interview, one thing that you wanted to achieve was bigger sales in the construction market. Were you able to achieve this growth in the construction sector, and are there any new industries that you are looking to expand further into?
We are also supplying fasteners and connecting devices to protect and reinforce world heritage buildings such as Nijo Castle, and that is ongoing in parallel with our new business to support wind power generation and generate clean energy. These are the two axes that we would like to go for in the future. If you are relying on only one industry, that is going to be risky. If you are just relying on the automotive industry for example, and you see the transformation from engines to EVs, then you may run out of jobs, and we do not want to end up in that situation. That is why we would like to be involved in diverse industries.
To answer your question more clearly, on the construction side, we have gained more business by providing not just the bolts and nuts, but components and other types of items. We have been involved in more of these jobs concerning the reinforcement of old castles and such buildings. This type of work where you protect old buildings is important for the construction market. We never thought of doing it this way, but we are trying to get involved in more of these types of old building reinforcement projects. It is still in construction, but more of a niche sector. It is a subsector that interests us when it comes to growth. It may not be a huge business, but there is got to be some kind of a need for it.
Again, we do not know what is going to happen in the future, so we should be ready for any possible changes in this business. I would like my employees to have that kind of mindset, so we are providing training for that.
What role does collaboration and cooperation play in your business model, and are you currently looking for any co-creation partners overseas?
Of course, collaboration is important. Rather than doing something alone, collaborating with other companies will make you achieve your goal in a faster and more effective way. I do not deny the effectiveness of collaboration, and we are pursuing new collaborations. We are also working together with other firms, both overseas and in the domestic market.
To tackle the overseas market, we have conducted some M&As, and we are working together with a Japanese company to address the American construction industry so that we can increase our presence and market share there. We cannot disclose the details yet, but the keyword here again is “combination”, or the compound bolts, where we jointly work together with another company to become one unit to deliver new functionality.
We are pursuing the creation of additional value. When I say value, I am referring to two different things. One is the value of a product itself, and the other is the value for people. As for the value for people, as I mentioned before, we are putting a lot of focus on training because the working population is declining and so is the birth rate, and as a result, manpower is becoming more and more limited.
It is very important to improve and enhance the value and the capability of each one of our employees, and that is going to improve the efficiency of our business as well. For example, you used to need 15 people for one step in the process on the manufacturing site, but if we are able to enhance the value, or the capability, of each one of these employees, then you will eventually need only 10 people for the same step. Other, simpler steps can be done by robots for example, and we can have human workers in more advanced areas of operations. We will be able to achieve this by enhancing the additional value for people. I would like to change the employees’ standpoint from one where they feel that they are forced to work, to one where they are creating by themselves and contributing to society with their work. If we are able to achieve that, then the products produced by them are going to be more advanced.
Moving forward, what countries or regions have you identified for further expansion into, and what strategies will you employ to do so?
That is a difficult question. Recently this year, we acquired a distribution company in Houston, the US. It is a company that supplies nuts to the oil and gas industry, as well as the energy market, so we have expanded our business more in the US. Some interesting areas, of course, are Europe and southern Asia, where we do not have a presence. We know that we are good at construction fasteners.
There are needs and seeds, and from a needs point of view, there is probably going to be a lot of construction, for example in Indonesia, where they need a lot of bridges. In European countries where some of the buildings are getting old and they have to remodel, we do see a need in those countries, which might be an area that we might want to look into.
India possibly, yes, but also, there are risks in each country, so right now it is hard to determine where we are interested in and where we are going to expand or wherever there is a need and it matches with what we can do.
We do not have a firm strategy internationally, but we are always open minded and trying to be ready for any kind of situation that might happen because six years ago, there were a lot of companies that were interested in Russia, but right now, many are pulling out, so we are not sure what might happen in the world tomorrow. However, the company and the workers are well prepared in terms of flexible thinking and not just trying to make the products well, but asking, “What can Unytite do for society?”. Whatever that mission might be, or whatever the needs might be, we want to be there.
Let's say we come back to interview you again in four years' time. What would you like to have achieved by then?
I am not thinking too deeply about what we want to achieve in the near future. I just hope that we will do whatever we can do and achieve stability. Of course, we have some financial targets, and last time I said that our target was ¥50 billion in sales. In the last three years, we were greatly impacted by the COVID pandemic, so we had a one-off drop in sales, but now we have recovered to the state before the pandemic. We now need to reset our targets, but we are more or less achieving ¥30 billion.