The ‘nuts and bolts’ of safety and performance

My first question to you is regarding the essence of monozukuri, the Japanese term for manufacturing. You have stated previously that you believe the basis of monozukuri is hitozukuri, the making of people. Why do you believe that this synergy of hitozukuri and monozukuri is so important in craftsmanship?

When explaining the essence and process of monozukuri, I often like to draw comparisons to differences in processes between countries, in this instance I will use Germany and Japan as points of reference. In Germany there is a tendency to focus on replacing the blue collar workers by automating processes. On the other hand, here in Japan, we focus on trying to maximize operations by utilizing the know-how and experience of the blue collar workers.

Where in Europe and the western world, many of the workers in factories are told to work within their job descriptions, here in Japan we believe the motivation of the blue collar workers and their drive is to want to make their company and its products better. This difference in mindset is what sets Japanese manufacturing apart from the rest of the world. The reason for this may be due to the nature of job hunting in Japan, where writing job descriptions to fit specific jobs has never really been a part of the process. This means that the workers can work off a clean slate with no restrictions and gives the operators on the floor the space to innovate and think for themselves. In this way we are relying on them heavily, but the workers respond to the trust we put in them. I believe this cultural practice in entrusting and fostering employees is how hitozukuri is such an important aspect of monozukuri.

This hitozukuri and high level of manufacturing that Japan has been able to achieve comes at a higher labour cost, especially when compared to those in emerging markets such as China and more recently, Vietnam. Some of your competitors for example, Shanghai Pride Machinery, are able to deliver similar types of products but at a cheaper cost. Nevertheless, we have seen companies such as yours remain competitive. How do you achieve this and protect your firm’s market share despite this stiff competition?

There are many ways which I can describe cutting running costs, but I believe that on top of these cost cutting measures, building and maintaining a trusting relationship with our clients is an important aspect in remaining competitive. For example, you mention our competitors in Shanghai; if we think about the cost of one bolt, the price differs from 5 yen to 3 yuan or even 90 cents, all of which are low cost. In this competitive market we know that where a bolt costs 90 cents that you could purchase it for half the price at 45 cents from Shanghai. However, when we consider that this one bolt is part of a car door that is there to keep the drivers safe, we are investing that extra 45 cents into the trust of our customers and drivers. This trust that we have built is a record of our performance accumulated over the years with regards to the quality of our product. If our competitors in Shanghai build up this trust over time, they will become bigger rivals for us.

The automotive sector is currently going through an exciting time full of transformations because of regulations on CO2 forcing automotive makers to reduce the weight of their cars. On the one hand this is creating a change in the materials used, where we are seeing the consumption of steels and ferrous metals going down, whereas the consumption of aluminum and CFRP composites is going up. On the other hand, the push of hybrid vehicles and full electric vehicles (EVs) are also changing the inner design of cars, for example with hybrid engines which are much smaller and more compact. So on the one hand we have changes in materials with plastics and composites, and on the other hand we have the necessity to change specifications. How are these two changes affecting your business? And what are some of the products that you are going to launch to meet these requirements?

We are using steel for certain components, which allows us to weld parts together. However, when it comes to aluminum, although it is possible, it becomes very difficult to weld parts together, and it is even more difficult for the CFRP parts. This meant that we needed more assembly parts for welding, and which was not a viable option, so we created a new solution to overcome this.

With our new technology we create parts which do not require welding and are able to join together mechanically. In this way, rather than trying to change the weight and materials of the bolt itself, we focus on adapting the materials around it and how to join the parts together, as these parts make up the majority of production costs as well as most of the total weight.

For example, we have what seems like a simple nut, but when this is fastened it creates dust and waste. However, on the other side of the plate we placed semiconductors which burn the dust created in the fastening process, leaving no excess waste after it has been tightened. Products such as these are a result of us creating solutions based on the requests of our customers.  Although it may look like a very simple product, it requires innovation and wisdom to create high-quality products such as these.

The products may not seem that different to what they were over 10 years ago but these small innovations allow us to answer the needs of our customers. Our competitors in Shanghai may offer cheaper products but we believe our strength is in maintaining and assuring the quality of our products so that we do not accept a single defect out of the hundreds of thousands of products we manufacture.

We know that your firm has production bases in the US as well as in China. As you mentioned previously the importance of maintaining an overall high standard of quality, and this is seen as you received the Standardization Award in 2015 as a supplier to Toyota Motors. What techniques do you employ to maintain this high standard across your production bases across the globe?

Firstly, on a general level we ensure that our 4 M’s remain the same across all of our production lines; the 4 M’s being materials, machinery, manpower and method. We believe by having these 4 remain the same we can produce standardized products across the globe. The materials and machines are easy to export to our bases abroad, however we cannot export our man power and methods directly as is. This is why we focus on the ‘method’ aspect in our plants abroad. As mentioned previously in Japan we focus on the workers maximising their freedom and initiative, but in our bases abroad we started to improve defining our job descriptions to ensure our workforce is better equipped. Initially when we established our plants abroad we sent over our Japanese engineers to teach our methods used in Japan to the local engineers. However this was not sustainable so we focused on building up documents, learning materials and videos to help the learning process. We also trained up teachers in Japan who acquired the skills from the engineers in Japan and would then go to the plants abroad to pass on the techniques to the local engineers in a style and language which was more suited to each local market. We believe that communicating the methods effectively is the key, rather than the nationality of the worker. Therefore we believe it is our duty to learn not only how to communicate but to understand if our teachings have been comprehended properly by our overseas workers.

We found that in teaching these skills to the locals abroad that some workers found it difficult to understand some of the cultural aspects of our methods. Despite this we have found that there is no drop in quality to the eventual end product, and that many of the workers abroad have a better understanding of the skills than our workers here in Japan. We also hold in-house competitions for the engineers where we have seen foreign workers from the Czech Republic or Indonesia beating the Japanese workers, much to the frustration of the Japanese engineers and operators.

As you have mentioned, your company has plants in the US which allows you to tackle the North American market and factories in China which allows you to target the Asian market. Looking at the future can you tell us more about your international strategy and what key markets or geographic regions you are looking to expand into?

Currently we do not have any specific markets or regions in particular that we are trying to break into desperately. In the past all of our expansion projects have been based on the needs of our customers, so whilst any future expansion projects will be dependent on our client’s needs specific to each local region, we want to support them to meet these needs as much as possible. Our clients’ requests may need us to push further into our existing markets or to establish ourselves in new markets and countries, so in this way we are very open and flexible about our future prospects.

I would now like to talk about the North American market. In comparison to the Japanese market, the cars that are sold in North America are heavier such as with pickup trucks, and we are also seeing companies such as Tesla rapidly adopting EV trucks. With this in mind, what is your company’s strategy for the North American market, and do you currently or plan to cater for American brands?

We have a good business relationship with Ford, and have been catering to them since around the year 2000. We also had a small deal with Tesla when they appeared on the scene. However apart from these relationships our brand exposure in the American market has been minimal so we are continuing to strengthen to increase our market share in North America. Although Toyota is currently our biggest piece of business in America, our exposure abroad is plentiful as in Europe we have business with BMW and also with some other brands such as the FAW Group in China. We believe that if we are partnered only with Toyota we will be unable to get a clear picture of where we are positioned in that particular market. Thus we are looking to expand our client base within North America to give us a stronger standing and make us more competitive.

We have mentioned many car brands over this interview with BMW and Toyota and more, which leads me to a fun question for you. What car do you drive and are the screws you manufacture in that car?

To answer your second question first, I place a lot of importance on whether our fastener are in a car when I am looking to purchase one! And to answer your first question I recently bought a Toyota Fuel Cell Mirai, it is in the parking lot right now so let us take a look on our way out!

My next question is a bit sensitive. I have noticed that one of your clients is Toyota Boshoku, with whom we have a very good relationship. We actually conducted an interview with their Chairman, Dr. Shuhei Toyoda last year, during which we asked him about the “Keiretsu” system. Dr. Toyoda explained that the Keiretsu system brought about the glory days for Toyota during the 80s and 90s, that it allowed them to control supply and pricing. However, as the 2000s arrived and globalization went into full throttle, companies in the Toyota Keiretsu suffered because they did not have international bases and were not used to competing. They were not innovating at all and were just following orders. This persisted to the point where in 2006, Toyota Boshoku lost the contract to manufacture the seats for the Camry Sedan to Johnson Controls, a massive loss. Dr. Toyoda explained that it was at that moment that they needed to change. My question to you is this: as a company that has been linked historically with Toyota, how do you envision the Keiretsu system moving forward? Do you believe that it has evolved? Does it need to evolve further?

Ultimately, I believe that it will be up to the competitiveness of each of the suppliers, including ourselves. It is important for us to understand that Toyota itself is engaged in fierce competition with other companies in the industry, such as Tesla. If Toyota loses its competitive edge by using our products it is not a good thing, and it is not good for our other business ventures as well. I previously mentioned our global market operations, in which we try to acquire shares from companies other than Toyota, but of course if we enter that market other companies will attempt to acquire shares from us as well. In that kind of competitive environment, I don’t believe that we will be able to maintain the Keiretsu relationship just because we have belonged to the same family for a long time.

On some level we can rely on our reputation of having never produced defective bolt products, but other companies will inevitably develop similar trustworthy reputations over time. It is critical that we maintain a healthy level of competition and continue to improve our capability. If we maintain an edge over our competitors we will be able to maintain our share in this market and it may appear externally that we are maintaining the Keiretsu relationship. However, it will not be the case that we will be succeeding thanks to our long-term connections alone. If we have that competitive edge, I believe that clients other than Toyota, even clients that are not Japanese companies, will show interest in our products. That is an objective we would very much like to achieve.

I have one final question for you as the president of the company. Last year your company celebrated its 70th year anniversary. Imagine we come back five years from now for the 75th anniversary and conduct another interview like this one. What dreams do you have for the company, and what legacy would you like to leave for the next president to come?

I am only the third president of this company and each of my predecessors, my father and grandfather, took charge for 20 to 30 years. In this regard we are not like many listed companies whose presidents change over within less than 5 years, so it is probably better for me to look further than 5 years into the future to answer your question sufficiently. Regarding your question, we did recently discuss our 5-year plan, however this time around I did not set any hard numerical targets that we should reach. Rather, I used this as an opportunity to allow the next generation of potential management team members to think for themselves and plan for our future. I did this as I am much more interested in giving the next generation room to grow, develop and set their own targets than give them all the answers. I am also interested to see how many of this future potential management team will consist of non-Japanese people, as it is something I would like to see in the future.