Having started out in 1975 as a maintenance company for Japanese automotive behemoth, Nissan, Fukuoka-based Heads Holdings has since diversified and expanded its business to provide automation and transportation systems for factories as well as non-contact automatic charging systems. The group also produces equipment such as conveyor belts and transfer systems, and has other complimentary business areas including logistics, dispatched labor, and real estate. We sat down with Yutaka Honda, President of Heads Corp), Takumi Honda, Representative Director and President of Heads Holding, Keiichi Honda, Chairman, to learn more about the company and its operations.
In the post-World War II era, Japan has become famous for its manufacturing ethos: monozukuri. Nowadays, Japan is subject to intense competition from Chinese and Korean makers; yet, we still see Japan succeeding in niche high technological fields. Can you give us your take on monozukuri, and why Japan is still able to succeed in these niche high technological fields?
Japan is not that different from other countries like Korea, China and Taiwan which replicate manufacturing processes. In the past, Japan has been one of the countries that have adopted many things from Europe and America. It is a natural process to adopt all good processes or technologies from other developed countries, in this sense there is a rotation of monozukuri throughout the world. At this point of development in the Japanese industry, we need to somehow stand out by showcasing outstanding features of what we do like factory automation. We pursue excellence and provide high-quality products that satisfy the customers' needs.
Yutaka-san, in Japan, there is a demographic trend of a progressive decline in the birth rate and an increasingly ageing population which is creating a labour crisis in manufacturing. Many people believe that one solution could be digitization and automation; however, Japan has been very slow in adopting digitisation and new technologies. What is your take on Japan's DX transformation?
Japan is, in general, not quick to adopt. However, we want to be more prompt and be one step ahead of taking advantage of the technological capabilities of automated guided processes to satisfy our customers' needs. Our customers have expressed their concerns about not having enough labour force, and automation not yet in full swing, but our company endeavours to do that by providing the best-fit solutions.
With mixed production lines of robots and humans, what is your take on full automation? Is there a social responsibility towards the workers, or is full automation an eventuality?
We need to look at the results from America and countries in Europe that now have completely unmanned plants with all processes performed by machines and robots. Japan is naturally moving towards a similar flow of development. We are going to get there sooner or later, but it is going to be a long way to reach the ultimate goal of full automation. Although we are still uncertain about the methods and techniques that we will be adopting to get to that point, we want to keep working towards it.
Takumi-san, Heads Holding business centres around providing automation and transportation systems for factories as well as a non-contact automatic charging systems. You not only provide production equipment such as conveyor belts and transfer systems, but your complimentary business also includes logistics, dispatched labour, and real estate. Could you talk to us about the synergistic benefits that you have created between these different businesses of Heads Holdings?
We see the benefits of the synergy created from doing things simultaneously. Besides our focus, AGVs (Automated Guided Vehicles) and AMRs (Automated Mobile Robots), we also do real estate and dispatched labour. The combination of assets, house buildings, rental spaces, human capital, and machinery works very well. When somebody rents from us, we provide the facility and dispatch labour; we later introduce our machinery to that plant. Since they are all interconnected, we can combine all our efforts and business approaches in catering to a particular customer. We remain flexible and capable of providing better solutions. Japan does not look at the long future; they only address the existing problems. For instance, one solution for the lack of human resources is automation, but it is not easy for companies to adopt methods that eliminate this problem. It is a challenge to make decisions in the long run, which may indicate that Japanese monozukuri is not as swift as other countries.
Keechi-san, the evolution of your company reflects the fact that customers do not know what they want and need. In 1975, you started as a maintenance company for Nissan, and in 1988, you began to produce welfare equipment such as wheelchairs. In 2001, you introduced a lightweight compact arc welder, then the AGV business began in 2007 and more recently, the robotics business. What do you consider as the key technical milestone from your history?
The company was established in 1975 as a maintenance business for Nissan Motors Kyushu Factory. My father founded the company with only ¥ 3 million as its initial capital investment. One of our milestones was the Yokohama facility in 1992 for design; it was double the initial investment. Until the early 2000s and even now, the company is in many ways dependent on Nissan, which has somehow limited the things we could do. We tried to do social welfare, but we later realised that we should take advantage of our close relationship with Nissan. Hence, we began the AGV business as it has been a hot commodity for Nissan until now. The first generation of AGVs ran on AC motors, and only recently have they shifted to automatic charging systems. My sons are taking over the business now, and they contribute to various endeavours of the company. Throughout the long history of our company, we have tried many things. We certainly want to foster our good relationship with Nissan and provide them with our best services.
Yutaka-san, one of the biggest problems though with factory automation is safety concerns. Although we are making new sites with automation in mind, the majority of the factories, warehouses and other facilities are brownfield sites and have not been purposely designed for automation. Can you outline some of the safety features you have integrated to ensure the smooth operation of these AGVs and these sites that are not specifically built for automation?
Safety is our priority in the manufacturing of AGVs. In the consulting services we provide, we have face-to-face meetings with our customers to better understand their needs and offer the most ideal solutions. We determine how our machinery can be integrated into the design of their existing facility. We have encountered brownfield sites where it is very hard to implement automation solutions, and the customers refrain from installing AGVs in their factories. Factories that have stairs, confined spaces, or equipment that occupy a large area can make AGVs not the most appropriate solution for the customers. As mentioned previously, Japan is conservative and slow to adopt, and many companies continue to be more traditional. Even if AGVs or efficient solutions are introduced, some companies may still opt to employ humans. Besides Nissan, our client base includes Mitsubishi, Toyota and other top-notch automobile manufacturers which are ahead of others and understand the need for automation, AGVs and AMRs in their factories. We receive constant demand from these companies, and it is just the beginning. We are anticipating that the demand for our products will continue to grow.
Takumi-san, Heads Holding has been diversifying into a wide range of businesses. Looking towards the future of your company, is there any specific business that you are looking to enter? How do you foresee the future of your holding?
The objective of working together as a group company is to be a total solution provider; thus, offer different services and products to our customers. We have around five business segments now, but we would want to expand to 10 business types. The diversification of our company gives more stability to our business and employees. As the CEO of the group company, it is my responsibility to understand what our employees do and promote transparency and stability. We are trying to see the broader picture to be able to grab hold of more than one specific business.
AGVs and AMRs are going to be demanded worldwide as mass production shifts to mass customisation, the rising popularity of e-commerce and improved safety standards in factories. The market is going to grow from USD 2.1 billion to USD 3.2 billion over the next five years. Which international markets will you be focusing on to reap the benefits of this growth in AGVs and AMRs?
Singapore, Thailand, America, India and many other countries that need solutions for factory automation will demand our products and services. When the time is right, we will be introducing and supplying our products to them.
Japan is famous for spending up to 3.5% of annual GDP on R&D spending, with only Korea bettering it. What are you now investing now in terms of R&D? And what benefits do you hope to reap from that investment in years to come?
Most companies usually employ factory automation in one specific factory or storage, but lately, it has been more necessary to transport things from one factory to another. Transporting solutions have to be improved, so we are attempting to go beyond the conventional transporting methods and consider transporting things underground or by air.
We engaged in a technical tie-up with BlueBotics, a Swiss industrial automation company. They provide the hardware and software, and our role is to propose our ideas to make them more efficient. Recently, companies worldwide, even in Japan, are introducing more Autonomous Mobile Robots (AMRs). To that end, we would like to contribute more in responding to that need.
Takumi-san, in addition to the one-stop service for the automation systems, you have labour and real estate aspects of your business. As the President of the Holding Group, could you give us an insight into the unique selling point of your company?
Heads is a professional manufacturer of automation equipment. Many companies take the easier path of utilising more efficient equipment or cheaper labour force. As an SME, we are capable of providing all types of tailor-made manufacturing solutions for automation equipment.
Keeichi-san, as the Chairman, what would you say is the philosophy of your company?
We used to be called Honda Kogyo; however, we had to change our company's name because we were working under Nissan. Heads is an acronym that shows our management philosophy; H stands for honesty. E means effort and engineering which we emphasise because we are excellent in engineering and put our best efforts into this segment. The next letter, A, is the appreciation for our affiliate companies and all who are related to our business. Dependence denotes providing our best products and services to our customers. S is for continuing to be service-minded as we have from the very beginning.
Takumi-san, you established a company in Singapore in 2012 and a factory in Thailand in 2013. Moving forward internationally, where will you expand to next, and what method will you do so? Are you interested in joint ventures, M&As or another factory or sales office?
We want to bring Japanese aesthetics and beauty to Israeli women. We are confident that our AGVs can be introduced to many countries. I want to expand to Europe; I have never been there.
Keeichi-san, as the Chairman, what vision do you have for the future of this company?
We want to be original and provide products that no other companies can. There are many monozukuri companies that can provide various solutions, but not a lot of companies go beyond those needs, go the extra mile and exceed the customers' expectations. We want to do that for our customers. Putting more effort towards design, engineering and R&D enhancements are crucial to our group company. By doing so, we can acquire more clients and better satisfy our existing customers. I believe that customer satisfaction takes precedence over profitability. My idea is to showcase our strengths as a company to attract more bright minds.
Takumi-san, imagine we come back five years from now to have this interview all over again. What would you like to tell us as the president of this Holding? What are your dreams for your company, and what goals would you like to have accomplished by then?
We want our products to reach many countries in the near future. Numerous factories and facilities will need AGVs as a practical solution. I want to increase our annual sales from ¥ 3 billion to ¥ 5 billion. Our company mostly operates domestically. We have representative companies in Singapore and Thailand, but we want to expand our business to Europe or America. Also, we want to create brand awareness of our company internationally.