Established in 1927, VALQUA Group is a pioneering company in the fields of seal engineering and resin-based materials, with the Japanese firm having established a successful presence in this niche area thanks to trust and brand strength it has built up over the past 90 years.
Over the last 25-30 years, Japan has seen the rise of regional manufacturing competitors who have replicated the Japanese monozukuri process but doing so at a cheaper labor cost, pushing Japan out of mass industrial markets. However, we still see that many Japanese firms are leaders when it comes to niche B2B fields. In your opinion, how have Japanese firms been able to maintain this leadership despite the stiff price competition?
I think we have been able to secure our presence in niche fields because we have this concept of working with users in Japan, especially in B2B businesses. We start working with the customers at an early stage and engage in close communication with them. We are very particular with materials, trying various types of materials and also mixing them to create new ones. This enables us to develop products required by the users, especially high-performance chemicals or materials.
Valflon (PTFE) is a material you developed used in products such as gaskets but can also be lined in steel pipes which are used to transport high-purity chemical solutions as Valflon has anti-corrosive properties and does not elute to metal ions. Can you tell us more about Valflon, and how else is it superior to more conventional PTFE-based materials?
Valflon is the so-called Teflon. Although it is quite expensive, it has unique characteristics as a resin material. About 70 years ago, we directly acquired this material from DuPont in the US. We were subsidized by the METI Ministry of Economy, Trade and Industry, formerly known as MITI”. We have successfully commercialized this material, which has excellent characteristics in terms of temperature control, friction and high resistance. Even though this material is difficult to process, we were able to establish the methodology to do so, which gives us an advantage. More than the processing, that goes for PTFE and other materials, such as the Elastomer. We are able to come up with the right recipe to create the material that is best suited for our customer's applications, and we have the right processing technologies.
The products you provide are used in a wide variety of applications such as semiconductor processes, electronics, automobiles, vacuum, food, power plants and even aviation. Is there a specific application that you are currently focusing on? Are there any new industries or new applications that you would like to introduce your products to?
The four areas are IT peripheral equipment including AI, aerospace, bio and defense applications. We started our business by supplying propeller shaft sealing material for jet fighters during World WarⅡ. After the war ended, we stopped producing products for defense applications. I think that was probably one of the reasons why Japan was left behind in picking up new technologies after the war. There is a conflict between China and the US right now, but Japan is also trying to pay more attention to the defense industry once again. Since contributing to the defense industry has been a part of our history, we want to look more into it as it is one of our four new focus fields.
What strategies do you have in mind in order to increase your presence in the defense market?
Our business already includes the defense industry, but our exposure percentage now is rather small in relation to our entire business. We are a satisfactory industrial partner for defense industry agencies. There is a need for Elastomer materials in the air and marine fields not only for the host but also for PC controllers and controlling units. Japan and the US are working together to develop defense equipment. As a certified supplier, we get the information from them.
In the case of your firm, what role is collaboration playing in your business today? Are you looking for partnerships to develop new materials? How can a partnership help you grow your business, both domestically and internationally?
We do align with the US and work with Western countries to re-establish the supply chain together. TSMC and Rapidus are investing and building factories in Japan once again. Apparently, we are regaining the attention of these companies. We are their global supplier, so we will be able to cater to them domestically too, in Japan. Also, we are now about to build new factories in Japan, and we are relocating our manufacturing location from China to other countries in the Asian region. I am taking the US-China decoupling rather positively because it may serve as a trigger to bring back monozukuri manufacturing probabilities and innovation in Japan. Moreover, it could be the start of another technical innovation expansion in Japan.
You worked with CONNECTEC Japan which has proprietary low-temperature application technology in order to look into applications of PTFE nanofibers for flexible devices in the medical field. Can you tell us more about the origins of this collaborative effort? What were some of the findings that you discovered as a result of it?
This PTFE nanofiber technology is something we have been working on together with a US company in the past 10 years or so, which has potential applications in the medical industry. I don't really have much news to share with you regarding the progress of this effort, but we believe that the medical field is an industry where we can expect stable growth going forward, as we witnessed with what happened during the COVID pandemic. Although there may be some risk with this kind of business, we still see some potential for growth.
When it comes to innovative technologies, Valqua has recently introduced MONiPLAT, an equipment inspection platform that enables periodic inspections and condition monitoring from remote management and central locations. What was the motivation behind developing this MONiPLAT service, and what other digital services are you looking to provide to your customers?
MONiPLAT is a system used in inspecting plant operations inside the factory. We supply seals and gaskets to customers, which are our main products. However, these days, there are not as many experienced workers working at the factories who can pass down their knowledge to the younger, less experienced workers. There are fewer people who are able to really properly utilize our products. To fill in this gap, we are offering this service to help our customers transfer the knowledge of operating these materials and ensure safety while using IT and AI. This is based on our philosophy or business model of each process, the hardware and the services. We have been able to capture the needs of our customers because we have been working closely with them to understand their wants and needs. We have been receiving a number of inquiries from our customers for this service.
Since Valqua's foundation in 1927, it has grown into a pioneer of seal engineering and resin-based materials. In four years, you will be celebrating your 100-year anniversary. In your opinion, what have been some of the key milestones in your history that have ensured the longevity of Valqua?
From a business perspective, we were the first ones to successfully commercialize or industrialize the PTFE material. The O-ring in the seal ring came from the US government, but we were the ones who initially produced and mass-produced this product in Japan. In the sealing material, there is a metal-based bellow that is used in the semiconductor industry. We have been pursuing functions for the seals for faucets such as no leakage and better control. To achieve these function capabilities of the seal, we have been looking at different materials. This has enabled us to become a seal company that supports the industry or sector, as a whole. Of course, there are some management milestones for us as well, but these are the operational milestones I can come up with.
Monozukuri also means hitozukuri which refers to people, and we have been emphasizing it for the first 20 years. We are training and educating the right people to manufacture the products that we need to make. That refers to both gaining the right skill set and nurturing the right mindset. We also have visionary management, which is about creating a vision within every person who is working for us. For us, monozukuri goes hand in hand with hitozukuri.
In monozukuri, it is important that our headquarters and frontline workers have a relationship based on trust. The frontline should be comfortable enough with the management team while doing their work, and at the same time pursue improvement. They have to feel secure working with headquarters. When I visited a couple of manufacturing locations, including one overseas, in the last seven months, I felt that it is essential for the management to directly meet and talk to the people. I believe that this can help us achieve no defects and ensure the safety of the work environment.
The automotive industry is undergoing a huge transformation with the switch to EV-based vehicles. EVs are much more simplified cars with very few components - a motor, battery & converter, compared to combustion engines. As a specialist in seals, what opportunities does this transition to automobiles represent? Are there any new products that you are developing for this industry?
We have a product called the harness seal for the drive control unit for the battery, from which we expect an increase in sales volume. When it comes to engine gaskets for compressional combustion engines, the volume will have to decline due to the shift to EVs. We will have to analyze what might happen with EVs globally and determine if it is something that is only happening in advanced countries or not. In the meantime, we are to stay in both areas and see what might happen. Keeping our feet on both fields is the basis of our marketing sales strategy.
Your company will celebrate its 100-year anniversary in 2027. If we were all to come back and redo this interview on that date, is there a certain personal goal or ambition that you as president would like to have achieved for the company by then?
Instead of a target, I would like to continue with our vision, the Valqua Way. We would like to be able to pass on this vision beyond the year 2027. Being in a world of uncertainty, I think it does not really mean much to us to set a numerical target because we would always end up making adjustments. We would like to continue to pursue the satisfaction of our stakeholders and make sure that we stay true to the Valqua Way.
Interview conducted by Karune Walker & Paul Mannion