Yamato Kogyo: “Our steel, your future”

The global steel market size is expected to reach $1.01 trillion by 2025, registering a CAGR of 2.6% over the forecast period. Growing inclination of contractors towards sustainable, low cost and durable building materials is driving steel demand in upcoming residential projects & industrial infrastructure. As a manufacturer company how are all these changes affecting your business?

The ferrous material represents 35% of the total weight of the earth with 230 billion tons of this material, which is the richest material on the planet. This fact is because steel has a great advantage over other materials in terms of its processing and recycling ease and cost competitiveness. It is a very important material for all kinds of infrastructure such as roads, bridges, buildings, ships, and cars. Therefore, I strongly believe that the importance of steel will remain unchanged throughout the world in developed and developing countries. Hence, we will continue investing in technologies to improve and grow. We aim to create new and better offers to our customers.

At the eve of the 4th Industrial Revolution, we are seeing a multiplication of new innovative technologies such as the rise of IoT and AI, improving the competitiveness of steel makers companies in the global market. How do you integrate Industry 4.0 technologies in your production process?

The trend of those 4.0 technologies comes amid an increase in trouble stemming from aging equipment built during Japan's postwar period, and the retirement of the high number of experienced employees that have made it difficult to pass on skills to younger workers.

To improve our competitiveness in the global market, it is necessary to adapt to the trends of the market and to apply AI and other cutting-edge technologies to our business. Thus, we have already installed some AI devices inside the EAF (Electric Arc Furnace) to monitor and control the temperature and atmosphere. Our goal is to constantly learn the newest technologies and to be one of the top companies that support infrastructures worldwide.

You were founded in 1944. After 76 years of history, can you share with us the key milestone of your company?

Two major milestones can be highlighted in the history of Yamato Kogyo. The first one was in 1975 when Universal Mill was installed here in Himeji. This is the stone foundation of our business as the structural steel manufacturer, which paved the way for Yamato Kogyo to expand its business in Japan and even further overseas.

The other big milestone was the entrance to the United States in 1987 with the establishment of Nucor-Yamato Steel Company, which is now the biggest company of this product segment in the United States. This affiliate supports our overseas activities, getting a big income.

Through this association, we learned that partnership is very important. However, it is essential to share the same spirit. In the Nucor-Yamato’s case, each partner prioritizes the Joint Venture instead of pursuing their interests by sacrificing the other. I think this is the reason why Nucor-Yamato was able to grow this big.  Following this partnership, we also did it in Thailand with Siam Cement Group, one of the biggest conglomerates in the country. It has grown to be the biggest steel section mill in Thailand.

Yamato Kogyo is based on three main businesses: steel production, heavy industry, and track work materials. Could you give us an overview of them?

Our steel production business contributes to countries all around the world with the idea of local production for local use, becoming one of the leading electric furnace steel manufacturers in the world. This business consists of two divisions: the steelmaking division and the rolling division. The steelmaking division is the first stage, where the semi-finished products are made using a large electric furnace and continuous casting machine. Then, in the rolling division, those semi-finished products are processed into the final shape by various types of machinery such as a reheating furnace and rolling mill. Our finished products are mainly used for civil engineering works and building structures.

Regarding the heavy industry business, our main products are used for shipbuilding and other various types of application. These products and services are based on our technology accumulated through more than half a century of experience, which is used in each work that we carry out. Our large machinery enables us to manufacture various types of fabrication such as processing cast steel and industrial facilities such as stern frame for shipbuilding.

Finally, our track work materials business contributes to the safety of railroads via a fusion of cutting-edge technology and craftsmanship. We have cutting-edge automatic machinery which processes rails and other products without human hands. However, at the same time, we rely on the craftsmanship skills of our most experienced employees. The fusion of technology and skills is our strength. Regarding our products, the design, development, and manufacture of railroad switches and derailment/departure prevention guards are the pillars of this business. Derailment/departure prevention guards are installed inside of Shinkansen bullet train rails in parallel to protect trains from earthquakes.

Last year Yamato Kogyo reached turnover of $2 billion. What is your mid-term strategy to continue with your corporate growth?

Approximately 90% of our production takes place in our overseas bases, generating the majority of our profit. This is why our mid-term mission is to continue growing internationally. Nowadays, the US market is the most relevant for us and we expect the Asian Market will be the next one.

Following our objective, recently, Yamato Kogyo acquired the 49% stake of the Vietnamese peer Posco SS Vina Joint Stock Co., creating Posco Yamato Vina Steel Joint Stock Co. The agreement will allow us to transfer expertise in high-quality steel production and cost reduction to the Vietnamese steel producer in a bid to supply the material used for the construction of buildings, warehouses, and shopping malls across all industries as well as civil engineering works in Vietnam.

Moreover, we have also a subsidiary in Thailand, Siam Yamato Steel Co., which allows us to supply steel products for the domestic and other Southeast Asian markets.

One of your competitive advantages is to produce high quality at a competitive price. How are you able to be more competitive than other competitors?

The first reason is that we mass-produce. In Himeji we manufacture 600.000 tons yearly with just one rolling mill. In addition to this, we have 3 rolling mills in the US and 2 in Thailand, and 2 more rolling mills in the Middle East and just added 1 rolling mill in Vietnam. We also have 2 rolling mills for rebar products in Korea and therefore, it means that the whole group has a total of 11 rolling mills producing approximately 7.0 million tons per year, which is equivalent to 1,750 Tokyo Towers.

Furthermore, the second reason is that we have high-quality engineers in every plant. Therefore, we take advantage of this benefit and we share among all the plants all their knowledge and experience on production, exporting the best practices of each factory. Therefore, through this exchange of information and engineers we share our ways of thinking to improve our operations. Those reasons make us a whole, allowing us to be competitive in the market.

Since your entrance in 1986 to the US, you have continued growing worldwide. Moreover, 70% of your profit comes from your activities overseas. What is your international strategy? Do you seek to find more international partners?

The growth opportunity in Japan is very limited. Therefore, we are looking for investment opportunities overseas, especially in particular sectors of the steel industry, where there are not many competitors yet. Our intention to get the best results is to combine both, our know-how and our experience in the industry along with our partner’s experience and knowledge on the local market. Moreover, with our overseas Joint Ventures, our business model is to let the local partner take the majority of the company (51%) while we keep the remaining stake (49%).

We are looking for countries with economic growth. Hence the meaning of our motto “Our steel, your future” is to grow together with the development of the country in which we operate. This is the case of Vietnam, which has huge potential. For the medium or long term, we also look for businesses opportunities in India and North Africa.

Regarding Vietnam and Thailand, we are the sole company producing structural steel, dominating the market in both countries. However, our business model overseas is based on using locally available raw materials instead of using overseas products. This is our way to contribute to the countries where we operate.

What would you like the brand Yamato Kogyo to stand for in the local and overseas market?

Some years ago, Yamato Kogyo had a very low profile. The company was solely known by the steel industry people. Nowadays, our strategy has changed dramatically, and we aim to increase Yamato Kogyo’s popularity. Our mission is to make the company recognized worldwide.

With this purpose, we are also modifying our values and philosophy to focus the company on what we would like it to stand for. Along with our mission, vision, and philosophy, we also renewed our company logo. In the new logo you can see an arrow, which symbolizes “creation of new quality” and “cutting-edge technology”. The remaining characters jump out from the arrow, representing “progress toward the future”. Moreover, we connected the letters to represent our flexible attitude and group relationships. Finally, the shape of the characters also implies a group attitude carving out a new future.

Furthermore, the Yamato Kogyo Group must expand overseas for further development. Therefore, we will develop our existing overseas businesses even further with our partners as well as seeking opportunities for new overseas business.

In conclusion, Yamato Kogyo Group will continue supporting our future by developing and expanding our global steel business with our technology hub in Himeji.

You have been the president of Yamato Kogyo for three years now. Seven years from now, what would you like to have achieved?

Our mission is to expand the talent and the quality of Yamato Kogyo overseas, creating a “Talent Pandemic”. Therefore, we aim to manufacture local products for each country all around the world to satisfy the infrastructural needs, to support their development, and to improve the lives of their population. Consequently, my wish is to deliver Yamato Kogyo group in a better shape to the next generation.