From reliability to revolution: unlocking Japan's manufacturing future

It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, customer-centric production, and advanced technology. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not?

To provide an overview of my company, 95% of our business caters to the domestic market, while 5% focuses on overseas ventures. The devalued JPY has had a positive impact on our overseas business and product exports. However, we are now facing increased import costs, resulting in higher expenses for raw materials. Currently, due to the balance of our business, we are not experiencing significant benefits from this macroeconomic situation.

Procurement has been a major concern for Japanese SMEs, particularly in semiconductor-related fields. Unfortunately, SMEs in this sector have limited influence over the semiconductor situation. Therefore, our approach is to shift procurement towards a more stable domestic supply. Recently, there has been a resurgence in bringing back semiconductor manufacturing to Japan, as exemplified by Sony and TSMC's plant in Kumamoto. This resurgence is also a significant driving force for our business, given that our primary customers are predominantly based in Japan. With the revival of manufacturing in Japan, we believe that more factories will be established, presenting opportunities for our processing machinery within those facilities.

With the weak JPY and the rising cost of labor in countries like China, this trend of bringing back manufacturing is happening across many different manufacturing industries. However, this seems to be at odds with one of the biggest challenges facing Japan right now, which is the aging population. It is all well and good to bring manufacturing back to Japan, but it is pointless if you don’t have enough workers. Additionally, to leverage the expertise and know-how of seasoned workers you need to have the required infrastructure in place to allow for the transfer of skills from old workers to new workers. How can Takeda help companies overcome these challenges with its machinery, and what impact is Japan’s demographic decline having on your day-to-day operations?

To address the population issue, we have moved away from relying solely on single machinery for production. Recognizing that a single machine is insufficient to provide a comprehensive production scheme, we have transformed into a complete solution system provider by developing auxiliary equipment and related systems. Our primary focus lies in labor-saving and process-reducing automated machinery. We take pride in offering customers user-friendly interfaces that can be easily operated by anyone. In the past, we provided multiple language options, but we recognized the need for improvement and thus devised a system of universally recognizable symbols. This approach not only enhances efficiency but also facilitates streamlined operations.

Two phrases that stick out in that answer are labor-saving and process-reduction, and this links very well with your flagship series, the CBF series, which from our understanding has a 3-axis drill that allows for the cutting and drilling of various holes and shapes, all in one single process. Could you introduce us to the CBF series and what you believe to be its key advantages? What are, in your opinion, the most interesting applications for this product?

Let's take our latest product, the M series, as an example here. It represents the most advanced version we offer, now equipped with 3-axis drilling capabilities. It is capable of drilling on the top, bottom, and sides, along with an additional circular saw. The reason behind naming the newest product the M series is due to the incorporation of milling functionalities. Users can now create longer and wider holes through this newly added milling capability.

In the construction industry, our primary market, milling processes are not typically required, as processing primarily involves drilling and cutting. However, applications such as the production of elevators and canning components such as girders necessitate milling and tapping operations.

The main purpose was to streamline the processing steps. Previously, to create a longer hole, one had to drill, remove the material, and then use gas to cut the area for the desired length. By incorporating milling features, these additional steps have been eliminated.

Our machinery is complemented by auxiliary equipment, such as loaders or unloaders. Establishing an efficient transportation system holds great importance for our clients, and this is a unique and valuable offering we provide to them.

circular saw cutting machin CHL-2515AII

office building

shaped steel processing machine CBF-3015

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You just mentioned your goal of expanding the market, and we would like to hear more about this goal, both in terms of different types of industries and also different regions. In the beginning, you outlined your 95 to 5 ratio of overseas and domestic sales. However, despite this, we do know that you have an extensive history working with partners and distributors in China, Malaysia, and Vietnam. What are the key takeaways or lessons you’ve learned collaborating with these partners and operating in these foreign markets? What are the next steps you plan on taking for your foreign expansion?

Our primary customer base lies within the construction industry, particularly in conventional building constructions and bridges. However, we have recently observed a rise in the construction of data centers, logistics facilities, and warehouses. As a result, we are directing our focus toward expanding our operations to meet the evolving demands of these new and exciting industries. While our niche has traditionally been in the construction sector, we are now actively targeting elevators, logistics centers, warehouses, and structured parking lots, aiming to align our technological advancements and updated machinery with these specialized areas.

Are there any particular regions outside of Japan, like China or Southeast Asia, where you are interested in promoting your equipment?

Regarding our overseas strategy, we initially focused on Korea, Taiwan, and China, and subsequently expanded our operations into Southeast Asia. We have been engaged in overseas operations for approximately 10 years. The establishment of a direct sales office served the purpose of training and educating sales agents, as well as providing maintenance support for our machinery. For these objectives had been achieved, we closed our office in Malaysia last year for a time. Currently, overseas business constitutes only 5% of our overall operations. However, our objective is to raise this percentage to around 20% to achieve greater satisfaction.

Through our overseas operations, we have gained valuable insights. Operating predominantly in Japan, we adhere to the strict construction code, which mandates that all holes must be drilled using a drill. Conversely, in Southeast Asia, there are no specific regulations governing hole-drilling methods. This market offers various options such as drills, plasma cutting, or even laser cutting. Hence, one of our focuses is to enhance the appeal of our products to cater to these diverse market demands.

In Southeast Asia, CAD systems from European companies are predominantly used, and our system's compatibility with European CAD standards is currently limited. Consequently, we are actively working on developing a solution to integrate our numerical control (NC) systems with the European CAD standard.

Are you looking for partnerships to help you create better synergy with European CAD standards?

Yes, we have a partnership already for this particular issue.

You just mentioned Malaysia, and how you just recently closed down your office, but I imagine that if you have an export business that’s so focused on distributors that training and maintenance can be a problem. Do you have any plans to re-attempt establishing a local office or base in a foreign country to be able to provide those services locally to your clients? If so, where?

We don’t know where yet but we do envision having an office in a locality where we can train agents. I was thinking of somewhere in Southeast Asia as a possibility.

Imagine that we come back and have this interview all over again in 3 years. What goals or dreams would you like to achieve when we return for that new interview?

Our objective is to further enhance our steel processing machinery while striving to achieve the previously mentioned 20% ratio of overseas business. However, we are also concerned about the ongoing global shift towards Building Information Modeling (BIM) in the construction industry. This transition introduces some apprehension since BIM designs are typically tailored to specific machinery defined by upstream companies. By specifying particular machinery, one can calculate costs, work volume, and speed. Our current customer base, includes steel frame manufacturers, house manufacturers, building constructors, and logistics equipment manufacturers. These manufacturers may face limitations imposed by the upstream entities of general constructors. To maintain our competitiveness in the market, it is crucial for us to continuously promote our advantages and products to various stakeholders within the industry.