CKD provides a wide range of FA equipment, including pneumatic and fluid control equipment, to customers in various industries in Japan and overseas who use CKD products to support their manufacturing sites.
We would like to use CKD Corporation as an example to challenge the misperception that Japanese firms have lost their innovative and quality edge in the eyes of the West. Can you tell us a little more about your monozukuri, and the strengths of CKD Corporation that allow you to compete in international markets?
Firstly, we would like to introduce the transition of CKD’s manufacturing. Looking back at our history, CKD was established in 1943 during World War II as a government corporation with investments from five companies: Kawasaki Heavy Industries, Koito Seisakusho, Toyobo, Nippon Steel Corporation and NEC.
Soon after the company was established, the war ended and as Japan recovered from its post-war devastation, radios and light bulbs for illuminating the night became necessities for people.
Under such circumstances, CKD developed equipment for manufacturing vacuum tubes used in radios and light bulbs, and became the first mass-produced products. Since then, products have expanded to include a wide range of machines and components, and now boasts more than 500,000 different products.
I believe that the strength of our commitment to new technologies and products that respond to the changing times, while placing the highest priority on quality, is still being utilized today.
Some of the products that CKD developed as a pioneer have since lost market share to inexpensive mass-produced products from overseas manufacturers, but we are competing with overseas products through our monozukuri strategy to achieve exceptional technology and high-quality products that enable us to differentiate ourselves while maintaining a wide range of products.
One of CKD's strengths is its technological capabilities developed from such a foundation, with more than 1,500 patents supporting the company. Among our products, there are many with high market share in the world or in Japan. As an example, our chemical liquid valves for semiconductor manufacturing equipment have a No. 1 share of the global market.
Secondly, we have two business pillars: Automatic Machinery and Components.
We have various types of automated machinery such as lithium-ion battery manufacturing equipment, packaging machines for pharmaceuticals and food products, and inspection machines for electronic circuit boards.
Our component products include electric actuators and fluid control components, which are used in all types of manufacturing sites, including semiconductor, automotive, and electronic parts manufacturing.
By offering such a diverse lineup, we have been able to incorporate our expertise in designing automated machinery into the development concept of our equipment, and have also been able to promptly incorporate products developed by our components into automated machines to improve the functionality of the machinery. In terms of sales, the two businesses have different target groups, so they are able to introduce each other's customers to each other, creating a synergistic effect.
Our other strengths include a product lineup that contributes to a sustainable and carbon-neutral society and a global network of 170 production and sales bases around the world.
Given how much clean water, electricity, and toxic chemicals are required to make semiconductor devices, what solutions are you providing these equipment manufacturers to help reduce the environmental impact of their machinery? Why should they pick CKD?
CKD offers products that contribute to reducing the environmental impact of semiconductor manufacturing processes. For example, semiconductor plants use hundreds of thousands of solenoid valves, and by using our power-saving products, power consumption can be reduced by 30-50%.
These products are used not only in the semiconductor industry, but also at other manufacturing sites. We have components that enable total CO2 reduction through waste reduction and transportation. We manufacture long-life series products that have a service life four times longer than conventional products.
Long-life products allow users to reduce maintenance cycles and waste. If product replacement is eliminated, no parts logistics occurs and no carbon dioxide emissions are generated.
In this way, we have a wide range of products that contribute to environmental protection and are used in the semiconductor industry.
You have recently built a new facility in Komatsu, Ishikawa, with the reported aim of supporting the semiconductor sector. Could you give us an overview of your new facility and why you chose Ishikawa as its location? What specific components or parts will you produce there?
The aim of the new plant is to meet the expected increase in demand for equipment for the semiconductor industry, and we have decided to build a new Hokuriku Plant in Ishikawa Prefecture in addition to the Kasugai Plant.
Prior to the Hokuriku Plant, we built a domestic plant to produce valves for semiconductor manufacturing equipment in the Tohoku region four years ago. The Tohoku region was severely damaged by the Great East Japan Earthquake in 2011.
CKD wanted to contribute to the region by building a new plant and creating jobs, so we decided to build a plant in the Tohoku region.
Currently, approximately 300 employees are working at the plant.
The plant is based on the concept of "people-friendly", and the satisfaction of the employees is high, and the productivity is increasing. We chose the Tohoku region partly to support reconstruction efforts, but also as a BCP strategy in Japan, where disasters are frequent.
Domestically, we have four plants concentrated in the Tokai region, and we have one in the distant Tohoku region.
In addition, we needed another plant for valves for semiconductor equipment. When selecting the candidate site, we considered various places including BCP aspects, and chose the Hokuriku region, which has relatively low risk of disaster.
In addition to the existing Kasugai Plant, valves for chemical solutions will be manufactured at the Hokuriku Plant, and valves for process gasses will be manufactured at the Tohoku Plant.
What role does collaboration or co-creation play in your business model and are you currently looking for international partners for the purposes of co-creation?
CKD will be celebrating its 80th anniversary next year. Looking back on its history, collaboration with European and US companies was active about 50 years ago. But over time, as CKD has accumulated technological capabilities, it focused on developing its own proprietary technologies, manufacturing and selling without cooperation, and growing. However, we recently realized that this approach limits the company's growth and expansion.
In order to increase speed and efficiency, collaboration and alliances with other companies are extremely important, and we are currently increasing our approaches and alliances with domestic and foreign companies.
To illustrate, CKD's technologies and products can be exported overseas to sell products by utilizing the sales networks of overseas companies, and conversely, the technologies and products of overseas companies can be sold in Japan. M&A and collaborative alliances will continue to be important elements in our growth strategy.
Are there any particular sectors in which you're pursuing these collaborative partnerships?
For instance, we have the largest share of the domestic market for pharmaceutical packaging machinery, but we intend to strengthen our overseas sales in China and other countries.
So we have concluded an agency agreement with a local company in China and are utilizing its sales channels. We are also engaged in joint development and OEM supply with domestic and overseas companies.
For example, we have received an OEM supply of electric actuator products from a Taiwanese company for a type of product that we do not have, thereby enhancing our product lineup for sales.
Some models of food packaging machines are also supplied by OEMs to major Japanese manufacturers and are sold globally using the sales channels of the other parties.
Are there any markets you’ve identified as being key in terms of your expansion effort that you'd like to further consolidate your presence in? You mentioned that you are looking for global distributors. Can you elaborate more on both the how and the where, in terms of your international expansion strategy?
About ten years ago, CKD's management strategy targeted three zones: Japan, East Asia and ASEAN. This was because we were latecomers to overseas expansion and wanted to focus first on the regions closest to Japan.
However, we have since gradually expanded our global expansion and now have a five-zone overseas strategy that includes the United States and Europe in addition to the three zones. In the U.S., we established a plant in Austin, Texas, in April of this year.
However, we are somewhat behind in Europe.
Our current strategy is to focus on the U.S. and Europe, but that does not mean we are neglecting Asia. We will continue to emphasize East Asia, and we will also strengthen efforts in ASEAN and India. At our Thai plant, we acquired a plant next to our existing plant last November, doubling the size of the plant, and we are further expanding overseas.
Currently, our overseas sales ratio is in the low 30% range, and we hope to raise it to 40% in four years, or even sooner. We also feel that our sales network is not yet sufficient in Europe, so we would like to strengthen our sales channels.
Let's say we come back to interview you again in six years' time for your company’s 85th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?
In general, people are self-centered and focused on themselves when they are young.
However, as we get older, we begin to see the whole picture and think about others in the domestic society, the international community, and about the global environment.
So I am able to take a more holistic view of how much I and the company CKD can contribute to society and enrich people's lives.
Six years from now, I believe I will be able to tell you a good story about how we have evolved, how much more engaged our employees are, and how much further we have become as a company that can contribute to society.
In closing, I think it is important to be filled spiritually and to accept a little inconvenience, rather than just pursuing material abundance and convenience in this world.
In the Chinese book Lao Tzu, there is a phrase "to know what is enough." This is to say, "Know one's portion and not ask for more than that. To be satisfied with one's portion and to have a sense of gratitude." If this concept of "contentment" spreads throughout the world, I am sure it will make the world a better place.
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