Honda Lock: the leader in safety and security

Could you give us an introduction to your company, please?

The company was founded in 1962 and we are 100% funded by Honda Motors. We have nearly ten thousand associates around the globe and our founder early on told us to go overseas as the competitor will be world-famous manufacturers. About 20% of our global total sales come from Japan and the rest is from overseas. Our domain is safety and security for mainly motorcycles and automobiles. We have sites in Japan and in seven other countries.

In the last 25 years Japanese manufacturers have been put under pressure from regional competitors in China, South Korea, and Taiwan that have replicated the Japanese monozukuri processes, but done so at a cheaper labor cost, providing the world with cheaper yet lower quality products. What do you think is the essence of the Japanese monozukuri and how are you able to compete in the global market against such steep price competition?

I mentioned above that we are funded by Honda Motors which also implies that our technology came from them. Honda Motors’ products are very unique and distinctive. For example, at one time more electric devices were added to cars and this needs more electric consumption, and if so, OEMs only need to change the battery size to cover all the usage of electricity. However, in this case, Honda Motors did not change the size of the battery and instead, we found technical ways to reduce the consumption. This is something unique to Honda Motors, such as applying weight lightening technologies instead of bigger engines for more horsepower. Honda Motors always requires us to do something different from others. In other words, we have no competitors, especially in terms of achieving their requirements. When it comes to price competition, we went to countries with lower labor costs while maintaining the same quality. I still believe the essence of monozukuri is continuously attaining two conflicting requirements, such as above, by using know-how and engineering skill so that we can overcome the competition.

How are you able to maintain the same quality that you have here in Japan in your sites that are located in seven other countries?

The important thing is how to transfer Japan's basic quality system. And we need to maintain associates who are trained in quality control. But it's not easy. In Japan, our products are made by stable skilled people, however, in some of our sites overseas the turnover rate is high. When the turnover rate is high, we have to keep training the new associates, in that case the efficiency is greatly affected. Recently, we have started an investigation to introduce more innovative technologies to address this issue. But we can’t forget that ultimate quality comes from “validity of product drawing” and the “quality control manufacturing process”. The key is how to reflect all manufacturing requirements into drawings. This helps us maintain the same quality regardless of the country or location.

Japan’s population has been declining and it is said that by 2050 the population will drop below 100 million which will result in a massive impact upon the labor force. For that reason, many Japanese companies have started using innovative technologies such as AI, IoT, and various other automated based solutions in order to cope up with this situation. How have you adapted to these innovative technologies and what benefit do they bring to your company?

As preparation for introducing new ones with AI and other innovative technologies, we have to shake off our habits that we excessively rely on specific people to run our too-self-customized system first in order to maximize the performance of innovative technologies. These too-customized tasks are often complex tasks that can be costly and wasteful. Now, we are in the process of streamlining our entire work procedures with a Value Stream Mapping. I expect a dramatic efficiency improvement as a whole and can be ready for new innovative systems.

Since the 1990s Japan as a whole has entered into a stagnated economy in which the manufacturers focused domestically in order to meet the domestic needs. Now, when they tried to market their high quality and highly reliable products overseas they faced what we call the Galapagos Syndrome whereby they were unable to convey the message of the utility of their products. In your specific case, what are your strategies to overcome these challenges?

We have to think outside the box to find new attractive products. The value of things is changing. Of course, Covid-19 has become a game-changer that the circumstances of traveling and direct meetings are restricted, then the products and services which are related to remote work, such as the food delivery business, have been expanded. One thing I was amazed with was that people or some companies were really quick on the draw to the change.

We have two activities currently in process. One is “In-company Idea contest” where we widely solicit  ideas from associates, and we proceed the idea to the market as a B to C business if it is attractive and feasible. We just have put “Fishing lure” and “Cultivating strawberry” in practice. We expect to promote a challenging spirit and advertise that auto parts suppliers can make something unique rather than profit. Another one is “Co-creation”.  We intentionally use consultants and are looking for opportunities for collaboration in other business categories. We’ve already had some positive discussions with several candidate companies and are fabricating a concept-model for more concrete elements. Our view is that we may foresee the value which is still hidden now and beyond our range through continuous conversation with other businesses. That is the true benefit of co-creation.

Japan’s R&D expenditure back in 2019 was around JPY 19 trillion and more than 22% of it was designated to the automotive industry. In one recent trend we have seen how different Japanese companies are shifting overseas to find partners in terms of co-creation. In your specific case, could you tell us the role that co-creation plays in your company? Is your company open to the idea of working together with foreign companies?

Our founder, Mr. Honda, did not like to buy some technologies from others. You had to think and squeeze your brain to do something. But now, the time has changed, and it is a fact that we cannot do everything by ourselves. It is only natural for us to do co-creation with others in order to survive. For us in Japan, some approaches for co-creation are ongoing.  We are also open to co-creation with foreign companies overseas. For co-creation, it is important to adhere to our company’s philosophy because we expect a long-term relationship. I believe we can overcome conflicts, if there's respect for each other as corporations.

Could you tell us your philosophy?

We share the same philosophy with Honda Motors. One is Respect for the Individuals, meaning every individual can contribute to the team with its knowledge, skill, idea and passion, and then we recognize their value which includes initiative, equality, and trust. Another one is Creating Joy … as a manufacturer, we would like to provide “Wow!” to our customers. In a nutshell, the deeper we pursue our philosophy, the better we understand that the essence is “People”.

The automotive industry has undergone a number of changes in recent years, we have seen the shift from the combustion engine to electrification and the usage of lighter materials such as aluminium or CFRP. As a company that has been involved in the automotive industry, what has been the impact that these changes brought to your company and what solutions do you provide for your customers?

Although those changes in the automotive industry seemingly bring no direct impact to our company, the electrification of cars requires a huge investment, meaning the automotive companies’ resources must be concentrated into it. As a result, this process compels us, a non-electrification area, to make the selling price lower somehow. For example, OEMs would buy just standard door mirrors or door handles instead of the special and more expensive counterparts. I confess that it is a great challenge for us to find a new value-added product for selling. Although we have been studying to strengthen our R&D performance, it is still difficult to identify which area to invest in.

Could you tell us and our international readers the reasons why you are the go-to partner? What are your competitive advantages and what makes you different from your competitors?

Our domain is safety and security, we are strong in this aspect. We are looking for ways where we could apply our expertise to other products. For example, a door mirror consists of various engineering elements such as mechanical, electric, mechatronics, electronics, fluid analysis, optics, surface treatment and so forth. We also design and manufacture dies molding and casting, board-mounting, build assembly process equipment as well as component parts. So, we can be responsible for the development of a concept or prototype to mass-production of complete products.

Do you have any products that you are about to release for the automotive industry? What are your best-selling products?

Our new products will be basically released in line with the launch of new Honda models. We are currently preparing for a new model while improving the cost of our existing products. Key set for motorcycles is the best-selling product and a product with a high sales ratio is our door mirror.

When we interviewed the president of Toyota Boshoku, he mentioned that the keiretsu model is coming to an end, as evident after Toyota Boshoku lost the contract to produce the seats for the Toyota Camry to an American company back in 2008. We are seeing big corporations such as Honda, Toyota, and Panasonic shifting overseas to find other suppliers that are able to provide the same quality products but at cheaper labor cost and with more innovative ideas. Since Japanese SMEs have been working for big corporations, they have lost their competitiveness, imagination, and this is forcing them to think outside the box. Can you give us an insight about this?

The case of Toyota Boshoku is quite true to us. Similarly, we lost some businesses because Honda Motors procured parts from the general market instead of a special one that requires new development for increasing its cost competitiveness. In order to overcome this severe cost competition, we entered the overseas market where Honda Motors operates and promoted the "Made by Global" strategy, which enables us to achieve an optimal cost competitiveness by procuring parts from all over the world.

We support businesses in each country with our technology and cooperate in business expansion.

Of course, joint ventures with local companies are also one of our strategies, and we will cooperate in good faith based on our philosophy and strive to build good relationships. In our company, Japan will lead the competitiveness by generating and maturing innovative ideas and then transferring those know-how to overseas.

Could you please talk to us about your Hondalock Vision 2030?

I believe a vision has enough power to reinvigorate a company, not just a catch phrase or a slogan. Our 2030 Vision is “Establish the New Honda Lock Brand through Innovation”. When I came to Honda Lock in 2018, I asked myself what the Honda Lock brand was at that time. Possibly, it reminds me of doing some business associated with Honda Motors or “never heard the name”. I dreamed that every associate loves Honda Lock as we commit to our founding philosophy (Respect for the Individual). In order to carry it out, the following three items are key: highly efficient production, strategic technology development, and human resources; in other words - Production, Technology and People. To me, the most important thing is that our associates can clearly imagine the world after we accomplish the vision. 

The founder of this company, Soichiro Honda, said to go into the global market which you have done since you are present in seven different countries. Please talk to us about your international strategy and the countries you are going to tackle in the future.

We advanced overseas in conjunction with Honda Motor’s global business expansion. The demand was the motive and creating jobs was a view for success. Now, we need to think more about survival. Other than a demand, there are various contributing factors in the strategy making such as personal value, supply chain, labor cost, tax system, and even currency or political risk of each country or area. We still need to raise the antenna high for how the economy moves after the Covid-19. India, Africa, and South America may be attractive markets in the future, but it does not mean we establish our facility there. For the meantime, we stabilize our profitability at our existing entities. Again, since co-creation with foreign local manufacturers is an option, we need to maintain our attractive value to appeal so that we can be a candidate for their partner.   

Please tell us more about your new “Honda lock brand”. How would you define it?

I define the new Honda Lock brand as follows. Externally, it is defined that we are acknowledged as a good business partner by OEMs not only by Honda Motors but also many other companies across categories, and they visit us for business or to make an alliance. Also, we are acknowledged as a big contributor to the society in countries where we have sites and always ranked top as a favorite company to work for. As internally, our associates take pride and have confidence in working at Honda Lock. For example, when we are asked “Where do you work at?” and the answer is “Honda Lock”, it prompts the favorable smile and the words: “Wow, Honda Lock!”. Working at Honda Lock is a status so to speak.  Our company culture is well-known as encouraging challenges and tolerant to failure. They confidently recommend work here to those who are seeking a job, and even kids have yearning eyes to Honda Lock. This happens wherever we have our entity. That is what we should be in 2030.

Imagine we come back to interview you again in two or three years, what would you like to tell us? What are your dreams for the company and what would you like to have accomplished by then?

The upcoming 3 years are still the first step of our approach for accomplishing the 2030 Vision. The tangible progress we would tell you is: Production – the three inefficient production lines which we had were incorporated into one flexible line and open a floor space for optimizing value stream. Technology – we have put the R&D investment into practice for strengthening our technological competency. People – You will see our associates are hungry for the next challenge and spontaneously work hard toward achieving the 2030 Vision through “Engagement”.