In order to reduce wear and tear of materials while also reducing binding and friction, industrial lubricants play an important role within the manufacturing sector. Nihon Kohsakuyu, also known as ‘Lube Tech’, has been providing these key lubricants for over 60 years. In this interview, President Shigeru Kobori outlines the rich history of Nihon Kohsakuyu and gives insight into the company’s R&D initiatives.
As a specialized manufacturer of metalworking oils with over 2000 products and over 5000 clients, what does ‘monozukuri’ mean to you and your company? What do you believe to be the competitive advantages or strengths of Japanese firms that allow them to succeed in competitive markets?
Our main product is industrial lubricant that is used for metalworking, and our main customers are automotive parts manufacturers as well as electric parts component manufacturers.
A common characteristic of both the electric and automotive industries is that every several years there's a big model change which not only applies to a change in the physical design itself, but also to a change in the materials used. And how the automotive industry works is that the manufacturing companies first inform the tier one companies about the expected changes before the actual launch of the new product. We get all the information and we start working towards the changes.
Although the shape of a component may still stay the same, the thickness or the material used may be different and that totally changes what is applicable as oil, so we have to discuss this with the client as well.
In South Korea and China there are many companies which are replicating Japanese products and providing them at cheaper prices. However, for many companies there's a big risk in switching to cheaper products because the strength of Japanese companies, including ours, lies in providing stable products at a stable cost. Other companies with cheaper products may experience sudden supply issues or price fluctuations but we offer stability and reliability for a fair price.
Fundamental changes are happening in the automotive industry, for example the shift from heavy ferrous materials to lighter ones like CFRP’s and aluminum. What impact are such changes having on your company?
It's true that by 2030, with the regulations in Europe and USA, there will certainly be a trend towards EV’s. However I’ve done some research whilst visiting dedicated Research Institute seminars regarding future prospects, and they said that by 2030 there may be a lot of EV’s, but internal combustion engines will still remain and will probably still cater to half the market.
The reason why it cannot be 100% EVs in that timeframe is because, firstly, there is the question of how to generate electricity. In Europe, there is a trend towards natural electricity from solar and wind power, but in the US and Japan it is still petroleum that is dominating electricity generation. Especially as ten years ago there was a big accident at a nuclear power plant in Japan, so it's very difficult to pursue nuclear powered energy at this point.
And secondly, in terms of electricity, many developing countries may be able to generate electricity, but by 2030 a great demand would be in African countries where ICE’s will still be prevalent since it would still be difficult for them to generate power.
With regard to changes in the materials used, that has been an ongoing development for the past 30 years. People have been discussing the use of aluminum, or making steel lighter and stronger, however, these changes have been hindered by the increased costs of both the material and the processing involved, and we haven’t been able to overcome this issue. You can't really tell what will exactly happen. Changing from ICE vehicles into EV’s is a big revolution and we need to be alert to the opportunities that can emerge from it.
Can you tell us about the various initiatives you are undertaking in order to observe and promote environmental protection and sustainability guidelines for the sake of a cleaner environment?
The majority of our oil is consumable and we're not able to recycle it. Our main product is oil used in stamping and pressing, and 99% of it is used on a once-through use. This oil is used in very high heat and high-pressure environments, so if you recycle it, that would actually make the situation worse for the next production. However, the oil used for cutting and grinding can be reused multiple times.
With regard to the environment, there have been stricter obligations and rules in terms of using hazardous substances in Europe, in the US and Japan. We need to abide by those rules and we are replacing any harmful additives with non-harmful ones.
And this was some time ago, but there's been the issue of damage to the ozone layer with certain types of gas. At that time, we were using a chlorine-based cleaner which was considered harmful to environment, but these issues were solved decades ago. As the regulations change and become stricter, we need to abide by the rules and change the materials we are using.
Could you please share with us the current focus of your research and product development strategy? Are there any new products or technologies that you can share with us?
The development of our products actually comes from our clients. We try to respond to clients’ needs through our R&D process, so our main focus currently is making our product more environmentally friendly whilst still catering to the needs of our clients.
Our G62 Series product is an oil that does not require any cleaning afterwards, and that actually came from pressing environmental needs at that time. We were using that chlorine-based cleaner that was not appropriate to the environment and the ozone layer, so we shifted away from that by developing the G62 series.
Our strength actually is not only to lower the cost of the oil itself, but to lower the cost of the overall production process. What makes our customers happy is having an overall cost reduction by using an oil that does not require the extra step of cleaning up after a production run.
Many of our client Japanese companies are going abroad so it's crucial for us to provide a stable supply of the same products to their overseas production facilities. In terms of R&D, we get a lot of requests about EV motors and batteries.
EV manufacturers use motors and batteries which are quite heavy so they’re trying to reduce the overall weight by using aluminum and other lighter material instead of ferrous metal. Discussion about aluminum related parts is quite prevalent within our company at the moment.
How has the Japanese declining demographic affected your company?
At this moment we're not very much concerned about shrinking domestic markets since we work together with Japanese automotive and electric companies which are actively going abroad and it's our duty to support them with our products as they expand.
What role does collaboration or co-creation play in your business model and are you currently looking for partners either in Japan or overseas?
This is somewhat linked to the shrinking domestic market. We currently have two production facilities in Japan, one in Saitama which is our main factory and there's another one in Kyushu which caters to the western regions from Kansai. This is a smaller factory and we did think about closing it down but we realized that within this industry we are the only company that has a factory in Kyushu, so we wanted to fully use this as an advantage and we are currently producing OEM products for many of our partnering companies.
We have a factory in Thailand and we are providing OEM to Japan, and to many other countries. 40% of our production is actually OEM products to our partnering companies and it's very important for us to create alliances or partnerships within the industry itself in order to survive the competition.
Our factory in Thailand is the base for providing products to China, Southeast Asia and India. In China, many Japanese companies have failed so we're trying to look into a way that is more appropriate for the Chinese business.
With India, we now have a local partner and we are trying to start production there locally. Our affiliate Japanese companies take care of about 99% of our production operations so we are not currently looking at expanding into other areas or find a new partner.
Could you please just elaborate for us more about your international strategy? Are there any particular markets or regions that you consider key?
We are currently investing in a few areas in Thailand but we're not thinking of entering into any other markets. When I became the president, there weren't any overseas projects. Since then, we’ve expanded into North America, Mexico, China and Southeast Asia, and we did have a facility in Europe but we closed that down about three years ago.
We are trying to focus on consolidating our positions rather than moving into new territories. We are investing annually in our Thai facility where we are seeing annual improvements in production capacity of 20%. We would like to continue finding ways of making it even more efficient. There’s been some discussion of M&A’s in the company but we’re not looking at doing that in the foreseeable future.
When we talk about the mid-term plan for the firm, are there any particular goals or objectives that you've set yourself and that you'd like to achieve by the company’s 80th anniversary in 2027?
My biggest mission is to pass this big milestone of the 100th anniversary, and I'm not thinking what I should target for that year yet. We’ve seen the Covid-19 pandemic, but luckily, we have not been impacted that greatly by it. There was a decline 2 years ago during summer, but since September of the first year of Covid-19, our production and demand has been recovering. Last year we had no impact from the pandemic whatsoever, so hopefully, it will be over soon and our products will be able to expand into various fields and various countries.
Let's say we come back to interview you again on the last day of your presidency, what goals would you like to have achieved by then?
My role as the president is to pass our know-how to the next generation and that role itself is a big responsibility and achieving that target would be a great success.