Through its unique welding technology, Kyowa Kikoh is looking to cater to the varying needs of its customers.
Since the end of WWII Japan has developed a great reputation for its attention to detail and for its kaizen philosophy of manufacturing. Nowadays though, monozukuri is more about responding to market demands and customer requests not only domestically, but also internationally. As an integrated manufacturer of industrial base construction machinery, what would you highlight as the advantages of Japanese manufacturing over foreign competitors?
That is a very difficult question. Looking back at the history of Japanese monozukuri, the big boom was experienced right after the country opened its borders during the Meji era. During this time the textile industry felt huge growth, and then after WWII, it was the industrial sector's chance to grow. This was seen through steel manufacturing as well as electrical appliance manufacturing. However, now times are changing, and mass production is no longer applicable and Japanese companies cannot compete in this field of mass production. So rather than dying out, Japanese companies focus much more on the customers. Product-Out is no longer applicable. The Product-Out concept is a situation where a company sets standards and works toward achieving the standard. As long as this standard is achieved, the end product is considered good. Actually, market-in is no longer applicable either. Customer-In is the most important right now, and the strength of Japanese companies such as my own is this Customer-In approach where we listen to the needs of our customers and respond directly.
A lot of your customers are in the construction industry, and if we look at the history of Japan’s construction, its first boom occurred post-1964 Olympics games. During that time, we saw many buildings and shinkansen being built. Now in the years since we have seen a lot of these structures age, there is a growing need for repair, maintenance and upkeep. Only cities such as Osaka and Tokyo are seeing an increase in buildings, and other cities are slowly diminishing. Could you give us your assessment of what you see as the future needs of Japan’s construction industry? Where do you see perhaps see your company contributing?
Japan’s construction has been based on scrap and build ideas, and currently, this scrap is ongoing. We have many machines that could work on scrapping aged buildings, such as our de-piling machinery.
This machine's job is to unplug the pile foundations that have been established for earthquake resistance. Around 150 units of the machine have been sold. Actually, as you mentioned, only urban areas are experiencing new types of construction, and with that, we can cater to the new demands of the industry such as the boring machine. New depth is required by recent construction, and there is oil and soil pressure present there. The deeper you dig, the more the pressure is, so we have developed machinery that can resist this high pressure. Construction work tends to go on whilst traffic is still moving and life goes on, so we cannot use trucks to transport mud and construction materials like we used to. The industry is shifting to more conveyor belts and automated machinery for transportation. We have machinery in that field too. Construction machinery is more on a custom-based and case-by-case development.
Currently, we are engaged in a joint development with a super general constructor in measuring the amount of soil or mud that is transported out of the excavation site. If too much is taken away from the site, you might experience a blockage of the hole, whereas if you keep too much, water may surface from beneath. It is important to measure how much soil is taken out of the ground and how much is put back in.
In our interviews, we have learned that the soil here in Japan is super complex. Here in Japan, we experience a lot of earthquakes and as a result, we see a lot of upturning of the ground. What advantages does it bring being a company that started here in Japan?
Japan is very complex in its soil structure, there are mountains and river soil, with the soil being a complement of rock, sand and stone. It is very complex, whereas, in Vietnam and other countries along the Mekong River, 80 meters of the surface is just mud. Since it is very easy to dig. Japanese companies such as ourselves have extensive know-how in dealing with complex Japanese soil, using that data is applicable anywhere in the world. Based on the data, Japanese industrial firms can easily adapt to the soil in Vietnam, in Europe, or anywhere else. Europe is actually interesting because the soil used to exist on a glacier, and thus is is a very simple soil structure. The challenge comes more from the cost competition, especially with Chinese companies.
Of course, the population change here in Japan is another challenge that all Japanese companies must face. Since 2011, the population has been declining, and it is also an aging population with over 28% of Japanese being over the age of 65. If you look at the construction industry, one in four workers is over 65 and there is an apparent labor shortage. How you are reacting to these population changes, and what kind of challenges or opportunities it is presenting you?
This Sasebo area is actually on the very Southern outskirts of Japan and the population is around 250,000 people. With that, the young workforce is very limited, so in 2006 we first invited 10 Vietnamese workers as trainees, but with the governmental training system, they can only stay for three years. In order to keep a long-lasting relationship with the Vietnamese employees we first established a base in Vietnam around 2010. In 2011 we constructed a factory there and started operating in the region. With that, we were able to enter the Vietnamese market. In Vietnam, the average age was around 28 or 29 at the time, so it was a very young population and is still. I visited many specialized schools there, but the content of their lessons was still very early in the development phase. We feel that currently, the Japanese-Vietnamese relationship is one of supplementing. Currently, we have 340 workers in the Sasebo area and 50 are Vietnamese. As we have over 10 years of experience with our Vietnamese base, we are very lucky in terms of not needing to look for experienced workers to fill shortages.
Japan has pledged to go carbon-neutral by 2050, and recently the Kishida administration has said that more than 38% of energy must be renewable by 2030 to meet that 2050 target. Wind power is seen as a huge opportunity here in Japan and the country has the third highest global wind power potential, falling behind only the US and Europe. For a firm such as yours, what kind of opportunities is this push for green energy providing you? What can you contribute to carbon neutrality?
For renewable energies, our focus is to enter into the construction of offshore wind turbines. We have had meetings with both a Dutch and a Danish company about offshore wind generation. I’ve learned that the industry is very advanced and that Japan is very behind the times. In terms of building wind turbines and wind power generation itself, GE Wind Energy and other major global players already have a big share of the pie.
We’ve been interested in offshore wind power projects for a long time, and in fact, we already experienced manufacturing a tower – specifically the foundation parts for it - and now we’re working on a SEP projects. When you install an offshore wind turbine you require a ship called a self-elevating platform (SEP) or sometimes it is known as a jack-up barge. We can provide these SEPs and what we are trying to do right now is negotiate with the Nagasaki prefecture, which has a plan in place to install offshore wind turbines off the coast of the Goto Islands. We are also promoting ourselves in industrial magazines to make an appeal to the industry about our SEPs.
The special thing about our SEPs is that they can hold over 1600 tons in weight, and that is a massive amount of weight. That kind of machine is the type that we can provide and can be used in the installation of wind turbines as well as in making relay hubs for the electricity generated.
Are you looking for technical collaboration in the future with European or American partners to help you further transition towards this new renewable business?
Yes, we are interested in collaborations and partnerships. Once we establish a contract with the Nagasaki prefecture, we can proceed more easily with a joint collaboration with foreign companies. Our current focus is the consolidation of our agreement with the Nagasaki prefecture.
Your company has a very experienced and professional team of engineers and welders that supervise a younger generation. Additionally, you have adopted meister system which is the German way of craftsmanship. How do you ensure that the experience your company has gained gets passed to the next generation of welders in your company?
First and foremost, the issue is that we cannot find enough young welders and young people who are willing to become welders. I myself am the chairman of the Welding Society of Nagasaki and have done so for over eight years now. Nagasaki prefecture has a professional school that has a welding department, but every year the school faces a shortage of applicants compared to demand, and we find that we don’t have enough applicants for jobs.
As I mentioned, Vietnam and our company have a mutual supplemental relationship, and it is actually seen through this welding technology. We currently have about 20 to 25 welders from our subsidiary in Vietnam and they are supporting our welding division. In fact, we’ve seen many Vietnamese that are very good with their hands and we feel that welding technology is good for the Vietnamese.
Do you have any particular projects or machinery that you would like to highlight in order to demonstrate your welding technology? Has there ever been a particularly complex customer request that you were able to execute and deliver on?
Our specialty is being able to weld many kinds of materials like duplex things such as double-layered stainless steel. That is often used in the conversion of seawater into pure drinking water in desalination plants. The requirement is that it can resist seawater that is over 35 degrees celsius and is anti-corrosive. Our welding technology is very high-end and high-tech in terms of being able to weld this duplex stainless steel. With this, we are now able to work with almost all the major pump companies in Japan.
There is a discussion of adding a new liquid type of ammonium to coal, to make it a more efficient form of power generation, whilst also reducing the amount of emitted carbon dioxide. When this ammonium is introduced to coal thermal power plants, a new type of stainless steel welding will be required. We are trying to gather as much information as possible so that we can continue to work with the major pump makers.
Moving forward, what new markets will you expand to, and which particular countries will you be prioritizing in development?
Our international business operation strategy is collaborating with our customers. There are many clients who are interested in entering and providing their products to the ASEAN market, but in order to do so there are many issues that need to be resolved. Issues such as cost, investment and lead time on delivery are very important to them. We are offering our services in things such as assembly to expedite those processes. By receiving key components from Japan and making them in our Vietnamese factory we can increase production efficiency. In terms of price competitiveness, we can help with that and assist our clients in delivering products to the ASEAN market. Since 2019 we have had an office near Ho Chi Minh airport, but due to COVID-19, it was not operating until recently. In the ASEAN region, airplanes are such an important aspect of transportation, so having a facility close to the airport is very crucial. By doing all of this, I really feel that we are able to increase our competitiveness.
Imagine that we come back on the very last day of your presidency and have this interview all over again. What are the goals and dreams that you hope to have achieved by then?
The ideal situation is that I can proudly say that my next generation has done me proud. I can look at the work we achieved and look on like a proud father.