"Best in class" is the only way to describe Niitech’s development and mass production processes for door hinges made from a range of materials including aluminium to high tension steel
Japanese monozukuri has become famous worldwide for its attention to detail and the kaizen philosophy of constantly improving a product. In Japan's automobile industry, we see a series of tier 1-3 suppliers forming the backbone of the Japanese industry. It is a very close tight-knit network that allows Japan to have the largest automobile exports in the world. Your company has been in operation now for almost 90 years. Can you give us your take on monozukuri? How does it give Japan an advantage in its international operations?
Our company is made up of individuals that also strive to meet the high expectations of our investors who contributed to ensuring that our business would continue. Our company is a family business. I was born into this kind of livelihood, so it was my destiny to be involved in the process of monozukuri, to be involved in its development, and to be aware of the factors that can cause its deterioration. I grew up learning what it means to own a company and the meaning behind monozukuri.
For someone who grew up with the monozukuri culture, you must have a great perspective on how Japanese firms now are competing globally. China, Taiwan and Korea are replicating products that have been produced by the Japanese for many years, but they are doing so at a much cheaper price. How can Japan compete with these competitors?
One of China's advantages over Japan is its cost-effectiveness. The Chinese also have strong knowledge and expertise in specific fields. On the other hand, Japan's advantage is its fiscal strength. Japan has a strong presence in many parts of the world. Chinese entrepreneurs often manage different businesses at once. They diversify and their entrepreneurs are quite flexible and adaptable. Japan does not have this kind of structure. The Japanese take a more specialized approach. This can be both a strength and a weakness.
Nowadays, we see a prolonged political dispute between America and China which is hurting Chinese industry. The Japanese yen has also seen great depreciation against American dollars. It was around 150 a month ago and now it is at 140. This is changing the paradigm of business in Japan. It is much more expensive for Japanese companies to supply raw materials. Exporting products to other countries has never been cheaper. What is your take on this macroeconomic situation? Is this more of a challenge or an opportunity?
It is both a challenge and an opportunity. There are always opportunities that arise from challenging circumstances. We cannot keep doing what we have always done. Japan's foundation of cultures and values can change. Japan functions very bureaucratically at a very slow pace. With the threats and challenges that we are now facing, a breakdown of the existing power structure that has been established for a long time is inevitable. This paradigm shift presents opportunities for us.
The population situation in Japan is something that threatens Japan's monozukuri culture. In 2008, your firm introduced a robotic line for the automated stamping of parts. Here in Japan, there is a huge decline in population, and is now below 126 million. Can you tell us the advantages robotic lines have in your business?
In the industrial sectors where monozukuri plays a major role, there is a shift in the demographics of the workers. This change presents an opportunity. Thinking about the corporation as a business and the need to sustain it, we need to be proactive and innovative in our monozukuri approach and management. Before covid, the engineers and operators in this field used to remedy the situation in Japan by outsourcing and recruiting workers from abroad for seasoned work as well as recruiting and accepting technical interns. We believe that this recruitment style is reaching new lows. Automation is now replacing recruiting foreign workers. This is how we are responding to the demographic shift.
Founded in 1937, your company started off manufacturing gear hubs. You focus mainly on hinges, and you provide a variety of different hinges. Can you give us a rundown of your history and some of the technical milestones that you have achieved in your history as a company?
My grandfather was the founder of the company. He was a craftsman. He lived in an age where he used his own eyes and hands to judge the quality of his work. He built his business with his intuition. We then incorporated digital technologies into our process to grow the business. Seeing firsthand the work of a craftsman and studying what it takes to make high-quality products helped me a lot. I found ways to integrate technologies available to me to create better products.
One of the technical areas we saw you have succeed in was your ability to stamp a variety of materials such as aluminum with a thinness of just 0.4 mm. With the transition to EV, new materials are being adapted such as CFRP, resins, magnesium and aluminum. Can you tell us more about your stamping ability for very thin aluminum? Secondly, this is quite hard because aluminum cracks and wrinkles easily. How did you develop the technology?
An important thing in stamping that can be a challenge is creating different levels of thickness required. Our main products which are hinges are quite thick and are used in engines. These are critical parts of a car, so they require precision. Otherwise, they will be subjected to a recall. Working with thick materials requires technologies that can forge different thicknesses as needed. We have a good track performance record in delivering specialized processing. However, this does not necessarily contribute to our profits. We learned that we profit more if this process is integrated after the molding process instead of during. The reason why Japan cannot compete with China when it comes to cost-effectiveness is that they have cheaper labor, and we have to accept that we cannot compete with them in that aspect. This is why we pursued thin materials. We researched if there is a need for thin materials and we realized that there was a market for it, so we switched our business direction and catered to the market that needed our technologies. It was a trial-and-error process that we forged our skills in this sector, but it has now become our strength and competitive advantage.
Another change that manufacturers and tier 1 suppliers are advocating for is new designs that can reduce the number of parts in previous devices. Your company created a self-developed hinge that combines the door hinge and the checker. Can you tell us more about this product and its advantages over previous products?
The integrated checker hinge is not used in Japan right now. German manufacturers BMW and Benz use this method. Tesla uses it as well. We decided to promote this product because the functions of the hinge and the checker are completely different. The hinge should have durability and the checker functions as a stopper. We adopted this integrated checker hinge system to shorten the assembly line and assembly time. This product is not widely used in Japan because Japan already has a set style of manufacturing and an established assembly line which is hard to change. This product caters to new and emerging companies that are in the initial phases of establishing their assembly line and manufacturing processes. We also cater to Chinese manufacturers. There is a Chinese company that wants to be Tesla's counterpart that will use this system. We introduced this product to the market 10 years ago, but they became our client when our product fell under their radar.
Is your company looking to diversify its client base? What type of co-creation partners are you looking for?
It can be a challenge to have partnerships whether domestically or abroad. It has to be mutually beneficial. I believe that there is no such thing as a mutual relationship when it comes to business. The closest form would be to take something, break it, then recreate it into something that can be shared. Sharing a market is like a lion and a tiger learning to coexist in the same cave. We have to establish relationships that can help us cater to clients' needs. If we do not take the approach of taking someone else's profit and tearing down their business, we have to come up with new and fresh ideas. We can stay ahead of the competition if we have new technologies and if we respond quickly to market demands. (Verbatim: If there is something similar or close to neutrality it will be like you take it and you break it then you recreate it into something you can share. If we look at the market like the animal world, it would be like how a tiger and a lion can coexist in the same cave. This kind of beast world where there is a hunted and a hunter and it is difficult to get away from that. Business is all about these kinds of relationships. It is about how we can work together and get a little bit of understanding and support our clientele that becomes a very interesting topic. It is challenging if there are only two companies. If there are only two, perhaps there can be a partnership. Advancing in this arena means having new technologies and quickly meeting new demands in the market. If you do not take the approach of taking someone else's profit or breaking down someone else's business, the alternative is giving birth to something fresh and new and sharing that space. From this perspective, new technologies would be the way forward.
In your international business, you have set up an office in Shanghai since 2002. Today, you have two factories in China. One is called Renjing Technology and Baicheng Niitech Auto Parts. Both are located in Jilin. Can you tell us the advantage of having these locations in China for your business? What potential do regions such as the US and Europe play in your business continuation model?
Expanding our global business is absolutely necessary. However, it can be difficult to manufacture overseas. If we get more clients who are interested in our products and technologies, we would need to reconsider our current strategy to cater to them. Most Japanese companies expand overseas similarly. They follow their clients which requires them to follow and adjust to different standards. In other cases, some companies just want to join the party even though they were not invited. As a result, many failed. I heard of many difficult and bitter lessons from these companies' failure abroad. I believe that the key to overseas expansion is having a solid clear strategy before going. We are a small-scale business, so we would expand with this limitation in mind.
Are there particular regions that you believe will have more demand for your company's capabilities?
I have to go and check it out first. Our R&D is very limited, and we are yet to identify and research which areas and regions would be best suited for us. Many SMEs expanded abroad, but the majority have failed. A big reason is that going abroad became the main goal. Rather than just going abroad, we have to understand how we can contribute to the market and think of a way to introduce our products and be recognized by the market.
Is there a goal or an objective that you would like to achieve during your presidency that you would like to leave to the next generation?
I am just aiming for sustainable corporate governance and continuity of the company. We want to grow our client portfolio as well and keep our products and technologies relevant.