Complex problems often require tailor-made solutions, and this is certainly the case when it comes to working with intricate materials. Japanese firm MicroCut has not been deterred by the intricacies of difficult-to-cut metal materials and has grown into one of the leading solutions providers for the industry.
Japanese manufacturing is at an exciting time. Over the past three years, significant disruptions in the supply chain have occurred due to COVID-19 and the US-China decoupling situation. As a result, numerous corporate groups are seeking to diversify their suppliers to ensure reliability. Consequently, Japanese firms, renowned for their advanced technology and reliability, find themselves in an interesting position. Observers argue that the weakened Japanese yen presents a highly unique opportunity. Do you agree with this sentiment? What advantages do Japanese companies possess in the current economic-macro environment?
Recent trends, such as the depreciation of the Japanese yen and the ongoing decoupling between the US and China, have presented our company with a distinct advantage as a global manufacturer and monozukuri partner. Established in 2008, MicroCut's core philosophy is rooted in the principles of capitalism and liberalism.
Japanese manufacturing, or monozukuri, has undergone rigorous comparisons with overseas competitors with regard to productivity and procurement. In the past, intense competition with foreign firms placed MicroCut at a disadvantage, subjecting us to a challenging business environment. Prior to the onset of the COVID pandemic, MicroCut's primary objective was to position itself as a formidable manufacturer and monozukuri partner capable of competing with and outperforming China. With unwavering commitment, we gradually gained the upper hand in terms of productivity. Today, we find ourselves benefiting from the favorable conditions arising from the US-China decoupling and the depreciation of the Japanese yen. In light of these developments, we are now strategically focused on capitalizing on our initial successes by further enhancing our productivity and fortifying our capabilities to successfully outcompete China in the market.
As a young company operating in a competitive sector within Japan, what were some of the challenges your organization encountered during its early stages, and how did you successfully navigate and overcome these obstacles? Could you share some valuable insights and lessons learned from your experiences in establishing and growing your company?
Since its inception, MicroCut has been steadfast in its pursuit of excellence, aiming to emerge as a front-runner amidst intensifying competition. Despite the challenges posed by handling difficult-to-cut materials, a labor-intensive and time-consuming endeavor, we remain committed to enhancing our competitiveness.
In the realm of automotive parts and components, where materials are relatively easier to cut, reducing reliance on human engineers is a more attainable objective. However, the scenario differs when it comes to handling intricate materials that require high-skilled workers. This obstacle, though formidable, did not deter us. Instead, we confronted it head-on, surmounting the hurdle and making significant strides in improving our productivity and overall competitiveness. Through our commitment to monozukuri, we have successfully established a robust and high-quality production management system. MicroCut was founded with some engineers. Our unwavering focus on digitalization has played a vital role in transforming our manufacturing processes.
As an SME, we take great pride in our achievements, having developed an exceptional management system that incorporates both a proficient production control system and an efficient order management system. Over the course of the last two decades, our efforts have borne fruit, resulting in a remarkable track record of maintaining high accuracy in our operations and management processes. Currently, we are leveraging the production system and the management system's status to drive cost management and pursue the ambitious target of zero defects. To realize this vision, we have harnessed a wealth of valuable data, ensuring the utmost precision in our cost calculations and defect prevention efforts. Our commitment to achieving these goals has prompted us to provide comprehensive training to all employees, enabling them to proficiently utilize both the high-quality production and sales management systems.
While we have made commendable progress, we recognize the need for further advancements. As a result, MicroCut Corporation has devised an annual plan that outlines our strategic roadmap for building upon our existing foundations. The plan charts a path to elevating our production and management systems, fostering continuous improvement and enhancing operational excellence. Our company’s system integration plan is well underway and is projected to reach completion by 2024. This integration initiative centers on consolidating the finance accounting, fixed asset management and salary management systems into a cohesive mainframe system. In parallel, our production management system plays an essential role in this endeavor, encompassing essential components such as planning, lot management, analysis and cost analysis. The seamless integration process involves efficiently transferring data from these systems to the mainframe, fostering a seamless and interconnected workflow. To achieve this integration, we have strategically aligned data transfers from various systems, including order sales or management, procurement, inventory, work attendance and sales management, under the guidance of our proficient team of SEs.
In 2019, we formulated a comprehensive midterm and long-term business plan, which remains in progress. As we approach 2024, the integration of various systems is slated to take place. Throughout the past 20 years, our company has employed multiple independently developed systems uniquely tailored to our specific needs. This strategy has yielded the advantage of facilitating ease of use for our employees and integrating these systems has substantially strengthened our overall competitiveness. We have diligently expedited the development cycle of our distinctive and high-quality technology, specially designed for processing difficult-to-cut metal materials. Concurrently, we have relentlessly streamlined our manufacturing monozukuri system, steadily advancing toward our ultimate objective of outperforming China. Five years ago, our efforts in cost competitiveness had already positioned us as a strong competitor, likely surpassing China. Our dominance in delivering excellence has consistently positioned us as industry leaders in high-quality outputs and reliable delivery, a legacy we have proudly upheld since our establishment.
The automotive sector is undergoing a once-in-a-lifetime change to the switch to EVs. We are witnessing the emergence of newer and lighter-weight materials such as magnesium, aluminum and CFRP (Carbon Fiber Reinforced Polymer). These materials are being incorporated to help counterbalance the weight added by lithium-ion batteries in EVs. What are the effects that this change of materials has had on your business?
MicroCut has strategically chosen not to engage in direct competition with parts suppliers in the automotive industry. Instead, we are committed to venturing into a new and promising business segment centered around electric vehicles. As part of this endeavor, we are actively developing a plating solution tailored to meet the requirements of automotive semiconductors. Our diligent efforts in the development of this innovative plating technology are well underway and are projected to be finalized by the end of this year. Subsequently, we have ambitious plans to commence mass production of this cutting-edge technology starting next year.
Are there any emerging industries or applications to which you envision introducing MicroCut's services, recognizing their significant potential for growth and impact?
Amidst the challenges posed by the pandemic, we took a strategic step forward by launching our US branch in San Diego. We swiftly embarked on the mass production of medical equipment, specifically the Titanium. Given the significant scale of this market, we are optimistic about the potential for substantial business growth in this domain.
Furthermore, recognizing the immense potential in the semiconductor manufacturing industry, we are actively considering entering the resin processing market for semiconductor manufacturing machines. This strategic move is driven by our belief in the promising opportunities that lie ahead in this sector. Additionally, we have set our sights on exploring the field of tungsten, a valuable material utilized in nuclear fusion reactors.
How does your business model incorporate partnerships, and what significance do they hold in driving your company's success? Moreover, are you actively seeking collaborations with potential partners in foreign markets?
M&As have been a focal point of interest in the business landscape. However, at MicroCut, we adhere to a distinct approach when venturing into new business territories. Our philosophy revolves around self-initiated launches, as we are independently expanding and launching. For us, the purpose of our company's business operations goes beyond mere business expansion; it is rooted in our unique way of thinking. We recognize that establishing business tie-ups with external entities - established companies or startups requires aligning their thinking with our distinctive business culture and ideas. This alignment process can be time-consuming. To maintain agility and swift progress, we prioritize the path of independent entry and development into new business arenas. This approach enables us to effectively leverage our internal capabilities and expertise, leading to faster and more effective outcomes.
Could you go into more detail about your R&D strategy? Are there any technologies you are working on that you would like to showcase to our international readers?
Our primary focus is to make a strategic entry into the lucrative US market, with particular emphasis on key sectors such as medical equipment, military, aircraft and space industries. In these domains, MicroCut holds a distinct advantage, owing to our expertise in the development and application of heat proof complex metals. It is worth noting that the major competitors in these fields are local American companies.
While we aspire to expand our presence and competitiveness in the US market, our approach is one of respectful engagement. We have no intention of disrupting the US industry entirely. Instead, we are committed to operating within the bounds of business laws and regulations, adhering to a fair and ethical approach in all our endeavors. Through this principled and equitable approach, we aim to strengthen our competitive edge, fostering collaborative growth and harmonious business relationships.
Moving forward, are there any countries or regions around the world that you have identified for further expansion?
Indeed, our primary market focus is centered in the United States, and currently, we do not have a presence in Asia. Given the competitive nature of China and its rivalry with the US, we understand that entering the Chinese market might pose challenges and constraints. While we do have some business transactions with a German company, we acknowledge that Europe may not be as active as the US in our industry. Currently, we possess limited knowledge and experience in conducting business operations in Europe, making it premature to discuss plans for expanding our presence in that region.
Japan holds the distinction of being the oldest society with a rapidly shrinking demographic line. The effects of this include a smaller labor pool of new graduates, making it very difficult for companies to find workers. What have been some of the challenges that this demographic shift has presented, and how are you overcoming them and ensuring the longevity of MicroCut?
As a corporate executive, my foremost mission is to propel MicroCut Corporation toward becoming an exceptional workplace that fosters highly motivated employees. To achieve this vision, we are dedicated to creating the finest working environment and offering attractive salary packages to our valued workforce. Our goal is to retain our current employees and attract new talents to join our ranks. By prioritizing the well-being and satisfaction of our employees, we firmly believe that we can reinforce our competitiveness in the market. This is particularly vital in the face of Japan's aging society and declining birthrate, which poses challenges to securing a stable labor force. Our employees are the backbone of our organization, and we firmly believe that retaining and nurturing a dedicated team is the key to our continued success.
As the president of MicroCut, I am committed to ensuring that our company remains an attractive and appealing workplace for potential employees. If we face challenges in attracting talent, I take full responsibility for ensuring that my capabilities and efforts are continuously improved to overcome such hurdles. To create a workplace appealing to great talents, I have worked toward establishing a conducive environment and favorable work conditions. I firmly believe that MicroCut is superior to its competitors, and I am devoted to enhancing our high-quality services even further. It is my duty to ensure that our company maintains a strong competitive edge moving forward.
How would you like your company to be seen in the US market?
As the president of MicroCut Corporation, my vision is to position our company as a leading force in the industry for our potential business partners in the US. While we may not have achieved that status as of today, it is our unwavering commitment to strive tirelessly toward that goal.
Interview conducted by Karune Walker & Sasha Lauture