Fuji Seiko: Solutions for a wide range of fields

Can you give us a brief introduction to your company, please?

Fuji Seiko was founded in May 1947, and started off by manufacturing metal bellows; that is why our name in English is Fuji Bellows. Now we have three departments: automobile equipment at the Ayase Plant and Fuji Plant, housing equipment at the Tsukuba Plant, and aerospace instruments at the Sagami Plant. We also have our subsidiary company in Vietnam, Fuji Seiko Vietnam. Our recent turnover is about 6.2 billion yen. We have many prestigious customers, including Toyota, Honda, Isuzu, Suzuki for automobiles, Panasonic, TOTO, LIXIL for housing equipment, Mitsubishi Heavy Industries, JAXA, and the Ministry of Defence for aerospace products. Thermostats are our main product and their accompanying thermo switch. There are many key parts from our housing equipment department such as the Constant Flow Valve and the High Efficiency Valve. For aerospace, we manufacture bellows, rocket parts, fuel efficiency controls, and pressure and temperature sensors. Apart from our subsidiary in Vietnam, we also have technical alliance contracts with companies in China, USA, India, and Korea.

We know that, traditionally in Japan, monozukuri means an extreme attention to detail and the pursuit of perfection in manufacturing processes. But nowadays it is so much more than that, it now also involves responding to customers and providing added value to the products delivered. Can you give us your take on monozukuri? What is the essence of monozukuri for you?

The Japanese monozukuri strength is the ability to create high-quality products and the philosophy behind it seeks to encourage continual improvement. The key element here is the fact that Japanese companies are always making improvements, the kaizen way of manufacturing as well as the product itself in order to improve efficiency and the cost effectiveness.

I understand that there are many chuken kigyo (Japanese SMEs)  that are incorporating TPS (Toyota production system) in order to increase efficiency and we are one of them. I feel that many Japanese products are based on the high level of craftsmanship and this applies to our company as well. Speaking of our company, we manufacture, for the aerospace industry,  0.1-0.2 mm thin bellows with Inconel-superalloy, which is very difficult to process, and after welding these bellows and metal fittings, we finish it into a product meeting very strict standards. Since such high-precision technology is required for assembly, this technology cannot be easily imitated by other companies.  Japanese companies, including ours, are always trying to improve production and the facility itself. This is considered a strength and that is my interpretation of Japanese monozukuri.

I wanted to ask you about the role of Japanese SME, the role of chuken kigyos, because they are renowned for developing niche tech and for the key role in the international supply chain, often unnoticed by the end user. For example, we have met with a company called Yamashina, a Kyoto-based chuken kigyo, who have a 30% market share for their Carbon Fibre Reinforced Polymer (CFRP) miniature mounting screws. Can you tell us what is your interpretation of the role of Japanese chuken kigyo in the world supply chain? What is the key contribution that they bring?

Japanese SMEs as you mentioned play a key role in the world supply chain. You gave the example of the Apple iPhone as an example of where you see Japanese companies as hidden champions. The phone is assembled by Foxconn in China but key components are made in Japan, and that is the strength of Japanese monozukuri. I feel that Japanese people, by inheritance, have the ability to constantly improve craftsmanship and that is why we are able to provide to the world a very high quality part that is required.  Furthermore, we believe that delivering satisfaction to the end user is one of our customers' goals. However, there are often design challenges that prevent it. We recognize that it is the role of SME like us to be a bridge to overcome these difficulties of design issues.

Looking at your company, you started in 1947 manufacturing metal bellows and later in 1963 you began to manufacture thermostats, and in 1985 you  started manufacturing OA equipment and vacuum equipment. Can you tell us more about the synergies that you have created between these distinctive yet similar lines of business in which you operate?

The reason why the bellows manufacturer started to manufacture thermostats for automobile engine cooling systems is that the initial stage thermostats were the bellows type. On the other hand, wax-type thermostats are common today. Thereafter we also started producing housing equipment parts.

Now bellows are used in new fields, which include aerospace and also vacuum equipment. So constantly, the demand for bellows has been changing and we are adapting to the changes in the market. Regarding the housing equipment field, we started off making the valve to control the gas but now it has been replaced with the control of the water. This valve technology is something that is our own unique invention that we have developed and we are now utilizing this technology to develop the products that could contribute to the reduction of the water usage. What our products can do is control the temperature, the pressure, and also the flow of the liquid.

As mentioned above, our technology is inherited while changing its shape and it is commercialized in the form required by the present world. Therefore, the synergistic effect between departments is not clear, but there is a possibility that a synergistic effect will come out as we move towards a hydrogen society in the future.

I wanted to ask you about how you are going to leverage your know-how with other fields because when we met the president of Nippon Coke, Kazuya-san, he told us the processing of coal for coke production resulted in hydrogen being 60% of the by-product produced and he was looking to re-utilize that for clean energy purposes. We know that in the case of your company, you are making the thermal and flow control valves as well as thermostats which allow for more efficient machinery. Can you tell us how you are going to contribute to this clean energy and hygiene-based society of the future?

Currently, for the aerospace industry, especially for rockets, we are providing parts and components that are related to the liquid fuels; liquid hydrogen and liquid oxygen because these are used as the fuel for the rockets. Since then, we have established our core technology that could accommodate cryogenic temperature. We believe with the change in society towards a CO2 free society, there will be more use of hydrogen. In that way, we hope that our products could be applied to other uses including facilities like hydrogen manufacturing equipment or the transportation of liquid hydrogen. In terms of the automotive industry, there is a trend towards Fuel Cell Vehicles (FCV) and hydrogen is used there and there would be a need to control the temperature of this fuel cell stack. We assume that there is a demand for our products in that field.

With the automotive field we are seeing tremendous changes at the moment.  On one hand, it is driven by demand for more environmentally friendly cars, and we see regulators are forcing car makers to adopt lighter weight materials. Then on the other hand of course, with the increase of hydrogen cars or so-called electric vehicles (EV) or hybrids, the combustion engine is changing. How are these changes in the automotive sector affecting your company? And what are some of the products or technologies you are developing to address this changing trend?

Regarding the changes in the automotive industry, of course there is a trend to go for EVs, which have no engine. But still, on the other hand, there is still a demand for hybrid cars or conventional engines too. We are looking to evolve and make kaizen-based improvements by ourselves in terms of cost efficiency of the parts. The world is going towards EV and FCV, since our strength is temperature control, we would like to enter into this field by providing a product that is related to the cooling of the battery as well as the cooling of the semiconductors and other computers that will be mounted on the automobile. Our strategy is to fully leverage our technology and capability to do temperature control and adapt to the new manufactured cars.

I want to return to the aerospace part because it was really interesting for us because we know that recently there has been big news in the aerospace industry. NASA and SpaceX signed a $2.9 billion contract to produce the first Lunar Lander since 1972. The interesting thing about this contract is that it is going to cost 10% of the original 1972 lander cost and may herald a new age of cheaper aerospace travel. We know in the case of your company you are developing your bellows with fuel control applications. Can you tell us firstly, what is your take on this new age of cheaper aerospace travel? And what contribution could you make to it?

Regarding the aircraft, we are not working with the private companies. We are only doing public work, such as work for the Japanese Ministry of  Defence, providing parts for the aircraft engine. We believe that the bellows will be replaced by the sensors for the semiconductors, and we do not assume that we can expand our share in this field but feel our strength is found in Japanese rockets, the existing one is called the H2 Rocket and we are currently contributing to the development of the H3 Rocket.

JAXA, Mitsubishi Heavy Industries, and other companies are working towards the commercialisation of the H3 Rocket. We are providing critical components for this H3 Rocket, only few companies can provide such parts. The reason why we can provide such products is because we have deep craftsmanship embedded in us and we are able to utilise that fully into making the components. Our next focus is on the H3 Rocket and providing our products there.

As you say, as a world trend, the cost spent on aerospace development is falling and we have to cut the cost to half of the current cost so we can have high competitiveness and the rocket can be actively utilised to launch satellites around the globe. What we are trying to achieve to cut the cost is replacing the expensive Inconel superalloy with stainless steel but doing so while maintaining the same quality/function level.

That is an approach that we are taking now to reduce the cost. The strength of Japanese rockets is the high rate of success at the launch, which is not actually well-known around the globe. So now, Mitsubishi Heavy Industries is trying to promote its sales of this rocket and by having more orders we can reduce the cost by producing in mass quantity. We hope that overall, the cost of the rockets will be reduced and be highly utilised around the globe.

We know in Japan that R&D is a huge part of Japan’s success in developing niche technologies. 3% of annual GDP goes towards R&D, the US is at only 1.5%, while China is at 2%. In the case of your company, we know that you are working to diversify into new fields such as medical and infrastructure with your bellows. Can you tell us more about your R&D strategy? Which products are you looking to develop at the moment?

We feel that the aerospace industry is very effective and has high potential for growth. Japanese rockets have become competitive in the world market and we have high expectations to increase our capability to provide parts to them. At the same time, moon travel and having factories on the moon will actually happen in the near future we feel too. Toyota and JAXA are currently jointly developing a vehicle to go on the surface of the moon, so we are very much interested in entering into the field also. Another project that we have is resource management, especially for water. Japan has a bounty of water that we do not consider as a resource, while water has become a more important resource in the world. Since we have the technology to control the flow of the water, we have our Constant Flow Valve which contributes to efficient use of water as well as the reduction of water usage.

We would like to use our technology to contribute to that field globally. At the same time, we can not only control the flow of water but any type of liquid. Entering in the medical field with our technology is really interesting too. I am sure there are other industries that would be interested in our technology. Regarding our constant flow valve, we are currently going through R&D in order to quantify by how much more it can be precise and have more capacity to control the flow of the liquid. I cannot disclose the precise information but in the field of medical, we are now working on developing parts for devices that patients can use to treat themselves, even if the doctor is not always with them.

You have had your subsidiary in Vietnam since 2011 and you also have a number of technical tie-ups in the USA, India, China, and Korea. Can you tell us more about the advantages that overseas sales, production, and technical tie-ups bring to your business?

I think twenty years ago, we were actually focused on the global bases including USA, Europe and China, and elsewhere in the world but currently our focus is on Southeast Asia which has high potential for growth. Since we have our Vietnam factory which is 100% a subsidiary of ours, we would like to fully leverage the Vietnam factory in order to enter this Southeast Asian market. In the field of sales, the Asian market is attractive for its economic growth rate and market size, and it is also attractive for its close proximity to Japan and its low wage and price levels. We still do not know what the future will be with the automotive and other industries but we would like to pay attention and see how it goes and then find new business opportunities as we go.

Let us imagine that we come back here to interview you again in five years from now. What objectives would you like to have achieved by then? What vision would you like to have realised both personally and professionally?

In five years’ time when you come back, I hope that we have made some more contribution to the development of society with our products. In particular, contribution to the saving of water resources and the thermal management of EVs and FCVs. With the new opportunities that we are able to open up, as a company, we need to keep evolving through new approaches and new perspectives. Looking back at five years ago, there has been a lot of change since then. I am sure in the upcoming five years there will be many changes, but we want to go with the flow. Also, through the experience of Covid-19 and the Lehman Shock, I truly feel that it is vital the company is under stable company management. In five years’ time, I really wish and want to make our company’s stability achieved. (Five years from now, by carrying out human resource development, I hope that I have made the company a more leading organization. I believe that this will contribute to society and provide stability.