Founded in 1979 Nagara specialized in press dies for automotive frame parts (doors, pillars, etc) from design to manufacturing, offering clients world class quality made in Japan.
I would like to begin by asking you to give us a summary of Nagara Co. Ltd. What does your business do, and what is your competitive advantage over rival companies? Why is it that time and time again, major Japanese companies choose to do business with you?
The major product we have here is manufacturing mold dies for automotive equipment companies. At the start of our company, back at the beginning, we started by producing electrical components for appliances. We shifted our production to mold design for automobile manufacturing from electrical home appliances. We didn’t drop out of this business completely, we still do steel frames for home appliances and electronics, but it is at a decreased rate.
I received an award from the Royal family of Japan. It symbolizes that we were the first to introduce vending machine technology to Japan. The very first generation of those machines. Those machines that you use on a daily basis, Nagara was the first to introduce those, and we have been praised by the Emperor of Japan. This is the reason for our company’s existence. Coca-Cola was the one making the vending machines, and we took the blueprints from Coca-Cola, applied the layouts to Japanese, and adapted the coin slot to fit Japanese money. This became one of the key milestones not only for our company but for Japan as a whole. Later on, we moved to refrigerators and ovens; all kinds of home appliances, but personally I feel the most significant milestone was the chance to introduce vending machines to the nation of Japan.
I was at the forefront of the company’s establishment, so I love thinking about the history of the company. The typewriter, the older style of typing that was imported from America, was made famous by Brother, a company that specialized in such products. Nagara was responsible for its introduction to Japan. The company actually was started by me when I was around the age of 40 as a solution to mold manufacturing. Toyota, Honda and Nissan are just a few of our clients at Nagara. Suzuki, Daihatsu, and Mazada; just name an automotive company and chances are they are a client of ours. These are all companies that use our designs and molds in their manufacturing. This location we are in right now is a factory designed to make molds and designs, but our R&D is done at a different location. To summarize, we are helping companies that introduce final products by designing molds, and our molds are introduced through those companies. We should also say that through this network we have expanded globally to over 14 countries worldwide.
Of course, it isn’t just automotive molds that we make. We make a variety of different parts, and currently, the automation that we do is widely appreciated and in higher demand. Nagara is famous throughout the industry and appreciated by well-known brands such as Toyota. We truly believe that we are helping these companies reach success by designing and manufacturing perfect molds. The clients can then apply other products and technologies on top of that and therefore introduce an overall better product.
We don’t limit ourselves to only the big fish and key players in the industry. We are working with all kinds of SMEs and we are working hand-in-hand with all types of companies, big and small. I like to think that we are walking this road together to provide customers with better products and services.
Japan is still a leader when it comes to niche B2B fields such as mold die manufacturing. How have Japanese firms been able to maintain their leadership despite stiff price competition?
I think the key lies in the combined efforts of all sorts of Japanese companies together, working hand-in-hand to support each other. I think this is a defining factor of Japanese monozukuri companies. Of course, Japan needs to work on bringing up the level of digitalization, and that comes along with the modernization of traditional techniques that originated in Japan. This is coming at a time when the design is actually coming from the final user. Toyota for example is submitting a lot of data and designs using CAD, and we have to operate at the same technical know-how level as some of these big players in the industry. We are not segregating and disseminating based on the size of the company. We strive to treat and deal with all companies in the same manner. The way we treat Toyota is no different from how we treat a smaller company.
The benefit of dealing with the bigger companies, however, is that you are under their umbrella. You are protected, and capable of having a steady stream of work. We adopt the principle that our company is an “all-round maker,” company. We do receive requests from different newcomers to the industry, and that is happening because of the recognition we receive within the industry. People know that Nagara is working with huge companies such as Toyota, Honda and Nissan. People appreciate us and understand that we are doing a good job. For that reason, they contact me to work with them.
Another thing that is occurring is the mechanization of local Japanese production. Big companies such as Toyota and Honda already have large-scale automatization, but it doesn’t have to be big companies anymore. For any company that is localizing its production outside of Japan, Nagara is helping with that. Not only introducing production sites but also dispatching personnel with specialized techniques.
Rinnai Corporation is a good example, a Japanese multinational company based in Nagoya, Japan, that manufactures gas appliances, including energy-efficient tankless water heaters, home heating appliances, kitchen appliances, gas clothes dryers and commercial-use equipment such as rice cookers, grillers, and fryers. They are building a new factory in America, and Nagara is taking that mold production that they do for Rinnai and localizing that production.
How are Japanese makers like you able to remain competitive?
It is true, not only for us but for any industry out there. Southeast Asia and China are able to produce with much lower labor costs, but these countries cannot place themselves on the same level as Japanese companies. Japanese companies are known for innovation, and ideas being born here. I think our communication creates innovation and is partly to credit for the birth of so many ideas here. Japanese companies are always talking to each other and gathering information, which in the long run fosters many different possibilities. That ultimately comes to us finalizing those great ideas here in the manufacturing location. Japanese companies' competitiveness is born from this idea, and they are able to deal with many different kinds of companies in many different industries. All the products we produce all give us many pluses. This combined effort gives us a step ahead and gives us the benefits to introduce new ideas or new techniques. Occasionally we do technological reports, usually done by our employees, and they are tasked with expressing any new ideas that they have come up with. To date, we have around 60-70 of these technical reports. This means that we are not stopping halfway and we are always evolving.
Of course, as you mentioned, we cannot compete with China in the field of mass production. Mass production is something that China does very well, and they are much cheaper than Japan. Despite this, we are still a step ahead in ideas and innovation. Our company always strives to stay on the cutting edge of change, and only this can save you in the super competitive world. I believe this has been a key component for us to reach our success.
People are now saying that Japan’s monozukuri is in jeopardy because of the population change. Already 28% of the population is over the age of 65, and with the low fertility rate, Japan’s population is in a state of decline, meaning that the population will drop to under 100 million by as soon as 2060. For manufacturers in Japan, that means a smaller domestic market to sell products to and a smaller pool of graduates to hire. In the case of your company, how are you reacting to these population challenges?
Of course, we too at Nagara are facing these spanning social problems. The decline in the population, as well as the elderly population, is a situation that is not new to us. This situation has been brewing now for several decades. We are now shifting our focus to solving these issues. More press molds are being used in the hospitality sector, such as houses for the elderly. This is an area that we are moving a lot of consolidated effort into. The labor crisis is obviously another big issue, so we have had to look overseas to countries such as Vietnam and China in order to fill the labor shortages. Human labor force deficits can be solved with overseas labor, and at the same time gives us opportunities to expand our business further too. Word of mouth spreads quickly, and if an immigrant worker gains valuable skills and training from us, he or she is more likely to spread the good name of Nagara to their friends and family. This opens doors for us and is a win-win situation.
We established our facilities in China, Vietnam and Korea for these reasons, and when we bring in workers from there, we tend to work on skills and services that those countries need. For example, the Vietnamese that we have brought to Japan, are doing machine processing. We see in the future that the Vietnamese may be in higher demand for these newly acquired skills. The Chinese are doing assembly, which is something that a lot of Japanese companies are having done in China these days. It comes down to communication and building good bridges between countries.
Japanese companies are becoming leaders in the industry because they are focused on educating people and sharing their technology with more economically developing countries. Around 10 years ago, some personnel came from Taiwan, and we taught them about Nagara technology and techniques. They brought that know-how back to Taiwan with them. We are looking toward Bangladesh and Myanmar as possible destinations in the near future. Compared to the scale of the rest of Southeast Asia, Thailand is already developed. Although there are so many social problems in Japan, we really haven’t felt too much of it here at Nagara.
As a mold manufacturer, how are you adapting to the material revolution that is taking place in the automotive field?
These new changes are giving us new opportunities to introduce more press mold expertise. Decarbonization activities are rapidly developing, and our customers are doing a lot of activities towards new approaches in the field. They have approached us to help them do so. Rinnai Corporation for example burns CO2 gas, and for that, they need press molds. Talking about materials, of course, we see a lot of changes happening, and these new materials are good news. We are always happy about changes, they are good news and it means the world as a whole is progressing rather than regressing. Without change, you will stagnate and stay in the same place forever. We are not about stagnation here at Nagara. We are about innovation.
Japan is facing a lot of problems right now, the electricity shortage for example, or the shortage of raw materials and the burden of CO2. These are the changes that will help alleviate these issues, and they really are inevitable. We are looking very optimistic at the ebbs and flows of the world right now.
What opportunities have been presented to you as a company independent of the Kurestsu to move outside of the Japanese automotive network and expand your services to foreign clients?
Our company’s success has only come about from being independent of the Kurestsu network. Also, we started late compared to our competitors, in 1979. I think an advantage we have is that we offer a very diverse number of services, we aren’t making just one product for just one client. There are so many companies that wish to buy our molds from many different industries. It isn’t just limited to Japan either, our product is a global product.
We aren’t doing any sales activities in the European or American regions yet. Once we start, we will aim for local companies such as automakers and electrical appliance makers. It usually comes from the customer, because traditionally they will approach us with a problem and we will offer solutions to them. Once a blueprint is submitted we take over from there, so it really could be from any industry. Media is very important in this aspect because they can demonstrate the features and advantages of Nagara over the competition.
It takes time, and obviously, there are so many obstacles. It needs to be a step-by-step approach in order to reach the ultimate goal to introduce press molds beyond Japan. Human capital is an issue for us because we are not a big company and we cannot do proper headhunting. We have been hiring local students here and fostering them inside the company. Amakudari is another thing, in Japanese, it means literally “falling down from heaven,” and it is commonly used for employees that have worked for a company for a very long time and then move on, possibly post-retirement to another company. It refers to the post-retirement employment of senior Japanese government officials in the private sector. It is considered compensation for those who miss out on promotion within the Japanese bureaucracy. The practice is generally considered a cause for corruption in the Japanese bureaucracy. We don’t do this and tend to do things by our own means. One thing is for sure when the time comes to expand overseas, we need to be ready.
In the case of your company, would you be interested in finding a partner in press working technology that can help you move abroad and expand your business overseas?
Maybe, but we must be very careful with something like that. We have had a bad experience with this in the past. Back in the day, we localized production in China, but due to some political problems, we were removed from that locality. To cut a long story short, the communist party took our factory away from us, and there really wasn’t anything we could do about it. It was unfortunate that we could not proceed further with that. We got burned quite badly by that situation, and we don’t want a repeat. The geopolitical situations that are happening across the globe present so many obstacles that we would rather avoid. Life isn’t always fair, so it is prudent to analyze risk and make keen but careful steps.
I feel the education of young people is the key to the future. I’ve talked earlier about educating foreign employees, but it isn’t just limited to foreigners. We also educate and train Japanese, and I myself go to Tokyo University once a week to teach. I have 84 students taking my class, and I’ve been doing it for the past 6 years. I teach about the design of production press molds.