First established more than a century ago, Nippon Oil Pump Co., Ltd. (“NOP”) has built a reputation as a supplier of reliable, innovative products which are crucial to the machine tool industry.
Since the end of World War Two, Japan gathered a very famous international reputation for its attention to detail and its kaizen philosophy of continuous improvement. In today's society, Japanese manufacturers have to respond to quality, cost, and delivery in a globalized world. As a manufacturer of what you call the “small life components” that are crucial to machining centers, for example, could you give us your interpretation of monozukuri? What do you think are the advantages of Japanese manufacturing?
First and foremost, we value QDC (quality, c delivery, cost). Normally it is called QCD, but we follow QDC - delivery comes before the cost, so quality and delivery are the reason why we can compete in the global market. In Japan and in the global market, quality comes first and foremost for our company. We always try to increase the quality.
Of course, this applies to both major companies and SMEs in Japan, and as an SME, we are also very particular about incorporating the Kaizen philosophy into our monozukuri. Kaizen, or improvement, cannot be done just by a top-down structure. It must come from the workers themselves, so we are trying to incorporate the mindset of Kaizen among our workers. That is our approach to Kaizen.
The Japanese population is the oldest in the world, with 28% of people over 65, and there is expected to be less than 100 million people by 2060. For firms, this creates problems in terms of staff longevity, and recruiting. It’s also becoming more and more difficult to train and pass down knowledge, and in terms of markets, the domestic market is shrinking. How are you reacting to these changes?
In terms of recruiting our workforce, what is essential is to make the company itself be attractive to workers, so they feel like they want to stay with us for a long time. It is true that the Japanese market is shrinking with the decline in the population, so it is very important for us to go to neighboring countries outside Japan. There are many markets that are growing and increasing their populations, so we need to shift ourselves to those overseas neighboring countries as well.
It is very apparent when we look at your company history that expansion to the international market has been the mentality for the last ten years. After the first overseas location was established in China in 2007, you established entities in India, Germany, Taiwan in 2015 and of course most recently in the US. Could you explain the reasoning behind that and what new markets are there still to unlock?
For our international strategy, for the past decade, the target has been established markets with a large size. For example, we entered Germany which not only has a large domestic market but also gives access to the continental Europe market. Also, Korea and Taiwan are neighboring countries to Japan that had relatively sizable markets. In terms of North America, the reason to enter from the US was also based on its market size.
However, we are now studying markets that have growth potential. Having said that, our track record in the international market is still at an evolving stage. Thus, we will continue to strengthen our position in markets where we have direct presence whilst at the same time study new markets that have growth potential. One of the new markets of interest to us is the Southeast Asian market where we do not yet have a direct presence.
Given our market share, the domestic market is saturated for our core products. We have been manufacturing the Trochoid pumps and hydraulic motors since the establishment of our company which goes back a century. Therefore, exploiting the international market was essential.
The Trochoid pump is one of your core products. As a product line-up, you have developed massive variety over time because the viscosity of the liquid varies across applications and you customize it for your customers. And a very unique polishing method has been implemented for the rotor within this product. What benefit does this polishing method bring to this pump?
Among the massive variety of Trochoid pumps that we produce, it can be narrowed down to four major categories based on the size of the rotor. Thus, proper function of the rotor is the key aspect of the Trochoid pump and high-quality control is inevitable. For sustainable high-quality, it requires polishing technology with accuracy of less than a few microns. However, it is not actually an exclusive technology that we have. It is more craftsmanship than technology. In fact, this accuracy is difficult to achieve through automation and requires craftsmanship.
You also offer water pumps that can be used with drink dispensers such as coffee machines, with two types of bodies - a stainless-steel body and a brass body. What is the targeted segment for each body?
The stainless-steel body product is used for drinks dispensers and food related items that enter the human body. Apart from stainless-steel, brass is used because it is cheaper in terms of cost, so in the areas that are not related to human intake, brass body product is used. As a company, we want to only offer stainless-steel type body product. However, there are needs for brass body products to those who cannot afford the price tag and using stainless steel body would be over-spec. Therefore, we offer stainless steel and brass body product in this category.
Since COP 26 took place last year, every country in the world has been following a set rule book as to how they are going to be held accountable for delivering on climate action. Here in Japan, we see companies like Mitsubishi Gas Chemical creating carbon neutral ammonia as an alternative fuel for industries, for example. In the case of your company, your pumps are used in wind turbines and have other renewable based applications. Could you explain more to our readers what contribution your company is making to carbon neutrality?
In terms of contributing to a carbon neutral society, we would like to continue supplying products that support renewable energy sources such as wind generation. Additionally, due to the surge of fossil fuel prices and the trend towards carbon neutrality, demand for fossil fuel controlling pumps is forecasted to decline. Ammonia is an alternative to fossil fuel, and we do have approaches from clients who would like to use ammonia as a fuel source.
If this fuel source is in liquid form, it is controllable with our products. However, if it is in gas form, unfortunately, our product cannot control that. We are researching using these alternative energy sources for our products.
In terms of carbon neutrality, not only should we have alternative fuels, but we should have more efficient use of our existing resources. When manufacturers consider the purchase of equipment, they often say the price is the most important thing, but they fail to account for the life cycle cost of owning and operating equipment. With your NOP Coolant Pumps, you are providing a product that is almost maintenance free - in some cases completely maintenance free. How have you been able to do that and what kind of savings can your customers potentially make?
NOP Coolant Pumps are a relatively new product category for us, and we anticipate this product category to become a core product category aligned with Trochoid pumps and hydraulic motors.
The reason why products in this category can be maintenance free is that conventionally a paper filter is used, and you get impurities stuck on the mesh, so you have to replace this filter once in a while. However, we have incorporated the Cyclone system which can separate contaminated liquid from clean liquid without having a mesh. We take the contaminated liquid out of the system, meaning that it will not go through the filter and clog it up. The strength of our product is not only that the pump itself is maintenance free, but that it also purifies, cleans, and takes contaminated liquid out of the customer’s tank, so we believe these strengths will allow clients to improve product efficiency through reducing maintenance time and burden.
Could you explain how your Cyclone technology works exactly? How does it separate two different liquids?
The blade rotates and the centrifugal force pushes the contaminated impurities towards the outside because they are heavier. The clean part remains inside the system, whilst the heavier contaminated liquid is removed from the system. The clean portion is sucked up and cycled again. We do not have a patent for the entire system, but we do have patents for certain parts.
You have recently become the new president. What are you looking to achieve over the next few years? What kind of midterm targets are you hoping to accomplish with the company?
There are many things that I need to do and that I want to do so I must make a careful decision and prioritize on what is practical and what is beneficial for the company.
First and foremost, the crucial factor is to increase the profitability of the company. To implement this factor, the international market will play a key role. Thus, strengthening the position in markets such as Germany and the US where we already have a direct presence and entering new markets where potential growth will be crucial.
Another important factor is to not fall into a production constraint as sales increase. To not fall into such a situation, enhancing production efficiency such as through introducing automation in certain areas will be an important implementation to accomplish.
Additionally, the company has a history of over a century and when looking into the future, knowledge transfer of technology and know-how to the next generation is critical.
Overall, how to increase our profitability, how to have a stable production platform, and how to retain a sustainable workforce are the three key areas that I am considering prioritizing. We are currently at the planning phase and intending to enter the implementation phase from next fiscal year through initiating the determined actions.
Nowadays we see the adoption of automation and digitalization technology across many industries. Industry 4.0 is on our doorstep. Can you explain to our readers how your technology is manufactured with Industry 4.0 standards in production?
In terms of applying automation, we always need to be concerned about quality and maintaining or even improving quality using automation technology. When it comes to producing components and parts, automation can be applied, but in terms of assembly, human senses are required to detect subtle changes or differences in noise, for example. That human touch is rooted in the quality that we produce, so we still need to retain manual procedures, and this is the craftmanship that I have earlier explained.
Saying this, automation will be a key role in enhancing production efficiency, which is one of my priorities.
As for being on time for delivery, it is very crucial that we make our production system efficient. We offer a massive variety of products and manufacturing is done through high mix, low volume. Manufacturing of low mix, high volume products is relatively straight forward, however, manufacturing of high mix, low volume requires efficiency and necessity of the know-how in making optimized production systems. That is also a key factor for our manufacturing.
As a president with a research & development background, what is the moment or technical achievement during your career that you are most proud of?
It is difficult to give a definite episode but what always remains as my philosophy is, success will be determined through meeting satisfactory customer needs in a short time frame. Such fulfillment and achievement of customer needs through new ideas and products also gives me great satisfaction.
One comment I would like to add is towards an ongoing product development. Within the NOP Cyclone pump category, the product line-up is currently based on the low pressure model. We identified needs in the high-pressure category and have been conducting the research and development efforts for the high pressure model. We are in the final stage to commercialize the high-pressure model and hopefully, this new line-up will capture the identified client needs.
Let us say we come back to interview you again on the last day of your presidency. What would you like to tell us about your goals and dreams for the company by that time, and what would you like to have achieved by then?
As president, my mission is to lead the company to sustainable growth. Currently in the planning phase and it is too early to comment on what I would like to tell on the last day of my presidency based on the determined goals. Having said that, I do have a major target in increasing the oversees sales ratio from the current 30% to 50% in the future. The domestic market is saturated but with the launch of new products and anticipating capturing new needs, we can grow the domestic sales as well.
Through the combination of these factors, we will achieve overall sales growth of the company.