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Walking together with clients towards sustainable growth

Interview - July 1, 2022

Founded over 50 years ago, Komatsu Kaihatsu has expanded its business from factory construction, building maintenance, dispatch of factory workers, logistics and packing materials, to automotive parts design and development, maintaining its stance that quality is king when it comes to satisfying customer needs and building trust with them. As major client Toyota Group expanded its business over the years, so too has Komatsu Kaihatsu, “growing and developing to cater for its needs,” says president Naoto Komatsu Komatsu. And that continued growth, he predicts, will be in the design and development segments, where he already has more than 280 engineers across Japan and Vietnam, with potential to spread into India, China, and even the U.S.A., in the near future.


What does monozukuri represent for you and your company? What are the strengths of Japan’s industry that allows for competition in the global market?

We think that monozukuri is "contribution to solving customer problems" and "creating customer satisfaction". In terms of mass production, Japan is struggling in terms of price competition in the global market, and I think its market share is declining. During the Shōwa era of the 1970s and 1980s, Japanese companies were making efforts to innovate, but for the 30 years of the Heisei era that began in the 1990s, I think that the share of Japanese companies has declined due to their defensive stance. "Towa-no-mirai" is a Japanese word that means an eternal future, but the problem is that this eternal future can only be obtained through continuous efforts. With the change to the Reiwa era, I think we must continue to innovate with the steady efforts and delicate attentiveness that we Japanese are originally good at.


How does your company apply the idea of continuous effort as a means of innovation? Can you tell us about your own personal manufacturing philosophy?

Previously, we also manufactured automobile parts, but now we are focusing on the production of logistics packaging materials. We manufacture and sell high quality logistics packaging materials that are ideal for transporting products such as automobile parts and industrial machinery.  Previously, we entered the Chinese market and tried to expand the market for logistics packaging materials, but unfortunately it didn't work at that time. The Chinese market wanted lower priced products than higher quality products. But we did not sell at low prices with reduced quality. Price is important, but we think that logistics packaging materials that protect products are just as important as products. We challenge various fields according to customer needs and value the trust of our customers.


Given a major part of your business is based on recruitment and dispatch of factory workers, what opportunities and challenges is Japan’s population change bringing to your company?

The aging population is one of the biggest social issues facing Japan right now. Our factory worker dispatch business focuses on dispatching non-Japanese and foreign workers, mainly Brazilians, Vietnamese and Myanmarese. Foreign workers may be indispensable to make up for the decline in the Japanese workforce. We think that it is our mission to meet the changing needs of our customers.

Do you have any plans or interest in extending those services to Japanese companies operating in foreign markets?

At this moment we are only focused on domestic dispatch business, however, if there are any opportunities, we would like to take on the challenge and succeed in building a new business model.


From factory workers dispatch, packaging materials, factory construction, building maintenance, automotive parts, and now your software development business, diversity is certainly part of Komatsu Kaihatsu DNA. What has been the motivation for such a high degree of diversity? Is there a particular segment that you anticipate will have the most growth or demand in the future?

Our company started off as a civil engineering construction company, and we still have that business running today. We have walked together with the Toyota Group. Even now, our major client is the Toyota Group. As the Toyota Group expanded and progressed their business, so too did we expand and grow to cater to their needs.

The design and development segment is expected to have the most demand and growth in the future. We are currently putting a lot of resources to design-development division and focusing on it and now have over 280 personnel working in this. In addition to Japan, we are also based in Vietnam, and we are aiming to expand into India and China in the near future.

Could you elaborate more on this design-development division and what solutions and proposals are you able to provide to your customers?

The first business start is mechanical design, then we have hardware design and finally, software design. We have many developments, designs and testing evaluation. One example is that we are working in the environment, safety and comfort field in order to create more efficient and cleaner engines, electrification of cars, safer brakes, Advanced Driver Assistance Systems (ADAS), autonomous driving. The scale of our software area has increased 6.3 times, hardware area 1.7 times and mechanical area 1.4 times, comparing data from 2014 to 2022. We are currently focusing on software development the most. Recently, we have been working on software quality assurance and auditing as a new business.


Can you tell us how your technologies and design-development capabilities are catering to the demand for alternative vehicles and lighter materials?

We feel that Toyota Group pursuit of autonomous driving cars is very important and we are supporting the group in achieving this goal. Our focus lies more on the ADAS and autonomous driving vehicles. Autonomous driving pushes the safety of driving to the utmost importance. We are in charge of several sections in this area. We are working on multiple software developments, including software that uses vehicle image sensors to control handles and brakes, and software that allows the vehicle to pinpoint its exact position.


From your point of view, what are the key obstacles that remain before hands-free driving becomes normalized?

Currently in terms of autonomous driving Japan is at level 2.5-3. Level 2.5 vehicles have environmental detection capabilities and can make informed decisions for themselves, such as accelerating past a slow-moving vehicle. Level 3 vehicles are autonomously driving under certain conditions, but still require a human override. The driver must be vigilant and ready to control the system in case the vehicle is unable to execute the task. In my personal definition, that is not autonomous driving. To qualify as truly autonomous, you should not require someone to sit in the driver's seat. However, even with the development of such autonomous vehicles, I think it will still take some time for people to reduce their anxiety and hesitation to use them. Rather than expecting people to begin to lose their anxiety and hesitation in using autonomous vehicles over time, we need to develop autonomous vehicles that make people think that autonomous vehicles are safer than driving by humans.


How is Komatsu Kaihatsu’s technological development bridging the gap between level 2.5 and fully autonomous level 5 driving?

In order to reach level 5, there are many challenges that we have to overcome. Since autonomous driving cars must not have any failures, lest they endanger people's lives, they must fulfill certain detailed criteria to ensure safety before being launched to market. Internally we are working on software quality assurance and progressing our research and development, providing better technical capabilities, whilst at the same time trying to shift the mindset of our engineers so we can elevate ourselves.


What importance does collaboration play for your company? Are you pursuing or looking for new partnership opportunities with companies overseas?

Regarding international cooperation, we have a base in Vietnam, but unfortunately due to the influence of COVID-19, we could not visit there frequently. We would like to further expand our base in Vietnam. We also want to expand into China and India in the near future. Furthermore, if I have a chance, I would like to expand into the United States. To that end, I would like to build cooperative relationships with local companies overseas in various ways.


You mentioned your desire to consolidate your presence in Vietnam as well as establishing a presence in India, China, and the US. These are three massive markets. Can you tell us more about your strategy to develop your overseas business?

Our basic principle is to establish a 100% subsidiary in the local areas we wish to operate, however, we have a shortage of manpower. Therefore, if we could find a good partner company that shares the same vision as us, that could be a fruitful joint venture.


Imagine that we come back to do this interview again in six years. What would you like to tell us? What are your goals for the next six years?

My motto for the management of this company is to create good human relationships. Our employees are our business partners in a sense, and it is important to create heartfelt communication. This form of communication is very important in terms of the operation of our company. The company has five diverse divisions, and in order to keep these divisions operating, we have over 400 members working with us. If a given department is in need of assistance, we can easily send support people from other departments due to the communication channels we have established. If you were to come back again for another interview, I would like to think that I could show you how the relationships and communication within our company have deepened during that time. My personal goal is to increase the smiles of our employees.