All rights reserved by RIAM, Translated by Kobe Univ. Suggestive selling company will survive. Yo s h i t o m o I s h i z a k i , P r e s i d e n t o f Ta k a k o Studied at Metal Engineering, Science and Engineering, Kinki University 1 9 5 9 - 1 9 7 2 Wo r k e d i n a c o m p a n y Experienced Manager of Quality Control, Sales, General Manager of Engine ering Dept. 1 9 7 3 F o u n d e d Ta k a k o S e i k i C o . , L t d . ( C o r p o r a t e n a m e c h a n g e d t o Ta k a k o I n d u s t r i e s I n c . o n J u n e 1 i n 1 9 9 7 ) 1990 CEO, TSW Products Co.,Inc. in Kansas, U.S. (It has 160 local staff members and sells hydraulic piston pump .)
D o y o u k n o w a c o m p a n y o f “ Ta k a k o ” i t ’ s g e n e r a l l y n o t f a m i l i a r w i t h p e o p l e h o w e v e r i t has 75% of market share of hydraulic piston pump in Japan, 85% in the U.S. having the top share in the world. It became independent from a company where the current p r e s i d e n t , Yo s h i m o t o I s h i z a k i w o r k e d i n 1 9 7 3 d u r i n g t h e t i m e f o r t h e o i l c r i s i s . I t started to sell special tool for American vehicles in the rent with 33m2 in Eastern O s a k a w h i c h w a s f a m o u s f o r t h e i n t e g r a t e d p l a c e o f s m a l l f a c t o r i e s . Ta k a k o h a s b e e n growing rapidly as a great venture company with craftsmanship in Eastern Osaka and h a s b e e n s t i l l g r o w i n g s t e a d i l y b a s e d o n t h e o r i g i n a l t e c h n o l o g y. I a s k e d M r. I s h i z a k i , P r e s i d e n t o n t h i s t o p i n t e r v i e w a b o u t w h a t t h e k e y p o i n t o f Ta k a k o ’ s r a p i d g r o w t h a n d h o w i t o b t a i n e d t h e c o r e t e c h n o l o g y.
T h i s i n t e r v i e w w a s c o n d u c t e d i n 2 0 0 0 . S o , w h a t M r. I s h i z a k i t a l k e d i n t h i s i n t e r v i e w and his background are original. His career after the interview is as follows. 2 0 0 7 A p p o i n t e d a s t h e C h a i r m a n o f t h e B o a r d o f D i r e c t o r s , Ta k a k o I n d u s t r i e s , I N C . 2010 Appointed as the President, General Production Company 2 0 11 A p p o i n t e d a s t h e D i r e c t o r a n d C o r p o r a t e A d v i s e r, Ta k a k o I n d u s t r i e s , I N C .
We d e s i r e t h a t y o u s e a r c h t h e i r w e b s i t e f o r t h e l a t e s t i n f o r m a t i o n . C l i c k t h i s U R L : h t t p : / / w w w. t a k a k o - i n c . c o m / e n g l i s h / i n d e x . h t m l
F o u n d e d Ta k a k o
I n t e r v i e w e r : P l e a s e t e l l m e t h e o u t l i n e o f Ta k a k o . 1
All rights reserved by RIAM, Translated by Kobe Univ.
M r. I s h i z a k i : I ’ m t a l k i n g a b o u t w h a t b u s i n e s s w e Ta k a k o a r e d o i n g . T h e r e i s a h y d r a u l i c p i s t o n p u m p i n t h e w o r l d . I t ’ s m a y b e d i f f i c u l t t o u n d e r s t a n d i t . We c a n s e e c o n s t r u c t i o n m a c h i n e r y, v e s s e l a n d a g r i c u l t u r a l m a c h i n e i n o u r t o w n . T h i s h y d r a u l i c p i s t o n p u m p o f o u r m a i n p r o d u c t i s u s e d t h e r e . We m a i n l y d o b u s i n e s s o f h y d r a u l i c machine representing the hydraulic piston pump. We m a n u f a c t u r e m a i n p r o d u c t s i n o u r f a c t o r y o f S h i g a p r e f e c t u r e a n d i n t e g r a t e d a l l productive functions around this Eastern Osa ka in the head factory of Shiga .
Interviewer: Why did you found your company?
M r. I s h i z a k i : I w o r k e d i n a c o m p a n y 2 7 y e a r s a g o , 1 9 7 3 w h e n I w a s 2 9 y e a r s o l d . I started this company a lone. It was in the severe condition of the oil crisis. I felt it difficult to start business in such severe period. I couldn’t help being independent of starting this business in a small place with 33m2. Of course, I did start it without any factory and machine and didn’t have any job at that time, so I sold special hand tool such as stud remover and drivers that US Navy used in the war through my American friend for two years. I did n ’t me an to fo und a co mpan y to sell s uch kind o f tool s h o we ver I ma naged to squeeze through the two years on this business.
D r. S c h l e s s e r ’s a d v i c e
Interviewer: How did you reach to sell hydraulic piston pump?
M r. I s h i z a k i : A s I t o l d y o u , w e m a n u f a c t u r e d h y d r a u l i c p i t o n p u m p b u t t h e f o r m a l name was axial piston pump which made very high pressure and was much smaller and more functional product than the conventional one. There has been such theory 100 years before. This pump has very complicated shape. For example, the part of sphere has to keep stable if the pump rotate s 360 degrees. But it has to move a little if it rotates. The gap between axis and hole is 1micrometer and the product has to be very p r e c i s e . I k n e w s u c h p r o d u c t s w o u l d b e u s e d i n v a r i o u s p l a c e s o f t h e w o r l d . H o w e v e r, i f 2
All rights reserved by RIAM, Translated by Kobe Univ. we spend much money to manufacture it , we manage to do it but we couldn’t mass produce at low cost. This was very expensive parts. At that time, if I developed the technology to mass produce this I thought any companies in Japan and the world adopted it because I started up business in the ti mes of recession. This was a start of t h i s b u s i n e s s . W h o g a v e m e t h e s u g g e s t i o n ? W h e n I w e n t t o t h e U . S , I m e t D r. Schlesser who worked at Eindhoven Industrial University in the Netherlands . He said to me, “I heard you started your own business but had no jobs to do. So why don’t you make a research for this product?”
This led me to develop the axial piston pump
e s p e c i a l l y t h e p a r t s o f p u t t i n g p r e s s u r e . T h i s w a s t h e s t a r t o f Ta k a k o .
Interviewer: How did you develop the product?
M r. I s h i z a k i : I h a d n o f a c t o r y a n d n o t h i n g . I j u s t h a d a n o f f i c e b u t n o e m p l o y e e s , s o I t h o u g h t h o w I s t a r t e d t o m a n u f a c t u r e t h e p r o d u c t . I ’ m o r i g i n a l l y a p r o d u c t i o n e n g i n e e r. I was also working as a production eng ineer in the previous company and majored in Metal engineering. I’m not an expert of business therefore I faced a problem how I manufactured this difficult product. The reason I chose Eastern Osaka was because many experts with special skills worked in the factory of this area. Such people specialize in the original works . For example, in order to make parts of the axial piston p u m p , f i r s t w e h a v e t o s h o r t e n s t i c k m a t e r i a l o r c u t t h e o u t s i d e a p p e a r a n c e . We c a l l i t lathe processing. One of those people specializes only in this lathe processing. Others s p e c i a l i z e i n m a k i n g s p a c e o r c u t t i n g s c r e w. M a n y p e o p l e a r e a n e x p e r t o f o n e p a r t o f those operations however few can do all of them, so in order to make this product, I have to make a process drawing which shows how we have to do in each process , and walked from place to plac e. If I do so, I can make a great product. Therefore, I need a person to coordinate the production. If I show them completed product and tell them to m a n u f a c t u r e t h e s a m e p r o d u c t , n o b o d y c a n d o i t . T h a t ’s w h y I r e g a r d e d E a s t e r n O s a k a as my own factory and started to make various products there. I experienced failures, but I could manufactur e various products that I wanted to do there.
Find the market
3
All rights reserved by RIAM, Translated by Kobe Univ. M r. I s h i z a k i : I n J a p a n , t h e r e a r e v a r i o u s f i r m s t o t r e a t h y d r a u l i c m a c h i n e s u c h a s K a y a b a i n d u s t r y, F u j i e t s u a n d K o m a t s u . I f I c a n m a s s p r o d u c e t h e p r o d u c t , s u c h b i g companies want to adopt it soon. Therefore I managed to manufacture the product and visited them to show it. When they saw it at first, they didn’t manage to believe me for a long time however they felt interested in it while looking at it many times.They thought it was impossible for me to mass pro duce them even if I made a few products . H o w e v e r, i f I m a k e i t i n e a c h s e p a r a t e d p r o c e s s a n d o b s e r v e t h e s c h e d u l e , I c a n m a k e i t . I told customers I could mass produce it and started to do business with major c o m p a n i e s . B u t i t w a s a l m o s t i m p o s s i b l e f o r m e , a s m a l l c o m p a n y, t o h a v e a b u s i n e s s account with a big company listed on the first section of stock exchange. Therefore, t h e y t o l d m e t o c o o p e r a t e w i t h t h e i r s u b c o n t r a c t o r. T h e y t o l d m e t o b e c o m e a s u b - s u b c o n t r a c t o r. I f I b r i n g t h i s p r o d u c t t o t h e i r s u b c o n t r a c t o r, t h e y c a n b u y i t f r o m t h e r e . M o s t c o m p a n i e s t o l d m e t h e s a m e t h i n g . H o w e v e r, I r e f u s e d t o d o s o . A s i s o f t e n t h e case with such indirect bu siness, needs is difficult to grasp especially in high t e c h n o l o g y i n d u s t r y. I h a d t o d e a l w i t h t h o s e m a j o r c o m p a n i e s d i r e c t l y, a l t h o u g h I d i d b u s i n e s s a l o n e . I t r i e d t o f i n d a c u s t o m e r w h o c o u l d d e a l w i t h m e d i r e c t l y. I t w a s v e r y difficult to do so but I thought to keep this policy for a while. Then, one day a major company told me to show the product again. At that time, I had on e more employee. The company had never opened a bank account for a company with two employees like us since it was founded and will never in the future , but they decided to deal with us e x c e p t i o n a l l y. We c o u l d h a v e t h e b a n k a c c o u n t d i r e c t l y w i t h t h e l i s t e d c o m p a n y a n d started to deliver the product. Then, the company recognized our products are pretty g o o d . . B u t t h e m a r k e t w a s l i m i t e d i f w e d i d b u s i n e s s o n l y w i t h a c o m p a n y, t h e r e f o r e w e tried to expand the market and went to other companies to sell it , but had the same problem of the account again. I t ’s b e e n f o u r y e a r s s i n c e w e s t a r t e d t h i s b u s i n e s s . I t h o u g h t i f w e s o l d i t t o o v e r s e a s customers, we could sell it in the Japanese market, too. It was the fifth year since we f o u n d e d t h e c o m p a n y i n 1 9 7 9 . We e x h i b i t e d o u r p r o d u c t i n H a n o v e r M e s s e w h e r e m a n y engineers all over the world visited. It is the biggest exhibition in the world. In Japan, there is Osaka Intex or Makuhari Messe , but those scales are much smaller than Hanover Messe. Although Osala Intex or Makuhari Messe used only 6 halls, Hanover Messe used 25 halls and engineers visited there from all over the world. The sixth hall w a s a t h e m e p l a c e w h e r e o n l y m a j o r c o m p a n i e s e x h i b i t e d t h e i r p r o d u c t s . We h a d a small booth in the center of the main place of the site because we had personal 4
All rights reserved by RIAM, Translated by Kobe Univ. c o n n e c t i o n s w i t h D r. S c h l e s s e r. O u r c o m p a n y d i d n ’ t h a v e s o m u c h s a l e s a t t h a t t i m e , but we borrowed ¥15 million from a bank which equaled to our annual sales to exhibit various products there . As a result, many companies relating to axial piton pump came t o s e e u s . E a c h e n g i n e e r i n A m e r i c a n c o m p a n y o f C a t e r p i l l a r, S w e d i s h Vo l v o a n d German manufacture Mannesmann visited our booth to see our products. They asked m e w h e t h e r I c a n d o m a s s p r o d u c t i o n o r n o t , a n d I s a i d “ Ye s . ” A f t e r t h a t , w e h a d requests from respective compan ies about our products. F e w p e o p l e i n o v e r s e a s c o m p a n i e s s a w t h e b a c k g r o u n d o f o u r c o m p a n y. T h e y d o n ’ t c a r e a b o u t w h e r e w e m a n u f a c t u r e d p r o d u c t s . T h e y j u s t f o c u s o n Q C D , Q u a l i t y, C o s t a n d D e l i v e r y. I m e a n i f w e c l a r i f y t h e o n l y d e m a n d o f q u a l i t y, c o s t a n d d e l i v e r y, t h e y d o n ’ t care about how to make it and whether we have a factory or no t.In case of Japanese companies, they try to see the background such as where we make products, how long we do business and which customer we deal with. Few overseas companies see those p o i n t s . We p r o p o s e h o w w e d o f o r i t . I t ’ s e a s y t o d o b u s i n e s s w i t h t h e m c o m p a r a t i v e l y. W h i l e w e w e r e d o i n g t h i n g s l i k e t h a t , w e c o u l d d o b u s i n e s s w i t h Vo l v o i n S w e d e n f i r s t and after that we had business with a major German company of Mannesmann like J a p a n e s e h e a v y i n d u s t r y. C a t e r p i l l a r i s v e r y f a m o u s f o r c o n s t r u c t i o n o r a g r i c u l t u r a l m a c h i n e s i n t h e U . S . a n d a l s o f a m o u s f o r a n e n g i n e a n d s e l l s s i n g l e u n i t o f e n g i n e . We a l s o c o u l d d e a l w i t h t h e c o m p a n y. T h a t ’s h o w w e c o u l d d o b u s i n e s s w i t h o v e r s e a s companies first. Then Japanese companies had a reputation that some companies started to mass produce such product or which company manufacture d it. They heard that it was manufactured in Japan. When we visited Japanese companies , we had ten employees at that time, we could enter there soon if we knocked the door. They could make a bank account for us without saying anything. The situation changed like that. N o w, w e m a k e a b o u t 7 5 - 8 0 % o f t h e w h o l e r o t a r y p a r t s o f a x i a l p i s t o n p u m p m o t o r i n J a p a n . We d o b u s i n e s s w i t h K o m a t s u , H i t a c h i C o n s t r u c t i o n , K a y a b a I n d u s t r y, F u j i e t s u a n d Yu k e n I n d u s t r y. T h e y a r e a l l l i s t e d c o m p a n i e s . We d e c i d e d t o d o b u s i n e s s o n l y w i t h m a j o r c o m p a n i e s a t t h e b e g i n n i n g . We a l s o d e a l w i t h Vo l v o a n d M a n n e s m a n n i n E u r o p e . We h a v e d i r e c t l y t r e a t e d t h e m a n d n o t r a d i n g f i r m s m e d i a t e b e t w e e n u s a n d o u r customers.
Develop the American market 5
All rights reserved by RIAM, Translated by Kobe Univ.
M r. I s h i z a k i : We h a v e a l o c a l c o m p a n y o f T S W i n t h e U . S . I t h o u g h t t h e r e w o u l d h a v e needs of products in the U.S. and could do the same business on the same way as Japan t h e r e . H o w e v e r, i n t h e U . S . , i t w a s m e a n i n g l e s s t o b r i n g a x i a l p i s t o n p u m p t o t h e company which didn’t manufacture it. So, in the U. S., we started business like this. Even a major company in the U.S. has a few problems as well as Japan and other countries. Although it manufactures such dif ficult products, it always has defectives and doesn ’t manufacture it well. Any companies had at least a few problems , so we went there to ask them whether they had any problems or not. I was sure they had. They had various problems such as severe precision products, expensive products i n a p p l i c a b l e f o r t h e r a n g e o f t h e b u d g e t a n d s o o n . We r e c e i v e d t h e d r a w i n g a n d thought various things about it to manufacture products with quality and cost to meet cus to me r ’s ne eds .
Interviewer: Do you do the same things in Japan as well as in the U. S.?
M r. I s h i z a k i : We d o t h e s a m e t h i n g s i n t h e b o t h c o u n t r i e s . We h a v e o u r o w n f a c t o r y with 150 American employees in the Central America, Kans as State where no Japanese factories exist. They are generally in Chicago, Detroit, Indianapolis, L.A and San F r a n c e s c o . H o w e v e r, w h y d o w e h a v e i t t h e r e ? Most companies have business first and will decide to build their factory as their b u s i n e s s b e c o m e s b i g g e r. H o w e v e r, w e b u i l t a f a c t o r y f i r s t a n d t h e n d e v e l o p e d o v e r s e a s m a r k e t . We d i d n ’ t h a v e a n y b u s i n e s s a n d c u s t o m e r s a t t h a t t i m e . We d i d n ’ t k n o w w h e r e o u r p o t e n t i a l c u s t o m e r s w o u l d b e . T h e r e f o r e , i f w e d e v e l o p e d t h e b u s i n e s s o n t h e We s t c o a s t a n d f o u n d a c u s t o m e r o n t h e E a s t c o a s t , i t w o u l d t a k e s i x h o u r s t o t r a n s f e r b y a i r. We c o u l d n ’ t t a k e c a r e o f s u c h c u s t o m e r, a n d t h o s e c u s t o m e r s a l s o w o u l d n ’ t d e a l w i t h u s . Therefore, when I saw the map, I decided to go to the central part of the U.S., Kansas. I t t a k e s a b o u t t w o o r t w o a n d a h a l f h o u r s t o g o e v e r y w h e r e i n t h e U . S . T h a t ’s w h y I decided to build our factory t here. I went there to see t he place. If I went there, I thought it better to go to the central place there, so I visited Hutchinson in the central part of Kansas called bellybutton in the U.S. At first, I went to the Chamber of Commerce of Kans as State to buy a land and ask it w h e t h e r i t h a d a n y g o o d l a n d t o b u i l d a p r e c i s i o n m a c h i n e c o m p a n y. A p e r s o n i n c h a r g e said, “Nobody has built such a company here because we have more cattle than human 6
All rights reserved by RIAM, Translated by Kobe Univ. beings.” Kansas is food inventory such as Kans as beef, wheat, corns. But I told him I wanted to do business here. He said, “There was a developed land to invite industrial companies twenty years ago . There is still no company in the place, so w hy don’t you build your factory there as the first company?” I thought I was so lucky and I bought about 40 acres of land first. If we hear 40 acres, we might think it takes a lot of money t o p u r c h a s e i t , b u t t h e p r i c e i s o n l y ¥ 8 m i l l i o n , ¥ 2 0 p e r a c r e . I t ’s u n i m a g i n a b l y c h e a p . K a n s a s h a s t h e s a m e s i z e a s t h a t o f J a p a n b u t h a s n o m o u n t a i n . I t ’s t h e w o r l d o f h o r i z o n . We b o u g h t t h e l a n d o f 4 0 a c r e s t o b u i l d a b u i l d i n g a n d f a c t o r y t h e r e a n d started to manufacture precision parts or axial piston pump in the same way as Japan from zero. Even if Japanese is good at sales, he can ’t compare with the local people. When I visited various companies and saw Japanese directed to American employee however I don’t think they work so hard under the direction of Japanese. Therefore, I decided not t o a s s i g n J a p a n e s e t h e r e a t t h e b e g i n n i n g a n d m a d e 1 0 0 % o f l o c a l c o m p a n y. We h a d 1 5 0 staff members there but no Japanese. The president is also from local site. I’m C h a i r m a n o f t h e c o m p a n y. T h e c o m p a n y b e c o m e s v e r y s u c c e s s f u l i n t h e s a m e w a y a s J a p a n ’s a n d h a s 8 5 % o f m a r k e t s h a r e i n t h e U . S . w h i c h i s b i g g e r t h a n t h a t o f J a p a n .
The biggest rival is our customers.
Interviewer: How about business in Europe?
M r. I s h i z a k i : I t ’s v e r y d i f f i c u l t t o d o b u s i n e s s i n E u r o p e . I t ’s b e c a u s e G e r m a n y i s o r i g i n a l l y a n a d v a n c e d c o u n t r y o f p i s t o n p u m p a n d a l s o i n d u s t r i a l d e v e l o p e d c o u n t r y, s o G e r m a n c o m p a n i e s c a n m a n u f a c t u r e s u c h p r o d u c t b y t h e m s e l v e s . H o w e v e r, t h e c o s t of their product is much higher than ours. So we can receive a lot of order s from large companies but only have 40% of the market share in Europe.
I n t e r v i e w e r : I t ’s s t i l l h i g h e n o u g h .
M r. I s h i z a k i : Ye s . I t h i n k s o , t o o . I s a y w h o m a n u f a c t u r e p r o d u c t s . O u r c u s t o m e r s d o i t . The product is a kind of engine of automobile which is the most important parts. Even 7
All rights reserved by RIAM, Translated by Kobe Univ. i f t h e p r o d u c t c o s t i s e x p e n s i v e a n d w e m a k e i t i n t h e i r f a c t o r y, t h e y c a n ’ t e n t r u s t u s with this task. For example, axial piston pump is used in many military product s such as combat vehicle and airplane. They don’t care about the cost of such product . A n y b o d y c a n m a k e i t i f i t c o s t s t w o o r t h r e e t i m e s h i g h e r. T h e r e i s s u c h p a r t f o r t h i s product, therefore we have no competitors in the world, but if we have it, we can say it is our customers. Our customers are competitors as well as our customers . Any customers, manufactures this kind of pump but have to purchase the inside of the most important part of heart f r o m u s . T h e y s h o u l d f e e l t h i s a l i t t l e u n i n t e r e s t i n g . H o w e v e r, i f g o o d p r o d u c t s a r e l o w e r t h a n t h e i r o w n p r o d u c t , i t ’s s m a r t e r t o b u y t h a n t o m a k e i t b e c a u s e t h e y w i l l l o s e c o m p e t i t i o n i f t h e y m a k e i t o n t h e i r o w n a t h i g h e r c o s t . T h a t ’s w h y t h e y p u r c h a s e o u r p r o d u c t s . We h a v e c o m p e t i t o r s i n o u r c u s t o m e r s . We h a v e g l o b a l m a r k e t s h a r e o f t h e present rotary kid of axial pump. H o w e v e r, s o o n o r l a t e r a n y b o d y w i l l c o p y i t b e c a u s e w e h a v e n o p a t e n t . T h e y s h o u l d imitate our know-how to manufacture products. The only feature we have is to manufacture such products with our own -made machine by our own design. If we p u r c h a s e t h i s w o r k i n g m a c h i n e f r o m a m a n u f a c t u r e r, a n y b o d y w h o h a v e m u c h m o r e money and are smarter than us should make the product by themselves. H o w e v e r, s i n c e w e d e s i g n t h e m a c h i n e b y o u r s e l v e s , e v e r y b o d y h a s d i f f i c u l t y i n following us. It also takes a lot of times to manufacture the product by machine sold e v e r y w h e r e . T h e r e f o r e , t h e o n l y f e a t u r e o f Ta k a k o c a n b e s a i d t o m a k e o u r o r i g i n a l e q u i p m e n t f o r t h e p r o d u c t o n o u r o w n . T h a t ’s w h y n o b o d y c a n m a n a g e t o i m i t a t e i t .
Obligation to Eastern Osaka
Interviewer: How many products do you outsource?
M r. I s h i z a k i : 2 5 % o f t h e s a l e s .
I n t e r v i e w e r : T h e r a t i o o f s e l f - m a n u f a c t u r e i s h i g h e r.
M r. I s h i z a k i : Ye s . H o w d o w e o u t s o u r c e ? We h a v e o b l i g a t i o n t o E a s t e r n O s a k a . W h e n w e 8
All rights reserved by RIAM, Translated by Kobe Univ. h a d n o m a c h i n e , w e a s k e d t h e m t o m a n u f a c t u r e p r o d u c t s . S o , i t ’s u n i n t e r e s t i n g t o s a y g o o d b y e t o t h e m b e c a u s e w e c a n d o b u s i n e s s b y o u r s e l v e s . T h a t ’s w h y w e o u t s o u r c e r o u g h w o r k b e f o r e c o m p l e t e j o b t o t h e m . We f i n i s h m a n u f a c t u r i n g p r o d u c t s i n o u r c o m p a n y w i t h o u r k n o w - h o w. We o u t s o u r c e o u r w o r k t o a b o u t 1 5 0 c o m p a n i e s i n E a s t e r n O s a k a . We c o o p e r a t e t o w o r k w i t h t h e l o c a l c o m p a n i e s . Yo u m a y k n o w o u r s e t t l e m e n t r e p o r t b e c a u s e w e ’ v e a l r e a d y a n n o u n c e d i t . We p o s t e d ¥7.1 billion in the consolidated basis in the year ended March of 2000, the parent c o m p a n y, ¥ 4 . 4 b i l l i o n , A m e r i c a n s u b s i d i a r y, ¥ 2 . 7 - 2 . 8 b i l l i o n a t t h e r a t e o f ¥ 1 0 5 a d o l l a r, w h i c h d e p e n d s o n e x c h a n g e r a t e o f t h e s u b s i d i a r y. T h i s s u b s i d i a r y i s a 1 0 0 % o f h o l d i n g c o m p a n y, s o w e a n n o u n c e d t h e f i n a l r e s u l t s i n t h e c o n s o l i d a t e d b a s i s . I n S e p t e m b e r o r O c t o b e r, 2 0 0 1 , We a i m t o l i s t t h e To k y o S t o c k E x c h a n g e a n d t h e O s a k a S e c u r i t i e s E x c h a n g e . We m a d e a p r o f i t o f a b o u t ¥ 8 0 0 m i l l i o n i n t h e c o n s o l i d a t e b a s i s but in fact the subsidiary in the U.S. made a profit of ¥600 million. The ratio of pretax p r o f i t o f t h e s u b s i d i a r y i s m o r e t h a n 2 0 % . O n t h e c o n t r a r y, d e s p i t e J a p a n e s e c o m p a n y posted ¥4.4-4.5 billion, it only made a profit of ¥ 200 million. It means how bad the current Japanese economy was . Fur the r mo re , be ca u se o f the d iffer en t sala r y s ys tem, we c an ’t r edu ce th e cos t. I n the U . S . , t h e a v e r a g e s a l a r y f o r 1 5 0 e m p l o y e e s i n 1 9 9 9 w a s $ 2 2 , 0 0 0 l a s t y e a r. S o , t h e annual income is ¥ 2.5-2.6 million a person. In Japan, it will become double. In Kan san s , e ve r ythin g in clud in g th e pr ic es is che ape r than J apan ’s so eve rybod y c an l ive t h e r e w i t h t h e s a l a r y. We d o n ’ t h i r e t h e m a t s p e c i a l c h e a p w a g e . T h e r e i s a n a i r c r a f t company next to us in Kans as because there is big land and runway for the test landing. Of course its salary is the same as ours. Charges of electricity in Japan are about ¥18-20 per KWH but ¥3.8 per KWH in the U.S. It is given a sizable porti on of the total e x p e n s e s f o r m a n u f a c t u r i n g c o m p a n y. T h a t ’s w h y w e c a n l o w e r t h e m a n u f a c t u r i n g c o s t th er e than Jap an ’s . H o w e v e r, a l l A m e r i c a n c o m p a n y d o e s n ’ t n e c e s s a r y l o w e r t h e c o s t . T h e p r o d u c t i o n s k i l l s in Japan are still the top in the world. In that point, American companies are still an inexpert and inferior in the production engineering ability to Japan, but which can balance the two out. Our American factory has 300 working machine manufactured by m e c h a n i c a l d i v i s i o n o f t h e p r o d u c t i o n e n g i n e e r i n g o f Ta k a k o a n d u s e s 1 0 0 % o f t h e machine. Therefore, the number of manufacturing products per hour is same as J a p a n e s e f a c t o r y ’s . A s a r e s u l t , t h e y c a n m a n u f a c t u r e t h e p r o d u c t a t l o w e r c o s t a n d increase more profits. 9
All rights reserved by RIAM, Translated by Kobe Univ.
Interviewer: I understand you outsourced 100% of your production including basic parts in Eastern Osaka when you started business and gradually
increased to
s e l f - m a n u f a c t u r e p r o d u c t s i n y o u r c o m p a n y. A n d t h e k e y p o i n t a t t h e b e g i n n i n g w a s t h e a b i l i t y o f d e s i g n o r d r a w i n g o r c o o r d i n a t i n g a b i l i t y.
M r. I s h i z a k i : Ye s . We c o u l d m a n u f a c t u r e p r o d u c t s t o a n e x t e n t a c c o r d i n g t o t h e d r a w i n g h o w e v e r w e c o u l d n ’ t m a k e t h e m a t l o w e r c o s t . We h a d n o l o s s o f d o i n g i t b u t c o u l d n ’ t r e a c h t h e c o s t l e v e l o f c u s t o m e r ’s r e q u e s t . I t h o u g h t w e w e r e i m p o s s i b l e t o increase the sales in such situation. Therefore, I decided to design and make special machine for manufacturing them. If we make a new machine to manufacture 30 pieces p e r h o u r, i n s t e a d o f t h e c o n v e n t i o n a l m a c h i n e w h i c h o n l y m a d e 1 0 p i e c e s p e r h o u r , w e c a n n a t u r a l l y r e d u c e t h e c o s t . T h a t ’s h o w w e s t a r t e d t o m a n u f a c t u r e p r o d u c t s i n o u r c o m p a n y. E i g h t y e a r s a f t e r w e f o u n d e d t h e c o m p a n y, w e s t a r t e d t o d e s i g n m a c h i n e little by little and rented a factory with 330m2 at the beginning where we started to make them a little by the machine. This is a start of our production.
Interviewer: Self-manufacturing enabled you to establish the original core technology that other companies couldn ’t imitate.
M r. I s h i z a k i : Ye s , w e g r a d u a l l y i n c r e a s e d t h e n u m b e r o f t h e m a c h i n e f r o m a p i e c e t o a f e w. N o w w e h a v e 3 0 0 a n d s e v e r a l t e n s o f m a c h i n e s i n t h e f a c t o r y o f S h i g a . We a l s o h a v e t h e s a m e n u m b e r o f m a c h i n e s i n t h e U . S . We u s e d a l l f i n a n c e l o a n s b e c a u s e w e n e e d m o n e y t o d o i t . We b o r r o w e d ¥ 5 0 0 , 0 0 0 f r o m P e o p l e ’ s F i n a n c e C o r p o r a t i o n t o s t a r t b u s i n e s s a n d w e m a d e t h e m o s t u s e o f s u c h n a t i o n a l l o a n s y s t e m t o m a n a g e f o r m o n e y. In that process, we experienced many economic recessions such as the second oil crisis a n d N i x s o n s h o c k . H o w e v e r, t h a n k s t o o u r c o m p a r a t i v e n e w p r o d u c t a n d t h e d e m a n d s that everybody changed the conventional system into this product even if the whole market fell into a decline, we could widely expand our products to the market and o v e r c a m e t h e s i t u a t i o n a l t h o u g h t h e s i z e o f t h e m a r k e t b e c a m e s m a l l e r.
Ta k a k o ’s C o r e t e c h n o l o g y 10
All rights reserved by RIAM, Translated by Kobe Univ.
I n t e r v i e w e r : Yo u r c o r e t e c h n o l o g y i s t h e m a n u f a c t u r i n g a b i l i t y. W h a t i s t h e m a i n technology if you specify it a little more in detail ? Production equipment designed by your company?
M r. I s h i z a k i : Ye s , I t h i n k s o . I t h i n k i t i s p r o d u c t i o n e q u i p m e n t e s p e c i a l l y e n g i n e e r i n g p o w e r a n d m a n u f a c t u r i n g t e c h n o l o g y. M a n u f a c t u r i n g t e c h n o l o g y m e a n s t o d e v e l o p manufacturing
process .
For
example,
other
companies
have
15
processes
from
procuring material to the final process to manufacture this. Generally speaking, anybody
needs
15
processes
however
smart
people
may
create
the
method
to
manufacture it on 13 process es. In such a world, if we develop the way to do it on nine p r o c e s s e s , w e c a n o f c o u r s e i n c r e a s e p r o f i t a n d h a v e c o m p e t i t i v e p o w e r. T h e r e f o r e , t h e d e v e l o p m e n t f o r m a n u f a c t u r i n g p r o c e s s i s t h e m o s t i m p o r t a n t t e c h n o l o g y.
Interviewer: In that sense, you have had the core technology in your company since you outsourced 100% of your works.
M r. I s h i z a k i : I t h i n k w e m a n u f a c t u r e p r o d u c t s i n a l i t t l e d i f f e r e n t p r o c e s s f r o m o t h e r s .
I n t e r v i e w e r : Yo u a c h i e v e d t o d e v e l o p t h e o r i g i n a l m e t h o d w i t h y o u r o w n e q u i p m e n t o n e a f t e r a n o t h e r. T h a t ’ s w h y o t h e r c o m p a n i e s c a n ’ t i m i t a t e i t .
M r. I s h i z a k i : T h e k e y p o i n t t o m a n u f a c t u r e p r o d u c t i s t h e m a n u f a c t u r i n g p r o c e s s . I f other companies make products on three processes however we do it on five processes, we will be in bankrupt soon.
Interviewer: How is craftsmanship used there?
Do you work upon products in
a c c o r d a n c e w i t h t h e c r a f t s m a n ’s p r o c e s s ?
M r. I s h i z a k i : Ye s . I t ’s g o o d t o t h i n k a b o u t t h e p r o c e s s b u t i f w e c a n ’ t m a k e p r o d u c t s i n t h a t p r o c e s s , i t ’s m e a n i n g l e s s . W h e n w e h a d n o o w n m a c h i n e , w e c o o p e r a t e d w i t h craftsmen to manufacture products very hard. If we do it in our company and manufacture products with skillful wor k only with his skills, people only with a few experiences can ’t work like th ose experts. As a result, we will face to challenge it by 11
All rights reserved by RIAM, Translated by Kobe Univ. ma chin e . Tha t’s’ h o w we re ac hed t he p oin t t o ma ke a de si gn o f th e m ach ine . Anyb od y can make the product with commercial m achine, so we have to develop the original e q u i p m e n t . I n o u r f a c t o r y, w h e n w e f i n i s h o n e p r o c e s s , w e s t a r t t h e n e x t p r o c e s s s o o n . O u r e q u i p m e n t h a s a u t o m a t i c f u n c t i o n t o c o n t i n u e o p e r a t i o n i m m e d i a t e l y, f o r e x a m p l e soon after it completes one operation , it starts the next operation to make a hole. If it finishes the process, it starts the next work again. If it finish es all processes, it will give us almost complete product. If we order a manufacturer of machine tools to make s u c h w o r k i n g m a c h i n e t o o l , t h e y f e e l i t i n t e r e s t i n g a n d w i l l t r y t o m a k e i t . H o w e v e r, i f t h e y c a n c o m p l e t e i t , t h e y w i l l s t a r t t o s e l l i t t o o t h e r c o m p a n i e s i n t h e s a m e i n d u s t r y. I t ’s n a t u r a l t h a t t h e y v i s i t c u s t o m e r s t o s e l l i t t o s a y t h a t t h e y h a v e d e v e l o p e d a n e w machine. If we order them not to sell it, they will sell it. If they do that, we will lose o u r t e c h n o l o g y.
Interviewer: Do you outsource parts for your machine developed in your company?
M r. I s h i z a k i : Ye s . We o u t s o u r c e t h e m a n d h a v e m a n y c a s e s t o o u t s o u r c e t o b u i l d t h e m up.
I n t e r v i e w e r : Yo u a s s e m b l e t h e p a r t s b y y o u r s e l f . Yo u c a n u s e a d v a n t a g e l e a r n e d i n Eastern Osaka.
M r. I s h i z a k i : Ye s w e c a n o r d e r i n u n i t s o f p a r t s .
I n t e r v i e w e r : I f y o u a s k a m a j o r c o m p a n y, y o u ’ l l l o s e y o u r k n o w - h o w, b u t i f y o u o r d e r a s m a l l c o m p a n y w h i c h o n l y c a n m a n u f a c t u r e o n e p r o d u c t , i t w o n ’ t k n o w y o u r k n o w - h o w.
M r. I s h i z a k i : P u t t i n g a c o v e r o n m a c h i n e , t h e y w o n ’ t k n o w t h e k n o w - h o w. H o w e v e r some people look inside and understand it. So before they start to make it, we have to d o n e w t h i n g s a h e a d o f t h e m o t h e r w i s e w e c a n ’ t r u n o u r b u s i n e s s o n l y f o r a y e a r. E v e r y b o d y t h i n k s t h e s a m e t h i n g s . We h a v e t o c o n t i n u e t o d o s u c h t h i n g .
I n t e r v i e w e r : Yo u s u b s t i t u t e m a c h i n e f o r c r a f t s m a n s h i p .
M r. I s h i g a k i : Ye s , w e d o . 12
All rights reserved by RIAM, Translated by Kobe Univ.
I n t e r v i e w e r : To s u m m a r i z e w h a t y o u s a i d , y o u r e l y o n o u t s o u r c i n g 1 0 0 % o f y o u r w o r k s at the beginning however gradually develop ed the original process by yourselves. Then you substituted handmade designed machine for craftsmanship to establish the own production system.
M r. I s h i z a k i : Ye s , t o t e l l i t i n a w o r d , y o u ’ r e e x a c t l y r i g h t .
Think about products on site
Interviewer: What engineer develop s the manufacturing process?
M r. I s h i z a k i : We h a v e 2 2 0 e m p l o y e e s i n Ta k a k o , 1 5 0 i n T S W a n d 3 7 0 s t a f f m e m b e r s i n t o t a l . S o m e p e o p l e d e v e l o p t h e p r o c e s s w h i l e t h e y ’ r e w o r k i n g . We h a v e f e w s u c h s p e c i a l s t a f f m e m b e r s a p a r t f r o m t h e o t h e r d e v e l o p m e n t t e a m . We h a v e 1 0 e n g i n e e r s i n c h a r g e of the process development but we can’t develop manufacturing process only with the staff members therefore do trial with proposal from people on site.
Interviewer: If you have engineers and technicians, you do it with both staffs.
M r. I s h i z a k i : Ye s . A n d i t ’s m e a n i n g l e s s t h a t w e o n l y w o r k o n a b u r e a u c r a t i c w a y. We have cross-functional teams. When people in charge of inspecti on go to the worksite, they
sometimes
propose
new
ideas
to
make
the
conventional
way
e a s i e r.
We
unexpectedly might have a chance to do such things .
Interviewer: I often visit smaller companies around the Eastern Osaka. When I went there, I found some comp anies made the most of their advantage that engineers and technicians
worked
t o g e t h e r.
I
think
people
ripe
with
experiences
will
have
imaginative and many ideas. If they enter the company and belong exclusively to do it, they can think nothing.
M r. I s h i z a k i : Ye s , t h e y w i l l h a v e h a r d b r a i n a n d c a n t h i n k n o t h i n g o t h e r t h a n t h a t . 13
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Interviewer: Growing smaller companies have a common point that their founder does ever ythi ng. He h as g r ea t edu ca ti ona l b ac kgr ound bu t he c an ’t he lp do in g a ll j obs fro m l a t h e b e c a u s e h e h a s n o s t a f f m e m b e r. S u c h v a r i o u s e x p e r i e n c e s e n a b l e h i m t o c r e a t e new ideas. I have such image for growing small companies. Their advantage is that e n g i n e e r s a n d t e c h n i c i a n s c o o p e r a t e w o r k i n g t o g e t h e r.
M r. I s h i z a k i : I f e e l t h e y c a n c r e a t e s o m e t h i n g n e w. We h a v e v a r i o u s p r o p o s a l g r o u p s b u t I t h i n k a m i x e d t e a m i s m o r e i n t e r e s t i n g . H o w e v e r, I c a n ’ t n e c e s s a r i l y i t ’s t h e b e s t . T h i s i s b e c a u s e w h e n w e d e v e l o p a n i d e a d e e p l y, w e h a v e t o t a l k a b o u t i t w i t h a specialist, otherwise we can do nothing. As I alw ays tell our employees and think it by mysel f, e ve n i f I h a ve a n ide a tha t I wa nt to do ho weve r I c an ’t do i t we ll i n s o me ca ses even if I want to do. If I think about it in the meeting room for a long time , I can’t solve i t . H o w e v e r, i f I g o t o t h e s i t e a n d s e e a r o u n d w i t h s e a t e d o n a c h a i r w i t h e v e r y b o d y, I will have an idea. Therefore, different from general case, we have a room for inspection and evaluation in the center of the factory of Shiga. If we have some problems, we ’ll gather on site not in a me eting room. When we seat there for an hour and do something, w e ’ l l h a v e a n e w i d e a . We h u m a n b e i n g s h a v e e y e p o w e r t h a t i s s o m e t h i n g i n v i s i b l e . Human beings especially have such powers. Therefore, if we have some problems, we ’ll go to the factory and talk about it. If we do so, we are very surprised that we can solve problems in many cases.
Interviewer: What special things do you have to continue to have such imaginative power?
M r. I s h i z a k i : We h a v e i n - h o u s e q u a l i f i c a t i o n s y s t e m a n d v a r i o u s l e c t u r e s s u c h a s l e s s o n s b y i n - h o u s e s t a f f i n c l u d i n g m e o r o u t s i d e t e a c h e r. I f o u r e m p l o y e e s h a v e s u c h lessons, they’ll receive a mark, and in order to get recommendation to promote an a s s i s t a n t m a n a g e r, t h e y h a v e t o g e t s e v e r a l m a r k s . Av e r a g e a g e o f o u r s t a f f m e m b e r s i s around 30 years old. I’m the oldest. All staff members are so young. Therefore, if I tell t h e m t o d o t h e i r b e s t o r w o r k s o h a r d , t h e y d o n ’ t u n d e r s t a n d i t . We h a v e t o t e l l t h e m w h a t t o d o a n d w h a t p u r p o s e t h e y h a v e t o w o r k f o r. I f w e d o i t , t h e y r e a l l y w o r k h a r d a l t h o u g h I t e l l t h e m t o g o h o m e e a r l i e r. W h e n I h a v e a d r i n k w i t h c u s t o m e r s a n d g o t h r o u g h t h i s h e a d o f f i c e a t 11 : 0 0 p m . T h e y s t i l l w o r k s o h a r d . T h e l i g h t s s t i l l t u r n s o n 14
All rights reserved by RIAM, Translated by Kobe Univ. b r i g h t l y. W h e n I ’ m w o r r i e d a b o u t a t h i e f c o m i n g i n t h e o f f i c e a n d g o t o s e e t h e r e , everybody still works so hard. I have to tell them to stop working and go home earlier b e c a u s e t h e y h a v e t h e i r o w n f a m i l y. We h a v e m e r i t - p a y a n d a n n u a l i n c o m e s y s t e m s . E v e n i f t h e y o v e r w o r k f o r a l o n g t i m e , t h e y w i l l h a v e n o o v e r w o r k p a y m e n t . We i n c l u d e monthly overtime payment for 30 hours in their annual salary regardless of their a c t u a l o v e r w o r k t i m e . I t e l l t h e m i t ’s m o r e b e n e f i c i a l t o g o h o m e e a r l i e r. T h a t ’s w h y w e i n t r o d u c e a n n u a l s a l a r y s y s t e m . We a d o p t t h e s y s t e m t o a n a s s i s t a n t m a n a g e r o r t h e u p p e r l e v e l . We r e v i e w t h e i r i n c o m e o n c e a y e a r a n d s o m e w i l l i n c r e a s e i t , o t h e r s decrease it. Although we have such system, a ll staff members work very well. Such method is ordinary thing in the U.S .
All school backgrounds are welcome.
I n t e r v i e w e r : I t ’s c o m p a r a t i v e l y e a s i e r n o w t o s e c u r e s t a f f m e m b e r s b e c a u s e e v e r y b o d y h a s d i f f i c u l t y i n f i n d i n g a j o b f o r t h e e c o n o m i c r e c e s s i o n . M e a n w h i l e , i t ’s v e r y d i f f i c u l t to find real great engineers or technicians .
M r. I s h i z a k i : Ye s . I t ’s d i f f i c u l t b u t t h e r e a r e s u c h g r e a t p e o p l e . I p u t a n a d v e r t i s e m e n t of axial piston pump on the spread of “B-ing” by Recruit last year with a copy of “Is t h e r e a n y b o d y t o d o s u c h a t h i n g ? ” We h a d 3 0 0 a p p l i c a n t s f o r i t . We r e n t a r o o m o f a h o t e l t o h a v e i n t e r v i e w s a n d d e c i d e d t o h i r e 5 p e o p l e f i n a l l y. T h e r e a r e r e a l l y g r e a t . From the latter half of the year to this March, we had a reason to increase the production therefore we hired 40 people midyear. Of 15 were new graduates. I used such medium although I don’t know some people might be good or bad.
Interviewer: Do all engineers graduate fro m university?
M r. I s h i z a k i : N o . We d o n ’ t c a r e a b o u t a c a d e m i c b a c k g r o u n d . O f c o u r s e , m a n y p e o p l e h a v e a d i p l o m a . We h a v e n o d e s c r i p t i o n o f a c a d e m i c r e c o r d i n o u r w o r k i n g e v a l u a t i o n or when we hi re employees. Therefore I don ’t know what background they have.
Interviewer: I hear people with various backgrounds such as hairdresser and civil 15
All rights reserved by RIAM, Translated by Kobe Univ. operator play more active role in smaller companies of the Eastern Osaka.
M r. I s h i z a k i : M a n y p e o p l e w o r k t h e r e . A p e r s o n w h o w o r k e d v e r y h a r d i n t h e production engineer was a musician before.
Interviewer: Such people are more interesting.
M r. I s h i z a k i : Ye s . We d o n ’ t k n o w a b o u t t h e i r e d u c a t i o n a l b a c k g r o u n d a n d j u s t a d o p t wages based on ability and ages. Their salary consists of half o f wages based on their a g e a n d o t h e r h a l f o n a b i l i t y. We d o n ’ t c a r e a b o u t h o w m a n y y e a r s t h e y e x p e r i e n c e w o r k i n g . We h a v e t o e v a l u a t e them like that. I also have no academic background. There is an area of Shigaraki, a famous portray t o w n i n S h i g a p r e f e c t u r e . T h e r e i s a m o u n t a i n c a l l e d M t . Ta k a k o . T h e n a m e o f o u r company comes from it. I went to Osaka for e mployment as a group and studied in evening class of Fuse Industrial High S chool for four years. I graduated from the s c h o o l w h i l e I w a s w o r k i n g d u r i n g t h e d a y. A f t e r t h a t , I s t u d i e d a t K i n k i U n i v e r s i t y a n d R e s e a r c h C e n t e r o f To h o k u U n i v e r s i t y b u t l e f t t h e r e w i t h o u t d i p l o m a . I a l s o stud ied a t MIT in t he U .S . h owe ve r I d idn ’t gr adua te th er e . Whe n I wa s asked ab ou t my academic background, I just said that I graduated from high school. Concerning about l i c e n s e s , I o n l y h a v e a d r i v e r ’s l i c e n s e .
I n te r vie we r : Even thou gh yo u do n ’t gra duate fro m tho se un ivers i tie s , wha t you lea rn ed i n v a r i o u s p l a c e s w o u l d b e h e l p f u l f o r y o u . F o r e x a m p l e , a m e e t i n g w i t h D r. S c h l e s s e r as you told me.
M r. I s h i z a k i : Ye s . I t h i n k s o . I o w e w h a t I a m t o v a r i o u s p e o p l e .
Highly-profitable Subsidiary in the U.S.
Interviewer: Could you tell me other business es?
16
All rights reserved by RIAM, Translated by Kobe Univ. M r. I s h i z a k i : I t o l d y o u t h e w h o l e Ta k a k o p o s t e d ¥ 7 . 2 b i l l i o n i n t h e c o n s o l i d a t e d b a s i s in this term. The sales relating to hydraulic machi ne accounts for 65% of the total. T h e r e a r e p a r t s c a l l e d c h i p m o u n t e r t h a t m o v e w e l l o n t h e p r i n t e d b o a r d o f T V. I t i s a device to mount a chip on the board. Such equipment for manufacturing electronic parts accounts for about 20%. The rest is automobile parts. Only our American subsidiary manufactures that. If we attach t he parts to hydraulic pump of d iesel engine for environmental measure , we can reduce discharge of Co2 and No2 to a half or less. I had this idea before. If we m anufacture injection pump of d iesel engine with this high pressure device, I might make an engine to cut discharge of Co2. I offered Japanese manufacturers to develop it, but same as the story I told you before, they t h o u g h t t h a t i t w a s r i d i c u l o u s s u c h a s m a l l c o m p a n y a s Ta k a k o t r i e d t o m a k e a r e f o r m of engine. I thought it u ninteresting and went to a big company of Navisto r in the U.S. w h i c h m a n u f a c t u r e d t r u c k o f F o r d o r C o n v o y c a l l e d N a v i s t o r, a t r u c k l i k e a b i g h o u s e . T h e c o m p a n y w a s s o i n t e r e s t e d i n t h e p r o p o s a l t h a t w e t r i e d t o m a k e i t t o g e t h e r. T h e y manufactured jet p ump of diesel engine with our rotary parts. Denso or Bosch manufactures the conventional pump which jets light oil with a pressure of 800kg square centimeters. But if we use our pump, it has capacity to jet it with 1,500kg pressure and discharges of Co2 will reduce to 60%. Therefore, Navi stor a n d C a t e r p i l l a r, a n e n g i n e m a n u f a c t u r e r i n t h e U . S . , R e x R o s e a n d o u r c o m p a n y d e c i d e d t o d e v e l o p t h i s p r o d u c t . We m a n u f a c t u r e d 1 0 p i e c e s i n 1 9 9 2 a n d p a s s e d t h e field test for a year in the desert or in Siberia . It was very small parts and was m a n u f a c t u r e d o n l y 1 , 5 0 0 p c s f o r a y e a r . I n 1 9 9 4 , w e s o l d i t 1 5 0 , 0 0 0 p c s a y e a r. I n 1 9 9 6 , Caterpillar adopted it on its engine, so we could sell it 320,000 pcs. In 1999, we sold 540,000pcs. Only this engine passed the control of exhaust gas in the U.S. There is no other company to manufacture it except for us. GM also adopted the product and Isuzu in Japan did, too. The parent company did nothing for it but what our subsidiary manu fac tu red wa s s old ver y wel l . T ha t ’s wh y ou r s ubs idia r y ca n ma ke hi gh p r ofi t. T he reason that the subsidiary becomes highly profitable is in fact there. I d i d n ’ t t h i n k a b o u t i t b e f o r e s o w h e n I f o u n d e d t h e A m e r i c a n c o m p a n y, I m a d e a n i n - h o u s e l a w t h a t 3 0 % o f a f t e r - t a x p r o f i t w o u l d b e p a i d t o t h e p a r e n t c o m p a n y. T h e l a w makes really effective. The subsidiary made a profit of ¥600 million, so after-tax profit was ¥400 million. It gave us the parent company 30% of ¥400million that was ¥12 m i l l i o n d i v i d e n d s l a s t y e a r. B e c a u s e w e w e r e i n t h e r e c e s s i o n , i t w a s v e r y h e l p f u l t o r e c e i v e s u c h a l o t o f m o n e y w i t h w h i c h w e c a n p a y s a l a r y. T h i s i s w h y o u r s u b s i d i a r y i s 17
All rights reserved by RIAM, Translated by Kobe Univ. highly profitable.
Aim to become a suggestive selling company
I n t e r v i e w e r : I n o r d e r f o r s m a l l b u s i n e s s e s t o s u r v i v e i n t h e f u t u r e , i t ’s i m p o r t a n t t o c o n t i n u e t o p r o p o s e n e w i d e a . I t ’s b e c a u s e i f t h e y s t o p d o i n g i t , m a j o r c o m p a n i e s w i l l enter the market. In your case, for example, if users start to self-manufacture products in their companies , you can’t keep to dominate the market. Therefore, if smaller companies like you have new business es, you can make the most of your advantage. In your case, continual proposal for new business idea such as parts for diesel engine leads to become successful. How will you propose new idea in the future ?
M r. I s h i z a k i : Yo u a r e e x a c t l y r i g h t . O u r c u s t o m e r i s n ’ t i n t e r e s t e d i n d o i n g b u s i n e s s w i t h u s i f w e d o n ’ t t a c k l e n e w b u s i n e s s o n e a f t e r a n o t h e r. T h i s i s b e c a u s e o t h e r competitors have already started the next new business and we leave behind unless we d o n e w t h i n g s a h e a d o f t h e m . A s y o u s a y, i f w e d o t h e s a m e t h i n g s w i t h o u t a n y c h a n g e , we’ll be involved in the competition . If small companies like us can propose nothing to customers, we will be in bankrupt soon. Subcontractor will become insolvent in the future.
They
only
receive
spare
jobs
from
others.
T h a t ’s
why
we
call
them
s u b c o n t r a c t o r. T h e i m p o r t a n t t h i n g i s t o h a v e a d i r e c t c o n t r a c t w i t h m a j o r c o m p a n i e s . A company which proposes new business to customer is sure to have an advantage . Smal l a nd med ium co mpan ies mus t p ro pose n ew id eas , o th er wi se the y ca n ’t s ur vi ve in the future. Subcontractor will close down first.
Improve the ability to prop ose
Interviewer: How can you get the ability to propose?
M r. I s h i z a k i : I n o r d e r t o i m p r o v e t h e a b i l i t y, w e s h o u l d s e e a f l o w o f t h e t i m e s a n d t h i n k about what we should do . Whether we have the ability or not depends on we think 18
All rights reserved by RIAM, Translated by Kobe Univ. about it or not. Anybody can understand it if he thinks.
Interviewer: For example, as you said, you went t o customers and asked them whether th ey had s o me thi n g you c ould d o to abs or b n ew bus ine ss . I t ’s i mpo r tan t to i mpr ove y o u r s e n s e t o c h o o s e w h a t c u s t o m e r s s a y.
M r. I s h i z a k i : I f w e g e t d i f f i c u l t j o b , i t ’ l l b e l i t t l e p r o f i t a b l e f o r u s . We c a n ’ t manufacture products with one part. There are other parts connected with the parts. We w e r e s o a p p r e c i a t e d t h a t w e g o t t h i s j o b b u t i t ’ s t o o d i f f i c u l t t o m a k e m o r e p r o f i t s o f this. Since we did business with minimum profits , when we went to the site and found some parts, we asked them to receive such parts . Our customer feels indebted to us for the difficult task. Therefore they gave us the parts and told us to estimate the price of our products. After receiving it, we’re going to receive the next ones. Then, we’ll i n c r e a s e i t o n e a f t e r a n o t h e r. I f t h e c o s t o f o t h e r c o m p a n i e s i s ¥ 1 , 0 0 0 , w e p u r s u e t h e way to do it at ¥500. If we have prospects for cutting down the cost to ¥500 and one of other companies is ¥1,000, we estimate our products price at ¥800 so that other companies can’t do the same. If they lower the price to ¥800, they’ll be in bankrupt.
Interviewer: There are mainly two information resources for new proposal. The first is relationship with customers. The second is the relationship with academic world such a s c o n n e c t i o n s w i t h D r. S c h l e s s e r.
M r. I s h i z a k i : Ye s , I t h i n k s o . We h a v e o p p o r t u n i t i e s t o e x c h a n g e p r o f e s s o r s o f v a r i o u s universities in Japan. Also our customer manufacture s their products to sell them th er e fo re we ha ve to al ways r es ea rch s uch i n fo rmatio n an d cus to mer ’s r equ es ts .
Interviewer: Are those relationships helpful for the sales activity?
M r. I s h i z a k i : We c o u l d d o b u s i n e s s w i t h t h e p e r s o n a l c o n n e c t i o n b e f o r e f o r e x a m p l e w e k n e w g e n e r a l m a n a g e r a n d f a c t o r y l e a d e r. N o w, i t ’s v e r y g o o d a n d e a r n e s t t i m e . E v e n i f w e k n o w a n y b o d y, c u s t o m e r s d o n ’ t b u y e x p e n s i v e a n d b a d p r o d u c t s . I f t h e y d o i t , t h e y ’ l l l o s e t h e c o m p e t i t i o n s . I f w e w i n i n Q C D , w e ’ l l g e t c u s t o m e r s . We s o m e t i m e s c a n ’ t s e l l our products because we have no connections even if we give them good and reasonable p r o d u c t s q u i c k l y. H o w e v e r, w e h a v e f e w c a s e s l i k e t h i s . We ’ l l d o v a r i o u s t h i n g s f r o m 19
All rights reserved by RIAM, Translated by Kobe Univ. now such as purchasing parts throughout the Internet. There is no personal connection o n t h e I n t e r n e t . I t ’ s g o i n g t o b e v e r y e a r n e s t t i m e s n o w. I t m e a n s a n y b o d y h a s a c h a n c e in all places and all people who have ability regardless of the size of company have a c h a n c e n o w. W h e n I f o u n d e d t h i s c o m p a n y, I w a s 2 9 y e a r s o l d . I t ’s b e e n 2 7 y e a r s s i n c e t h e n . I b e c a m e 5 6 y e a r s o l d n o w. I c o u l d r e c e i v e a l o t o f s u g g e s t i o n s f r o m v a r i o u s people for 27 years. I have to do it more and more with young people. I have a youthful spirit of being 30 years old.
I n t e r v i e w e r : Yo u s a i d y o u w o u l d l i s t y o u r c o m p a n y o n t h e s t o c k e x c h a n g e . I f y o u d o s o , you will have increasing fixed expenses in a halfway scale of your company and have to make mainframe products resulting in competing with major companies. I think there is the minimum and best scale of a company to list. What do you think of it?
M r. I s h i z a k i : We h a v e t o a c h i e v e ¥ 1 0 b i l l i o n i n s a l e s . I f w e a c c o m p l i s h i t , t h e n e x t g o a l i s ¥ 2 0 b i l l i o n . I t h i n k w e h a v e t o r e a c h a t l e a s t ¥ 1 0 b i l l i o n a s a c o m p a n y. We h a v e n o reason to list us. None of my rela tives and family involve in our company therefore everybody
can
stand
on
the
same
start
line.
Our
shareholders
are
financial
institutions, insurance company and in -house share holding group. In -house share holdi ng group ac co unts for 27 % o f the to ta l . Sin ce we ar e in su ch c ondi tion , i t’s the best to become publicly-opened company for everybody in order to make each financial asse t. Tha t ’s wh y we’ re th in kin g o f i t.
I n t e r v i e w e r : I t h i n k i t ’s b e t t e r y o u h a v e m o r e s a l e s . H o w a b o u t t h e n u m b e r o f employees?
M r. I s h i z a k i : We h a v e 3 7 0 e m p l o y e e s i n t o t a l a n d w i l l h a v e 4 0 0 i n c l u d i n g 4 0 n e w s t a f f m e m b e r s w h o e n t e r t h i s y e a r. I d o n ’ t c a r e a b o u t i t t o o m u c h . I w o u l d r a t h e r c a r e a b o u t what management system we have to make.
Message to the top
I n t e r v i e w e r : We h a v e c o r p o r a t e m e m b e r s h i p f r o m m a j o r c o m p a n i e s t o s m a l l b u s i n e s s e s 20
All rights reserved by RIAM, Translated by Kobe Univ. among readers of Business Insight. Finally as a successful venture President, please give them some message.
M r. I s h i z a k i : A s I s a i d b e f o r e , w e s m a l l b u s i n e s s e s h a v e t o p r o p o s e n e w b u s i n e s s i d e a s t o c u s t o m e r s o r m a r k e t . We h a v e t o c o m e o u t f r o m s u b c o n t r a c t o r. T h e m o s t i m p o r t a n t i s to be a company who can propose new business ideas . If we do so, we naturally will know what we have to do. If we know it we are in the same condition as we can achieve the goal so we just start to do it. I think lik e that. I n a d d i t i o n t o t h a t , I t o l d y o u t h e e y e p o w e r s . We h a v e t o c a r r y o u t o u r b e l i e f . I l i k e a Kanji(Chinese character) of “Nen(Mind)” that is strong sense or feeling. In short, the i m p o r t a n t t h i n g i s t o h a v e t h o u g h t t h a t w e w a n t t o d o . Wi t h o u t t h o u g h t t h a t I l i k e y o u , y o u m a y n o t l i k e m e . Wi t h o u t t h o u g h t t h a t I w a n t t o d e v e l o p t h i s , I ’ l l n a t u r a l l y h a v e an creative idea. Therefore, we have to continue to think about it. If we have no idea, we can start nothi ng. The important thing is to continue to have thought. If we stop h a v i n g t h o u g h t , w e ’ l l b e o v e r.
I n t e r v i e w e r : T h a n k y o u v e r y m u c h f o r g i v i n g u s y o u r p r e c i o u s s t o r y.
[Postscript] Ta k a k o h a s t h e m a n a g e m e n t w i t h c r a f t s m a n s h i p o f E a s t e r n O s a k a . M a n y a r t i c l e s d e s c r i b e t h e c o m p a n y l i k e t h a t , h o w e v e r, w h e n I t a l k e d w i t h M r. I s h i z a k i , I u n d e r s t a n d h i s e f f o r t s n o t t o r e l y o n s u c h c r a f t s m a n s h i p a r e t h e k e y f o r c e o f t h e c o m p a n y. H e substitutes his original manufacture process for outside available craftsmanship to m a k e t h e c o r e t e c h n o l o g y. T h i s i s a n a d v a n t a g e o f t h i s c o m p a n y. H e d o e s n ’ t s a t i s f y t h e existing core technology but always continue to acquire or maintain the ability to c r e a t e n e w p r o p o s a l s . T h i s w i l l b e s a i d t o t h e k e y o f t h e f u t u r e o f t h i s c o m p a n y. I t ’ s a l s o c o m m o n c h a l l e n g e f o r m a n y s m a l l c o m p a n i e s a n d v e n t u r e s . We s h o u l d k e e p a n e y e o n h o w Ta k a k o w i l l d e v e l o p i n t h e f u t u r e .
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