HOME > 経営をよくする > Vibrant SMEs of JAPAN

Vibrant SMEs of JAPAN

Launching "Serious Battle" in Press Machining Against Manufacturers in Emerging Nations [Heian Manufacturing]

Secret to Robustness
  • Defeating manufacturers in emerging nations in terms of costs with manufacturing in Japan.
  • Making counterproposals to clients for in-house developed parts.
  • Moving into overseas markets without establishing production bases.

Heian Manufacturing Co., Ltd.'s main focus is manufacturing automotive engine parts and transmission parts using metal press machining. As automakers accelerate local procurement overseas, Heian Manufacturing is focused on its manufacturing efforts in Japan. In Asian nations where labor is cheap, parts can purportedly be produced thirty percent less expensively than in Japan. However, Chairman Kunihiko Araki's policy regarding this is quite simple. "If that's the case, all we have to do is cut costs in Japan by thirty percent."

Handicap Battle

Beat out the competition in emerging nations in terms of costs while maintaining manufacturing in Japan. What kind of strategy has the company adopted to compete in battles in which Heian has an overwhelmingly disadvantageous handicap? Since about 1990, Heian Manufacturing has expanded activities to reduce costs by innovating its production methods without changing the performance and functions of the products. Occasionally, the company will tamper in-house with parts that it receives from customers to increase the functionality while also reducing costs. Chairman Araki stated confidently, "Our big weapon is the ability to develop new construction methods and provide VA (value analysis) proposals."
For example, consider the drive plate that is used in starting the engine and power transmission. In the past, manufacturing was divided into gears that were cut with a hobbing machine and the plate that was press formed. With the new manufacturing method, a single steel plate is integrally formed, and as a result, lower costs and a lighter weight design are achieved. The ability to maintain start-to-finish production from the design and fabrication of the dies to press forming and machining has led to cost reductions. Chairman Araki emphasized, "Through this, we are able to produce goods less expensively than our competitors in emerging nations. A concept that was thought to be impossible has changed into something that we can provide with confidence."
The environment surrounding automotive parts is undergoing significant changes including a move into emerging nations where wages are cheap and the adoption of lightweight parts that contribute to improving fuel efficiency. With these changes, part manufacturers are of course being required to provide low cost, lightweight parts. However, significant cost reductions are difficult to achieve while also manufacturing parts in accordance with the customers' drawings. To meet this demand, Heian Manufacturing is exerting force in the form of VA proposals.
The company examines manufacturing methods when it first views drawings and then proposes development parts to the customer. In other words, "We make counterproposals for parts that we develop ourselves." (Chairman Araki) With reliable quality and cost competitiveness backed by outstanding manufacturing technology, customers are steadily adopting parts developed by Heian Manufacturing. Currently, in-house developed parts account for 75% of the company's total sales.

Not Establishing New Production Bases Overseas

August 2013. Chairman Araki and President Tetsuji Takahashi tried to take a gamble, namely full-scale entry into emerging nations. Until that point, the company's greatest strength had been competing against emerging nations while maintaining production in Japan through efforts such as developing new manufacturing techniques to reduce costs by 30%. However, according to President Takahashi, "The domestic market for automotive parts is shrinking, so expansion overseas is vital for future growth." In other words, the company had reached a turning point.
Be that as it may, wages in emerging nations began to climb sharply. Takahashi analyzed the situation and stated, "The merit of low wages that existed until now is no longer an easily effective means of reducing costs." Furthermore, cost competition began to unfold between local companies and Japanese companies that had moved into those areas such as Thailand, and the local companies that had introduced state-of-the-art equipment including automated equipment were winning the orders for jobs. In some cases, Japanese companies were even facing situations in which they had no work. Thus, the risks involved with moving into overseas markets were high, but growth would be difficult to achieve without moving into those markets. The company faced a major dilemma.
Not giving up when facing situations such as this is one of Heian Manufacturing's strengths, and the company decided to move into overseas markets without setting up new production bases. To do this, the company formed an alliance with Pamindo, an automotive parts manufacturer in Indonesia. In other words, Pamindo would be used as the overseas base to supply parts to Japanese automakers moving into Southeast Asia. The company began by providing its drive plate production technology for drivetrain parts.
When technology licensing had proceeded, Heian Manufacturing also decided to examine making an investment in Pamindo. According to Chairman Araki, the objective is to strengthen ties by forming a capital relationship and to "reduce the risk of outflow of technology." Heian Manufacturing moves fast. In fact, the company has already obtained approval to supply parts through Pamindo to two Japanese automakers advancing into Indonesia.
Chairman Araki and President Takahashi travel to the local site in Indonesia once a month. Araki reemphasized their commitment and stated, "We're drawing strength from the local employees while providing instructions on how to make improvements to the factory floor. We'll do this for 5 years as we promised the president of Pamindo. We'll do everything we can."

Drive plate production.The finishing process for it is cyrried out in 

Drive plate production.The finishing process for it is cyrried out in Indonesia

One Point: Key Point is Foreign Market

Providing Improvement Instructions Based on Expertise

Before providing technology licensing, Heian Manufacturing endeavored to improve productivity by unsparingly providing expertise on the Japanese style of production. Chairman Araki stated with satisfaction, "Productivity was significantly improved. The staff in Indonesia earnestly and quickly absorbed the information that we provided." Test production of the finishing process for the drive plate has been started, and it looks like the delivery of products to Japanese automakers moving into the local area will be decided in full-scale. Will this innovative strategy of competing in an emerging country without establishing a local production base yield results? It is a point worth watching in the future.

Company Data

President:Tetsuji Takahashi

President:Tetsuji Takahashi

Company name Heian Manufacturing Co., Ltd.
President Tetsuji Takahashi
Industry Type Automotive Parts Manufacturer
Address 464 Nakasho, Makino-cho, Takashima-shi, Shiga Prefecture, Japan
Phone 0740-27-1271

Printing day:March 14, 2014

Recent Posts