Addressing Industry Needs

On a recent trip to Tsugami in Japan, I interviewed Mr. Takao Nishijima, chairman of the board and CEO. Following are some of his insights about the future of world and U.S. precision parts manufacturing and how Tsugami plans to use the trends of the industry to fuel its growth.

 

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It is our understanding that 35 percent of the machine tool industry relies on automobile components. Another large portion of the industry involves industrial applications. One other field that has a major impact on manufacturing is personal electronics, where precision requirements for spindle motors and semiconductors have increased exponentially. This third industry has been a major factor in Tsugami’s increased growth. While big players such as Intel and Micron/TI have been driving forces for this area of growth in the United States, much of this small-part production has been contained in Asian markets.

When it comes to the keyword of “growth” in the market, there are two ways of thinking. One is expanding the ways in which advanced, leading-edge technology is required for small, high-precision components. We foresee considerable growth here, and we are paying higher salaries for more sophisticated engineers to satisfy market requirements. Creating an advantage in leading-edge technology is a fundamental issue for future growth. The second consideration for growth involves geographical strategy. An important factor is how mature a market is or how rapidly that market is growing in developing countries for low-end machines. While China, India and other developing countries are important for commodity machines, Tsugami has more of its technologies focused in high-end, high-technology machines. We try to maintain growth in more mature markets that need more advanced technology products.

The basic concept of Tsugami’s business strategy lies in the field of high-precision technology. We have our lineup of automatic lathes, grinding machines, machining centers and turning centers. With all of those, we concentrate on the very small, precise components market. Tsugami has a long history, as we celebrate our 70th anniversary this year. In the past the company was not as strong, but as market requirements in recent years have shifted toward precision machining, we have experienced considerable growth. Tsugami machines are now gaining popularity because of their environmentally friendly, energy-saving nature and their ability to meet complex machining requirements. For example, the automobile industry is concerned with energy savings, and higher precision allows for better performing parts, such as fuel injectors. These parts require more and more precision all the time.

In the U.S. market, Tsugami has found most of its recent growth in the information technology and medical markets. Long-term, market requirements will continue to head toward components that are more precise and much smaller. This trend will continue in Asia, Europe and the United States. Still, about 50 percent of the company’s revenue remains in the automotive industry because of increasing precision requirements of the small engine components. In the future, even the automotive industry will have its ups and downs, but the trend still will be high precision, especially for environmental considerations and energy savings.

Our development is based on the market, or customer requirements. As long as automation is important to the customers, we will take that into consideration in the development concept. We have a long-standing relationship with the Morris Group for distribution in the United States. Rem Sales is not only responsible for Tsugami sales in the U.S. market, but they also provide vital feedback to our development teams for U.S. market requirements. We, therefore, work to implement solutions that will fit these requirements.

For customer satisfaction, we strive for win-win relationships in the long run. To achieve this, we focus a lot of effort on quality and customer service. Our strategy is to challenge our employees to meet the detailed requirements of the market. We know our customer requirements, and we put our R&D efforts into meeting or exceeding them. We find that this co-development with our customers has been more suitable for growth.

To address our own labor requirements as the company grows, we consider employee satisfaction, particularly through salary. Because we are a listed company in the Tokyo Stock Exchange, we need a stable profit, regardless of the cycles of the industry. Even during tough times, it is our duty to maintain a satisfactory profit. Therefore, we must maintain a stable breakeven point. So, instead of increasing the number of workers, we maintain about 40 percent of our workforce as part-time and allow that to fluctuate based on the amount of work coming in.