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We have this interview with Mr. Noji, President & CEO of Komatsu Ltd., on a quarterly basis. My name is Akari Joko, and in this feature section, I am going to interview Mr. Noji.
In the feature section of this interview program, we decide on different topics in relation to Komatsu's strengths and future efforts.
Komatsu has been successfully improving its business results by capitalizing on the steady recovery of demand for construction and mining equipment.
In light of the Japanese yen's appreciation against other major currencies, they have pointed out the strength of Komatsu's global manufacturing operations capable of timely responding to demanded changes.
In this feature section, I am going to ask Mr. Noji about basic policies of Komatsu's global manufacturing operations and future directions.
First, let me give you a brief outline of Komatsu's manufacturing operations.
Komatsu began full-scale offshore production in the 1980s, establishing and increasing plants in North America, Europe and Asia.
Most recently in June last year, Komatsu began production at a new plant in Russia,
making its production network a total of 45 plants in 14 countries, including Japan, today.
Komatsu has two basic policies of production. First, Komatsu assembles products in the markets with sufficient demand.
Second, Komatsu produces key components, such as engines, hydraulics, transmissions and axles, exclusively in Japan and supplies them to all assembly plants around the world.
I am going to ask Mr. Noji about the background of these policies and the like.
The first policy calls for assembly in the markets with strong demand.
Generally speaking, local production prompts us to think about reduction of production and logistic costs as well as countermeasures for foreign exchange risks. What about Komatsu?
First, we assemble our products in the markets that have sufficient demand,
because we work to win the trust of local customers as we sell our products. Therefore, cost reductions or foreign exchange risks don't come first;
rather, we begin local assembly when market demand reaches a sufficient level. We have done so traditionally.
Additionally, local production enables us to shorten our lead-time. We can deliver products to our customers sooner.
We can also respond quickly to any mechanical problems at our customers' location in the form of product support by repairing or giving advice
as there are manufacturing and development engineers at our assembly plants.
Great!
We can also provide feedback regarding market needs for the development of new models.
For these reasons, for example, we enjoy a very high degree of customers' trust in our U.S.-made machines in the United States.
The second most important objective is to win the trust of local communities by offering job opportunities.
By promoting assembly operations in the markets with high demand, we are building a win-win relationship between Komatsu and local communities and winning their trust,thereby generating merit for all involved.
With assembly plants in different regions of the world, you are also better positioned to respond to changes in local demand.
Right. Over the last 10 years, we have promoted the standardization of parts numbers and design drawings and integrated our production management systems by using the ERP system called BaaN.
Having established the production management infrastructure, we are now engaged in the global-scale cross sourcing of our products.
In particular, our plant in Thailand supplies its products worldwide.
When North American demand was very high, our plant in Thailand supplied their products to the United States, making up for the lack of our production volume in the U.S..
Today, our U.S. plants have excess production capacity and are, therefore, shipping their products also to Latin America with strong demand.
To ensure the efficient utilization of our plants around the world,
we review and change, if needed, our global production plans about every three months by checking global market demand, foreign exchange rates and our group-wide production capacity.
Now let me ask you about the second policy, that is, concentrated production of key components in Japan.
Are you concerned about the possibility of outflow of manufacturing technologies for key components?
No, we are not concerned about the outflow.
With the quality and performance of key components, we establish our product identity by means of differentiation from competing products.
Moreover, we develop our DANTOTSU products by promoting technology innovation of key components.
In addition, our key components represent the combined engineering expertise of Komatsu, manufacturers of raw materials, specialized manufacturers and our suppliers.
To my knowledge, there are not other countries but Japan where suppliers with leading-edge technologies are easily available.
Lastly, since Komatsu is a Japan-based company, it is easier for us to hire high-caliber engineers in Japan.
Our continuing development and production of key components will also support and expand employment in Japan.
Can you tell us some specific accomplishments you have made by developing and producing key components in Japan?
Let me give you a few examples.
We have been able to reduce the weight and costs of transmissions to half for about the last 20 years.
Our engines have enhanced their power by about 40 percent for about the last 15 years.
The performance of hydraulic excavators is closely determined by the quality of hydraulic control valves.
As we produce those valves in an integrated manner from cast materials in house, we have been able to sharply enhance our competitiveness. 50 00:08:18,000 --> 00:08:25,000 We are one of the leading manufacturers of hydraulic components for our advanced hydraulic control development technology.
Concerning our hybrid hydraulic excavators, we also develop and manufacture their components, such as electric motors and inverters, in house.
As a result, we have improved their costs considerably, and hybrid hydraulic excavators have already grown into one of our pillar of earnings in Japan.
Lastly, could you tell us about your future efforts?
Sure. We will uphold these two basic policies.
Especially important is the second policy of concentrated production of key components in Japan.
We will continue to promote technology innovations for our key components to further sharpen our cost competitiveness.
With respect to the development of future DANTOTSU products, we need to further refine our expertise in ICT applications.
To this end, we are considering to hire more engineers specializing in ICT and look into M&A possibilities.
As a new effort to facilitate direct linkage between our plants and distributors around the world,
we are planning to build the Global HANSEI Operation Center (Global Sales & Production Planning Center) on the premises of the Osaka Plant.
In this center, we will be able to monitor the real-time conditions of production lines of all our plants and machines being used by our customers around the world.
We are going to share the information with our distributors and suppliers.
All in all, with this new facility, we are going to build a win-win-win relationship among end-customers, partners and Komatsu.
Thank you very much, Mr. Noji.
In this feature section, he has described Komatsu's global manufacturing operations.