No. 28: A small big company in the medical instrument industry (June 20, 2012)

Management

Mani, Inc. is not a big company in terms of sales and capital, but it is a big company in the medical instrument industry in terms of presence. It is the leading manufacturer of suture needles for surgical operation and extra fine medical instruments for dental surgery. Since it was established in 1959, it has been concentrating its management resources on developing and marketing suture needles in pursuit of the highest quality and the largest share in the world market.

All executives, development managers, and marketing managers get together in the head office two times a year to compare its products with competitive products from around the world. Participants examine all products submitted for the discussion by market segment. If Mani’s product is No. 1 in quality and share, the question will be “What we should do to widen the margin between the follower and us.” If Mani’s product is No. 2 or below No. 2, the question will be “What measures we should work out to catch up with and beat No. 1.” It is very simple, but the simplicity is the key to any strategy as we learned from Jack Welch of General Electric.

The company develops only products that enable it to become the world leader, and holds a meeting every month to study whether or not the product can be the world leader in the future and whether or not the current development approach is right. Management staffs always ask themselves, “Does the market really need this product?” This is a very important question because engineers mostly tend to assume that the products they are developing will be in great demand in the market. Konosuke Matsushita, the founder of Panasonic, once asked his brilliant engineers, “Do you really think that customers will be happy with your product?” at the end of the product presentation that they delivered with great confidence and emotional excitement. That’s it.

This company declared that it will not be a family company in the future, though it is a family company at present. It does not allow children and relatives of management staffs to join the company. Saying is one thing, doing another. Every company starts with a family company. Neither Mitsubishi nor Toyota is an exception. In some day in the course of development, a company has to say goodbye to family management. Soichiro Honda, founder of Honda Motor, did not allow his son to join his company. Talking about his successor, he asked his management to search an eligible among all employees. If you cannot find an eligible, search him throughout Japan. And if you cannot find an eligible in Japan, find some one all round the world. This story alone is enough to show how great he was. 

No. 27: Imports of rare earthes decrease rapidly in the first quarter (June 15, 2012)

Market

Imports of rare earthes from China decreased nearly 70% in the first quarter from the same period of the previous year. According to the Trade Statistics, imports of rare earthes in the first quarter decreased 58% from the same period of the previous year to 3,650 tons, and those from China decreased as much as 69% from the same period of the previous year to 1,894 tons. In fact, imports of rare earthes have been decreasing on a year-on-year basis for the past five months. The drastic decline can be attributed to the stockpiling and innovation of Japanese companies.

Shin-Etsu Chemical, which has 20-30% share in the world high performance magnet market, already introduced a production method that considerably reduces dysprosium consumption. For magnets used in air-conditioners, it is in the process of introducing the magnet that halves dysprosium consumption, and plans to replace the current magnet with this new magnet entirely by next spring. An increasing number of Japanese companies are returning from metal magnet to ferrite magnet. And magnet makers are actively developing new rare earth-free metal magnets.

In the production of high performance magnets, it is necessary to add dysprosium for nearly 8% in weight to increase heat resistance. Hitachi Metals is studying the method to reduce the content to 4% by the technology to distribute dysprosium effectively. The company plans to establish the mass production technology by 2014. At the same time, Japanese companies are diversifying the supply sources of rare earthes. Mining companies in the U.S. and Australia will start to ship cerium and neodymium to Japan within the year.  

The prices of rare earthes are declining in June. Neodymium is currently 150 dollars per kg and dysprosium is 1,100 dollars per kg. They both declined about 70% in price from July of the previous year when they recorded all-time highs. As is often the case, technological development reduces the prices of natural resources considerably.  

No. 26: Using electric vehicles to create a CO2 emissions quota (June 11, 2012)

Management

Nissan is scheduled to start a system to create a CO2 emissions quota in June using its “Leaf” electric vehicles. The company will create an emission quota for about 10,000 tons per year in collaboration with Leaf owners and sell the quota for the improvement of fast charging facilities and forest conservation. Since an EV does not emit CO2, it can create a quota of 0.9 ton per year that is equivalent to the annual CO2 emissions of a gasoline car. The company gets the reduced CO2 emissions from a LEAF owner for free and sells the combined amounts of emissions to Green Investment Promotion Organization affiliated with the Ministry of Economy, Trade and Industry. Nissan will distribute information on CO2 emissions reduced by EVs to collaborators through the Internet in real time to keep them informed of the progress of CO2 emissions. The emission quota will be sold for 1,500 yen per ton. Nissan so far sold 12,000 Leaf’s in Japan. 

Other companies are creating emissions quotas. TOTO, Japan’s leading manufacturer of bathroom equipment, introduced energy saving equipment, and OMRON, one of Japan’s leading manufacturers of sensors, supports energy saving efforts of households through its power sensors. Mitsubishi UFJ Lease and Finance is trying to create a quota by leasing LED lighting to medium-sized companies. The Ministry of Economy, Trade and Industry started the Domestic Clean Development Mechanism in 2008, and Japan already created about 500,000 tons of quotas that are purchased by many companies. 

No. 25: A restaurant chain installs chargers for electric vehicles for free charging (June 4, 2012)

Management trend

Skylark, one of Japan’s leading restaurant chains, will start to install chargers for EVs in its restaurants across the country for free charging. In the initial stage, it will install them in 900 restaurants, one third of its total restaurants, nationwide in less than five years. The charging cost is estimated at several tens of yen per charge, and company bears it. Skylark plans to absorb the cost increase by introducing LED lighting inside the restaurant. Everyone can charge his car with the charger, even though he is not a restaurant guest.

This is the first attempt of a national restaurant chain to offer this kind of service. The charger to be installed will be a standard charger of 200 V about tens of thousand yen a unit, but the company plans to install quick chargers more than one million yen a unit as well. The total investment is estimated at several hundred million yen. Convenience store chains are also increasing the number of stores equipped with charger. The leading five convenience store chains have already installed chargers in a total of 52 stores.

Automakers are also busily increasing the number of dealers equipped with charger. Toyota installed standard chargers in 1,200 dealers, while Nissan installed standard chargers in 2,200 dealers and quick chargers in 400 dealers. Osaka Prefecture is constructing the “Osaka Infra System Service” network for better charging service in alliance with Enegate, a subsidiary of Kansai Electric Power Company, Nihon Unisys, and Kanematsu.      

 The quick charger that Osaka is spreading for electric vehicles