Comment: Japan is booming, but there are no shortcuts to success

The time is right to position Japanese technology to full-system thinking

These are good times for the Japanese machining industry.
When we see the result of the Japanese Machine Tool Builders’ Association (JMTBA), order intake for the first half of 2014 (January-June) was JPY 701 billion. That is +35% over last year’s level. Over the five months between March and July, each month surpassed JPY 120 billion. The association expects the order level to reach JPY 1.4 trillion (EUR 10.1 billion) by the end of this year (+25% vs. LY). This will be the level of good old days.

Why is this happening?
The biggest factor is actually the exchange rate of the US dollar and euro against the yen. The Japanese Yen came back to its previous level of about 1 USD=110 JPY, and 1 EUR=135 JPY. This helped to make the export business profitable and machine tool builders regain their competitive edge against European and other Asian manufacturers.

Takarada Michio, 財田充郎

Takarada Michio, 財田充郎

Are other industries performing just as well?
While the performance of other industries is also fine, it is not at this level. The domestic market situation for machining turned better due to a government incentive package that offered a subsidy and investment tax reduction for new machines. Externally, they have enjoyed strong purchase demands from USA and Europe plus extra project orders for IT industries in China.

How long will the uptrend continue?
A couple of issues threaten a downturn, such as the Russian/Ukrainian conflict as well as non-performing loan risks in China. But unless some critical incident happens, analysts predict that the strong demands from overseas and domestic recovery are expected to continue at least to the end of this year.

What is Grundfos doing?
In order for us to maintain the leading position in the Japanese machining industry’s pump market, there is no magic and no shortcut. We will not stay the leaders by just selling pumps. To get here, we have put a lot of attention on where we can add value for our customers in terms of the “hard” (high quality, high efficiency products in line with local regulations) and “soft” (shorter lead times and competitive global coverage).

In April 2015, new high efficiency motor regulation (IE3) called “Top Runner” comes into effect in Japan. Grundfos produces both pumps and motors. We strive to deliver the right products at the right place at the right time. Our machine tool pumps with the new MG and MGE motors already meet or surpass the IE3 levels.

Furthermore, our customers produce and do business all over the world. With our global network, we work to show better professional assistance. When our customer sets up a new production in USA, UK or anywhere in the world, we can easily deliver the required quality products and services in a same manner as they get in Japan. In this way, we are far more advanced than other pump manufacturers.

"Japan enjoys high machine tool order levels of the good old days. While we are riding high, there are no short cuts to success."By Takarada Michio, 財田充郎 Business Development Director, Grundfos Machining Industry Asia Machining Industry Business Center