KANTO YAKIN KOGYO (KYK) was established in 1957 and has developed into a company that designs, manufactures and sells industrial heat treatment furnaces. Starting with metal heat treatment furnaces, the company has been leading the market with its innovative technologies, such as aluminum brazing furnaces and carbon firing furnaces. The ultra-high temperature furnaces that KYK began developing over 30 years ago are now actively used by the world’s leading carbon fiber manufacturers as carbonizing and graphitizing furnaces. From the beginning, Mr. Shinichi Takahashi, President of K Y K , h a s b e e n working closely with major Japanese carbon fiber manufacturers to lead the technological development of ultra-high temperature furnaces.
Japanese manufacturing has developed an excellent reputation worldwide since World War II. If we look at functional materials, we see companies like Nippon Carbon Co., Ltd and Toray Industries,Inc. whose CFRP is used in aerospace, automotive and industrial applications. All of these fields require high reliability, high safety, and high quality. Japan really shines in this respect. What is your take on Japan's monozukuri? What for you are the qualities of Japanese manufacturing?
I believe the core essence of Japanese monozukuri, especially in SMEs like ourselves is in pursuing a long-lasting relationship with the customers and not short-term profit. It is about developing the product hand in hand with our customers even if it may take some time. As an example, we have been working together with Toray Industries, Inc., Teijin Limited and Mitsubishi Chemical Corporation which are the three leading carbon fiber companies in the world. It took us fifteen years to enter the carbon fiber market and provide products (heat treatment furnace) that fit the market needs. We chose to be in a niche industry in order to be competitive and sustain our company. Had we entered a common industry where major companies are, it would be difficult for us to compete with them. Focusing on a niche field and providing unique technologies such as our ultra-high temperature treatment furnace helped us remain in business.
Japanese manufacturers are focusing on niche fields characterized by high-mix, low-volume production. Although China, Korea, and Taiwan have been replicating Japanese monozukuri with cheaper labor costs, Japan is still the leader in these niche fields. How did Japan overcome such stiff price competition?
It is most ideal to produce new products and technologies at a low cost and develop new markets. However, our focus is not solely on the costs but more on developing new products. When our company was established in 1957, we focused on metal heat treatment for automotive. There were many car parts and components that required heat treatment. At that time, Japanese companies were growing, they were developing new products that were recognized worldwide for their quality such as the Sony Walkman. Major Japanese companies and SMEs were trying to lower costs and rush mass production. However, during that time, Chinese liberation and other political changes took place which opened the way for cheaper labor costs. The price was incomparable. Japanese products were considered very expensive. These emerging countries started to learn from Japanese manufacturing and it became impossible for us to compete in terms of pricing. Because of this, Japanese companies have shifted their strategy by developing and providing the market with new cutting-edge technologies. There is a risk of being copied again, but our companies need to continue developing new technologies and new markets.
The key to technological development is human resources. Japan has always had talented engineers that create customized solutions for clients, new products or new categories to diversify into, but this is threatened presently by Japan's aging population. Companies such as yourself are finding it harder to recruit talented graduates from universities. What is your company doing to mitigate the impact of Japan's population change?
The aging population is really posing a threat to our recruitment. We are now open to recruiting Asian university graduates from Korea, China, and Singapore. We recently recruited new staff from Korea and Taiwan. At first, we were worried that the Korean and Taiwanese employees would not be able to adapt to Japanese SME culture. However, we realized that they are following Japan’s path and will get there in a few years’ time. They are not hesitant in working with a culture that is not theirs. Japanese monozukuri is taking the lead in the world market because of its awareness of environmental sustainability. Japanese companies are very much aware of making their products environmentally friendly, especially now that it has become a global theme. When we look at developing countries where the labor cost is low, they still are emitting a lot of harmful gases such as carbon dioxide and experiencing severe pollution which Japan experienced in the 1960s and 1970s. By introducing technologies that may not be new in Japan such as an older generation environmental device, it would still be very effective in developing nations. It would be a great opportunity for Japanese companies to take these green technologies to developing countries and provide support in reducing pollution through, for example, bilateral agreements between governments that exchange carbon dioxide emission rights. Our company is hiring Southeast Asian employees and working with them and providing technology for them as an effective means to contribute towards this goal.
It has been said by the Suga administration two years ago that by 2050, everybody must go carbon-neutral and we can already see green technology being adopted. We spoke with JFE Steel and they said that they want to reduce their furnace CO2 emissions 20% by 2025 through carbon capture technology. As a company directly involved in furnace design, what are you doing to help your clients achieve this carbon-neutral target?
The industrial furnace uses a lot of energy. Burning type furnaces use gas or fossil fuels. Other furnaces use electric heating, induction heating, or high-frequency microwave type sources. We make an electricity-driven resistance heating furnace. We do not directly emit carbon dioxide. However, the electricity we use is generated with fossil fuels. It is important for us to shift to a natural energy source as well as reduce the amount of electricity that is required to operate our furnace.
We are now concentrating on recycling solar panels. Currently, solar panels life expectancy is 20 years. In 2011, with Fukushima’s big earthquake, there was a big implementation of solar panels and many of those solar panels are coming towards the end of their life cycle. We are trying to build a furnace that can recycle solar panels. Not necessarily recycle it back to solar panel but to take the silicone materials and make raw materials that could be used for other purposes. This will be our focus for the next five years.
Japanese companies believe that lowering labor costs will only allow us to gain market share in the short term. Japanese companies are working on long-term strategies. In our case, we launched a CFRP recycling furnace five years ago. We produced the furnace not only to provide a high-quality CFRP tool to manufacturers but also to provide a recycling furnace for CFRP for sustainability purposes. We do that by taking the CFRP residues from car and aircraft body production. We take the resin out and use the carbon fiber concentrate to make new carbon fiber. Although the product’s strength might deteriorate, it is still strong enough to be reused. For example, in the civil engineering field, it is effective and used as an additive for cement and concrete in building roads or bridges. They were not able to use carbon fiber in the civil engineering field before because it was too expensive, but we have been able to lower the price with recycled carbon fiber. Instead of being treated as waste, it is now reused in other fields.
Apart from carbon manufacturing furnace and solar panel recycling, we also have the furnace for nuclear power plant generation. By using fuel made by mixing plutonium and uranium in nuclear reactors again, uranium can be recycled, and it can be a promising energy source in Japan, where energy resources are scarce. It is called the MOX fuel and it is considered a next-generation nuclear power plant fuel. We have completed manufacturing the furnace to sintering Mox Fuel and it will be launched by March or April this year. With Japan’s scarce resources, we turned uranium dioxide waste into a new resource that can become a huge fossil fuel reservoir.
OXYNON® stainless steel brazing furnace
Your technology Oxynon removes oxygen from the atmosphere inside the furnace and allows your clients to have a better finish for sintering and brazing by integrating carbon fiber materials in the process. Could you explain the applications of this process? Which clients are benefiting most from it?
A vacuum-type furnace’s ability to extract oxygen and create a complete vacuum environment using mechanical pumps has limitations. On the other hand, our Oxynon technology applies chemical reactions, where the surface of the furnace made from carbon materials reacts with the free oxygen molecules inside the furnace to cancel them in the form of CO gas. In this furnace, we can provide an atmosphere with ultimately reduced oxygen. This technology is an extension of the furnace for carbon fibre that we have been developing. The carbon fibre is seven microns in diameter, but it becomes four or five microns if oxygen is present in the furnace, decreasing its strength. Oxynon was developed to serve the need to expel oxygen during the manufacturing process, and we are making a horizontal application of this technology to the brazing and heat treatment industries. Before the launch of Oxynon, we already had the greatest market share in furnaces for aluminum brazing; however, it has further enabled us to deal with new types of materials. Aluminum brazing usually requires about 600 degrees Celsius, and we use metal belts which can be used at a maximum of 1150 degrees Celsius. But with Oxynon, it can be raised to 1200 or 1300 degrees which can be used for brazing stainless steel and titanium by using our carbon-carbon composite belt (max 2400 degrees). Therefore, these industries are widely using our products. This high heat treatment technology was initially developed furnace for carbon fiber that goes up to 2000 degrees Celsius.
Aerospace and the automotive industries would benefit from these new, lighter materials. The automotive industry's switch to EV gives rise to the demand for lighter materials, such as CFRP, titanium and magnesium. How are you catering to this shift in the industry with your technology? What do you foresee the demand could be for the automotive industry?
The automotive market, our major end-user, is currently shifting to the electrification of cars. Many components, especially ones used in the internal combustion engine (ICE) parts, required heat treatment, so our furnace hae been frequently used, but there are not as many components in EVs that need heat treatment. On a positive note, since the electrification of cars is still at the phase of deciding whether to go with electricity, Lithium-ion battery, all-solid-state battery, or hydrogen type of battery, we have time to see a clearer picture of the direction in which EVs are headed. We would like to be able to discern the situation to provide the most appropriate furnace.
With that foresight in mind, would you be looking to work together with a partner to help you develop technologies that cater to these fuel cell vehicles or all-solid-state batteries? Or would you continue to pursue technical alliances like the one you formed with a Korean and a Chinese firm?
We are still at the research stage when it comes to partnerships. We need to first see how the overall picture for EVs will take shape. Overseas, we have been working with a material manufacturer that likely produces GDL (Gas Diffusion Layer). Through these new attempts, we are hoping to figure out which technologies will remain in the future to help us decide on finding new partners. Partnerships are crucial to our business, and communication is important to ensure that we share the same values towards a positive and synergistic relationship.
Are you looking to target foreign carmakers or tier-one suppliers to further expand your business overseas? And if so, how will you do that?
We have an extensive record of working with non-Japanese companies. We have been attending the JEC International Composites Show in Paris for the past 10 years, where we have gained good contacts and received orders. I cannot disclose everything due to NDAs, but our user named SGL in North America provides carbon fibers to BMW. The turnover from our overseas business in North America, Europe, and Asia is about 50% to 60% which gives evidence of how diverse our business is. Besides our representative office in Shanghai, we are asking our partner companies in China and Korea to do OEM for us. Even though many customers want a Hiratsuka based aluminum brazing furnace, it is very expensive. Therefore, to reduce the cost, we provided the design of our machinery to the Asian company that manufactures our OEM. We deliver under our brand name and guarantee the quality.
Is there a new specific region that you would like to tackle in the future?
Our new focus is the recycling business, especially with the call for carbon neutrality. The yearly carbon dioxide emissions reach up to 40 billion tons, where 20 billion tons is from China and the US, while Japan only emits 1.2 billion tons. It is crucial for Japanese companies to contribute to the reduction of carbon dioxide emissions by providing a recycling furnace. It is very difficult to develop a new cutting-edge technology in this field, so our strategy is to develop a new market.
Imagine we come back in five years to have this interview all over again. What would you like to tell us? What are your dreams for this company? What goals would you like to have accomplished by then?
The Suga administration has declared that in 2050, Japan will achieve net zero emissions and has set the midterm goal of a 46% reduction in carbon emissions by 2030. When you come back in five years, in 2027, three years shy of the 2030 midterm evaluation, we will see whether we have attained that goal of reducing carbon emissions. By then, we can discuss why we have succeeded or failed in achieving that goal. In the meantime, we will be doing our best to actively promote carbon neutrality.
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