Japan: Eastern Promise
- September 13, 2017
Japan, known for its large and complex manufacturing base, has a growing reman sector. Rematec News Asia-Pacific correspondent Tim Maughan takes a look
Mitsutaka Matsumoto, senior researcher at the National Institute of Advanced Industrial Science and Technology (AIST), sits in a restaurant in Osaka, a city at the nucleus of Kansai, Japan’s second metropolis. Customers watch sumo match on a television. After speaking to ReMaTecNews, he will walk the short distance to Shin Osaka train station, and take the famed shinkansen, or ‘bullet train’, back to Tokyo. This highly productive, manufacturing-based economy is involved in remanufacturing - but not, perhaps, on the scale you would imagine. Generally speaking, Matsumoto explains, reman in Japan does not enjoy the same type of recognition as it does in America and Europe. The AIST (a research institute funded by the Japanese government to bridge the gap between academia and industry) 2016 International Remanufacturing Industry Conference report states that the Japanese government, so far, has paid relatively little attention to the sector. The contrast between the US and Japan is startling: in 2015, 71% of driving licence holders in America (car, van, and truck drivers) had heard of remanufactured parts. In Japan, the figure stood at just 21%.
Although the turnover of the Japanese reman sector is thought to be several billion US dollars, its exact scale is unknown. But there are hundreds of independent remanufacturers of auto parts in the country. In 2014 – the latest available figure - the Japanese automotive reman business stood at Y109 billion (just under $1 billion). Shin-Etsu Denco Co, one of the largest remanufacturers of automotive parts in Japan, handles 160,000 alternators and 170,000 starter motors a year. Other significant areas for Japanese remanufacturing are the aerospace, locomotive engine, IT equipment and power plant equipment sectors. The report also looks at the heavy duty and off-road equipment, or plant business - a sector which is increasingly involving itself in reman. In the tyre market Bridgestone, Yokohama, and Toyo Tires are the chief remanufacturing protagonists. Around 20% of truck and bus tyres are retreaded in the country. “In Japan, and I am not sure about the reason for this, the history of reman of automotive parts is shorter compared with the US and Europe,” states Matsumoto. “The cost of remanufactured automotive parts in Japan is usually 40% cheaper than new products. The most typical products are alternators and starter motors.” The Japanese have a sharp eye for quality, and image and detail are important. Referring to his own report, Matsumoto confirms that consumer awareness is limited when it comes to reman in the automotive parts business. The question is, in a nation where citizens are guided by a strong sense of order - and demand quality - are Japanese consumers sceptical about remanufactured products? There are concerns about quality in general, he says, although the problem is not so much about scepticism over reman, but more about the fact that, quite simply, consumers have scant knowledge of it.
Conflicting forcesSpeaking of the future of the Japanese auto reman sector, Matsumoto explains that there are two conflicting forces at work. “The future of reman in Japan depends on specific sectors. Generally speaking, I would say that it will increase. In the case of the automotive sector, the length of the usage of cars is becoming longer, so this increases the demand for reman auto parts,” he says. But, at the same time, the parts themselves are lasting longer, which will affect how often they come under the scrutiny of the remanufacturer. Eric Ramstetter, research professor at the Asian Growth Research Institute thinktank in Kitakyushu, western Japan, says of reman in Japan: “It is very common in photocopying, it is very common in large machinery, like that manufactured by Caterpillar or Kubota - large farming machinery, large mining machinery. Basically, the technological requirements for reman to work are you need to have a large part of the equipment which will last a long time, with relatively little maintenance, combined with a bunch of parts that tends to wear out quickly.” His colleagues visited Fuji Xerox, near Nagoya. “The story that everybody seems to hear is that you don’t remanufacture a product and give it back to the end user who was originally using it, because it takes too much time – and this leaves the end user without his product,” he explains. “So what they will do usually is sell them a separate remanufactured product, buy the old product from them, remanufacture that, and sell that onto someone else.” As Matsumoto points out, Japan has its own unique set of conditions which impact on remanufacturing. Ramstetter says: “Because of the anti-pollution laws in the country, the environmental restrictions, disposal is very expensive. If you want to dispose of a notebook PC now, virtually everywhere in Japan, it costs you Y5,000 (around $44). If you want to dispose of an automobile it is going to cost you a lot more. One of the key reasons remanufacturing is used in Japan is that the government has had one of the most aggressive environmental policies in the world, for four or five decades. The gist of any good environmental policy is to reuse, use second hand goods, and make disposal expensive.”
At the same time, he says (as Matsumoto touched upon), Japanese consumers have always been reluctant to buy used goods. But there is a twist – he points out that with many products, such as agricultural tractors and mining equipment, the older product is often “better made” than the newer. So many companies in Japan prefer the older machines. This, of course, bodes well for remanufacturing, given the older parts. For this reason, he predicts, Japanese remanufacturing will continue to hold its ground in the big business sectors, such as plant equipment and photocopiers. Reman exists on a much smaller scale, too – and is invaluable, even in the pre-production stages. Rob Oudendijk, CEO of Nara-based company YR-Design, designs electronic devices using a Makerbot 3D printer. “I make the models first in 3D, and then I see if they are exactly what I want, or the modifications I want, in 3D. Then I print the parts I need in 3D and test them again,” he states. “And if something is not right, in the next minute, I can update it. If you don’t do the 3D printing, you have to go through many more steps: you have to make a CAD file, the CAD file has to go to the mold maker, the mold maker has to then make it, and send it to you. Then you have to change the modifications and change the CAD file again.” Oudendijk, who operates JR-Design with joint CEO Yuka Hayashi, highlights the impromptu qualities of 3D printing. “It makes the remanufacturing of parts much easier because you can make custom parts,” he says. Japan’s neighbouring giant is leaping ahead with 3D printing, having recognized its benefits, he explains: “I think that, when I see the way the Japanese work, it [Japan] will be slow to start. But once it’s started they will embrace it completely, and then you will see that they will use much more 3D printing. But they are behind the game. If you see what’s happening in China, they are ahead of America in the way they use 3D printing in their remanufacturing, or manufacturing, or prototyping. Japan has had a slow start.”