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Sakane Coming back to Komatsu as a microcosm, in the early postwar years our
head office was still in Ishikawa Prefecture, as were most of our factories. Later the
head office moved to Tokyo, and as our market became centered along the booming
Pacific Coast, the Ishikawa factory locations became inconvenient and we opened
factories in Osaka and the Tokyo area. By then the strong yen had arrived, and we
plunged into offshore production. So, we went from Ishikawa to the Pacific Coast,
and then offshore.
Komiyama Indeed.
Sakane Then in 2001, when I became president, we reassessed whether Japan’s
competitiveness was really so low. We found that with all the businesses and product lines we were engaged in, the indirect operations in our headquarters divisions,
IT departments, etc. were where there was waste, and meanwhile we were doing
well in terms of pure monozukuri (making things). In fact, looking only at the variable costs, at the time the exchange rate where Japan and the United States would
be on equal terms was about 72–73 yen to the dollar. Since we weren’t losing on
variable costs, we took a fresh look at our Japan production and investment
strategy.
Komiyama You say 72 or 73 yen, that must have been Komatsu only.
Sakane Between you and me, at that time, when the yen was at 110 to 120 to the
dollar, other companies too would surely have shown a competitive edge in comparisons of variable costs alone. But Japanese companies generally do not choose to
break out their variable costs. Which is to say that executives are wedded to the idea
that onsite employment is an untouchable fixed cost. The reality is it is a variable
cost. When we take it as a variable cost, in the case of Komatsu, Japan right now is
slightly behind Thailand and China, but definitely not behind the US or Europe.
Japanese monozukuri skill provide a competitive edge, and therefore once again we
come around to Japan. These past 5 years, all the new Komatsu factories were built
in Japan.
Komiyama Where are they?
Sakane In places like Kanazawa, Ishikawa and Hitachinaka, Ibaraki – near seaports, because they produce for direct export. From Kanazawa, the machinery is
usually carried to the Port of Busan in Korea for onward export to the rest of the
world.
Komiyama Busan has become quite a hub.
Sakane Japan accounts for about 20% of our two trillion-yen sales turnover, and
about 50% of our production.
Interview
Sakane Coming back to Komatsu as a microcosm, in the early postwar years our
head office was still in Ishikawa Prefecture, as were most of our factories. Later the
head office moved to Tokyo, and as our market became centered along the booming
Pacific Coast, the Ishikawa factory locations became inconvenient and we opened
factories in Osaka and the Tokyo area. By then the strong yen had arrived, and we
plunged into offshore production. So, we went from Ishikawa to the Pacific Coast,
and then offshore.
Komiyama Indeed.
Sakane Then in 2001, when I became president, we reassessed whether Japan’s
competitiveness was really so low. We found that with all the businesses and product lines we were engaged in, the indirect operations in our headquarters divisions,
IT departments, etc. were where there was waste, and meanwhile we were doing
well in terms of pure monozukuri (making things). In fact, looking only at the variable costs, at the time the exchange rate where Japan and the United States would
be on equal terms was about 72–73 yen to the dollar. Since we weren’t losing on
variable costs, we took a fresh look at our Japan production and investment
strategy.
Komiyama You say 72 or 73 yen, that must have been Komatsu only.
Sakane Between you and me, at that time, when the yen was at 110 to 120 to the
dollar, other companies too would surely have shown a competitive edge in comparisons of variable costs alone. But Japanese companies generally do not choose to
break out their variable costs. Which is to say that executives are wedded to the idea
that onsite employment is an untouchable fixed cost. The reality is it is a variable
cost. When we take it as a variable cost, in the case of Komatsu, Japan right now is
slightly behind Thailand and China, but definitely not behind the US or Europe.
Japanese monozukuri skill provide a competitive edge, and therefore once again we
come around to Japan. These past 5 years, all the new Komatsu factories were built
in Japan.
Komiyama Where are they?
Sakane In places like Kanazawa, Ishikawa and Hitachinaka, Ibaraki – near seaports, because they produce for direct export. From Kanazawa, the machinery is
usually carried to the Port of Busan in Korea for onward export to the rest of the
world.
Komiyama Busan has become quite a hub.
Sakane Japan accounts for about 20% of our two trillion-yen sales turnover, and
about 50% of our production.
Interview