“Continuous Seeding” Makes JTEKT “No. 1 & Only One”

JTEKT, a mega-supplier of auto-parts, bearings and machine tools, was born in 2006 through the merger of Koyo Seiko and Toyoda Machine Works. Since then, JTEKT has been leading the industry. Development and mass-production of the world’s first electric power steering system is only part of their continued success, and sales exceeded 1.3 trillion yen for the first half of the year. PRESIDENT has interviewed Mr. Tetsuo Agata, the president leading the company, on his management policy and plans for future business development.
Tetsuo Agata
Born in 1953, Agata graduated from Hitotsubashi University in 1976 and started his career at Toyota Motor Co. Ltd. (now Toyota Motor Corporation).  After serving as Senior Managing Director of Toyota Motor and Executive Vice President of Toyota Industries, he has been President of JTEKT since 2013.  Personal interests include visiting castle ruins.

Always Looking 5 Years Ahead To Determine What to Do Now

──JTEKT has a clearly stated vision for the group, which serves as the foundation of its business activities.  Can you tell us what it is and what it means?

Agata: JTEKT Group vision “No.1 & Only one” instills our three desire. First is building value; Provide value to customers by delivering products and services that exceed their expectations. Second is building excellent products; Astonish the world with “Monozukuri”, the art of refined craftsmanship and superior quality. And building professionals; develop a team composed of individuals working together, acting with initiative, confidence, pride, and passion as global members of JTEKT.  One out of four cars around the world use JTEKT’s steering system which makes us the market leader with top share, and this is an example of our vision taking shape.  Visions should be the ideal state of a company condensed in a short phrase and should function as the guiding principle of all actions.  I believe it is crucial that this vision is shared throughout the company and I make sure this happens.

──We heard you have a unique mid-term business plan for the corporate vision to come to life.

Agata: Yes. We have a mid-term business plan looking 5 years ahead and what is important here is that we review it every year.  For example, many automobile manufacturers changeover their models every few years.  That means today’s business is mainly about 5 years ahead.  However, we would be too slow if we wait for our customers’ requests for proposal after they finalize their specifications.  I always encourage sales teams to get RFPs during the development process.  In that sense, we need to frequently adjust our mid-term business plan according to changes in the external environment.  That is, we need to be agile in adapting to change and decide on what needs to be done and when.

On the other hand, when we try to envision how we want to be 5 years from now, it is also important to have a reflective perspective where we simulate looking back at ourselves from further into the future.  With this in mind, we also have a “Beyond mid-term business plan” in which we discuss how we want the company to be 10 or 15 years from now.

──What indices are important for you in managing business?

Agata: For business performance and finance, I believe operating profit margin and ROA (Return on Assets) are very important.  Profit margin is literally the company’s “ability to earn”.  We use 1 USD=95 yen and 1 EUR=110 yen as the assumed currency rate when calculating our profit margin, quite a conservative rate, and try to understand our true business conditions on a currency neutral basis.

I also pay high attention not only to the earning statement but the balance sheet, too. Not just how much we earn, but how our debts are looking and turnover of inventory asset are important in measuring our financial condition and the overall condition of the company.

──As a global company, is there anything that JTEKT particularly focuses on in human resource development?

Agata: JTEKT is a global company where approximately 27,000 out of our approximately 44,000 employees are non-Japanese.  So it is critical to have a system in place where talented people can work to their full potential regardless of their nationality.  We have ranked main positions, both domestic and overseas, by job description and responsibility level, and have organizations that discuss the identification and development of successors for each of the positons as well as the effective positioning of human resource in each region.  And of course, nationality has nothing to do in this process.

We are also working on advancing our workstyle.  In our factories, we leverage intelligence from the working scene to automate and unman the production line so that the potential of our technical staff can be maximized.  As the quality of production skills in the manufacturing process is critical for manufacturers, we have created curriculums to avidly support technical staffs’ skill development.

In the back office, we try to standardize all tasks so that we can leverage IT to a broader range of tasks.  At the same time, we are working on business reform with “multi-skilling” in mind so that one staff can handle multiple tasks.

In 1988, JTEKT was first in the world to develop and succeed in mass production of electric power steering systems.  It maintains global top share to date and now strives to develop steering systems for autonomous driving vehicles.

Promoting Autonomous driving Related Technology and
Reforms to Boost Efficiency of Factories

──We are now entering the age of autonomous driving cars.  What is JTEKT’s strategy in the steering business?

Agata: We are planning to strengthen three functions in our steering business.  First is the function taking over human reflexes.  In electric power steering, a computer calculates the required assist force based on information such as driving speed and gives directions to the motor.  This control algorithm provides a function similar to the human reflexes such as instantly retracting your hand the moment you touch something hot, which enables comfortable and safe driving.

Second is redundant design, the doubling of functions to deliver advanced stability.  The motor and power supply are doubled to ensure the steering assist system will never stop.

And third is a technology called “steer-by-wire” where steering is not controlled in the conventional mechanical way but by electric signals.  By doing so, shafts are no longer needed for the engine, and our curstomers can design the engine room more flexibly.

──How are you working on IoT and Industry 4.0?

Agata: First, JTEKT is going to create a “smart factory where people and equipment collaborate, where the wisdom of people are put to work, and where people are at the center” for ourselves.  We will then propose the same to our customers’ factories.  Meanwhile, we call this concept IoE (Internet of Everything) and not IoT (Internet of Things).  This is because we want to connect not only things but also people to the Internet.  JTEKT has unique control systems that enable various manufacturing equipment, regardless of manufacturer, to be connected.  We would like to leverage this technology to create solutions to enhance visibility of the production line’s condition and to enable improvements to be made from early signals.

──How are you going to secure stable growth into the future?

Ataga: For the past 4 years since I came on board as president, I have been striving to create and develop the fundamentals of JTEKT from scratch.  In a sense, I have been “seeding”.  This activity does involve substantial fixed costs, but without this, we will not be able to grow.  Seeds grow into blooming flowers and will eventually bear fruits.  It is fine with me that it is the next generation that harvest the fruits.  I firmly believe that the key to growth is to always keep the fundamentals in mind and to create a culture where sufficient investment is made without hesitation where and when needed.

JTEKT is a machine tools manufacturer and also develops production line control systems. It is also working on evolving its factories to smart factories and plans to offer the technical knowledge acquired through this process to other companies.