GK spoke with Makoto Kohno, President of Kitz Corporation, about the company’s role in hydrogen energy and the future of semiconductor-related valves.
As a manufacturer of next-generation valve systems, how has Kitz been supporting the hydrogen energy sector?
In terms of the hydrogen industry, we are vital in many aspects of the supply chain. First, we have to generate the liquid hydrogen and deliver it via vessel and store it at the station so that it will be available for the consumers. Now, we are working on the development of valves that can cover the process of the whole value chain of hydrogen.
The first thing is about automobiles. Toyota produced a hydrogen car called ‘Mirai’ but Honda focuses more on EVs. For buyers, it’s a choice between the two. Japan is a mountainous country, hence the winters are more severe. As such, EV systems and their resulting limited range present severe risks. As such, hydrogen-fueled vehicles serve better in these conditions compared to EV vehicles. Recent talks with mayors around the country mentioned the same concept; that hydrogen is indispensable as a fuel source. I believe that hydrogen will continue to play a key role in the industry and there would be a wider application of hydrogen fuel leading to an increase in demand in the future. So, there would be an opportunity for us to ride this trend.
Another opportunity will be hydrogen stations. We are running a hydrogen station division in our business; we provide hydrogen stations not only for passenger cars but also for vessels. We installed hydrogen stations at each port so that hydrogen-fueled vessels can run from port to port and we hope there will be an increased demand for hydrogen stations in the future. We are currently having discussions with municipalities and private sectors, and we have seen an increased demand for the non-commercial use of hydrogen-fueled cars and vessels. Based on that, we are going to focus on this area of business.
Regarding your valves business, what types of applications are you currently experiencing the most growth in, and which are you looking to strengthen?
Let’s begin with the hotel business in the Nagano prefecture. Our founder, Mr. Kitazawa, started his career at the Toyo Valve located in Suwa, Nagano. That was run by his father, but soon he became independent from that. That’s how he started this business in Suwa and that’s why we have a long history with this city. That’s also how we inherited the hotel from its predecessor which was called ‘Beniya’. That is the only hotel we run and although we have no plans to expand the hotel business further, it has become our ‘palace’ in a sense to welcome guests from around the world. As such, it is mainly an entertainment and hospitality facility within the company. However, it is still part of our body of organizations.
For the valve business, the main focus is semiconductor-related valves. We have seen an increase in demand, especially for the two types; discharge transformation and de-carbonization. In terms of discharge carbonization, we have seen record-high sales of semiconductor-related valves.
Similarly, for the filters used in semiconductor manufacturing, we have subsidiaries dedicated to making the filters for that equipment and that company has also seen record-high sales in recent times. We have decided to increase investment in facilities for both departments; the valve and brass bar business.
What is it that has allowed your company to gain this reputation, and what is your competitive advantage?
Globally, other brass manufacturers are doing business by purchasing materials from others to process, assemble and inspect and finally paint the product. That is the whole business scheme. Our policy is a totally integrated process covering the development of materials. Our founder has always said that the material is crucial for our business. I am the 5th president and I never plan to change this policy. We believe that is the reason why other partners around the world have reliance on our products.
As a corporation, we set a declaration. In the declaration, we set up 2 purposes. One is the enhancement of fluid control techniques but also material development. We believe that our services are coming from the development of materials so that we can support social infrastructure.
And another factor is quality and stable supply. We have seen some irregular external factors such as the shortage of materials and shortage of components. However, we remain able to provide a stable supply. That’s why domestic and global partners recognize our company. We also follow the just-in-time system, pioneered by Toyota, so that we are ready to provide necessary components to clients when required. We set up the production system to enable us to do that hence we can provide a stable supply to clients constantly so that they can continue production and run the business as well. This is the main reason we are highly recognized amongst our partners.
Lastly, we have a tight-knit network. Not just in Japan but around the world. In Japan, we have a lot of distributors covering from the northern island of Hokkaido down to Okinawa, a solid network of strong sales partners. It is the same for the global market. We have a lot of distributors that allow us to expand our business around the world. So the tight-knit network and the detailed service they provide is also our competitive advantage. In terms of business revenue for Kitz as a group, only 10 percent is the direct deal with clients, the remaining 90 percent comes from agents and distributors. Building that tight network was hard to achieve, but has become the foundation of the business.
