Investing in Japan
Success Stories Genesis Systems Group Japan KK
Industry: Other Manufacturing
Genesis Systems, based in Iowa, the US, develops and manufactures processing and inspection systems which are bringing about innovation in welding and inspection processes. The company has enjoyed remarkable success through earning the trust of Japanese-affiliated automobile part manufacturers in the US. Seeking to further strengthen relationships with its clients’ headquarters in Japan and expand business activities in Japan and other countries, Genesis Systems established a Japanese subsidiary in 2010. We interviewed President Tadaji Seko and Executive Managing Director Makoto Matsuoka about the group’s expanding business in Japan and future global development through cooperation with Japanese manufacturers.
Genesis Systems Group, LLC (“Genesis”) was established in 1983. Headquartered in Iowa, the US, the company is the biggest robotic welding system manufacturer in North America. The strength of Genesis is in development and manufacture of laser welding systems, which will play important roles in next-generation manufacturing. To date, the company delivered more than 4,500 robotic systems to factories for automobiles, aircrafts and railroad vehicles.
In addition to its US operations, Genesis has business bases in Japan and Mexico. Overall group sales total some 10 billion yen(91 million USD) and the number of employees is 330. The company has business partners for systems manufacturing in the Czech Republic, Brazil and India, and its main clients include such world-renowned companies as Bombardier, John Deere and Caterpillar.
Strength in laser welding
Laser welding, which uses a laser beam as a heat source, is basically a welding technique for joining metal components by locally melting the metal through focused laser radiation and then solidifying it. This technique makes it possible to weld difficult-to-process materials such as high hardness metals, high melting-point materials and ceramics, and also to weld different kinds of material together. The stand-out features of laser welding are high accuracy, time savings, and reduced influence on materials due to heat. Compared to conventional welding techniques, laser welding can enable a smaller area to be welded. Therefore, it is possible to make materials smaller and lighter. Given the current trend of weight reduction in automobile parts and demand for shorter delivery lead-times, the market for laser welding is expected to expand significantly.
Genesis laser welding systems
Background of Japanese operation
Since its foundation, Genesis has placed great importance on the concept of genchi genbutsu (actual place, actual thing) and it understands the principle of monozukuri (craftsmanship) that is valued by Japanese companies. This has enabled the company to steadily develop a customer base of Japanese-affiliated enterprises in the U.S. In 2010, 20-30% of total group sales were attributable to Japanese-affiliated companies, leading Genesis to establish a representative office in Japan.
In 2013, one influential client asked Genesis to start full-scale operation in Japan because the client wanted to install laser equipment in its factories. In response to this request, the office was relocated in Aichi prefecture, where there is space for testing. At the same time, Genesis Systems Group Japan KK (“Genesis Japan”) was established. Genesis Japan has been successfully boosting its performance since its establishment and, in 2016, it moved to a bigger factory with manufacturing facilities, in Aichi.
Developing and manufacturing in Japan and exporting to “home country”
The new factory, relocated in 2016, can produce about 30 units a year. It takes around four months to produce one unit and the factory delivers its products at prices ranging from approximately 50 million yen through 100 million yen (0.45 – 0.91 million USD) per unit. One-third of total production volume is exported to its home country, the US, and Canada. Of course, because the factories of Genesis are located in the US, it tried producing there but ultimately decided to design and produce in Japan by request of Japanese-affiliated clients. Consequently, Genesis Japan, which has a detailed understanding of the needs of its clients, designs, produces and exports from Japan. In addition, in order to provide appropriate after-sales services for exports from Japan, US-based engineers visit Genesis Japan for customer service training.
In laser technology itself, Japan follows the US and Germany, but Japan offers superior craftsmanship in using the technique effectively, properly identifying customer needs and building up processing systems. Genesis Japan appears to succeed in Japan by achieving this synergy.
President Seko does not speak English. This is rare in a 100% foreign-owned company in Japan. Senior Director Makoto Matsuoka says: “When choosing the head of a Japanese subsidiary, many foreign companies place too much emphasis on his or her English proficiency as a basis for their decisions and, consequently, they fail at doing business in Japan. Genesis Japan chose Mr. Seko as president, who had been working for Toyota for more than 40 years and has a good understanding of relevant industries, welding techniques and the needs of clients, based on actual experience. The capital and technique are from the US but it is Japanese personnel with locally-oriented know-how which are engaged. Japanese clients evaluate it as follows: Genesis is “a foreign-owned company but familiar to Japanese clients. That provides a sense of security and leads to ongoing business.” President Seko understands Japanese manufacturing concepts. This is more important than communication in English. He enjoys deep trust from both Genesis executives and his expatriate subordinates.
President Tadaji Seko (left) and Senior Director Makoto Matsuoka
Laser welding market expanding - need to promptly expand manufacturing capability
Because the laser welding technique can bring about significant time savings and help in making products lighter, the market for this technique is sure to keep expanding. Genesis Japan is targeting annual sales of two billion yen (18 million USD) by 2020 and is considering expanding manufacturing capability to satisfy the robust and global demand from automobile-related companies. Therefore, Genesis Japan is also considering every possibility, such as accepting capital investment, establishing joint ventures and acquiring other related Japanese companies. On the other hand, since the market for electric vehicles (EV) is expected to expand rapidly, to what extent Genesis Japan will be able to enter that market is the most significant issue.
Impossible to start a business in Japan without support from JETRO
It was in 2010 that Genesis began giving serious consideration to establishing a Japanese subsidiary. That was when Genesis participated in an invitation program for foreign companies conducted by JETRO. After meeting a highly promising potential partner, Maeda Industry Co., Ltd., at ‘Mechatronics Technology Japan’ (MECT) in Nagoya, through arrangement by JETRO, Genesis was convinced that its products could be marketable in Japan.
Mr. Matsuoka says: “In those days, due to the impact of the Lehman Brothers’ bankruptcy, Genesis was operating under the difficult conditions of restructuring. We couldn’t start a business in Japan and neither could we afford to travel on business at the company’s expense, so we are very grateful to JETRO.” Genesis also utilized Invest Japan Business Support Center (IBSC), an incubation facility in Nagoya, where it received advice from experts on procedures for establishing a Japanese subsidiary. JETRO also introduced a property when Genesis Japan wanted to move to a bigger factory, helped with staff recruitment, mediated between Genesis and municipalities, held business-matching events, and cooperated in public relations activities. Genesis enjoyed active support from JETRO. Says Mr. Matsuoka: “We hope to receive similar support for establishment of a new business office in Tokyo or Osaka.
(Interviewed in May 2017)
|1983||Genesis Systems Group, LLC established in Iowa, the US|
|2010||30% of group sales attributable to Japanese automobile-related companies Establishment of liaison office in Japan|
|2013||Genesis Systems Group Japan KK established in Tokai, Aichi; starts of systems manufacturing|
|2016||Relocation to Kasugai, Aichi; expansion to factory/office with integrated facilities for assembling manufacturing facilities through finishing|
|Business Activities||Systems manufacturing/servicing for laser welding, etc.|
|Parent company (group)||Genesis Systems Group, LLC|
|No. of Employees||30|
|Address||1-38 Hikisawa, Kagiya-cho, Kasugai City, Aichi, 480-0304, Japan|
Support from JETRO
- Invitation to Japan program (arrangement of business matchings with Japanese companies)
- Leasing of a temporary office (IBSC)
- Consultation on establishment of a subsidiary
- Provision of incentives information
- Introduction of property for an office and a factory
- Mediation between Genesis and municipalities
- Invitation to exchange activities for foreign companies (business talks)