Investing in Japan
ZF Japan Co., Ltd. (Mr. Richard Kracklauer)
Mr. Richard Kracklauer, President of ZF Japan Co., Ltd.
ZF Japan Co., Ltd. is the Japanese subsidiary of the ZF Group headquartered in Friedrichshafen, Germany. As a global supplier of automotive parts, since the establishment of its base in Japan in 1980, the group has been introducing advanced technologies through joint development with Japanese auto manufacturers while continually growing. We interviewed Mr. Richard Kracklauer, President of ZF Japan, to find out about the company’s business situation in Japan and future outlook.
The ZF Group has been providing advanced technologies to auto manufacturers around the world in the fields of driveline (transmission system) solutions and chassis technology. Celebrating its 100th anniversary this year, the group has been operating globally with 230 production bases in 40 countries, and has approximately 134,000 employees. We interviewed Mr. Richard Kracklauer, President of the Group’s Japanese subsidiary ZF Japan Co., Ltd. to learn about the state of the company’s business in Japan and plans for the future.
What is the background for ZF Group’s start of business in Japan?
Our Japanese base was established in 1980 with the intention to provide after-sales service for imported cars. At that time in Japan, the number of imported cars was increasing rapidly but the auto manufacturers in Europe that exported those cars did not have sufficient support systems in Japan, so we repaired those imported cars and replaced the parts. Then in 2006, in order to boost company awareness and to have a single point of contact of our business, all the bases and divisions in Japan were integrated and ZF Japan as we know was born.
How is the current business situation in Japan?
The ZF Group positions its base in Japan as an important engineering center. Today, the respective divisions of Car Powertrain Technology, Chassis Technology, the Commercial Vehicle Technology and the Industrial Technology offer sophisticated products with high fuel-efficiency, safety and comfort.
What are the strengths of ZF Japan?
First of all, it is the ZF Group’s global network. In the ZF Group, a branch that has a customer’s headquarters within its territory is supposed to take care of that customer, therefore ZF Japan has a big responsibility for Japanese auto manufacturers’ expansion into overseas markets. By utilizing the group’s network of 230 production bases in 40 countries around the world, we can make competitive proposals in the countries and regions where Japanese companies have operations. The group is internationally recognized and has a good reputation. For example, we are one of the top 10 companies in a list of the top 100 global OEM parts suppliers, based on automotive parts sales, selected by a car magazine called “Automotive News”. In addition, now that we completed the acquisition of TRW, a major automotive parts supplier in the US, in May, we will be able to make higher-quality proposals to our customers.
Another strength of our company is that as an independent automotive parts manufacturer, we can jointly conduct development activities with Japanese manufacturers and enter into OEM agreements with them based on our technologies that we have accumulated over the years. We are aggressively making investments and we invest approximately 5% of the total sales of the entire group in research and development every year. Japanese auto manufacturers often decide on the specifications of core technologies within Japan, and therefore we are asked to build a relationship with them from an early stage of product development through joint development of prototypes and so on. Once the specifications of a product have been decided, the business is transferred to the production base within the group for mass production.
Did you face any difficulties when developing business in Japan?
We have never felt any major obstacles when operating in Japan. We don’t have any problems in terms of regulations either. It is true that office and residential rents and labor costs are relatively high, but I feel that the living environment is extremely good.
If I have to pick up a future issue, it will be how we can secure human resources. Currently in the Japanese base, there are engineers who are in charge of application development, but in the future, we would like to build a system that enables us to conduct upstream research and development activities as well. We have 15 engineers now but are planning to increase the number to 50 by 2016 and to 200 sometime between 2018 and 2020. Recently in Japan, not only has the birth rate been declining, but we also have the impression that younger people are becoming less interested in engineering, so securing human resources is an urgent issue. To address this, we place importance on cooperation with universities, and sponsor the Student Formula Japan’s Competition for Object Creation and Design, which is a gateway to success in finding a job in an auto manufacturer or becoming an automotive engineer. We also provide our products and technological follow-up. A competition like this is a golden opportunity to find and secure excellent human resources.
What about your future business development in Japan?
Currently, the sales in Asia, including Japan, account for about 18% of the entire group’s total sales, but we would like to increase this to about 30% in the future. Actually, we have been recording high sales growth in Asia and we are determined to make efforts focusing on further expansion.
In addition, we will also focus on research and development activities in Japan. Under the policy of making a long-term commitment in the Japanese market, we will set up a technical center in Japan. Moreover, we are also keeping the view of establishing an R&D base. Japan is facing the serious issue of a declining birth rate and an aging society and thus it has stronger needs for e-mobility than other countries, so we feel that we need to develop products with the perspective of technologies five to 10 years ahead. When thinking that there is a high possibility that other countries will also face the issue of a lower birth rate and aging population, it can be said that the Japanese market is offering many opportunities to us, because we can work on the world’s issues before anyone else.
|1980||ZF Japan Co., Ltd. established|
|2006||Tokyo Engineering Center (integration of bases from each division) established|
|2013||Entered into agreement to become official partner of Super GT|
|2015||Acquired TRW Automotive|
ZF Japan Co., Ltd. (Japanese subsidiary)
|Business:||Development, production and sale of auto parts (driveline solutions and chassis technology)|
|Address:||Palazzo Astec Bldg 7 - 8F 2-8-1 Higashi-Shimbashi Minato-ku Tokyo|