Table Speech

Initiation Speech

August 10, 2011

Mr. Kimikazu Nakamura
Mr. Richard Dyck

Mr. Kimikazu Nakamura
President & CEO, Sankyu Inc.

About Maintenance

 Today, I would like to speak on maintenance of the basic industries in Japan, such as steel, petroleum, petrochemical and electricity. Maintenance means to “maintain” the condition of facilities, by making diagnosis, reparation and restoration to its initial condition. There are 2 types of maintenance: first, regular maintenance incorporated in the production plan of facility owners, and second, irregular maintenance due to mechanical or operational troubles. Irregular maintenance calls for an urgent response on around-the-clock basis to minimize disorder to the production plan. The Great East Japan Earthquake caused disastrous damages to the infrastructure. Many technical experts from across Japan rushed to restore damaged factories and they are still in operation.

 I am sure you have visited plants of the basic industries, mostly during its operation with only a few people inside. Once the operation is suspended for maintenance, you will see a totally different picture.
During a regular maintenance (shut-down maintenance), especially for petroleum/petrochemical industry, at least 1,000 workers per day, sometimes as many as 20,000 workers, are engaged in detailed inspection, replacing expendables and reparation over 1-2 months. They specialize in welding, piping, and rotary machinery etc.
Maintenance depends on workers’ technical skills and it takes as long as 7-10 years to train them. Now baby-boomers are retiring and how to hand down the skill is a pressing issue.

 Maintenance is less creative, compared with manufacturing industry, and it is hard to maintain the workers motivation. The government once introduced the accreditation system for highly skilled workers, yet it was abolished due to the screening process for cutting the public expenditure. We are working hard to train the younger generation, but they have fewer chances for on-the-job training, due to further progress of globalization or the introduction of the 4-year-cycle-regular maintenance as a result of deregulation, which made the maintenance industry highly volatile. This is why we ask facility owners to make adjustments to their cyclical or seasonal fluctuation and stabilize the workload, in order to foster the young generation.

 Maintenance can be provided either by the facility owners, facility manufacturers or dedicated maintenance companies. It is becoming more and more common to outsource maintenance to dedicated companies with high technical skills and recruitment capacities. They utilize IT technology, make data compilation of damages of each facility to identify optimized maintenance for prevention.

 Basic industries are positioned at the upstream of the Japanese industry. If there are interruptions there it would adversely impact on all Japanese industry. To prevent such situation, stable maintenance and management of facilities is crucial to support the basis of the Japanese industry. It is my sincere wish that you keep in mind that many of those experts behind the scenes are supporting Japan.

Mr. Richard Dyck
Chairman, Alphana Technology Co.,Ltd.

Semiconductor and Its Yield

 I have been engaged in the semiconductor industry since the early 1970s. My Master’s Degree thesis was on semiconductor, and I worked for Teradyne, the semiconductor test company, over 20 years. Today, I am still deeply involved in this industry. It is interesting to compare US, Japan, Korea, Taiwan and China by analyzing the semiconductor industry, as it exemplifies both the economic and manufacturing systems of each country.

 Worldwide semiconductor sales totaled 300 billion US dollars last year, making it the largest component market. The industry grew by 50% during 2000-2010, from 200 billion to 300 billion dollars. Looking at the market by region, nearly 70% of the products are sold in Japan and other Asian countries, while over 60% are manufactured in Asia.

 Semiconductor market is highly volatile in spite of its very high growth rate. Sharp growth achieved in a certain year can be followed by falling demand and negative growth. Various economic theories explain its reason, of which I believe Schumpeter’s “creative destruction” theory is the most applicable. This theory advocates that epoch-making technology stimulates the emergence of new markets, where numerous new firms mushroom by surging capital investment, which could eventually trigger an economic bubble. Once the bubble bursts, the market will suffer recession. The ‘’ bubble in 2000 was a typical example.

 Moore’s law also describes the long-term trend of semiconductor industry. Gordon Moore, co-founder of Intel, published his thesis in 1965 that stated “the number of transistors placed on an integrated circuit (IC) doubles approximately every 18 months.” Numerous manufacturers, including those in the semiconductor or production equipment industry, have been striving to achieve this target by solving various global issues. Accordingly, the number of components per IC has been doubling as Moore predicted. For example, CPU chip manufactured by Intel contained 2,500 transistors in early 1970s. Today, one CPU chip has 300 million transistors, with advanced processing speed, while its price remains steady. Manufacturers are compelled to keep fighting a tough game to meet the Moore’s law.

 Japanese semiconductor manufacturers have been making significant contributions to solve various global issues to date. Japanese firms used to occupy more than half of the leading 10 semiconductor manufacturers, thanks to their excellent production technology and quality management that have improved the yield and achieved mass-production. Until quite recently, the US firms accounted for about 35% and the Japanese firms for 50%, while European and Korean firms occupied the rest. We started to see fewer Japanese firms since 2000, due to the sluggish Japanese economy and restructuring in the electronic industry. By 2010, only 2 Japanese firms remained within the leading 10 manufacturers, as the manufacturing know-how has started to be disseminated to other Asian countries, including Korea, Taiwan and China.

 Should Japanese manufacturers start to play minor roles in the worldwide semiconductor industry, I am afraid it will become extremely difficult to keep up with Moore’s growth speed. It is my sincere wish that the Japanese industry will recapture its vitality to remain in the leading position to raise the worldwide technological standard.