Will Dalrymple spoke with Koichi Tadano about quality, prices, and Diet Coke
Koichi Tadano
“We are traditionally strong in Japanese market, with market share more than 50%. Looking at overseas, Tadano were strong, have been strong, in Asia, Oceania, and Middle East, but overall our market share outside Japan is not as much as in Japan. Outside Japan, we have some room to improve. In this sense, Tadano is paying attention to market share in Europe, North America, and other areas. We want to emphasise our sales and aftersales activity outside Japan.
“Demand is more than supply. If we would be able to produce more products, we could sell them.
“It is our intention to increase the production numbers or supply, but the big question is how long will the economy run. This is one of the important points – how to read the future.
“Current delivery time from Tadano for domestic market is nearly 12 months is standard delivery time, and outside Japan it is 18 months, although this depends on the model.
“We are trying to increase sales production numbers by something like 30%, and this is our target. The factory reorganisation at Shiro will free room to try to increase production capacity by 30%.
“We have some concerns about the Chinese companies. At the present moment in the markets, one of the problems is the shortage of products. In response, some of the customers may take machines from China. This is the current situation.
“We have joint-venture production company in Beijing [BQ Tadano]. They are producing truck cranes. From that basis, we are able to export truck cranes outside China. Currently we are concentrating on the domestic market in China. When we raise the level of quality, then we want to take those machines outside China – in three years’ time.”
CT: Is there a conflict between BQ and Tadano product?
“In China, there are some layers of customers. Some customers like complete machines outside China, some like joint-ventures, some like local makes. We supply based on those customers’ interests.
“We think in the future, the demand will come for rough terrains. In 2006, total demand for Chinese cranes is approximately 14,000 units. Of that, 20 units are rough-terrains, exports from Tadano. That is a small number of the segment.
“But the BQ Tadano joint venture is concentrating on truck cranes, not rough-terrain cranes. So far we have no idea to produce rough-terrain cranes in our joint venture.”
CT: What are some global trends that you have noticed recently?
“1. Cranes are getting bigger.
2. We have three segments: all-terrain, rough-terrain, truck cranes. The all-terrain segment has been increasing.
3. Truck crane total market is reducing, but recently demand on the contrary is increasing.
“One of the customers’ concerns is to maximise their productivity. One advantage of truck cranes is that they are economical compared to other products. If manufacturers supply quality truck cranes, there is the possibility to increase the market.
“We will bring a traditional truck crane into Europe, but not now.
“The lead times means that we are putting more priority on the Japanese market. There is an effort to emphasise overseas sales too, so there needs to be a balance.
In our 2007 financial year, we sold: 1,400 units of rough terrain cranes, 200 units of truck cranes and 350 units of all-terrain cranes, not including cranes made by BQ Tadano.”
CT: Does short supply of cranes increase rental rates?
“Yes. This is good.”
CT: Should manufacturers limit supply so that there will not be an oversupply of cranes in the market?
“The manufacturer cannot take full responsibility for this point. The manufacturers are one party and the users are another. We can’t control the customers. It is our duty to supply products when the customers want and need them. Manufacturers should take responsibility to develop the markets well.
“The market has been changing. The structure of demand has been changing. In the past, there were three big markets: Asia, North America, Europe. Now there are many emerging markets like India, Russia, South America, those markets are coming up. This is an evolving structure of the market.
“Surely all the manufacturers when they increase production numbers, what comes is oversupply, some day in the future. The most important point is what is adequate production numbers, this is a big question of all manufacturers. Among the manufacturers, we at Tadano, think we will increase demand by 30% to meet customers’ needs.
“We have been trying to lower the production costs, but we do not think about lowering the product price. The product price must be stabilised for the interests of the industry. Cranes are not commodities. Customers have been using cranes 10, over 20 years, and it is the manufacturer’s responsibility to maximise the value of the customer’s asset. Even 10-15 years later, secondhand products, they have to keep the asset value as long as possible. This is our responsibility as manufacturers. To do this, pricing must stay in a certain level.
“Looking back, it is in fact surprising that the market is changing, and is sometimes going down, that has happened. Currently, we are trying to stabilise pricing. This is what we hope.
“Over the past three, three and a half years, material costs of components have been increasing – particularly steel and tyres, and Tadano has been trying to minimise the cost of production. Because of the component costs, we have been forced to try to ask customers to absorb increased production costs. After our efforts, the market price is coming to an adequate and proper level.
“As we reduce costs, quality should not change, it should improve. Our idea is about promoting the idea: value engineering per unit cost should be maximised. The cost stays the same, but functionality increases. Or functions should remain the same, but costs should decrease.”
CT: Are you against buying a crawler crane company?
“No. We should be flexible to all possibilities.
One of the important points for Tadano is the globalisation of mobile crane production, R&D and service as well. We have many things to do.
We are not interested in buying Kato. We need a good rival in Japan.”
CT: What sort of equipment should you produce yourself, and what should you source from sub-suppliers?
“Tadano produces hydraulic cylinders, booms and LMIs. Those are key components of functions of the crane operations. And we produce them by ourselves.
Some other components satellite companies produce based on our drawing.
Other components such as powerline and engine we buy best one from the market.
It is our strategy to decide which components go into which.”
CT: What about servicing those products?
“We don’t think only the manufacturing is important, but also the service is important. The crane is a machine to be used for many years, over even 20 years. The most important point is that the machine should be in the best condition for the longest period, even 20 years, so aftersales service is a very important factor for manufacturers.
“There are two important words. To produce a quality machine, and to provide the best product support.
“The most important point in product support is quality . We need to increase the quality of product support. We put more human resources in service departments, and increasing the spare parts stock all over the world in order to make prompt delivery.”
CT: How has the company changed since you took over?
“Point 1. Globalisation. We have been trying to increase overseas business. This is our aim. The second point is the level of quality, increasing our position of the quality of the machine and service/product support.
“We have been promoting the globalisation of mobile cranes. Other segments like truck loader cranes and aerial work platforms we concentrate on the domestic market. This will be one of the next ones which we make.
“We think this is one of the issues that we need to think about.”
CT: Do you have a favourite drink?
“I don’t drink any alcohol. Diet Coke… and water.”
Koichi Tadano Koichi Tadano
