Riding the Advanced Ceramics Wave
Founded in 1959, Kyocera continues to expand by identifying and serving emerging technologies with advanced ceramic materials.
In April 2016, Kyocera International Inc. began a $10 million expansion project for its Vancouver, Wash., manufacturing facility, increasing the existing 40,000-sq-ft space by 45% to 58,000 sq ft. Originally built in 1992 as a R&D center for advanced ceramic materials, the location now produces high-value-added engineered ceramic components for structural, functional and mechanical applications on a custom order basis.
Kyocera International is one of 235 companies that comprise the Kyocera Group. In 1959, Kazuo Inamori, then a 27-year-old engineer, created the Kyoto Ceramic Co. in Kyoto, Japan, with the equivalent of about $10,000 in capital. How did one man’s vision for developing new ceramic technologies evolve into a $13.1 billion global powerhouse? I recently spoke with Jay Scovie, Kyocera’s director of corporate communications and education, to find out.
In the beginning, what products did Kyocera produce?
Inamori was the first in Japan to successfully synthesize forsterite as a high-frequency insulating material, which found a lot of applications in telecommunications. He developed the electric tunnel kiln for ceramics and many innovative ceramic components. Kyocera’s first product was the u-shaped kelcima, which was an insulating component that supported Japan’s early TV picture tubes. This was excellent timing for this type of application.
Inamori established a business model for Kyocera to support emerging technologies with advanced ceramic applications, regardless of the field. Those applications generally took the form of insulators and substrates, and later passive electronic components, semiconductor packaging, and, of course, mechanical and structural ceramics.
Today, Kyocera’s fine ceramics are used in many high-performance, high-reliability applications, with key roles in the semiconductor, aerospace, automotive, medical and renewable energy markets. After Dr. Inamori’s early work in synthesizing forsterite, he led Kyocera to expand into many other ceramic materials with approximately 200 different formulations, including alumina, silicon nitride, silicon carbide, sapphire, zirconia, cordierite, aluminum nitride, mullite, steatite, and cermet, among others. Kyocera’s particular process expertise includes dry pressing, cold isostatic pressing, hot isostatic pressing, injection molding, tape casting, multi-layering, and metallizing ceramics.
What have been some business highlights over the years?
Inamori created his first subsidiary company outside of Japan just 10 years after founding Kyocera, in 1969. That company was Kyocera International, Inc. in California, which developed a semiconductor packaging business around Silicon Valley. In the 1970s, Inamori diversified Kyocera’s business through licensing, merger and acquisition, as well as his own growing portfolio of ceramic material and process technologies. He specifically branched into four markets: industrial cutting tools, ceramics used in dental and orthopedic implants, solar energy, and lab-grown gemstones, ushering in a period of rapid growth for the company.
Kyocera issued shares of common stock in the U.S. in 1976 in the form of American Depositary Receipts (ADRs), and the company was listed on the New York Stock Exchange in 1980. In 1984, Inamori established Japan’s second phone company, DDI, which is now called KDDI. For years, we had produced materials that went into telecom applications and components, as well as a lot of passive devices for telecom equipment. By the mid-1980s, Inamori had introduced Kyocera’s telecommunications equipment business. KDDI’s revenue last year was about $40 billion.
Under Inamori’s leadership, Kyocera developed an amorphous silicon print drum for use in copiers and printers, and the company introduced its first laser printer based on this durable technology in the early 1980s. It was a very difficult market, competing against giants like Xerox and Hewlett-Packard. Kyocera led a turnaround of the Japanese copier manufacturer Mita Corp., which then became Kyocera Document Solutions Inc., manufacturing and marketing office document equipment that uses Kyocera’s unique, long-life imaging components. Today, Kyocera actually generates more revenue from document equipment than it does from ceramics.
Dr. Inamori brought AVX Corp. into the Kyocera group in 1990 through the first stock-swap merger involving a Japanese corporation and a U.S. corporation. AVX and Kyocera share a number of synergies in materials and markets, and AVX is a world-leading producer of electronic components.
How does Kyocera manage its expansion strategy?
Most companies are divided by function generally into departments, segments or divisions. Our expansion strategy is based on a concept called Amoeba Management. Amoeba units within the company can be large or very small (maybe just 3-10 people). An amoeba has its own profit/loss statement, just like an autonomous business. Under this principle, internal divisions seek to grow based on their own operating necessities and financial metrics.
An important element to this principle is the requirement for every product line to be built on what Inamori calls a “noble goal.” If the goal of a business is truly what you would call noble, then it is designed to help others and contribute to society. Perhaps it relieves an environmental burden or helps with other needs that contribute to the quality of life for many people. If the goal is noble and we sincerely commit to it, then business expansion should occur naturally.
In the ceramics business, if we commit to helping our customers attain higher levels of productivity, quality and cost efficiency in their own business, then we find that to be a noble goal. And if we can succeed in that, growth should occur organically. A recurring theme of our philosophy that dovetails with this involves working very closely with customers so we can help them identify their most difficult engineering challenges, and then collaborate on solutions that will probably involve advanced ceramic materials.
Within Kyocera, the decision to expand a business is always predicated on the needs of our customers. We’re finding that continued technological advancement in a wide range of markets increasingly depends on better-performing materials. In many cases, conventional materials—and their performance limitations—are the main obstacles preventing today’s manufacturers from achieving breakthroughs. Fortunately for us in the industry, ceramics offer unique properties that can bring key performance advantages to many of these applications. In the end, if we attain our noble goal and succeed in helping our customers overcome these performance limitations, to achieve higher productivity and greater quality, then demand for our products should naturally result and may make expansion necessary.
Did You Know?
Kazuo Inamori was voted Japan’s Most Effective Business Leader in two separate surveys of Japanese executives in the 1980s. But Inamori’s most recent business achievement had nothing to do with ceramics.
In 2010, although officially retired and at the age of 78, Inamori was asked by the Japanese government to lead a bankruptcy turnaround of Japan Airlines. He resisted initially, but ultimately agreed to a three-year leadership role for no compensation. Just a few years later, Japan Airlines is now among the world’s most profitable airlines. In 2012, Inamori was honored in a survey of Japanese business leaders a third time; he was named President of the Year at the age of 80.