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Productivity Race
The facsimile output capacity of the Honjo plant is currently 460 units per day. The
final assembly is done on two parallel lines, each with an indicator of the daily
production target and a second counter to show performance against the target. As each
finished machine comes off the assembly lines, the daily tally is incremented and the
performance counter adjusted. The two production-line staffs essentially race against
each other, as much for the honor of being ahead as for the small bonus that they can
win at the end of the month.
Even the computerized delivery vehicles seem to be in an hurry, competing with one
another to raise the daily production quota. At 460 fax units per day, the Honjo plant
output is running at approximately $1.5 million daily. This output is far from the plant's
ultimate capacity. The factory management anticipates easily reaching more than
700 units daily through shift work at the current facilities. Management further claims
that even higher output could be reached through additional improvement in production
techniques.
Such increased production capacity will be critical to Harris/3M, Oki's largest
worldwide OEM customer. Indeed, in 1987, Harris/3M ramped up its production
requirement with Oki by more than 168 percent against its 1986 shipments and is now
responsible for more than 55 percent of Oki's total worldwide facsimile output.
Clearly, any restrictions applied on facsimile imports into Europe would have a
major impact on Oki and its OEM partners alike. Should such restrictions be applied,
however, Oki does have a European manufacturing facility in Scotland and would be able
to move fax production there within six months.
DATAQUEST ANALYSIS
Dataquest anticipates that the worldwide fax market will remain one of the
fastest-growing telecommunications market segments over the next few years. In terms
of unit shipments, we estimate that the worldwide fax market will increase by a
30 percent CAGR from 1988 through 1993. In telecommunications, only the cellular
radio handset market is expected to grow as rapidly during this period. Here, again, the
Japanese have significant presence.
Dataquest believes that Japanese manufacturing skills, combined with a closely
affiliated semiconductor technology and the current level of R&D spending to maintain
technical innovation, will make Japanese manufacturers a tough team to beat. This will
be particularly true in product areas where production volumes are high and the software
content is low. A typical product of this kind is the facsimile machine. Central office
switching technology, however, is an example of a product requiring specialized
software. In the case of central office switching, we do not expect the Japanese to
make a significant market impact in Europe.
© 1988 Dataquest Incorporated May ESAM Newsletter