2013 Untold Story Winner – Gold Award Winner

A group of unproven graduate students at a California university might not seem like natural partners for one of the world’s foremost manufacturers of computer numerically controlled machine tools.  But when Japanese machine tool giant Mori Seiki decided to gamble on the talents of University of California-Davis mechanical engineering student Adam Hansel and his friends, the result was an off-shored research center that has both created a slew of cutting-edge innovations in machine tool design, and significantly improved its Japanese parent company’s competitiveness around the world.

The human catalyst for the bold decision was Dr. Kazuo Yamazaki, a UC-Davis professor of mechanical and aeronautical engineering.  In the year 2000, Dr. Yamazaki led an initiative by Hansel and a handful of his fellow graduate students intent on seeing their research reach commercial markets.  The potential partner they set their sights on was Mori Seiki, and the resulting venture would ultimately strengthen U.S.–Japan business relations and create new manufacturing jobs in what was once thought of as “yesteryear’s industry.”

Dr. Yamazaki had a relationship with Mori Seiki stretching back decades, to when he was a professor at Japan’s Toyohashi University of Technology.  In 1980’s Japan, the race was on to develop a superior computer numerical controller (“CNC”) for machine tools.  Dr. Yamazaki recalls the visitor sent to his laboratory by Mr. Yukio Mori, then president of Mori Seiki and father of Mori Seiki’s current head, Dr. Masahiko Mori:  “He sent one engineer to my university, and asked me to develop and educate their engineers such that Mori Seiki could develop the CNC controller by themselves.  The president felt it was too dangerous to just slowly depend on (their main supplier’s) controller for the future.”

Heading up a team of fifteen, Dr. Yamazaki succeeded in developing the desired CNC in 1988, establishing a long-lasting friendship with the company.  Yet as a world leader in CNC research, he longed to try working in the US:  “At the age of 43, I decided to move to UC-Davis,” he recalls. “The style of research and education at US universities — I never had that kind of experience to teach, or even take classes as a student in a US university.  The first five years were very tough work.”

Dr. Yamazaki’s decision was fortuitous for Hansel and his friends, who found themselves studying under one of the world’s top experts in the field.  Eschewing funding from the National Science Foundation, Dr. Yamazaki preferred to seek sponsorship for his research projects from industrial corporations, often establishing the initial relationships through consulting.  After working with his talented UC-Davis students for several years, he asked Mori Seiki president Dr. Masahiko Mori if he would consider retaining the UC-Davis lab’s research and human capital by establishing its own cutting-edge digital technology laboratory right in Davis.

One might think the proposal – relying on such a youthful American team – would be a hard sell to an established Japanese company.  Industry observers considered it risky for Mori Seiki’s US wing, DMG/Mori Seiki USA, to “shear off” from its American headquarters in the machine tool capital of Chicago to establish operations in distant California.  But Dr. Yamazaki says the need for the technology was pressing, and that urgency helped clear the way:  “I think that they (the Japanese engineers) had a lot of future-direction thinking, and I had a lot of ideas how to put more and more so-called intelligence into the machine tools,” he says.  One Mori Seiki manager knowledgeable about the venture comments: “The capital outlay was minimal — to simply lease an office and purchase sufficient computing and software technology.  This R&D effort started exclusively working with the development department in Japan, and wasn’t sales oriented.  In this way, it actually broadened Mori Seiki’s R&D portfolio and reduced risk of isolation.”

Hansel is now president of the DMG/Mori Seiki USA Digital Technology Laboratory (“DTL”), and still remembers that big year:  “Three or four of us came from the University of California at Davis,” he recalls.  “We were studying mechanical engineering, all four of us, and we started a small subsidiary for Mori Seiki in this area doing research and development on machine tools.  We felt this would give Mori Seiki a competitive advantage.  Every single Mori Seiki machine that’s developed now runs through our office in terms of the analysis work and the prototypes — at the pre-prototype stage.”

While the internal customer for the Digital Technology Laboratory is the development team at Mori Seiki Japan, Hansel says he and the DTL founding team members like to think of themselves as a scrappy

start-up:  “That’s more or less how we pitched it to Dr. Mori,” he says. “As a little start-up.”  Now, he adds, “We have a factory next to us, 12 years later, and we’re moving right along.”  The Digital Technology Laboratory at Davis and its new neighboring $50 million state-of-the-art factory are one hundred percent owned by DMG/Mori Seiki, and currently employ about 140 workers.

The Digital Technology Laboratory has also generated a wave of innovations and benefits for Mori Seiki.  DTL-created computer simulations have helped improve Mori Seiki’s product quality, and were key to extending the DMG/Mori Seiki USA product range to the new line of “X-Class” machines that incorporate simulations to produce a host of benefits.  Hansel detailed some of the advances DTL has created: “People only make money when their machines are running.  We make it so that you can simulate the machine movements in the computer environment, and check for potential collisions before you put a program on the machine.”

Basing a key research function so far from Japan presented challenges.  Establishing the Davis laboratory was an exercise in intercultural communication for both the Davis DTL and Mori Seiki Japan staff members as they tried to work with — rather than against — time zone differences.  Hansel says that Davis personnel rely heavily on videoconferencing with Japan to keep the 24-hour development cycle flowing.  “We have a pretty big (data) pipe to Japan, so it’s pretty good.  We rarely experience a difficulty.”

The international collaboration has created “intelligent machines” with a homegrown edge.  Irene Adler, general manager of Mori Seiki’s global marketing department in Munich, Germany reports that the advanced software capabilities that originated in the Davis laboratory are in high demand with customers, and that the California facility offers critical advantages over manufacturing in Japan.  “When all the machines are produced in Japan,” says Adler, “we have the shipping costs and the delivery time, which we can eliminate when produced locally.”

The “little start-up” in Davis, brainchild of Dr. Yamazaki and executed by Hansel and the team of former students, has become a source of innovation and growth for one of Japan’s most successful companies.

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Steve Ross, anchor/reporter for the Orient News Network.  Prior to his work in Japan, Steve reported for CBS affiliate station KOLN-TV in Nebraska’s capital, and for Turkish-owned Ebru News in New York City (http://news.ebru.tv/).  He was a Donald T. Sheehan International Fellow to the 2011 Wharton Seminars for Business Journalists, and was a JET (Japan Exchange & Teaching Program) Fellow from 1994 to 1997.  Steve is a graduate of Columbia College of Columbia University.