Feature: A Visit to Sokkia: Back to Basics
Professional Surveyor Magazine - September 2002
Marc Cheves, LS
I recently traveled to Kansas City to visit one of the most well-known names in surveying equipment, Sokkia. The Americas portion of the company is just finishing up a major re- structuring under the tagline Back to Basics. A three-year restructuring of the Japanese side was completed last year. In contrast to the other Japanese manufacturers which have large divisions that make medical equipment, cameras, and other products, Sokkia is unique in that it manufactures surveying equipment only.
Sokkia, formerly Sokkisha, has had a long affiliation with Lietz, an American company started in 1882. Lietz was originally a distributor for Sokkisha products until it was acquired by Sokkia (see sidebar on company history).
Sokkia made a major market penetration with all of its products, most notably total stations (SET-B) and data collectors (SDR-series), however several factors combined to cause it to begin losing market share. Tak Oda, President and CEO, and Keith Raymer, Business Development Manager, explained two key reasons why this happened.
Before restructuring, 60 percent of Sokkia's worldwide market was in Japan, with exports accounting for the remaining 40 percent. It is now the reverse, due to the restructuring of the Japanese economy. Previously, 15 percent of Japan's GDP was construction-related, compared to four percent in the U.S. Now, the construction percentage of Japan's GDP has dropped to five percent. This painful restructuring has caused many Japanese construction companies to go bankrupt.
Back in the U.S., however, new opportunities also led to new challenges. Sokkia Corporation began to acquire a number of dealer locations, who had either retired or left the industry. This initially increased market share for Sokkia. With the added distribution channel, however, demand for resources increased. Sokkia faced the challenge of having to serve its already large dealer network, while at the same time develop and nurture a retail chain. Sales increased, but the perception in the marketplace was that Sokkia was now competing with its dealers.
In addition, research and development money was siphoned off to develop GPS products for the Japanese market. Sokkia is the only Japanese manufacturer to have made its own GPS equipment (as opposed to entering into an OEM relationship with an existing GPS manufacturer). Sokkia began manufacturing GPS equipment ten to twelve years ago, but because the products were not suited for Western markets, they were sold only in Japan. Six years ago, Sokkia came very close to an agreement with Ashtech to end GPS development in Japan and sell Ashtech products for all the worldwide markets, but the agreement fell through. Because the R&D funding was being diverted, development of a Sokkia robotic total station suffered. As market share fell, something had to be done.
Sokkia's marketing abilities remained strong, as did its worldwide distribution network and its reputation for quality. In 1999 it struck a deal with NovAtel and created Point, Inc. Point was responsible for developing GPS products; Sokkia in turn marketed and sold the products. In 2001, Oda returned to Kansas City from Japan to assume the position of president of Point, Inc. But corporate restructuring continued to evolve.
As of April of this year, Point now markets, sells, and supports GPS products, and will sell directly to dealers. Oda has taken over as President and CEO of Sokkia Corp. for the Americas. But even more important, because revenues are no longer being diverted to GPS development, development of new technology products is rapidly proceeding.
New Technology, New Demands
Oda had already foreseen the coming mergers in the industry and knew that the future of the industry lay in part in advanced technology and automation. But with the new technology came new demands for support, while prices and profits on core products were going down. After careful examination, it became apparent to Oda that the company was growing in many directions, but unable to dedicate time and energy effectively to both its retail operations and its dealers. To rectify the situation, Sokkia had to develop a solution, which they call going Back to Basics.
Oda had realized from Day One that dealers were the key to a manufacturer's success because of the close contact they have with end users. He devoted his life to cultivating these relationships. In the traditional Japanese business relationship, loyalty is paramount. And loyalty works both ways: a lifelong commitment is made between the company and the employee, and both work together to protect and further each of their interests. Oda sees "the basics" as better serving the loyal dealer channel, which in turn allows them to better address the customers' needs.
Effective March 31, 2002, Sokkia sold its Sokkia Measuring Systems chain of retail stores to a group of former Sokkia employees that converted the stores to the FieldWorks brand. FieldWorks continues to represent Sokkia products but does not maintain any affiliation with Sokkia Corporation. Sokkia will once again focus on wholesale distribution and product development. To reinforce this commitment, Oda spends three days out of every week traveling and visiting the dealers, many of whom he has known personally for more than 30 years.
As an editor and as a surveyor, one of the opportunities I enjoy most about publishing a magazine for the positioning and measurement community is getting a "front row seat" as companies debut their newest products. Sokkia has a steady and constant history of releasing new products, and I was told that this will continue. For example, it has recently released a new series of motorized total stations.
As part of the restructuring, the company reorganized its District Managers along product lines. District Managers now serve dealers for Sokkia Corporation (surveying instruments and supplies), Point Inc. (GPS), and AGL Corporation—acquired in 1996—(construction lasers and machine control).
While the surveying industry is Sokkia's core business, there are other areas of growth that Sokkia continues to develop. While in Kansas City, I also met with Kevin Eaton, General Manager of GIS/Mapping Division. Eaton discussed Sokkia's project and enterprise solutions. Existing products include the Axis3 GPS unit and IMap software, as well as the new HL3D handheld laser. Additionally, Sokkia has partnered with Panasonic to develop a GPS receiver add-on to Panasonic's Toughbook field computer. The new product was recently exhibited at this year's ESRI Conference. Eaton also noted that Sokkia has been hard at work on its GIS products for the past two years and that more new products are in the pipeline.
Law Enforcement Applications
Besides GIS and mapping, Sokkia has mounted a major effort directed at the law enforcement community with the creation of Sokkia Law Enforcement Applications (LEA). Besides forensics and accident investigation, other uses include criminal investigation, search and rescue, and liability. Equipment includes specialized packages of total stations, data collectors and software. A customized version of Autodesk's Field Survey product, called MapVista, not only provides symbology and coding specific to law enforcement, but also ensures compatibility with software used by district attorneys and other agencies. An exclusive arrangement with ArcSecond's Vulcan provides football-field-size mapping, as well as such things as ballistic and trajectory determination. Finally, MicroSurvey has written the Evidence Recorder application for Sokkia's new SDR8100 Windows CE-based data collector.
As part of my visit, I toured Sokkia's new 62,000-square-foot building. Finishing touches were being made as Sokkia, Point, and FieldWorks settled into their respective spaces. Sokkia will continue to be responsible for warranty work, and will still maintain the complete factory parts inventory. (After a product is discontinued, the company still carries parts for seven years!) The parts department uses computers to track more than 10,000 separate parts. A fully-automated 30,000 square foot warehouse brings all the inventory together from four former locations in Kansas City.
The purpose-built structure is unique among the U.S. survey equipment manufacturers. Sokkia celebrated the building's Grand Opening on October 20, 2000 (see PS, Dec. 2000, p. 67). The inside is beautifully decorated with survey imagery, including giant stylized plumb bobs, level rods, and targets and vernier scales in the floor. A Chicago artist was hired to paint an abstract design on the curvilinear wall in the lobby that incorporates the company colors and the sine wave emitted by an EDM. Two state-of-the-art training rooms (which can be combined to accommodate up to 125 people) provide space for the many groups that come directly to Kansas City for training. The conference room has T3 connectivity and video conferencing capability.
Sokkia has more than 600 dealers in the U.S., and the customer service staff has 10-15 years of experience, which means that staff members have personal knowledge of the dealers. Oda has been with the company since 1968 (see the sidebar for an account of Oda's fascinating experiences), and Raymer has been with the company for 24 years.
Many of you may remember as I do the Red-1 EDM manufactured by Sokkisha many years ago. One of my former employers had a whole raft of SETs and SDRs, and as I drive around today and see surveyors in various parts of the country, I frequently see Sokkia total stations being used.
An old Lietz slogan comes to mind: "It's easy to do business with Lietz." The dealers have let Sokkia know that they want the same thing their customers want: a good product at a good price with great service. Given the rich and varied history of both Lietz and Sokkia, and their contributions to the construction industry today, it's good to hear that they have made it through a sometimes painful restructuring process. Today, with their corporate vision of getting Back to Basics, Sokkia is poised to continue its valuable contributions.
1882 Adolph Lietz starts a surveying instrument company in San Francisco. His motto: "Quality, Service and Price."
1906 After the devastating earthquake, Lietz transits are used to help rebuild San Francisco. (They were also used from 1933-1937 in the construction of the Golden Gate Bridge.)
1910 Lietz begins manufacturing a line of drafting equipment and opens its first retail store in San Francisco.
1920 Sokkisha Co., Ltd. is formed and begins manufacturing transits in a small shop in Tokyo. The name was coined from Sok (Surveying) Ki (Instruments) and Sha (Company). Meanwhile, Lietz begins to patent transit frames and other equipment.
1947 Lietz stops manufacturing equipment and becomes a product distributor.
1950s Sokkisha introduces its B2 automatic level. (To date, more than 400,000 B2s have been sold worldwide.) Lietz also begins to market instruments made by Sokkisha.
1970s Lietz Company becomes exclusive distributor of Sokkisha products in the U.S., and moves its distribution center to Kansas City.
1984 Sokkisha acquires Lietz to be its sole marketing, distribution and factory servicing arm in the U.S. During the 80s, Sokkisha expands its sales network worldwide and establishes divisions in Australia and Europe.
1990 Sokkisha celebrates its 70th anniversary and changes its name to Sokkia.
1999 Sokkia enters into a joint venture with NovAtel to create Point, Inc. for GPS products.
Tak Oda, President & CEO
Tak Oda, President and CEO of Sokkia, joined Sokkisha in 1968. He spent his first six months in the repair shop learning about surveying instruments. He lived in a company dormitory during this time, and at the end understood the instruments inside and out.
In 1969, when Sokkisha decided to enter the American markets, Oda traveled initially to Canada, with Vancouver selected as the first city in what would become a steady eastward march across Canada. Oda was nostalgic as he related to me many of the events that took place more than 30 years ago … As he prepared to leave Japan, family members and friends came to the airport; there were many tears. It was his first time on a plane. Sokkisha's equipment brochures were not written in English, so he brought black and white photographs along with him instead. Because he was a novice at air travel and English, he shyly said, "No thank you," as the stewardess offered him scotch and steak. Fortunately, he had brought along a bottle of sake, so not all was lost. He still recalls the beauty of the Puget Sound area as the plane came in to Seattle. Because his first stop was Vancouver, he had to pass through Canadian customs, and remembers how his lack of English made communication very difficult. He also recalled the extreme culture shock.
Did Not Know How to Begin
Upon arrival in Vancouver, he booked himself into a hotel where he stayed one week, until finding better rates at a local boarding house. Three sisters, all widows, ran the boarding house, and one of them was a fortune teller. The boarders ate their meals together, which helped Oda practice his English. But the language barrier was not his only obstacle. The real challenge was that he did not know how to begin selling his products! Frustrated, he did nothing for two weeks. During the day he left the boarding house and went to a park so people would think he had a job. One evening he was talking to a fellow boarder, and explained his predicament. The boarder quickly responded with two words: Yellow Pages! Oda quickly learned that there were six dealers, and off he went. One dealer wanted to see a real instrument, so Oda cabled Japan. Instruments were shipped by boat—a process that took one month. In the meantime, Oda worked for the interested dealer by doing such tasks as repairing electric erasers (remember those round electric erasers?). The dealer happened to be Stan Jackson (originally from Toronto, recently retired) of Canadian Survey Inc. who became Sokkisha's first dealer in North America. It took two months to complete the sale.
From Vancouver, Oda took a bus to Calgary, then to Saskatchewan as he worked his way across the country. To save money, he stayed at the YMCA for $2 per night. Next was Manitoba, and at that point, Oda decided that it looked unbusinesslike to stay at the YMCA, so he began staying at the Holiday Inn. In Toronto, however, where he stayed for two months, he once again opted for a boarding house. Using Toronto as a hub, he worked Ontario, Quebec, and Nova Scotia. In 1969, he met a woman who was working for the organizers of Expo70 in Osaka. One year later, they were married. During the year he was in Canada, he grew more confident of his English, and he learned the "business" from dealers he met.
400,000 Levels Sold
At the end of that year, Oda and his wife returned to Japan for three years. In 1973 he moved to Los Angeles and worked in the Lietz Company as the first representative from Sokkisha. The Lietz Company was Sokkisha's exclusive distributor at the time. Oda's job was to coordinate between Sokkisha and Leitz by learning about the market and calling on dealers to understand their needs. Then it was on to Chicago where he worked with the local Lietz dealers and salesmen from 1976 to 1979. Oda told about his experiences working with the Kara Co. (Bernie Kara, now Ray Kara). Kara only sold
European instruments. Bernie opened up a B-2 level and said it was one the best levels he'd ever seen. Up to that time, Zeiss NI-2 was the most popular level. The B-2 eventually sold more than 400,000 units worldwide.
Business grew, and so did the young Oda family. Their first son was born in Los Angeles, and their second son was born in Chicago. Both received college degrees in the U.S. Today, one works with an import-export trading company in Japan; the other son is in New York, studying in the film industry.
From 1979 to 1984, the Odas lived in Kansas City. Sokkisha purchased Lietz in 1984 (Lietz's 102nd anniversary), and began expanding their markets to Latin America. Oda also established a distribution center in one of the famous limestone caves in Kansas City. The cave had been declared a free trade zone, and products were transhipped throughout the Americas from there.
During his stay in North America, Oda visited dealers in the 48 contiguous states and in seven Canadian provinces. From this experience he learned that the three most important things about business are 1) communication, 2) trust, and 3) the need for continual improvement.
In addition to learning English, which took him three years, Oda had to learn Spanish in order to deal with Latin American markets. He did so in just one year, by attending night school. His first assignment in Bogota, Colombia varied greatly from his first experience in Vancouver. The Yellow Pages method wasn't an option in Bogota, so in order to locate the Instrumentos Topograficos outlets, he walked all the downtown streets in a grid pattern—it took him three days—to locate the dealers. Every other month he visited Latin and South America.
In 1983, he visited La Paz, Bolivia. La Paz, at 4,000 meters, presented the usual high-altitude challenges. Adding to this was the fact that the region was undergoing a revolution. Civil unrest was rampant, and Bolivia had experienced 22 governments in 20 months. At one point, all foreigners were told to leave the country. Adding to the stress of a frantic crowd at the airport was the fact that fuel handlers and mechanics were on strike. There was not enough fuel, so it was decided that only 15 of the passengers would be allowed to board the plane. Oda was one of the lucky ones. Another Japanese businessman who was forced to stay behind gave Oda a message to give to his wife in case he didn't make it out. The plane finally took off, and Oda remembers seeing the mountains directly beneath the plane as they barely made it into the air. But their troubles were not yet over. Even though the flight was scheduled to leave the country, the pilot made an unscheduled stop due to lack of fuel. After several more nightmarish experiences with housing and meals, they finally made it out. It was shortly afterward that several missionaries were killed in Bolivia. As for the other Japanese businessman, Oda later learned that he was able to escape with his life.
Europe and Russia
Oda returned to Japan where he was in charge of Sokkisha's International Department from 1986 to 1989. From there he moved to Amsterdam to focus on Sokkisha's European operations. While there, he established nine European subsidiaries and opened a Russian dealer network. Nearly ten years passed, and in 1998, he returned to Japan, again to head up the International Department. In 2001, he returned to America's heartland and became President of Point, Inc. in Kansas City. This past April, the man who started out making dealer contacts from the Yellow Pages of a boarding house phone book in Vancouver, was named President and CEO of Sokkia Corporation in the U.S.
I enjoyed listening as Oda shared with me numerous events and crossroads in his life, and as the details unfolded, a common thread became obvious—it was his single-minded determination to succeed, no matter what it took. In all, Oda has moved 22 times since beginning with Sokkisha in 1968, yet over the past three decades, he has made and kept many friends. He is still on a first-name basis with some of the first dealers he ever met. At one point during our conversations Oda gritted his teeth and said, "This is my baby. When I went to work for Sokkia in 1968 we both made a promise to each other to succeed. We will keep that promise." I believe him.
About the Author
Marc Cheves, LSMarc Cheves was a former editor of the magazine.
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