Strengthening Competitiveness through In-house Cutting Tool Production

In precision component machining, the performance and cost of cutting tools are critical factors that determine productivity and profitability. While many manufacturers rely on commercially available cutting tools, We, Hiraoka Sangyo Group has strategically started in-house cutting tool production, enhancing competitiveness in both production technology and supply chain management. With production bases in Thailand and India operating over 1,000 CNC lathes, the group has established a large-scale mass production system. As production volumes increased, so did cutting tool consumption, making the cost and lead time of imported tools a bottleneck for business continuity and profitability. To address this challenge, the group has established an integrated in-house system for the design, manufacturing, and regrinding of cutting tools. This article discusses the strategic significance and specific initiatives from a manufacturing technology perspective, explaining how in-house cutting tool production contributes to reducing manufacturing costs, shortening lead times, improving quality, and maximizing customer value. 

The Role of Cutting Tools and Background for In-house Production 

In precision metal component mass production cutting processes, cutting tools are core elements that define machining quality and productivity. Processes such as lathe and machining center operations heavily depend on the form accuracy, cutting edge quality, and wear resistance of tools like drills, end mills, turning inserts, taps, and reamers. These tools serve as vital interfaces for finishing materials such as steel, stainless steel, aluminum alloy, copper alloy, and brass to specified dimensions and surface finishes. Particularly in fields demanding high reliability, such as automotive parts, fuel injection components, and medical device parts, tool quality and stable supply directly impact the total cost of ownership of the final product. Operating over 1,000 CNC lathes and continuously producing large lot sizes of precision components, our group’s monthly consumption of cutting tools has reached a significant scale. The clear understanding that cumulative tool unit costs, inventory burden, and supply lead times could affect long-term competitiveness became the practical starting point for advancing our in-house cutting tool production. 

Addressing Import Dependency Risks and Investing in In-house Tool Production 

For mass manufacturers like our group, sourcing certain specialized tools from overseas impacts productivity not only through tool prices but also through shipping costs and delivery times. Long lead times necessitate increased safety stock, raising inventory costs and supply chain risks. Furthermore, external environmental volatility has increased in recent years due to international logistics disruptions and geopolitical risks. Against this backdrop, enhancing autonomy in cutting tool procurement has become a crucial management issue both for cost and stable supply. To address this, our group introduced tool grinding machines at our Thai base, E&H Precision (Thailand) Co. Ltd., and formally commenced in-house cutting tool production. This investment was not merely for reducing purchase costs; it was a production technology investment to holistically optimize tool design, machining conditions, and supply lead times. Subsequently, equipment was expanded in line with increasing demand and broader coverage, gradually raising the in-house production ratio. Today, we have established a hybrid supply system balancing in-house production and external procurement for specific tool categories, achieving both cost efficiency and risk mitigation. 

Target Cutting Tools for In-house Production and the Manufacturing & Regrinding Process 

Our in-house cutting tool production has expanded sequentially, starting with tools directly linked to mass production needs. For lathe operations, we design and grind cutting inserts for turning tools and specialized tool tips using carbide and high-speed steel, pursuing cutting performance and durability tailored to workpiece materials and cutting conditions. For drilling and internal machining, we produce specialized tools in-house for applications where standard tools are insufficient, such as deep-hole drilling, micro-hole machining, and tools for specific materials, including drills, boring tools, reamers, and end mills. This contributes to reducing the number of machining steps, lowering tool change frequency, shortening setup times for tool changes, and improving overall line throughput. Moreover, our group continuously engages in tool regrinding. For step drills, reamers, guide bushings, and collet chucks, we assess wear conditions and perform regrinding with tool grinding machines, restoring performance to meet functional requirements for reuse. Combining manufacturing and regrinding operations in this way not only reduces tool costs but also enhances resource efficiency and contributes to lower environmental impact. 

Direct Cost and Supply Advantages from In-house Production 

Producing cutting tools in-house enables continuous improvement of our manufacturing cost structure. First, tool procurement costs can be contained. With external procurement, tool unit prices include logistics and import-related costs. In-house production reduces dependency on these external factors, allowing cost management based on material costs and machining labor. Second, shortened tool supply lead times alleviate inventory burden. Reliance on imported tools requires safety stock to account for uncertainty, but in-house production enables tool supply as needed, optimizing inventory levels. Third, it enhances flexibility for short-lead-time orders and production ramp-ups. Tool manufacturing schedules can be adjusted according to production line load fluctuations, mitigating the risk of production opportunity loss due to tool availability. Furthermore, increased design freedom for specialized tools enables extended tool life and reduced changeover frequency, contributing to lower indirect tool-related costs. Such effects are particularly pronounced in our group due to the scale benefits derived from our status as a mass manufacturer that continuously uses large quantities of cutting tools. 

Machining Quality Optimization and Accumulation of Cutting Technology Know-how

In-house cutting tool production yields significant benefits not only in cost but also in machining quality and technology accumulation. While general-purpose tools prioritize design for broad applicability, mass production sites require tools optimized for specific materials, shapes, and processes. Our cutting tool development department designs tool geometry, materials, and coatings holistically, in response to requirements such as workpiece material characteristics, specified dimensions, tolerances, and surface roughness. For example, for fine shaft machining of stainless steel, we develop specialized turning tools with unique shapes to suppress workpiece deflection and vibration; for deep-hole drilling, we design dedicated drills combining flute geometries and coatings to enhance chip evacuation. This facilitates stable achievement of chatter reduction, surface finish improvement, dimensional variation suppression, and extended tool life on mass production lines. Moreover, possessing an integrated in-house process for tool design, grinding, and evaluation fosters accumulation of knowledge within the company on cutting theory, material properties, abrasive machining, and coating technologies. This knowledge forms the technical foundation for proposing VA/VE solutions to customers and suggesting manufacturable shapes and lower total cost process configurations during the mass production design phase of new products. 

Smart Production Integrating In-house Cutting Tool Production and Digital Technologies

Our group positions in-house cutting tool production not as a standalone initiative but as a crucial component of smart production integrated with digital technologies. Production sites are equipped with IoT sensors and monitoring systems, providing continuous visibility into machine operation status, cycle times, and tool wear trends. Data on in-house tools is also collected and analyzed for tool life and quality indicators per machining condition, aiding in tool design improvements and standardization of tool change timing. In production planning, scheduling considers lead times and inventory status of in-house tool manufacturing, coordinating production lines and tool manufacturing lines to build a streamlined flow with minimal waste. Furthermore, digital tools like RPA and OCR are utilized for administrative processes such as drawing management and tool ordering, fostering an environment where engineers can focus on high-value-added improvement activities. Regarding quality management, while leveraging frameworks like ISO 9001 and automotive industry quality standards IATF16949, we emphasize establishing continuous improvement cycles through in-house tool production and data utilization. 

Conclusion: Manufacturing Competitiveness and Customer Value Supported by In-house Cutting Tool Production

In-house cutting tool production has become one of the foundational technologies supporting the competitiveness of Hiraoka Sangyo Group’s mass production machining. By establishing in-house solutions through equipment investment and technology development to address challenges related to tool procurement costs and lead times, the group has simultaneously achieved improved cost structures and stable supply. Initiatives such as designing and manufacturing specialized cutting tools using carbide and high-speed steel, and enhancing resource efficiency through regrinding of used cutting tools, serve not merely as cost reduction measures but as crucial platforms for deepening our precision lathing technology. Furthermore, being able to control tools ourselves within a smart production system integrated with IoT and data analysis provides a significant strength in enhancing quality stability, on-time delivery, and process flexibility. Backed by this technology and framework, our group continues to stably supply diverse metal components—from micro-parts to critical functional parts—to customers worldwide. In-house tool production will remain a vital strategy for our manufacturing and customer value creation, acting as a linchpin connecting the production floor and digital technology. 

We, E&H Precision, Asia’s Largest CNC Machining Metal Lathe Turned Parts Manufacturer has more than 700 CAM / CNC automatic lathe turning machines in Japan, Thailand & India, delivering to Asia, Europe, North America and South America. 

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** The images on this blog are for illustrative purposes only. They may differ from the actual situation.