Nidec and Makino Milling Machine - A New Era in the Machine Tool Industry?

The global economic landscape is shifting dramatically. Trade disruptions caused by tariff battles and other factors are creating ripples in the global supply chain, and industries around the world are facing increasingly intense competition.

Among these changes, the merger between Nippon Steel and US Steel is one of the hot topics in the manufacturing industry. However, another critical acquisition is gaining attention in the world of machine tools under the surface.

Global Trends in the Machine Tool Industry

DMG Mori Seiki is the global leader in the machine tool industry today. This company was formed when DMG (Germany) and Mori Seiki (Japan) merged in 2016, solidifying their position at the top of the global market. The integration of these two companies allowed them to leverage each other’s strengths, further strengthening their leadership in the industry.

However, Nidec, a company primarily known for its motors and automation technologies, is now emerging as a formidable player in the machine tool sector. Nidec has been actively acquiring machine tool-related companies with the aim of becoming the industry’s next leader. The most recent target of their acquisition efforts is Makino Milling Machine.

Nidec’s Next Target: Makino Milling Machine

Makino Milling Machine is a Japanese machine tool manufacturer known for its precision machinery and impressive track record in high-tech applications. Nidec’s move to acquire Makino has sent ripples through the industry, with many speculating that this acquisition will push Nidec as one of promising competitors in the global machine tool market.

The Rising Technological Advancement of Chinese Manufacturers

China has risen to the top in both machine tool consumption and production shares in recent years. Currently, China holds the #1 position in global consumption and production of machine tools, leaving traditional powerhouses like Germany and Japan trailing behind in second and third positions, respectively.

This shift has created a sense of urgency within the Japanese machine tool industry. As Chinese manufacturers such as Beijing Jingdiao Technology Co., Ltd (北京精雕集团) continue to make significant technological advancements, Japan’s leading companies may feel pressure to consolidate and strengthen their position in the face of growing competition. China’s rising presence in this industry could very well be the driving force behind the ongoing mergers and acquisitions within Japan’s machine tool sector and also the German Machine Tool market.

Why Are These Acquisitions Happening?

The backdrop to these mergers and acquisitions is the intensifying competition in the industry. As technological innovations accelerate, companies in the machine tool sector must evolve rapidly to keep pace with changes like automation, robotics, and IoT. To remain competitive, these companies are increasingly turning to acquisitions to expand their capabilities and scale up their operations.

Nidec’s strategy seems clear: By acquiring Makino, Nidec can combine its strengths in motors and automation technologies with Makino’s high-precision machining expertise. This synergy is expected to result in new business opportunities that will help Nidec challenge DMG Mori Seiki’s dominance in the future.

However, acquisitions like this don’t come without risks. The loss of existing customers and suppliers during integration is a real possibility. For instance, Makino’s long-standing relationships with clients and suppliers might be disrupted in the short term as Nidec integrates its new acquisition. The key question will be how quickly Nidec can establish new relationships that recover lost volume and create new business streams.

What About the Employees?

One of the most sensitive aspects of these mergers and acquisitions is the treatment of employees. In previous acquisitions, Nidec has shown a careful approach to employee management, especially regarding the integration of Mitsubishi Heavy Industries’ machine tool division. In the case of Makino, Nidec will likely need to exercise caution in maintaining a harmonious work environment while blending the two companies’ corporate cultures.

The careful treatment of employees will be crucial to ensuring smooth integration and retaining the talent that has made Makino successful in the past. Nidec will need to find a way to maintain job stability and foster a productive work environment while aligning the two companies’ objectives.

What Does the Future Hold?

The merger between Nidec and Makino has the potential to reshape the machine tool industry. However, the road ahead will require careful execution, especially regarding customer retention, supply chain adjustments, and employee integration.

Conclusion

Nidec’s acquisition of Makino Milling Machine is just one example of the rapidly changing landscape in the machine tool industry. As global companies look to consolidate their power, Nidec’s move could prove to be a game-changer.

It seems that Japanese machine tool manufacturers tend to focus on the domestic market because Toyota Motor Corporation is based in Japan. However, with the transformation of the automotive industry and changes in the global supply chain, it may be time for them to shift their focus from the domestic market to the international market more and more.