Special Feature 2012 - Nidec's Risk Management and Strategy
3. Diversification of Clients and Regional Risks
Transformation of the Business Portfolio in Order to Diversify Customer Risks
The fact that the proportion of HDD motors in the sales and profits of Nidec Group is overwhelmingly large and that the top three sales results per customer of the total Group sales consist of HDD motor customers is one of our strengths, but at the same time constitutes a challenge in terms of risk management.
Nidec Group strives to achieve sustained growth, and expanding other business areas and reducing the dependence on HDD motors are also important business policies from the perspective of risk management. Because of this, Nidec Group is working on drastically transforming our business portfolio.
Looking at the "Sales structure ratio per FY (Fig. 4)," it is apparent that the structural sales ratio for general motors (automotive motors and motors for home appliances & industrial machinery), for which the largest sales expansion is expected, is changing significantly. Especially the growth of electric power steering motors is dramatic; in addition, the active utilization of M&A activities with the acquisition of Valeo (France), Sole Motor (Italy), and the motor business of Emerson (U.S.) led to the rapid growth of the general motor business (Chart 1).
The ratio of sales of general motors in the total sales results for FY2011 was 26%, which constitutes growth of 6% over the previous year, indicating smooth progress in the ongoing transformation of our business portfolio.
In order to strengthen the industrial motor business, we acquired in 2012 Ansaldo Sistemi Industriali S.p.A*3 Nidec Group activities have been greatly expanded through the additions of Nidec Motor Corporation specializing in large-sized motor rated at a maximum output of 3,700 kW, and ASI manufacturing supersized motors rated at an output of 35,00 kW (ten times that of Nidec products.) As such, Nidec is striving to become the world's leading manufacturer of motors for industrial applications as well.
Nidec Group's dream is to broaden the application fields of motors to include railway, marine vessel, and airplane markets in addition to the PC and automotive markets that Nidec currently serves. Based on this, the acquisition of ASI, a motor and power generator manufacturer, is not only a part of our business portfolio transformation but also related to our next-generation business strategy.
- *3 Ansaldo Sistemi Industriali S.p.A (ASI)
- Headquarters: Milan, Italy. Major bases: Italy (four bases), France, and Russia. ASI was established in 1853 and boasts an approximately 160-year history. The company is known as a major manufacturer of industrial motors, but is also active in the power generator and low-to-medium voltage drive markets, as well as industrial system and automation markets, while also running maintenance and other servicing businesses. ASI has approximately 1,200 employees and reported sales of 292 million Euros (approximately JPY 31 billion) in the FY ended December 2011.
Further Promotion of Globalization Through a Geographical Market Diversification
We are moving forward with a geographical market diversification in parallel to the diversification of customer risks.
In the area of computers, globalization is close to completion with, apart from certain languages and software, special product characteristics, based on usage that is unique to certain languages or regions, having nearly vanished. For instance, HDD motors produced by Nidec in Thailand are installed in computers manufactured in China and then exported to customers all over the world. The same is true for mobile and smartphones, for which products utilizing the same system are sold and used globally.
However, automobiles and home appliances as well as the industrial field are not yet in such a situation. Cars selling well are different between Asia, Europe, and the Americas; home appliances such as washing machines, dish washers, and air conditioners have different specifications depending on the lifestyles and customs of the countries and regions where the appliances are used.
That is where new business opportunities are born. There is no doubt that, in light of the necessary risk diversification, it will be important to enter markets all over the world rather than stay focused on Japan and Asia.
Nidec Group is building its global network by entering the respective markets and either starting to produce in-house there or acquiring a company that has its roots in this country and is doing business there
In the area of the automotive motors, Nidec acquired Valeo (France) in 2006 and the motor business of Emerson (U.S.), which owns SR motor technology, in 2010 (current Nidec Motor Corporation). Thus, while Nidec is expanding our business in Europe and the Americas, we will also establish a production base in India in the near future (Fig. 5).
Regarding home appliance motors, Nidec acquired Sole Motor (Italy) in 2010 and is expanding operations by adding Nidec Motor mentioned above. In the area of industrial motors, ASI (Italy), acquired in 2012, has sales channels in Europe as well as in Russia and South America and fulfills an important role in the global network that is being created (Fig. 6).
As described above, the automotive motor and home appliance and industrial motor businesses have become important pillars that support Nidec Group's risk management in terms of three factors: customer, product, and region.