Collaborative agreement offers unlimited possibilities

As Dr. Masahiko Mori, (center) looks on, Dr. Rüdiger Kapitza, (left) explains to Tom Grasson (right) that the goal of DMG and Mori Seiki is to build a strategic partnership and closely collaborate on areas which include, but are not limited to, production, research and development, and purchasing. It has been said that synergy is the magic force that allows for enhanced cost efficiencies when two companies come together in terms of a merger, or in the case of Mori Seiki and Gildemeister, a collaborative agreement.
When this collaborative agreement was announced between these two well-known machine tool builders, located halfway around the world from each other, questions started to surface relative to what these two companies envisioned that would benefit endusers within the global machining sector. U.S. manufacturers were especially interested in learning what this agreement would mean to them and how it would affect their relationship with each of the companies.

When it was brought to the attention of Dr. Masahiko Mori, chief executive officer of Mori Seiki and Dr. Rüdiger Kapitza, chairman of the executive board of Gildemeister, that U.S. manufacturers were perplexed by the collaborative agreement of these two major machine tool manufacturers, they agreed to meet with our staff at the EMO Show in Milan, Italy. The meeting was to help clarify any misunderstandings and/or confusion regarding the agreement.

At the onset of the meeting, Dr. Kapitza was quick to point out that sometimes one plus one equals more than two. He then went on to explain that worldwide, customers using both Mori and DMG machines in their facilities accounted for only 1% to 2% of total sales for both companies. “In fact, in Turkey, Gildemeister and Mori Seiki have slightly more than 300 clients. Yet, only 12 of them have both a Mori and DMG in their facility,” Dr. Kapitza notes. “It is either one or the other.”

Reinforcing this statement, Dr. Mori pointed out that the same scenario holds true for South Korea. In fact, many potential customers in countries such as Taiwan, Thailand, Indonesia, and Turkey have commented to Dr. Mori that Mori Seiki is always competing with DMG and the two companies should be working together for the common good.

With similar comments being heard at Gildemeister, the foundation was set in place for Dr. Mori and Dr. Kapitza to join forces and work out a collaborative agreement. Each company agreed to a cross-shareholding investment of 5%. Under the agreement, Dr. Mori and Dr. Kapitza would be appointed to high-level positions within each other’s firms. Moreover, Mori Seiki would become the largest, single shareholder in Gildemeister. In addition, it was agreed upon that a steering committee would be setup to manage the partnership.

Under the terms of the agreement, the two machine tool builders will function under one brand (DMG/Mori Seiki) in four markets: Taiwan, Thailand, Indonesia, and Turkey. As for the United States, both Dr. Mori and Dr. Kapitza agree that a strategy is not yet in place. Currently, the plan is to take it one step at a time and look at strengthening the synergies between the two companies, market by market, where Mori Seiki and Gildemeister have complimentary activities. By consolidating sales activities in selected regions, such as in the countries mentioned above, the new partners see an opportunity to invest jointly in emerging markets. Eventually, the focus will turn to the United States and a strategy will be developed to benefit the U.S. customer. However, for now the focus of the collaboration agreement will be on global business opportunities outside the United States.

Both Dr. Mori and Dr. Kapitza have a proven history of running profitable companies and understand that remaining in the forefront requires innovation.When you take into consideration that both German and Japanese machine tool sales have declined by more than 60% in 2009, the forward thinking of Dr. Mori and Dr. Kapitza could be the right prescription for both companies as they cope with the effects of a global recession. As Dr. Kapitza points out, at the moment it makes no sense for DMG to merge with another German company. Nor does it make sense for Mori Seiki to merge with another Japanese company. What does make sense is to blend German engineering with Japanese technology and gain from the benefits of both worlds. Today, DMG buys components from Mori Seiki, such as spindles and ballscrews, and without hesitation, Dr. Kapitza admits that they work perfectly, without a flaw. However, the vision of this collaboration agreement is intended to go much further than working together on the interchangeability of machine components.

Neither Dr. Mori nor Dr. Kapitza is a stranger to the machine tool industry. Over the years, both men have been very successful. They have a proven history of running profitable companies and understand that remaining in the forefront requires innovation. In addition, both of the industry leaders are very confident in their plans for the future.

So, as we look ahead, the collaboration between Mori Seiki and DMG will encompass much more than sales and service. They will also build a strategic partnership and closely collaborate on areas that include, but are not limited to, production, research and development, and purchasing. This, according to Dr. Kapitza, will bring about the highest level of efficiency ever achieved by either company. Reinforcing this comment, Dr. Mori points out that the fusion of technologies and strong sales and service networks brings together greater productivity benefits for the customers as well.

On a final note, Dr. Mori sees the United States as a very important market. Especially in the aerospace, energy, and medical sectors, he believes that in the long term this collaborative agreement will benefit U.S. manufacturers with the best combination of designs and technologies that Germany and Japan have to offer.

Both Dr. Mori and Dr. Kapitza realize that when the strategy for the United States is finalized, it must deliver added-value for the customer as well as both machine tool companies in order to be truly successful.

Knowing that Mori Seiki has been much stronger in the U.S. market than DMG, Dr. Kapitza has agreed to have Mori Seiki provide the leadership and focus on developing the joint U.S. strategy.

No doubt, Dr. Mori and Dr. Kapitza are about to set a new standard in the machine tool industry, and in the months ahead, we can be assured that we will be hearing a great deal more about DMG/MoriSeiki.
 

Mori Seiki Americas
Hoffman Estates, IL
moriseiki.us

DMG America
Itasca, IL
dmgamerica.com