Nidec’s Nagamori-ism brings profits and productivity to German acquisitions

Nidec acquired Geraete und Pumpenbau, a German pump manufacturer based in Thuringia in 2014.  The 1000 or so employees were worried about their job security as a result, according to Nikkei Business magazine.  Nagamori visited shortly after the acquisition and said “you are making a superb product.  We can sell this not just in Europe, but US and Asia,” he declared in Japanese, without an interpreter: “Let’s make GPM even bigger.”

Michael Grellmann COO of GPM, says that since joining Nidec Group, they have been able to reduce costs and double profitability thanks to thorough “progress management”.

Nidec started acquiring companies in 2010. mainly in North America and Europe.  They have now made 49 acquisitions, of which 24 are overseas.

Nagamori-ism (which we blogged about here before) has helped the acquisitions thrive – passion, enthusiasm and tenacity as well as high growth, high profit and speed. “This was the biggest project in 150 years of our history.  Before, we would never have thought to go after such a thing” says Giovanni Barra, CEO of Nidec ASI (formerly Ansaldo Sistemi Industriali)

The project was the contract to provide a 90 MW energy storage system to the German utility STEAG.  Nagamori told Barra that he was just making excuses when he said his traditional market of supplying energy systems to oil & gas and iron and steel manufacturers was shrinking.  Nagamori told him to set targets and decide what was needed to achieve those targets and what was lacking and what needed to be improved.

Nagamori management style includes “well digging management”, “1000 cuts management” and “household accounts management”.

Well digging management means that in order to improve or decide on management issues, there should be a thorough pursuit until the idea appears.  1000 cuts management means that however complex the topic, if it is cut into smaller pieces, it can be solved.  Household accounts management means if sales and purchasing is thoroughly managed, there will be a profit.

Barra started up cross functional teams to get costs down and think up new business ventures and also a War Room for those teams to meet in.

NASI has doubled its order book in 4 years.

Another German acquisition NMA (Nidec Motors and Actuators) doubled its productivity.  Nagamori told them to increase their operating profit which was at the usual 5-6% for the industry to 15%.  Olav Schulte, the CEO, initially thought this was too much of a stretch.  He had joined from a major German car manufacturer in 2013 and decided to take up the challenge. He renewed most of the machinery on the line and cut the number of employees by half.  He also took Nagamori-ism’s “3 News” to heart – new markets, new customers, new products.  He looked across the group to gain synergies – combining with NGPM and Nidec Elesys to find new markets and customers.

Nidec now stretches across 33 countries.  Nagamori predicts by 2030 Nidec will be in all the 75 countries where the population is bigger than 10 million.  As the group diversifies in business and countries, the key will be how far he can promote Nagamori-ism and accelerate synergies.  This will require Nidec to start on the road to a new global management structure.

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