According an interview with Nikkei Business with Alistair Dormer, Representative Executive Officer for Hitachi’s main board and EVP for the Green Energy & Mobility Sector Strategy Planning Division, Hitachi faced two main challenges in its rail business in Europe. Firstly that they were not so strong in control and signal systems, particularly as standards were quite different between Japan and Europe. Secondly, they were too dependent on Britain. For those reasons, it made good sense to acquire Italy’s Ansaldo.
Dormer is himself British – he was in the Royal Navy, before working for Alstom UK and then joining Hitachi Rail in 2003, becoming Managing Director of Hitachi Rail Europe in 2005 and then Global CEO of Rail in 2014. He had already risen to board level at Hitachi by 2015, but took a break in 2022 for family reasons. He was been re-appointed as Representative Executive Officer and Executive Vice President, in January 2023, as well as chair of Hitachi Europe and Hitachi Energy.
The acquirer needs to have the mindset that they are the ones who will change
He has some wise words to say about the post merger integration with Ansaldo. Ansaldo, like Hitachi, had over 100 years of history and a strong culture. “After an acquisition, the acquirer may think about changing the other party’s corporate culture, but this is extremely difficult. Rather, I think the acquirer needs to have the mindset that they are the ones who will change.”
Hitachi Rail created a management team with 30% Japanese, 30% British, and 30% Italian. Additionally, executives from Ansaldo were appointed to Hitachi’s board of directors. Giuseppe Marino, the current CEO of Hitachi Rail, is a former Ansaldo employee.
“When a company is acquired by another company, employees become anxious. Will I be able to continue working? Will the parent company do something strange? Will this factory be closed? Rules must be clearly set,” says Dormer.
Loss of decision making power could shut down the business
“When acquiring a company, you may take away all decision-making rights from the other company. As a result, the acquirer becomes dissatisfied, loses decision-making power, everything slows down, management and employees become dissatisfied, and customers become dissatisfied.” Unlike many previous Japanese acquisitions, where the acquired company was left to carry on as before, the brand name and uniform were changed to Hitachi on day one. Hitachi signs were posted at all factories, and Hitachi’s values were posted on bulletin boards.
“Because Hitachi was not used to developing business in Europe, it instructed Ansaldo to seek permission for even the most trivial details. This would have shut down the business.” So Dormer suggested to the CEO Nakanishi that Ansaldo made their own decisions, and Dormer would monitor their performance monthly. New rules were created, made out of Hitachi and Ansaldo rules.
“Simple English” communication
Communication is of course key. “We also encouraged the use of simple English in communication. Particularly to British people, who tend to use complicated words. This is also necessary for Japanese, Italians and Germans. Having a common language called Simple English will make your job much easier.”
With the acquisition of ABB’s Power Grid Systems business, the values were very similar, but nonetheless it was important to change the communication methods and processes. Dormer encouraged ABB executives to stay in Japan for six month to see for themselves how decision making works there. “We should change the way we ask questions. First of all, simple English. Then ask, “How does this process work?” You will find that 90% of the process is the same as theirs” says Dormer.
Hitachi is now hoping to acquire the railway signaling business of French electronics giant Thales – the UK’s Competition and Markets Authority has just approved. If the EU approves, Dormer hopes to use the same approach, resulting in Hitachi becoming number one in the global railway control market.
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