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The eBearing News
September 22, 2003
Minebea Faces Pricing Pressure, Despite
Market Share and Matsushita Venture
copyright © 2003 eBearing Inc.
Minebea Group Ltd. (Japan) indicated it may miss sales, export level and
profitability targets this year, partially
due to strong downward pressure on its product pricing worldwide. Consumers now expect
and demand ever-lower prices for electronics, squeezing basic component manufacturers
such as Minebea.
Via its NMB brand, Minebea is the world's largest manufacturer of miniature and
precision instrument bearings. In bearings and other products, it employs 45,000
people in 39 manufacturing facilities across 10 countries. Minebea commands a 65%
world market share of ball bearings under 22mm bore. In precision rod end and
spherical bearings, it has a 60% world market share. In the United States,
Minebea's holdings include New Hampshire Ball Bearings. Particularly important
for the current period, Minebea dominates the computer disk drive
market for fluid dynamic bearing motors and pivot bearings.
Despite Minebea's dominant market position supplying several key rotating electronic
components, it has not been able to completely resist downward pricing pressure.
Passed on from consumers to end manufacturers to component vendors, the forced
price deflation is impacting Minebea's operations worldwide, to the point where it
now expects total sales value to decline this year, even as the volume rises.
For manufacturers, this trend is a troubling reversal. Although manufacturing generally
benefits from higher volumes through better leveraged cost structures, efficiency,
lower per-unit overhead and other factors, Minebea's fast-rising volumes have
still not been enough to counteract the extreme downward pressure on component prices.
But the company says it knows what it has gotten into. "Unit prices have always been
coming down," said Tosei Takenaka, Minebea's Regional Director for Asia, even as he
cites customers suddenly demanding unannounced 5% discounts across the board.
The solution, he said, is to continue investing in manufacturing technologies and
pursue joint ventures which strengthen its position globally.
And like many other manufacturers in today's economy, Minebea does not intend to
add more employees as sales increase. Instead, it is employing systems to improve
efficiency and spending on increased automation.
To that end, Minebea has been investing aggressively, particularly in Thailand,
where seven locations, 37 divisions and 30,000 employees produce 60% of the
company's output. Over 90% of Thai output, or baht 40 billion (USD $986 million)
is exported, primarily to Japan.
In the fiscal year through March 2003, Minebea invested baht 4.5 billion
($111 million) in its various Thai operations. In 2002, the company
invested baht 3 billion ($74 million) in Thailand. In all, Minebea has invested
over baht 65 billion ($1.6 billion) during its 20 years operating in Thailand.
"Diversification is needed in Minebea's plants in Thailand and Shanghai. The facilities
in Thailand will be much more sophisticated, while the ones in China will be focused
on labor-intensive processes," said Mr. Takenaka. Unlike many other manufacturers,
however, he said he did not expect that Minebea's China production would ever
outstrip Thai production.
Further leveraging its electronic component manufacturing operations, Minebea
recently announced a key joint venture with Matsushita to produce small, high-precision,
electric stepping and permanent magnet motors. It is Minebea's first joint venture.
The new venture, currently in the due diligence phase, will be 60% owned by
Minebea and 40% by Matsushita. It is expected to be active by second quarter 2004.
Mr. Takenaka said, "Through the joint venture, we will be the number one or number two
in market share in some of the motor products." Total sales of the joint
venture operations are expected to top baht 30 billion ($740 million) in 2004.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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