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Hitachi does deals with Mitsubishi and Sanyo Denki

01 August, 2001

Hitachi has joined forces with two of its Japanese rivals in the fields of automation and servo drives. In the first deal, Hitachi will obtain PLCs and other automation equipment from Mitsubishi, while supplying moulded transformers in return. Each company will sell the bought-in products under its own name.

In the second deal, Hitachi is joining forces with Sanyo Denki in the AC servomotor market. The partners plan to combine Hitachi`s low-cogging torque and high-speed positioning control technologies with Sanyo`s high-volume manufacturing capabilities. At a later stage, they may integrate their production.

The Mitsubishi deal comes against a background of a Japanese economy which is not expected to grow much in the foreseeable future. Japanese automation suppliers are also facing increasing competition from global players such as Siemens, Rockwell and Schneider which are making inroads into the traditionally closed Japanese market through strategic partnerships. This has contributed to a decline in prices.

Hitachi says that these factors have created "an urgent need for industrial equipment manufacturers to narrow and refocus their businesses" to boost their competitiveness, and to make best use of their resources. It hopes that by offering a wider range of PLCs, networking equipment, and other Mitsubishi-made products that support the open CC-Link fieldbus network, it will be able to strengthen its systems business.

For Mitsubishi, the aim is to keep its number one position in the Japanese automation market as well as making it more competitive globally.

Himanshu Shah, a senior analyst with the ARC Advisory Group, says that "with the Japanese economy almost sliding into recession and intense internal competition, revenue growth is not in sight without taking strategic steps". The cross-selling deal "will allow both companies to serve the market broadly and offer greater value to their customers," Shah suggests. "This will not only help to increase the revenue, but also to make their foothold firmer in the Japanese market."

Hitachi`s agreement with Sanyo Denki allows the two companies to supplement each other`s servo products and to work together on new developments. The two companies hope that this will boost the efficiency and competitiveness of their operations, avoid overlapping investments, and reduce the time it takes for products to reach the market.

Hitachi focuses on high-end servos, while Sanyo Denki`s wide portfolio includes general-purpose AC servomotors and two-, three- and five-phase stepping motors.

The AC servomotor market has been growing strongly in Japan, with sales last year worth around £755m - a 35% increase on the 1999 figure.

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