Mabuchi Motor Co. Ltd.

views updated

Mabuchi Motor Co. Ltd.

430 Matsuhidai
+81 47 384 1111
+81 47 389 5299
Web site:

Public Company
Employees: 51,796
Sales: ¥ 105.74 billion ($983.80 million) (2003)
Stock Exchanges: Tokyo
Ticker Symbol: 6592
NAIC: 335312 Motor and Generator Manufacturing

Mabuchi Motor Co. Ltd. is the world's leading manufacturer of small electric motors, with a global market share of more than 50 percent. The company designs and manufactures a broad range of motors for the audiovisual, telecommunications, automotive, office equipment, precision instrument, home appliance, and industrial equipment industries. The company's motorsranging from tiny to minisculeare literally ubiquitous, finding applications in such products as DVD players, CD players, video cameras, VCRs, and the like; portable telephones and pagers; automobile features such as window lifters, rearview mirror actuators and door lock mechanisms, cruise controls, antenna lifters, navigation systems, and dozens of others; computers and related devices, such as printers, fax machines, copiers, computer cameras, CD-ROM and DVD-ROM drives, and other computer components and peripherals; appliances such as electric toothbrushes, vacuum cleaners, hair dryers, clippers, and shavers, as well as power tools such as drills, sanders, grinders, and the like; and a wide variety of toysincluding model slot-car racers. Founded in 1954 from technology developed by Kenichi Mabuchi, the company has long focused its manufacturing operations outside of Japan, with production facilities centered on China, Taiwan, Malaysia, Singapore, Vietnam, and Hong Kong. Mabuchi is listed on the Tokyo Stock Exchange but remains controlled by the Mabuchi family, including the founder and his younger brother and current chairman Takaichi Mabuchi.

Making Things Move in the 1950s

Kenichi Mabuchi founded a research institute, Kansai Rika Kenjyusho, in 1946 and in no small way changed the world. Mabuchi began work on developing a miniaturized, electrically powered motor, and by 1947 had succeeded in designing a small horseshoe-shaped magnet-driven motor capable of being powered by both electricity and batteries. Mabuchi's invention was to have an enormous impact on virtually every industry. One of the earliest markets for the Mabuchi motor came from the toy industry. Whereas toys had long been driven by rubber bands and wind-up spring motors, they could now be battery operatedand seem to run forever.

Mabuchi continued developing and improving his motor design over the next several years. By the early 1950s, with the motor perfected, Mabuchi launched his own company, Tokyo Science Industrial Co. Ltd. Financial backing for the new company was provided through a ¥1 million loan from a Japanese toy maker. Tokyo Science's initial goal was to begin the manufacture of toys, models, appliances, and other end products, in addition to its motor production. In support of that effort, the company established a subsidiary, Japan Science and Industry Co. Ltd., in 1955.

Yet motors quickly became the company's primary focus. A major step forward in the later Mabuchi Motor's growth came in 1955 as well, when Mabuchi developed an automatic winding machine, used for wrapping the motors' copper wire armature. The new machine enabled Mabuchi to achieve a significant boost in production capacity. Another significant moment in the company's history came in 1958 with the launch of a new motor based on a ferrite magnet. The new material permitted still smaller, more lightweight motor designs.

By then, Mabuchi had established a dedicated export sales business, Mabuchi Shoji Co., which began operations in 1957. In 1959, the two earlier companies were merged together, at first renamed as Mabuchi Industrial Co., but then becoming Tokyo Science Co. Ltd. The development of the company's next generation of motors, the miniature, high-precision RM and FM types, in 1960, marked the début of the company's growth into the world's leading small electric motor manufacturer. The company now began supplying a wider variety of customers. In addition to the toy industry, Mabuchi began supplying motors to audio equipment manufacturersespecially makers of turntables and reel tape machinesand watch and clock manufacturers.

In 1962, Mabuchi built a new factory in Tatabayashi in order to meet the demand. The following year, the company launched its new, powerful FT motor typewhich quickly revolutionized the slot-car racing market. Another high-power motor, the RS, launched in 1963, enabled the company to enter the market for home appliances as well.

The following year, Mabuchi took the unusual step of opening a production plant in Hong Kong, then a source of ready, cheap labor. As such, the company was able to cut manufacturing costs by as much as two-thirds. Yet Mabuchi continued to invest in its production capacity in Japan, building a new factory in Matsudo City, near Tokyo, in 1965. In that year, also, the company opened a sales office in the United States, which emerged as one of Mabuchi's most important markets.

Mabuchi released several more successful motor designs through the late 1960s, including the compact RE type, the low-cost FA type, and a "submarine" motor for the toy and hobby market. The company also entered the European market, establishing a sales subsidiary in Frankfurt, Germany in 1969.

Public Offering in the 1980s

Mabuchi continued building up its international manufacturing base through the 1970s and into the 1980s. The company turned next to Taiwan, founding Mabuchi Taiwan Co. in Taipei in 1969 in a 5050 partnership. That company quickly began construction of a new, modern facility, which opened in 1973. By then, Mabuchi had officially changed its name, to Mabuchi Motor Co. Ltd., in 1971. That year, also, the company moved into a new headquarters in Matsudo City, combining its production and sales operations. In 1972, the company created a new company, Mabuchi World Trade Co, combining its domestic and export sales divisions.

During the 1970s, Mabuchi expanded its operations to include the production of high-precision machine tools, needed for its motor production. The company also began producing more of its components, including motor shafts. For this, the company established a new subsidiary, Mabuchi Precision Industries, in 1974.

The 1970s also were marked by a rapid expansion of the company's motor technologies into a variety of new areas. In 1974, the company introduced a new motor for the model airplane market. More significant was its launch of a motor with built-in governor, which permitted the development of new home audio and electronics products, such as cassette decks and eight-track tape players. The release of a geared motor in 1975 brought the company a new range of customers among vending machine manufacturers, among others. That same year, Mabuchi launched its first automobile mirror motors, marking the company's entry into the automotive market. Mabuchi also became an early entrant in the promising market for videocassette recorders, developing its first motors for those appliances in 1980. Similarly, the following year, the company's development of an electric drill motor prompted its full-scale entry into the market for power tools and industrial equipment.

The rising costs of business in Japan led the company to increase its investment in Hong Kong in the mid-1970s, with the construction of a new production plant in Tsuen Wan in 1976. The company also built a new factory in Taiwan, in Hukou, in 1978. The following year, in order to respond to dramatic increases in demand, Mabuchi built a third plant in Taiwan, in Kaohsiung. Part of the driving force behind the rising demand was the company's decision to establish a dedicated local sales and service subsidiary, Mabuchi Motor America, in the United States in 1977.

Mabuchi constructed a new factory in Katsushika, Tokyo in 1982, and built a new factory as well as expanded its existing Hukou plant, in Taiwan in 1984, in order to keep pace with the surging demand for its motors worldwide. In 1984, also, Mabuchi made its first move into the public market, listing its shares on the Tokyo over-the-counter market. Two years later, Mabuchi joined the Tokyo Stock Exchange with a full listing on the exchange's secondary market. Just two years after that, Mabuchi's stock moved to a listing on the primary board. By then, the company's sales neared $320 million, producing net profits of $45 million. The company's production totaled more than 600 million motors per year. Kenichi Mabuchi, then entering his 70s, had taken on the role of company chairman, while younger brother Taikaichi guided the company as president.

The late 1980s marked a significant shift in Mabuchi's manufacturing focus. The company opened its first processing facility in mainland China, in Guangdong in 1986, becoming one of the first Japanese manufacturers to shift part of its production there. One year later, the company became the first Japanese company to set up a fully owned subsidiary in China, Mabuchi Motor Dalian Ltd. The company opened a second subsidiary in China in Shenzhen the following year, to produce machine tools and provide maintenance services for its main Guangdong subsidiary.

Company Perspectives:

In the 21st century, a time when the field of competition will change dramatically, Mabuchi Motor promises to solidify our value as a corporation and become a staple enterprise to the world.

Mabuchi turned its attention toward expansion in the fastgrowing ASEAN region as well. In 1989, the company opened a manufacturing subsidiary in Malaysia, following by a subsidiary in Singapore. These moves helped the company shift the largest part of its manufacturing base outside of Japan. By the early 1990s, the company already operated ten manufacturing sites overseas, and by the beginning of the next decade, fully 98 percent of the company's production took place outside of Japan. In this way, Mabuchi was able to slash operating costs by as much as two-thirds, and avoid the worst effects of the rapid inflation of the Japanese yen.

At the same time, Mabuchi strengthened its sales and marketing operations in the West. After opening a new sales office in Detroit in 1989, the company shifted its U.S. subsidiary's headquarters to that city in 1997. Meanwhile, Mabuchi installed a full subsidiary to support its European sales in Frankfurt, Germany, replacing the representative office originally opened there.

Global Leader for the New Century

China's position as Mabuchi's primary manufacturing base was reinforced through the late 1990s and into the 2000s with a series of new plant openings, including in Wafangian and Jiangsu in 1994, and a new sales office in Shanghai in 2002. The company completed a new bearings factory in Dalian in 2003, as part of its effort to gain tighter control of its components needs. In the meantime, Mabuchi continued to seek new manufacturing opportunities in the greater Southeast Asia region. In 1996, the company entered Vietnam, establishing a wholly owned manufacturing operation there.

Mabuchi continued to expand its range of operations through new product development as well. In the mid-1990s, the company began developing motors for pagers. That activity led to the development of motors for portable telephones in 2001. In 2002, the company strengthened its operations in the automotive industry with the launch of a new power unit motor department dedicated to developing actuator applications. The following year, Mabuchi moved into the optical disk segment with the launch of a new class of brushless motors for CD and DVD players.

By 2004, Mabuchi's sales had topped ¥105 billion ($983 million). The company celebrated its 50th anniversary as the world leader in small electric motors, with a global market share of more than 50 percent. The company's history of innovation and strategic expansion underscored its growth prospects for the new century.

Principal Subsidiaries

Dongguan Mabuchi Motor Equipment Co., Ltd. (China); Mabuchi Industry Co. Ltd. (China); Mabuchi Industry Co. Ltd. (Hong Kong); Mabuchi Motor (Europe) Gmbh (Germany); Mabuchi Motor (Jiangsu) Co., Ltd. (China; 88%); Mabuchi Motor (Malaysia) Sdn. Bhd. (86%); Mabuchi Motor (Shanghai) Co., Ltd.; Mabuchi Motor (Singapore) Pte. Ltd.; Mabuchi Motor America Corp. (U.S.A.); Mabuchi Motor Taiwan Ltd.; Mabuchi Motor Vietnam Ltd.; Mabuchi Motor Wafangdian Ltd. (China); Mabuchi Precision Industries Hong Kong Ltd.; Mabuchi Precision Industries Ltd.; Mabuchi World Trade Co. (Malaysia).

Principal Competitors

VA Technologie AG; ABB Inc.; Siemens AG; Elgin Maquinas S.A.; Elektrodvigatel Plant; Elma EAD; United Technologies Kft.; Rockwell Automation Inc.

Key Dates:

Kenichi Mabuchi founds the research center Kansai Rika Kenkyusho to develop small electric motors.
Tokyo Science Industrial Co. is created to produce electric motors.
The company builds an automatic winding machine, enabling large-scale production.
The company builds a new factory in Tatebayashi.
The company builds its first foreign manufacturing plant in Hong Kong.
The company invests in its first manufacturing plant in Taiwan.
The company changes its name to Mabuchi Motor Co. Ltd.
The Mabuchi Motor America Corp. is founded in the United States.
The company lists stock on the Tokyo Stock Exchange's over-the-counter market.
The company moves its shares to the Tokyo secondary market; its first production and processing plant in China is opened.
The company's shares are listed on the Tokyo main board.
The company launches a manufacturing joint venture in Malaysia and a subsidiary in Singapore.
A European sales subsidiary is established in Frankfurt, Germany.
The company establishes a manufacturing subsidiary in Vietnam.
Mabuchi controls 54 percent of the world market for small electric motors.

Further Reading

Do Rosario, Louise, and Hamish McDonald, "Offshore Revolution," Far Eastern Economic Review, February 13, 1992, p. 46.

"Japan's Mabuchi to Buy Back 5.74% of Own Shares," Reuters, May 26, 2004.

Katayama, Hiroko, "Making It Abroad," Forbes, November 30, 1987, p. 240.

Konaga, Yoko, "Mabuchi Motor a Prime Example of How to Do Business in Asia," Tokyo Business Today, February 1994, p. 26.

"Mabuchi Motor Ready to Post Highest Profits," Comline Transportation, February 20, 1998.

"Mabuchi Ups Dividend Sharply Despite 7% Profit Fall in FY 2003," Japan Weekly, February 23, 2004.

"Mabuchi Motor Group Earnings Down in Fiscal Year to Dec. 31," Japan Weekly Monitor, February 18, 2002.

"Profits Rise for Japan's Mabuchi Motor," Knight Ridder/Tribune Business News, August 19, 2003.

M.L. Cohen