When we launched the Global Perspectives section of Control Engineering in 2009, the idea was to highlight reporting from our sister publications across Europe and Asia. Since then we have provided insight into the post-recession Czech automation market, sustainable engineering events in Asia, and industrial networks in Europe.
In the same spirit of Control Engineering ’s Global Perspective, Control Engineering North America was recently invited to take part in Mitsubishi Electric’s own version of the concept brought to life with a visit to the company’s Tokyo, Japan, headquarters, its Nagoya Works production facility, and exposure to Japanese culture in Tokyo, Nagoya, and Kyoto.
Most participants on this trip were Mitsubishi customers representing a variety of industries. On this particular trip were Richard Hanson, commercial business unit director at SyncroFlo Inc., Norcross, GA, a manufacturer of water pumping systems principally for use in high-rise buildings; Peter Lawton, director of engineered systems, at Pearson Packaging Systems in Spokane, WA, a producer of nearly 30 different models of packaging equipment; Mark Rose, electrical engineer at The Robbins Co. in Oak Hill, WV, a manufacturer of tunnel boring systems; and Krzysztof (“Kris”) Wilk of the electrical engineering department at bearing manufacturer NTN’s facility in Elgin, IL.
Such trips are a regular part of the customer connection for Mitsubishi Electric, which, for the past 10 years, has been conducting these events about 15 times each year. Mitsubishi Electric Automation (MEAU—Mitsubishi Electric’s North American business unit) is part of two to four of these trips, according to Scott Rohlfs, MEAU’s director of product marketing, and host of this trip.
Rose and Hanson are examples of Mitsubishi Electric clients that predominantly use Mitsubishi equipment in their products. For example, all of Robbins Co. conveyor systems are powered by Mitsubishi Electric products. While NTN is a major customer of Mitsubishi Electric (80% of its automation base is comprised of Mitsubishi products), Wilk is not a principal buyer of Mitsubishi automation. He describes himself as an active end user interested in learning more about the production improvement possibilities offered by Mitsubishi, in particular its eF@ctory shop floor-to-enterprise connectivity platform. At the other end of the customer spectrum represented on this trip was Lawton, who said that Pearson Packaging is not a major Mitsubishi Electric client, as most of its packaging units are highly engineered-to-order and, as such, the onboard automation equipment is often specified by its North American clientele—most of whom do not typically request Mitsubishi products.
During the course of the trip, Hanson and Lawton provided some insight into the business outlook for North American manufacturers in 2010. Both noted that their operations are continuing to perform well in the first quarter of 2010. Hanson says Syncroflo typically produces about 600 systems a year and remains on pace to do so again this year. Lawton said that Pearson has been “slammed for the past six months” and does not see any decrease in activity going forward. Helping stoke Pearson’s activity was its acquisition in late 2008 of Goodman Packaging Equipment in Chicago, which has exposed the company to more business in the food & beverage industry sector.
When asked about his reasons for using Mitsubishi Electric products in the North American market, where the company is little known compared to its western counterparts, Rose said, “The main reason is that their CC-Link network is the only copper network that will even come close to the distance I need (13.2 km maximum). Most other networks only go 1.2 km to 4.8 km on copper.” Another principal reason Rose cited for using Mitsubishi is the price. “A few years ago, I did an apples-to-apples comparison of the top five or six PLC platforms and Mitsubishi won hands down with the “A” series first and their “Q” series second,” he said. “The quality is certainly equal if not better than competitor’s products priced at three times Mitsubishi’s price.”
Global market positioning
Despite its long history of providing automation products such as PLCs, motors, and inverters that are widely recognized as being among the highest quality available, Mitsubishi Electric only has about 3% market share in Europe and North America. This is in sharp contrast to Asia where the company is either the #1 or #2 automation provider in China, Korea, and Taiwan, specifically, as well as in the rest of Asia.
Mitsubishi Electric’s target for 2010 is to achieve 25% market share in Asia, and 43% in Japan for its automation products, according to Satoshi Takeda, planning and administration department manager of Mitsubishi Electric’s Factory Automation Systems Group. Currently, the company’s market share is 19% in Asia and 40% in Japan.
“It’s not easy to gain market share in Europe and North America,” Takeda said. The company is focusing on expansion in certain western areas, such as southern Europe (e.g., Italy), eastern Europe, and Brazil. Rather than targeting market dominance in western hemisphere geographies, Mitsubishi Electric is targeting specific industries where it believes it has an advantage due to its product capabilities. These industries include semiconductors and flat panel displays. Production environments that require “smaller footprint automation with high-performance capabilities are areas where we can provide better products than our competitors,” said Takeda.
Takeda says Mitsubishi Electric does not have a different product strategy in terms of which products are offered to certain markets, but said that Mitsubishi does adapt its offering to the needs of specific markets. For example, many of Mitsubishi Electric’s Chinese customers do not require high-end PLCs, therefore the company offers its more basic PLC units to these customers. Takeda asserts that “the benefit of Mitsubishi Electric products to its Chinese and Korean customers is not that Mitsubishi Electric’s product are of the lowest cost. They come to us for the same reasons our high-end PLC customers do—quality.”
As manufacturing continues to contract in many areas of the world and productivity rises with more automation, the viability of automation providers is of increasing concern to buyers. Asia remains one of the most actively growing industrial markets, and therefore Mitsubishi Electric could find itself well positioned for continued growth. In February 2010, industrial output in Japan increased for the eleventh straight month, up 2.5% in January over December’s level (1.4 points higher than the increase predicted in a Kyodo News survey of economists).
Toyota and Japan Inc.
During my trip to Mitsubishi Electric’s Japanese headquarters, Akio Toyoda, president of Toyota Motor Corp., was testifying on Capitol Hill. Considering Toyota’s long history of being a recognized provider of quality products, I was interested to hear Mitsubishi Electric’s perspective on the issue and how its management thought it might impact their market performance.
“In Japan and the rest of Asia, I don’t believe it will be an issue for us,” Takeda said. “However, there is no doubt that we may see some damage” in the rest of the world because of the Toyota incident. “But we don’t know what the extent of that damage may be yet,” he added.
Takeda believes that Toyota’s confidence in its quality probably contributed to its slow reaction—and therein lies the lesson for any business. “What matters most is what matters to the customer,” said Takeda. “Regardless of who is at fault, it is the responsibility of the business to address the customer’s problem as soon as possible.”
Mitsubishi Electric’s culturally ingrained customer focus, according to Takeda, should help it avoid having to confront a similar set of circumstances. “Our quality control level is so severe compared to some of our competitors largely because of customer requirements.” Takeda said.
|Greenfield is editorial director of Control Engineering. Reach him at email@example.com .|