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Nidec pushes further into industrial sector with two US acquisitions

20 September, 2012

The acquisitive Japanese motor-maker Nidec is pushing further into the industrial and commercial motors market by buying two US companies, Illinois-based Kinetek and Ohio-based Avtron Industrial Automation. Reports in Japan suggest that Nidec is paying around $500m to the two businesses’ private equity owners.

Nidec hopes that the acquisitions – along with Emerson’s motors and controls business which it bought in 2010, and Italy’s Ansaldo Sistemi Industriali (ASI), which it bought earlier this year – will help to boost its ACIM (appliance, commercial and industrial motors) business from ¥124bn ($1.57bn) in the year to March 2012, to ¥230bn ($2.92bn) by March 2014, and ¥300bn ($3.81bn) by 2015.

Following the acquisitions, Nidec expects that it will be in a better position to achieve profit margins of at least 15% from the ACIM business by 2015. By that stage, it expects that 45% of ACIM’s revenues will be coming from the commercial sector, 35% from industrial motors, and 20% from appliance motors.

Nidec, which has traditionally focussed on smaller motors for applications such as computer disk drives, sees the global industrial and commercial motors market as being attractive, not only in terms of its size, but also of its potential for providing access to high-quality customers and achieving stable growth for products with high margins.

The larger of the two latest acquisitions, Kinetek, sells commercial motors, gear-motors and controls globally, focussing on end-uses such as escalators/elevators, commercial refrigerators, materials-handling, and golf and utility vehicles. Around 80% of its products are customer-specific.

Kinetek has 24 sites around the world, including 14 in the US, four each in China and Italy, and two in Mexico. It employs almost 3,000 people and had sales last year worth $400m. Its operating companies include Advanced Motors & Drives, Imperial Electric, Euclid Universal, the FIR Group, Valmark Industries and Scott DC Power Products. Earlier this year, Kinetek set up a new division to design and develop small AC brushless motors.

Following the Kinetek acquisition, Nidec expects its commercial motors portfolio to more than double, placing it in a better position to become a leading player in the global market for these machines.

The second new acquisition, Avtron, produces highly engineered control, automation and drives systems for heavy industries (such as cranes, marine, mining, metals and forestry equipment), as well as harsh-duty rotary encoders. It employs 154 people in the US and had sales worth $33m in 2011. The acquisition will allow Nidec to make a full-scale entry into the North American industrial automation market, as well as strengthening its existing industrial motor and automation operations in North America. Avtron is also expected to serve as a North American sales channel for ASI’s drives, motors, generators and automation systems.




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