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Toshiba-Schneider joint venture will be `world drives leader`

01 July, 2000

Toshiba and Schneider Electric are forming a joint venture that they say will make them global leaders in the drives market. Under the deal, the two companies will jointly design, develop, manufacture and market general-purpose inverters rated up to 630kW.

The joint venture will consist of a holding company and regional subsidiaries in Europe, Japan and the US. Drives products will be developed in all three locations and sold under both the Schneider and Toshiba badges.

Schneider will own 60%, and Toshiba 40%, of the new company, Schneider Toshiba Inverter SAS, which is due to start operating early next year. It will have sales of around £250m and a staff of 470. The headquarters and European plant will be in at Pacy sur Eure, near Paris. The chairman will be appointed by Schneider.

The European and North American subsidiaries will be wholly owned by the holding company, but Toshiba will have a 51% stake in the Japanese operation. The European and Japanese businesses are due to start operating in the first quarter of 2001, with the North American operation following a year later.

The partners say that the joint venture will combine Toshiba`s strengths in power electronics and motor technology, with Schneider`s electrical controls capabilities, its marketing operation and global sales channels. They suggest that the combined venture will be able to develop and market products faster and respond more rapidly to market demands. Economies of scale will help to contain costs and make it easier to procure materials.

According to a recent ARC study, Toshiba has a 4.5% share of the global market for low-power drives and Schneider has 3.4%. If the combined business keeps these shares, it will still be smaller than ABB (with 10.9% of the market), Rockwell (10.6%), Siemens (8.5%), Yaskawa (8.1%) and Mitsubishi (8%), according to the ARC figures.

Toshiba and Schneider have been collaborating for almost a decade. In 1991, they set up a joint venture to produce contactors and in 1998 formed a joint development company to work on general-purpose inverters for specific product lines. Last year, they created a joint venture for low voltage distribution equipment and they have also worked together on high voltage transmission equipment.

Earlier this year, Toshiba announced plans to form a joint venture with General Electric to collaborate on large industrial drives systems. This venture is due to start operating in October.

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