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Mitsubishi restructures after `traumatic changes`

01 May, 2001

Mitsubishi restructures after `traumatic changes`

Mitsubishi is restructuring its UK automation after undergoing what general manager Steve Jones describes as "traumatic changes", both in the UK and globally. The company has announced a clutch of initiatives aimed at securing its position as one of the UK`s top three automation suppliers (alongside Rockwell and Siemens).

The changes include:

• broadening its activities from factory automation to general automation, including building management;

• slimming down its distribution network to three regional partners (compared to around 50 distributors ten years ago);

• opening six regional sales offices;

• investing around £500,000 to update its Customer Application Centre;

• transferring its warehousing to an external logistics operation; and

• starting to sell its products via the Internet.

Jones reports that since the UK automation market peaked in 1997/98, it has suffered from declines, both in volumes and prices. "It`s been tough," he adds. "So many OEM customers have gone away."

Despite this, he says, "we have managed to grow our business - but not a lot". Both sales and profitability improved last year, he adds.

Jones claims that Mitsubishi is still the UK`s largest supplier of single-phase inverters and has more than half of the market for compact PLCs. It also holds about 20% of the UK HMI market.

Explaining the changes in Mitsubishi`s distribution arrangements, Jones agues that, as the automation market matures, many customers do not need the same level of support from distributors as they have done in the past. Although 75% of Mitsubishi`s £25m UK business is still being done through distributors, the company`s new regional sales offices will allow it to cut out a layer of costs. Another reason for setting up the offices is that "it is important for Mitsubishi to be in touch with its customers," says Jones.

The Internet sales operation, due to go live in the third quarter of this year, is another way of cutting out costs. Customers will be able to buy either on account or using a credit card.

With the automation market showing little signs of growth, Mitsubishi is trying to reposition itself as a supplier of general - rather than industrial - automation. In addition to building management, this could include activities such as energy monitoring and control, and commercial applications such as advertising displays. At present, these non-industrial activities account for just 5% of Mitsubishi`s UK automation business.

Despite the difficulties of recent years, Mitsubishi has continued to invest more than 5% of its turnover in research and development. It has recently spent $125m on a new r&d centre for automation in Japan.

"We are looking to new technology as a way forward," reports Jones. One example of a technology in the pipeline is the "Java virtual machine" which Jones describes as "the next generation beyond PLCs". When it arrives in about two years` time, it will make it easier to transport data across networks.




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