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Japan's Kingpins Battle for Share

Robot Gear Works Under the Hood

Critical importance of robot parts gets pushed to the max

The Emperor of All Robots: Japan
It took the planet fifty years to build and deploy its first million industrial robots and only eight years for its second million, so says the International Federation of Robotics.

The next million are forecast to arrive in half that time. Of that next million, 64 percent will be purchased by Asia and a full 40 percent of that number will take up residence in the Middle Kingdom.

That’s over 8,000 industrial robots per month for the next forty-eight months. China’s own estimates, according to the IFR, put the monthly inflow at upwards of 13,000 per month. The Nikkei Asian Review is calling it a Chinese robot buying spree.

Of course, the billions of dollars that China spends on robots as it hustles its way toward Made in China 2025 wind up in Tokyo’s banks. Put there by Japanese robot makers who own the lion’s share of all robots sold, not only in China, but worldwide.

Of the eleven major robot manufacturers, seven are Japanese, and they control the vast majority of deployed robots. When a country announces how many robots it has working per 10,000 workers, it’s usually talking about how many Japanese robots per 10,000 workers. The Emperor of All Robots has a tight grip on the global supply.

Electric motors rule
Even more telling, stick your arm up under a robot and give a look at its innards— the actuators, servos, reducers, joints and cabling—and most all will be stamped: Made In Japan. That goes for both European and Japanese robots—both for those newly manufactured as well as for those working robots that need replacement parts.

The Japanese provide the R&D money to develop and upgrade these high-precision components as well as the billions to build factories to produce them. Their patent stash on robot components is measured by the truckload. In short, Japan has a lock on both industrial robots and robot parts.

It’s a business that’s in the hands of a few, the kingpins are only four in number: Nabtesco, Nidec (and its subsidiary, Nidec-Shimpo), Harmonic Drive, and Sumitomo Heavy Industries. There’s a lone, newbie Chinese parts builder, LeaderDrive, which has 20 percent of China’s market.

Robot parts is a multi-billion dollar business that, in most cases, is working 24×7 to meet the needs of the marketplace, and falling short of the mark. More capacity is needed, and all of the kingpins are racing to make that happen.

All four are building out capacity, while three of them—Nidec, Harmonic Drive, and the domestic maker, LeaderDrive—are contending with each other in China for leadership in precision reduction gears. Reduction gears reduce an electric motor’s high-speed rotation in a robot’s axes or joints so that it can function with precision.

Yu Jie, who heads Harmonic Drive’s office in Shenzhen, reports that orders tripled during 2017 and deliveries could not keep up with demand. Until 2010, Harmonic Drive was the hands-down sales leader. Harmonic intends to increase production to nearly 300,000 units a month (by 2020), about three times the current level.

Harmonic Drive says its share of China’s robot-use small reduction gear market is 40 percent, while LeaderDrive claims 20 percent.” Nabtesco claims a 40 percent share.

Nagamori-san empire building
Kyoto-based Nidec is planning an expansion in reduction gear capacity to 200,000 per month. Between the two, that tallies up to a neat half-million units each month. That’s six million a year! “Nidec aspires to control 50 percent of the global reduction gear market,” says the Nikkei Asian Review. WinterGreen Research reports “revenue for precision gearbox drives was $838 million in 2017, and products are expected to generate revenue of $3.517 billion by 2024.”

Nidec, the world’s largest industrial motor manufacturer, with revenue on net sales of $9.78 billion in 2016 and $11.15 billion for 2017, plans to spend $1.8 billion in corporate acquisitions and capital expenditures by fiscal 2022. Some of the investment “will go toward the opening of a new plant dedicated to the product in central Japan’s Ueda. Nidec already makes the part in Kyoto and the Philippines.”

Nidec is in the process of acquiring five German robotics companies for $450 million, including MS-Graessner, a manufacturer of reduction gear boxes, for $45 million.

Nidec’s founder and legendary patriarch, 74-year-old Shigenobu Nagamori, is more than bullish on the future of automated manufacturing and electric vehicles. He wants Nidec to figure very large in both. He’s betting that electric drives will replace combustion engines, and he’d like nothing better than to produce those drives.

Launching his company in 1973, together with three employees, he made electric motors for computer hard drives. Nidec now has over 100,000 employees in 43 countries—and global leadership in precision electric motors.

He’s also not shy about acquiring companies that make his own better. At last count he has acquired sixty. “I’ve made no mistakes in some 60 acquisitions, not a single one, whereas four out of five M&A deals by Japanese companies fail,” Nagamori told Reuters.

Analysts say Nagamori has an uncanny ability to predict industry trends such as the rise of factory automation and shift to electric vehicles. He plans to sell factory automation robots as well, but first trying them out in his own factories.

According to the research firm Fuji Keizai, the global market for next-generation factory automation devices and systems may nearly triple by 2022 to around $62.5 billion from about $22 billion in 2017.

“One day, all vehicles will be equipped with Nidec motors. Nobody believes it now, but it will happen,” boasts the confident Nagamori.

“A great wave of innovation is on the way,” he said at a New Year’s news conference. “We’ll do everything we can to prepare,” for what he described as the biggest wave since the company’s founding.

The parts wars
Nidec is building a plant in Hanoi for 15,000 Vietnamese workers, who will build air conditioner parts as well as 100,000 robot speed reducers. Operational in 2018, Nidec is looking to invest $500 million in Vietnam by 2022. Timing is good for the investment noted Nidec Chairman and CEO Shigenobu Nagamori, because the supply of robot parts has not kept up with demand.

Nidec-Shimpo (subsidiary of Nidec) will see $36.2 million from parent Nidec to increase production of robot speed reducers. Previously producing 5,000 units monthly, capacity was raised to 10,000 per month (which is a market share of just 5 percent), with further plans to reach 20,000 units next March and 35,000 by 2019. Nidec-Shimpo, with a sales goal of $135 million by 2022, is introducing a Kiva-style logistics robot with a capacity of 1 ton that is capable of calling an elevator and riding between floors.

Sumitomo Heavy Industries improved sales of robot components by about 20 percent. Its reducer-gear sales totaled about $900 million. The company has nearly reached capacity at its manufacturing center in Nagoya and both factories in Germany.

Harmonic Drive received $77.8 million in speed reducer orders for industrial robots in the January-March period, “more than double the amount from the previous quarter. The company added production lines and established a two-shift system but cannot match demand.”

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