Five European machinery makers, starting with Demag (2008)

Escaping one cycle, into another

To dismiss the five European purchases as overseas M&A that misfired is to lose the order of events. Sumitomo Heavy Industries went shopping in Europe because it carried the memory of two mass redundancies inflicted by the swings of shipbuilding and construction machinery; the expansion was meant to move its earnings into machinery fields where the swings were smaller. But the gears, plastics machinery and boilers it took on turned out to move with European demand and energy costs, so that in escaping shipbuilding it walked into a different cycle. A portfolio that was supposed to be diversified had taken on a second business cycle instead.

That said, one can only call the expansion a mistake with the knowledge that the three main units all fell into loss together in 2024. For the sixteen years since Demag — six even from Lafert — the European bases did genuinely widen a business mix that had leaned on ships and excavators. The quality of management shows less in the buying than in how the acquired businesses are folded back down in a trough; Sumitomo Heavy Industries, a dozen years and more after its European shopping, can be read as one instance of that.