Exiting the engine, betting the company on cordless (2022)

Drawing the business back to the electric line

The heart of this decision was to give up a product line rather than defend it. For decades Makita had sold petrol-engine chainsaws, brush-cutters and blowers alongside its electric tools; in 2022 it stopped making them and committed fully to lithium-ion cordless machines. Three forces pointed the same way — European cities tightening their rules on engine noise and exhaust, lithium-ion batteries gaining enough output to do an engine’s work, and an industry in which Makita, Bosch and Stanley Black & Decker were all racing toward cordless. Narrowing the range back to the electric line Makita had run on since 1915 was, in effect, the 1958 pivot made a second time: leave the field you cannot win to concentrate on the one you can.

The result read quickly in the accounts. Operating margin, squeezed to 3.7% in the year to March 2023 by raw-material costs and the currency, recovered to 8.9% and then 14.2% two years on, as a shared battery platform, higher-powered brushless tools and rising demand for battery-run outdoor equipment lifted the whole 55-country network at once. Cordless also changed the economics: the tools sell dearer than corded ones and pull batteries and chargers along with them, nudging the revenue toward a more recurring, repeat-purchase shape. Yet the move doubles down on the same overseas-heavy, single-trade bet — so the very concentration that drove the recovery keeps Makita exposed to the yen and to the cyclicality of the building markets it serves.