Nidec Corporation
Corporate History & Strategy

In 1973, Shigenobu Nagamori resigned from his employer Yamashina Seiki at age 27 and established Nihon Densan (Nidec). He had originally planned to go independent at age 35, but seeing the economic upheaval — inflation driven by the 'Remodeling the Japanese Archipelago' boom and the shift to a strong yen / weak dollar — as 'a time of abundant opportunity,' he moved up his entrepreneurship by seven years. He set sail with capital of just 2 million yen, with everyone around him opposed. His mother's only words of encouragement were: 'If you can work twice as hard as everyone else, you'll succeed.'

Just three months after founding, in October 1973, the first oil crisis erupted. However, as demands for energy conservation and labor savings intensified, demand rapidly expanded for brushless motors — small, high-performance, and maintenance-free — and the technology Nagamori had been researching before founding proved perfectly aligned with the times.

In 1974, he received a 5 million yen investment from KED, a venture capital firm led by Omron founder Kazuma Tateishi. The investment amount itself was not large, but the track record of 'having received KED funding' functioned as credibility, and lending from financial institutions expanded dramatically. The raised funds were allocated to the construction of the Kameoka Plant, establishing Nidec's production base.

Nagamori took his prized precision small motors and made the rounds of major domestic manufacturers, but was turned away at every door. While the product quality was acknowledged, he was refused transactions for being 'too young,' 'lacking credibility,' and 'having no money.' Confronting the wall that in the Japanese market, a company's credibility and track record took precedence over product capability, Nagamori gave up on the domestic market and pivoted to the U.S. to develop customers.

In the U.S., the business practice of evaluating purely on product performance and price prevailed, and Nidec's motors won orders from 3M for small motors used in videotape equipment. Orders further expanded to major American corporations including IBM, and in its early years, 95% of Nidec's revenue came from exports. Even as of 1988, 99% of revenue came from custom orders, with virtually no catalog sales — a business structure entirely specialized in made-to-order production.

When 3M and IBM products incorporating Nidec motors were exhibited at U.S. trade shows, major Japanese electronics manufacturers began evaluating Nidec's motors in hindsight. The track record in the U.S. market functioned as 'credibility,' and orders materialized from domestic manufacturers who had previously turned Nidec away. It was a structure of reverse-imported credibility.

Additionally, Nidec differentiated itself through after-sales service following motor delivery. When a production line at a major manufacturer's factory stopped due to a motor failure, while competing large companies deferred their response to the next day or later, Nidec's representative rushed to the site immediately and completed the repair. This rapid response was highly valued, and from that point on, the major manufacturer entrusted all of its motor orders to Nidec.

Through this differentiation in sales and credibility acquired via the U.S., Nidec steadily expanded its customer base in the precision small motor market. Fifteen years after founding, in 1988, Nidec achieved revenue of 25.8 billion yen and ordinary income of 2.6 billion yen, and listed its shares on the Osaka Securities Exchange.

Throughout the 1980s, Nidec continued aggressive investment in HDD spindle motors, and by 1989 had secured production volume of 14 million units and a 72.2% global market share. Far ahead of second-place Shinano Tokki (3.2 million units, 16.5%) and third-place Fuji Electric (1.2 million units, 6.2%), Nidec held a dominant position, and HDD small precision motors had grown into a core business supporting the company's earnings.

Shinano Tokki was an electronic components manufacturer headquartered in Nagano Prefecture, operating as a subsidiary of TEAC. However, intensifying price competition with Nidec had deteriorated its performance, and by the end of March 1988, the company had fallen into negative equity. Parent company TEAC judged that there was no prospect for business turnaround and decided to sell Shinano Tokki.

In 1989, Nidec acquired shares of Shinano Tokki from TEAC, executing an acquisition through equity participation. With the No. 1 market player Nidec acquiring No. 2 Shinano Tokki, the combined post-merger global share of HDD spindle motors was calculated to reach approximately 88.7%. For Nidec, this was an acquisition that simultaneously achieved the rescue of a competitor and the establishment of a market monopoly.

The biggest hurdle was antitrust regulation. Since the post-merger share would reach approximately 90%, review by the Japan Fair Trade Commission was required. Nidec committed to the Commission that it would maintain employment of Shinano Tokki's employees after the acquisition, declaring that the monopoly would not result in domestic job losses. This commitment to job preservation proved decisive in securing approval.

Through the acquisition of Shinano Tokki, Nidec built a structure of near-monopoly in the global HDD spindle motor market. It maintained an 80% global share through the early 1990s, and HDD motor shipment volumes continued to grow alongside expanding PC demand. This earnings base became the funding source supporting the aggressive M&A strategy from the late 1990s onward.

However, market monopoly in a single product inherently carried vulnerability to demand fluctuations. In FY1995, a temporary slowdown in PC demand caused a sharp decline in HDD motor orders, and Nidec fell into a net loss of 2.5 billion yen. This experience became the catalyst that led Nagamori to decide on 'breaking free from HDD dependence.'

In FY1994, Nidec fell into a net loss due to slowing demand for HDD motors. At the time, HDD-related products accounted for approximately 80% of total company revenue, and fluctuations in PC market supply and demand directly impacted Nidec's performance. Despite commanding an overwhelming market dominance with over 80% global share, it became clear that concentration in a single customer industry directly translated into management risk.

In 1995, Microsoft released Windows 95, PC demand recovered, and Nidec returned to profitability the following period. However, Nagamori did not rest easy with the temporary recovery, recognizing the structural vulnerability of HDD dependence as a management issue. Around 1997, Nagamori laid out a policy to reduce HDD-related revenue to one-third or less of the total, setting a target for completion by 2002.

The goal of shrinking a business that accounted for 90% of revenue to one-third meant fundamentally remaking Nidec's business structure. Since organic entry into new markets would take too long, Nagamori chose a strategy centered on M&A.

In developing business areas beyond HDD, Nidec chose corporate acquisitions rather than organic development as its primary approach. Entering automotive and consumer electronics motors required developing new sales channels, but in the Japanese market, barriers were high against newcomers without transaction track records, making it more efficient to acquire companies with existing business relationships and credibility. Additionally, since Nidec had grown as a company specializing in motor assembly since its founding and lacked accumulated precision machining technology, acquisitions were also rational as a means of technology acquisition.

The criteria for selecting acquisition targets were distinctive. Nagamori preferred to acquire companies that met three conditions: 'dirty factories,' 'poor employee work ethic,' and 'high procurement costs' — and were roughly breaking even. The logic was that if a company breaks even in a state of inefficiency, disciplinary improvements alone could make it highly profitable. Conversely, companies that were in the red despite diligent employees and hardworking management were avoided, as the fundamental competitiveness of the core business was problematic and turnaround would be difficult.

In post-acquisition PMI, Nidec would negotiate a contract with the target company's labor union beforehand guaranteeing 'no employee layoffs.' Rather than cost-cutting through headcount reduction, Nidec's distinctive PMI approach improved profitability through operational improvements: cleaning factories, enforcing work discipline, and reviewing procurement suppliers.

From 1995 to 1998, Nidec executed acquisitions at a pace of approximately two companies per year. It took equity stakes in Kyoritsu Machinery, Shimpo Industrial, Tosok, Read Electronics, Kyori Kogyo, and Copal in rapid succession. Tosok was a parts manufacturer in the Nissan Motor group, and through this acquisition, Nidec gained a transaction track record with the automotive industry.

Nagamori described the purpose of acquisitions as 'purchasing history and credibility.' In the U.S., transactions are determined by product performance and price, but in the Japanese market, transaction track records and corporate history carry weight. By acquiring Tosok, which had nearly 50 years of history, the credibility of being 'a relative of Nissan' was conferred, making it easier to develop new business relationships. It was a strategy of circumventing Japanese market business customs — which could not be penetrated by product capability alone — through M&A.

As a result, Nidec transformed from a single-pillar business structure dependent on HDD into a diversified motor manufacturer serving automotive, consumer electronics, and industrial equipment. Acquisitions continued to accelerate through the 2000s and 2010s, with Nidec's cumulative M&A count exceeding 60 companies.

In April 2023, Nidec established a five-vice-president structure. Kitao (former Sumitomo Mitsui Banking Corporation), Koseki (CTO), Kishida (former Sony), Otsuka (President of Nidec Sankyo), and Nishimoto (President of Nidec Shimpo) were appointed vice presidents, selected as successor candidates for founder Shigenobu Nagamori. The structure cast a wide net across externally recruited talent, headquarters executives, and subsidiary presidents.

Nagamori had previously appointed multiple externally recruited presidents, but all had departed after short tenures. The succession issue had been a long-standing management challenge for Nidec, and the five-vice-president structure was a mechanism designed to identify the optimal successor through competition among candidates.

In February 2024, Mitsuya Kishida was appointed Representative Director and President. Founder Shigenobu Nagamori assumed the title of Representative Director and Global Group Representative, creating a dual representative director structure. This was a business succession framework aimed at gradual authority transfer from Nagamori to Kishida, with Nagamori not immediately stepping back from the front lines of management but instead running in parallel during the transition.

Kishida is an external recruit from Sony, not a Nidec insider. Nagamori has been at the center of management for 50 years since founding, and Nidec's corporate culture and decision-making mechanisms have been inseparably linked to Nagamori as an individual. The substantive question of this succession structure is how much independent management judgment the successor president can exercise while the founder retains representative authority.