Buying Dayton Progress and Anchor Lamina: manufacturing die components (2012)

Buying what standardization cannot reach

This acquisition can be read as MISUMI reaching, by another method, into territory its own invention could not cover. Choose by part number, receive on the appointed day — the mechanism worked powerfully on Japanese and Asian shop floors, but North American die-component supply is bound deep into the customer’s design work, and there was little room to enter from outside. If so, take on the whole company that already owns those circuits. In 2005 MISUMI had undone its dependence on outside production; seven years later it moved to undo its dependence on outside sales channels. The two decisions were different answers to the same question.

The business it bought, however, had a different character from the small-lot, short-lead-time world MISUMI was good at. Die components tied to automotive production plans absorb the swings of capital spending directly, and their margins have never reached those of the automation business. More than a decade on, the business still yields scale effects in good years and shows up as fixed cost in bad ones. Whether taking the outside of standardization by sheer scale pays off, and when, is a verdict that looks likely to be rewritten with every turn of the demand cycle.