Nidec Corporation is one of the world’s largest manufacturers of electric motors. In addition to working on traction motor drive systems for electric vehicles that integrate electric motors, inverters and gearboxes, the company is also engaged in the business of equipment devices such as punching presses and gearboxes. Its in-vehicle business is also a key business. In the last two years, Nidec has been making many moves in the machine tool manufacturing sector, attempting to develop its machine tool “empire” through an acquisition strategy.
Recently, Nidec Corporation announced its plan to acquire the Italian machine tool company PAMA, spending 15 billion Japanese yen (about $108 million) to acquire all of PAMA’s shares. This marks the first time Nidec has initiated an overseas corporate merger and acquisition (M&A), as the company entered the machine tool business in 2021.
PAMA, an unlisted company, has an operating income of nearly 20 billion yen. Its primary business is large machine tools for shipbuilding and heavy motor companies that drill holes in metal blocks. Nidec aims to expand its previously domestic-centric sales channel for machine tools into overseas markets, nurturing it as a growth pillar after electric vehicle (EV) drive systems.
The acquisition of Italian machine tool company PAMA is said to be an essential part of Nidec’s machine tool strategy. Nidec noted that the first step in expanding the machine tool business’s production system would be establishing production bases in Europe or Asia. In addition, Nidec is considering acquiring several companies with promising synergies, particularly in Europe, where many machine tool manufacturers exist.
Nidec Corporation entered the machine tool business by acquiring the machine tool business of Mitsubishi Heavy Industries, Ltd. in August 2021 and establishing Nidec Machine Tools Co. To further develop the machine tool business, Nidec Corporation took over the shares of OKK Corporation in February 2022 and established Nidec OKK Corporation in July to further expand the group’s machine tool business.
In addition to moving in the machine tool sector, demand for EV drive units is growing with the explosive growth of the electric vehicle industry. In November 2022, Nidec Chairman and CEO Shigenobu Nagamori said in an interview that a new plant to produce “E-Axle,” an electric vehicle (EV) drive unit, would be built in Mexico. Construction of the new plant is set to begin as early as the fiscal year 2023 (up to March 2024), with an estimated investment of 100 billion yen.
Nidec is producing the E-Axle in China and Europe and will also build a production base in North America to establish a supply system in a market where EVs are becoming increasingly popular. The E-Axle is a system that integrates the motor, gearbox, and inverter into a single unit, which is the core of an EV. Nidec was the first in the world to mass-produce the E-Axle in 2019, developing customers mainly for EV manufacturers in China and Europe. In China, the E-Axle is now being produced at three plants, including a joint venture plant with Guangzhou Automotive Group. In Europe, a joint venture plant with Stellantis was launched in France in September 2022.