Makita Corporation is Japan's number one manufacturer and
exporter of electric power tools. The company develops, manufactures, and distributes
tools--more than 350 different products in all--in four areas. Makita's
portable general purpose tools group, which accounted for more than 52 percent
of 2003 revenues, encompasses drills, jackhammers, grinders, sanders,
screwdrivers, and other construction equipment. The portable woodworking tools
group includes saws, planers, routers, nailers, and other carpentry tools. It
generated about 19 percent of sales in 2003. Stationary woodworking machines,
including table saws, planer-joiners, and band saws, contributed just over 1
percent of sales. Though the company has traditionally targeted the
professional user, Makita's distinctive turquoise tools increasingly appeal to
the do-it-yourself market. Consumer tools include heavy-duty and household vacuums,
chain saws, brush cutters, hedge trimmers, and blowers. These, along with
industrial-use dust collectors and generators, made up around 11 percent of
annual revenues. Makita's parts and repair services were another important
business area, contributing more than 16 percent of revenues in 2003.
Having launched multinational operations in 1970, Makita boasted
more than 100 sales offices and 39 overseas subsidiaries in the early 2000s,
selling its products in more than 100 countries around the world. Although
North America was its oldest market and generated 26 percent of sales in 2003,
Makita's largest foreign market was Europe, constituting just under 33 percent
of sales. Approximately 22 percent of revenues originated within Japan itself,
while Southeast Asia contributed almost 8 percent. Aiming to make its products
as close to its customers as possible, Makita manufactures its power tools and
other products at plants in Japan, Brazil, Canada, China, Germany, the United
Kingdom, and the United States.
20th-Century Foundation and
Development
The company traces its history to 1915 and the establishment of
Makita Electric Works, a repair shop for electric tools and equipment in
Nagoya, Japan, midway between Tokyo and Osaka. It was incorporated in 1938 as
Makita Electric Works, Ltd. In April 1945, near the end of World War II, the
plant was relocated to Sumiyoshi-cho in nearby Anjo City in an attempt to avoid
damage from air raids. The company has been located in Anjo ever since.
But it was not until 1958 and the administration of President
Juiro Goto that the company diversified into the manufacture of electric power
tools. In January of that year, Makita began selling portable electric planers,
the first such product in Japan. A 1962 public stock offering raised funds for
the diversification program. By 1969--just over a decade later--Makita had
leapfrogged to the top of the Japanese power tool market. The company credited
its success in the domestic power tool market to high quality construction,
pioneering research and development, and a unique system of direct
distribution. Instead of relying on wholesalers to market its tools to
retailers, Makita employed its own direct sales force. The close relationships
engendered by this system gave the company insights into the needs of retailers
as well as the end user, thereby fueling innovation.
With their brushed metal casings, the company's earliest tools
looked bulky, heavy, and primitive by today's standards. Over the years, Makita
traded metal casings for shock-resistant, turquoise plastic; added multi-speed
motors and electronic controls; and developed a mind-numbing variety of
accessories. Makita targeted professional tool users in the carpentry,
construction, timber, and masonry trades with its powerful, durable equipment
that often cost two to three times as much as a typical tool made for the
consumer market. Focusing on the high end of the power tool industry mitigated
price competition, thereby boosting profit margins substantially.
Overseas Expansion Beginning in
1970s
Realizing the limitations of the domestic market, Goto sought
global expansion in the 1970s. Stock offerings in 1968 and 1970 generated a
"war chest" that financed Makita's overseas campaign. The company
employed a multinationalist strategy, establishing a new subsidiary in each
target market. Makita set up a foothold in the United States first, in 1970.
Within just four years, the company had operations in France, the United
Kingdom, Australia, Canada, the Netherlands, and Italy. The late 1970s and
early 1980s witnessed the creation of subsidiaries in Germany, Belgium, Brazil,
Austria, and Singapore.
Makita used
its comparatively low-cost production base to advantage in Europe and the
United States. By the end of the 1970s, the company had captured almost one-fifth
of the global professional tool market, nearly matching Black & Decker
Corporation's market share. As an unidentified analyst told Fortune's Bill
Sapirito in 1984, "Basically, Makita had them by the you-know-whats and
just said, 'Cough.'"
By this time, competition between Makita and U.S. industry
leader Black & Decker had saturated that country's market for power tools
to the point that sales growth appeared limited to replacements, parts, and
trade-ups. In fact, manufacturer's sales slid 16 percent from 1980 to 1983.
Fortunately, the development of cordless rechargeable power tools established a
whole new avenue of growth. After ten years of research and development, Makita
launched its first cordless tool, a drill, in 1978. Eliminating the cord freed
the worker from the power source, but early cordless models had several
limitations. They were often heavier and less powerful than their corded
forebears, had very limited running time, and required long periods to
recharge. Though these factors kept cordless tools out of many professionals'
tool chests, they did appeal to the home handyman whose projects were less
demanding. Improvements in battery technology throughout the late 20th century
boosted power and running time while reducing recharging time. By the late
1980s, Makita's 9.6-volt family of cordless tools was beginning to find their
way onto construction sites.
Power
Tools
MOBILE
DRILLING & FASTENING
SAWING
PLANERS, TRIMMERS & ROUTERS
SANDERS & POLISHERS
AIR & GAS NAILERS
HAMMERS & DEMOLITION
CUTTING
GRINDING
BLOWERS & DUST EXTRACTION
HEAT GUNS
MEASURING
MULTI-TOOL
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