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The Mitsubishi
Monitor talks with Dr.
Tamotsu Nomakuchi, president of Mitsubishi Electric.
Mitsubishi Electric
has reshaped itself dramatically. You have spun off
your monitor display operations into a joint venture
with NEC Corporation and transferred a big part of your
semiconductor operations to a joint venture with Hitachi,
Ltd. Most recently, you have agreed to shift your business
in industrial electric and automation systems to a joint
venture with Toshiba Corporation. How would you characterize
the progress of your restructuring?
The restructuring is basically
complete. It already has produced convincing results.
We converted an operating deficit in the fiscal year
ended March 2002 into a substantial operating profit
in the past fiscal year. And I expect continuing gains
in profitability from our newly refocused operations.
We are making good on our corporate slogan, “Changes
for the Better.”
What have been your criteria
for deciding which operations to keep?
Two criteria have been profitability
and growth prospects. Another criterion has been risk.
That was the decisive consideration in transferring
our system LSI semiconductor operations to the joint
venture with Hitachi, called Renesas Technology. The
escalating cost of investment in semiconductor factories
and the roller-coaster fluctuations in prices are becoming
too demanding for any manufacturer to cope with alone.
An equally important criterion has been
the potential for synergies. This is the era of networking.
Nearly all electronic products today operate in the
context of systems, and information networking can optimize
overall functionality. We are concentrating our operations
on businesses that support each other through networking.
So what are your core emphases,
now?
Our restructuring program
has focused our company on five business sectors:
• heavy electrical systems, such as turbine generators
and other electrical generating equipment, elevator
and escalator systems and electric locomotives and other
products for mass transit systems
• industrial electronics, which encompasses automotive
electronics, including car navigation systems and a
full range of products for engine control and other
vehicle functions, along with factory automation systems
• information and communication systems, including
cell phones, communication satellites, relay stations
and other items for communication grids
• electronic devices, centered on power devices,
optoelectronic devices and liquid crystal displays
• home appliances, including air conditioners,
refrigerators and washing machines
And these businesses support
each other?
They certainly do. Elevators
are a good example. Modern elevators have sophisticated
information linkage with building management systems.
They employ high-power motors, and they rely on advanced
electronic devices. Our elevator operations benefit
immensely from strengths in our other operations.
What about the first two criteria,
profitability and growth prospects?
Each of our five business sectors
contains core products where we are a market leader. And
each sector contains products where we are confident of
expanding our business greatly. We speak of “victory”
categories, where we reinforce strong positions in established
markets, and “advance” categories, where we
assert established strengths in markets for system solutions
based on information technology.
For example?
Automotive electronics is an
excellent example. We have built a global market share
of some 10% for our core products in this sector. And
we are aiming to double that share. Meanwhile, we are
combining our strengths in automotive components, information
networking and semiconductors to build a strong foothold
in the emerging market for intelligent transport systems.
We already are a Japanese leader, for instance, in infrastructure
and vehicle systems for electronic toll collection.
People use your products
worldwide. And you and your subsidiaries employ more than
100,000 people around the world. How are you making your
business management more international?
This is a high priority at Mitsubishi
Electric. We are localizing management in every region.
Local executives occupy senior positions at a large and
growing number of our operations. We are also working
to foster a global perspective at our headquarters in
Tokyo. That includes a vigorous, international rotation
of management personnel.
What does being part of the
Mitsubishi community of companies mean for you?
It means something like having
a lot of brothers and sisters who have grown up and gone
their separate ways. We all retain a sense of kinship.
But we also feel the independence that goes with being
out on our own. We manage our companies separately with
an eye to our individual best interests. Like brothers
and sisters everywhere, we have our occasional differences.
Underlying our interaction, however, is a fundamental
spirit of mutual goodwill.
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