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Makita: Today

January 20, 2013

If you visit the Makita website, homepage and start checking out the “About Us” sections, you will find this motto by Makita:

“Makita’s aim is to become the best supplier of electric power tools world wide, including battery operated power tools, wood working machines, pneumatic tools and garden tools, all of which makes living much more comfortable and enjoyable.”

-Makita

Back in the late spring, early summer we did a post on the storied history of Makita and their long tradition of excellence. When we do these company spotlights we like to do a then and now, and as such this post concludes our company spotlight with a post on Makita Today.

Unfortunately, in the year 2000, the power tools division of Makita found itself under-performing. In a series of economic climate changes, Makita, a long time well established Japanese company would find itself in unfamiliar waters. First, the internationally weak global stock market took a nose dive, affecting Makita’s securities, causing them to sustain a big hit. At the same time this was unfolding, Makita also found itself confronting rapid changes in order to stay afloat in the ultra-competitive power tool industry, during a time when many of their strongest opponents were finding success by implementing their own new manufacturing process and techniques. These new processes led many of Makita’s competitors in the U.S. to begin using manufacturing facilities in China to lower overall production costs. As a result Makita would have to confront drastic downward pressure on their pricing, that would ultimately result in major net losses.  In 2000 Makita would release the bottom line numbers that would show a 94% plunge in net income. Those same financials would also show an overall loss of 20.6 million in sales, ultimately resulting in a modest net gain of only one million dollars that year. Understandably, the situation was dire, and it continued to be as Makita’s U.S. subsidiaries which were all in the red, reported operating losses of $16.5 million in 2001, $27.5 million in 2002, and a continuously low profit of $2.3 million in 2003.

Makita needed to act fast to put out the fires and save their ship from sinking, thus in order to gain back some lost ground, they set up subsidiaries in China, which proved to be a very viable path for them as it cut overall manufacturing costs significantly. In addition, in order to continue its relevance as a top brand in the United States, while also continuing to compete in the most lucrative market in the world, Makita began to set up sales subsidiaries in the U.S., which would mean taking on its fiercest competitors, on their turf, and by engaging them in the game they invented. To do this, Makita re-tailored their Florida based subsidiaries to handle sales in Central and South America, which also included the Caribbean region. Makita also cut fixed costs as they restructured, closing three of their seven warehouses, and closing twenty repair centers in the United States. As they downsized, they relied on their outlet stores to pick up the ball and do more of the service repair work.

When it was all said and done, Makita’s ability to make quick and agile movements has helped them to regain much of the ground they lost in the early 2000′s. Today Makita has showed significant recovery and has been able to keep its brand reputation for manufacturing high quality, professional tools and service intact. In this decade, Makita is recognized as a premium manufacturer of high quality, dependable tools, with more than a modest share of the power tool industry.

 Sources:

http://www.fundinguniverse.com/company-histories/makita-corporation-history/

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