TOOLS MAKITA

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<br>color:#3D3D34">Makita Corporation is Japan's number one manufacturer and
<br>exporter of electric power tools. The company develops, manufactures, and distributes
<br>tools--more than 350 different products in all--in four areas. Makita's
<br>portable general purpose tools group, which accounted for more than 52 percent
<br>of 2003 revenues, encompasses drills, jackhammers, grinders, sanders,
<br>screwdrivers, and other construction equipment. The portable woodworking tools
<br>group includes saws, planers, routers, nailers, and other carpentry tools. It
<br>generated about 19 percent of sales in 2003. Stationary woodworking machines,
<br>including table saws, planer-joiners, and band saws, contributed just over 1
<br>percent of sales. Though the company has traditionally targeted the
<br>professional user, Makita's distinctive turquoise tools increasingly appeal to
<br>the do-it-yourself market. Consumer tools include heavy-duty and household vacuums,
<br>chain saws, brush cutters, hedge trimmers, and blowers. These, along with
<br>industrial-use dust collectors and generators, made up around 11 percent of
<br>annual revenues. Makita's parts and repair services were another important
<br>business area, contributing more than 16 percent of revenues in 2003.<o:p></o:p></span></p>
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">Having launched multinational operations in 1970, Makita boasted
<br>more than 100 sales offices and 39 overseas subsidiaries in the early 2000s,
<br>selling its products in more than 100 countries around the world. Although
<br>North America was its oldest market and generated 26 percent of sales in 2003,
<br>Makita's largest foreign market was Europe, constituting just under 33 percent
<br>of sales. Approximately 22 percent of revenues originated within Japan itself,
<br>while Southeast Asia contributed almost 8 percent. Aiming to make its products
<br>as close to its customers as possible, Makita manufactures its power tools and
<br>other products at plants in Japan, Brazil, Canada, China, Germany, the United
<br>Kingdom, and the United States.<o:p></o:p></span></p>
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<br>mso-border-alt:none windowtext 0cm;padding:0cm">20th-Century Foundation and
<br>Development</span></strong><span style="font-size:10.0pt;font-family:"Helvetica Neue";
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">The company traces its history to 1915 and the establishment of
<br>Makita Electric Works, a repair shop for electric tools and equipment in
<br>Nagoya, Japan, midway between Tokyo and Osaka. It was incorporated in 1938 as
<br>Makita Electric Works, Ltd. In April 1945, near the end of World War II, the
<br>plant was relocated to Sumiyoshi-cho in nearby Anjo City in an attempt to avoid
<br>damage from air raids. The company has been located in Anjo ever since.<o:p></o:p></span></p>
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">But it was not until 1958 and the administration of President
<br>Juiro Goto that the company diversified into the manufacture of electric power
<br>tools. In January of that year, Makita began selling portable electric planers,
<br>the first such product in Japan. A 1962 public stock offering raised funds for
<br>the diversification program. By 1969--just over a decade later--Makita had
<br>leapfrogged to the top of the Japanese power tool market. The company credited
<br>its success in the domestic power tool market to high quality construction,
<br>pioneering research and development, and a unique system of direct
<br>distribution. Instead of relying on wholesalers to market its tools to
<br>retailers, Makita employed its own direct sales force. The close relationships
<br>engendered by this system gave the company insights into the needs of retailers
<br>as well as the end user, thereby fueling innovation.<o:p></o:p></span></p>
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">With their brushed metal casings, the company's earliest tools
<br>looked bulky, heavy, and primitive by today's standards. Over the years, Makita
<br>traded metal casings for shock-resistant, turquoise plastic; added multi-speed
<br>motors and electronic controls; and developed a mind-numbing variety of
<br>accessories. Makita targeted professional tool users in the carpentry,
<br>construction, timber, and masonry trades with its powerful, durable equipment
<br>that often cost two to three times as much as a typical tool made for the
<br>consumer market. Focusing on the high end of the power tool industry mitigated
<br>price competition, thereby boosting profit margins substantially.<o:p></o:p></span></p>
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<br>mso-border-alt:none windowtext 0cm;padding:0cm">Overseas Expansion Beginning in
<br>1970s</span></strong><span style="font-size:10.0pt;font-family:"Helvetica Neue";
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">Realizing the limitations of the domestic market, Goto sought
<br>global expansion in the 1970s. Stock offerings in 1968 and 1970 generated a
<br>"war chest" that financed Makita's overseas campaign. The company
<br>employed a multinationalist strategy, establishing a new subsidiary in each
<br>target market. Makita set up a foothold in the United States first, in 1970.
<br>Within just four years, the company had operations in France, the United
<br>Kingdom, Australia, Canada, the Netherlands, and Italy. The late 1970s and
<br>early 1980s witnessed the creation of subsidiaries in Germany, Belgium, Brazil,
<br>Austria, and Singapore.<o:p></o:p></span></p>
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<br><p style="margin: 0cm 0cm 0.0001pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";color:#3D3D34">Makita used
<br>its comparatively low-cost production base to advantage in Europe and the
<br>United States. By the end of the 1970s, the company had captured almost one-fifth
<br>of the global professional tool market, nearly matching Black & Decker
<br>Corporation's market share. As an unidentified analyst told<span class="apple-converted-space"><i><span style="border:none windowtext 1.0pt;
<br>mso-border-alt:none windowtext 0cm;padding:0cm"> </span></i></span></span><em><span style="font-size:10.0pt;font-family:"Helvetica Neue";mso-fareast-font-family:
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<br>mso-border-alt:none windowtext 0cm;padding:0cm">Fortune</span></em><span style="font-size:10.0pt;font-family:"Helvetica Neue";color:#3D3D34">'s Bill
<br>Sapirito in 1984, "Basically, Makita had them by the you-know-whats and
<br>just said, 'Cough.'"<o:p></o:p></span></p>
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<br><p style="margin: 0cm 0cm 15pt; line-height: 14.65pt;"><span style="font-size:10.0pt;font-family:"Helvetica Neue";
<br>color:#3D3D34">By this time, competition between Makita and U.S. industry
<br>leader Black & Decker had saturated that country's market for power tools
<br>to the point that sales growth appeared limited to replacements, parts, and
<br>trade-ups. In fact, manufacturer's sales slid 16 percent from 1980 to 1983.
<br>Fortunately, the development of cordless rechargeable power tools established a
<br>whole new avenue of growth. After ten years of research and development, Makita
<br>launched its first cordless tool, a drill, in 1978. Eliminating the cord freed
<br>the worker from the power source, but early cordless models had several
<br>limitations. They were often heavier and less powerful than their corded
<br>forebears, had very limited running time, and required long periods to
<br>recharge. Though these factors kept cordless tools out of many professionals'
<br>tool chests, they did appeal to the home handyman whose projects were less
<br>demanding. Improvements in battery technology throughout the late 20th century
<br>boosted power and running time while reducing recharging time. By the late
<br>1980s, Makita's 9.6-volt family of cordless tools was beginning to find their
<br>way onto construction sites.<o:p></o:p></span></p>
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