On Saturday, April 13th, we received an email from Konica Minolta regarding a press conference on Monday morning, April 15th. This is the second time Konica Minolta has scheduled a hurried call with the press and analysts. The first was to ensure that we fully understood the financial information that Konica Minolta Japan had recently released.
This time, Konica Minolta President & CEO Sam Errigo outlined a major series of events for Konica Minolta in its new fiscal year. He approached this presentation by referring to it as a “policy reform,” noting three areas:
- Business selection and concentration,
- Reallocation of resources,
- Structural reform to reinforce profit.
What does this mean? It begins with the use of technology such as AI to facilitate workforce productivity. Errigo asserted that the 2,400-employee workforce reduction that was recently announced will not affect those working in the U.S. He added, “We are not selling branches as we have a very healthy distribution of 50% direct and 50% dealers.”
According to Errigo, this policy reform aims to increase revenue by 20 billion yen in FY ’25. It also aims to create a means to move forward and ensure a stable work environment by providing opportunities for growth.
The discussion shifted to lessons learned during the pandemic. COVID increased the company’s operating costs during the supply chain crisis, when Konica Minolta paid $30,000 per container to ship products. He expects pricing to return to what it was prior to the pandemic.
Konica Minolta Fujifilm Strategic Alliance
The most significant part of this discussion focused on a strategic alliance between Konica Minolta and Fujifilm in MFPs and production print. Both parties actively sought this alliance. Once we heard this, we fully understood the reason for the rushed press conference.
Konica Minolta executives witnessed the reaction to the announcement by Toshiba about its joint venture to manufacture parts with Ricoh and a mix of opinions, including Ricoh buying Toshiba and that this joint venture would produce Ricoh products for Toshiba. Neither was remotely true.
Ricoh and Toshiba have lowered their manufacturing costs to produce products that would be utilized by both manufacturers in their respective (not common) products. This is not new. Canon has been building engines for HP for years. We have never heard anyone say that their products were even remotely alike.
This Konica Minolta alliance with Fujifilm is a huge win for both companies. Konica Minolta has an extremely competitive production print and industrial print product line. Fujifilm, in my opinion, has a stronger offering in production print for addressing the needs of today’s customers. Konica Minolta has an impressive textile printing line that has yet to be introduced in the U.S. We saw it at the 2018 ITMA exhibition in Barcelona. This technology brings enormous capabilities to Konica Minolta, particularly in industrial print.
There is no question that Konica Minolta now has an excellent resource for producing parts that will satisfy the demands of print products for today and tomorrow. We suspect there is more to come.
Errigo wanted to ensure everybody understood that this was as much of a Konica Minolta win as it was for Fujifilm. The cost of the common parts will be significantly reduced, and each partner will gain something of greater value from their combined volume. The joint venture is estimated to take a year to complete, but it could take longer. This was a press conference to make sure there was no misunderstanding about what this effort was all about.
On a related note to Konica Minolta’s initiatives in industrial and production print, the hiring of Frank Mallozzi, formerly with EFI, to lead Konica Minolta’s industrial print efforts was an excellent move. He knows more about the sales and marketing of industrial print products than anyone we know in North and South America. He was a great teacher for us. He introduced us to those products in 2007 at an EFI Connect Conference. Look for an upcoming Fridays with Frank interview.
Konica Minolta’s Future Focus
Errigo then turned the direction of the discussion to the future. He stated what is being planned will enable the following:
- Increase competitive advantages
- Stabilize and avoid risk from an insecure supply chain
- Create opportunities for future alliances
All of this will enable Konica Minolta to increase its market share. Errigo also wanted to make clear that these joint efforts are only for producing parts. It was obvious the intent here was to say a private labeling agreement with Fujifilm is not going to happen. Konica Minolta does not need, nor would they desire, that kind of relationship with Fujifilm.
Not For Sale
Many of you have been asking which manufacturer will be the first to sell. As we have stated before, no one. What is going on here is a significant consolidation on the parts manufacturing side by four major copier/print manufacturers: Toshiba, Ricoh, Konica Minolta, and Fujifilm. Will there be more joint efforts by the print manufacturers? We believe the answer is yes. We suspect the next one we will hear from is Kyocera. The company is already a major provider of inkjet printheads, so, the relationships already exist.
Xerox is now functioning as a large dealer and is Fujifilm’s largest customer. There is no way this relationship will be severed. Fujifilm has made it clear that they are happy building products to sell to other manufacturing companies such as Sharp.
We have already discussed the joint ventures of Toshiba and Ricoh. We noted the possibility of Kyocera being a candidate to seek new joint relationships beyond providing inkjet print heads. Kyocera is an extremely healthy financial industrial manufacturer making parts for other companies and clients. They are expanding their inkjet production print line, and we fully expect to learn more about this in September at Printing United.
Once again, I want to emphasize, no manufacturer of copying and printing products is going out of business or will be acquired by another manufacturer. That is my opinion, and if I am wrong, then most assuredly, I will hear about how wrong I have been. Should that occur, it will not bother me one iota. I would rather give my honest opinion than dance around a subject that I believe is especially important to our dealer audience. They deserve no less.
