KYOTO, Japan -- Every other week, Nidec CEO Shigenobu Nagamori pays a visit to a midsize machine tool unit that plays an outsize role in the Japanese motor maker's future plans.

Nagamori himself is leading the charge to revive money-losing OKK as Nidec seeks to turn robot components and machining equipment into a new growth engine.

Manpower shortages are driving the growth of industrial robots. "As artificial intelligence evolves, factories will become unmanned, and demand for industrial robots will soar," Nagamori said.

In one recent visit, the Nidec chief arrived at OKK's headquarters near Osaka in high spirits, an hour ahead of the scheduled 10 a.m. start time.

"I am excited to see a company transform itself right before my eyes," he said.

Nagamori spent the morning speaking with the management team and touring the facilities. After a lunch with 10 or 20 employees, he delivered an hourlong speech to a larger group of workers, speaking casually with his signature Kansai accent.

He summed up his work philosophy as "do it now, no matter what, until it's complete." The question-and-answer session that followed lasted even longer, until the attendees ran out of queries.

"Mr. Nagamori's plain speak draws employees in," said OKK President Yoshihide Morimoto. His marketing know-how of visiting five customers a day seems to have made an impact at OKK. Its orders jumped roughly 140% on the year in April to an all-time high.

OKK mainly produces machining centers, used for high-precision working of metal components. (Photo by Yuji Ohira)

OKK, whose history goes back more than a century, is now mainly a maker of machining centers. It has logged three straight years of losses, partly due to the coronavirus pandemic disrupting auto production, and has been dealing with accounting irregularities on top of that.

Nidec approached OKK about bringing it into the group last November, and turned it into a subsidiary in February.

Nagamori's deep involvement in the post-merger integration reflects the role machine tools play in his vision for Nidec, as well as enthusiasm for venturing into a new business.

Japanese research company Global Information forecasts the market for industrial robots, including software and peripherals, more than doubling from 2020 to $28.9 billion in 2026. Nagamori has been laying the groundwork for Nidec to tap into this growth.

Nidec subsidiary Nidec-Shimpo makes gear reducers used in joints for robot arms. Last year, Nidec acquired Mitsubishi Heavy Industries' machine tool business , which makes equipment used to produce the gears needed for these components.

OKK's high-precision machining centers are not only essential for producing many robot components, but also use gear reducers themselves, adding another complementary connection.

Nidec plans to set up a new division for industrial robot parts and machine tools this fiscal year. It targets 500 billion yen ($3.7 billion) in annual sales in this area alone by fiscal 2025, and 1 trillion yen by fiscal 2030.

OKK will invest 4 billion yen in expanding and updating production facilities this fiscal year using proceeds from its share allocation to Nidec. It aims to double its machine tool production to 1,200 units in fiscal 2022, and again to 2,500 units in fiscal 2024. The company expects to move back into the black on a net basis this fiscal year.

Nidec CEO Shigenobu Nagamori has emphasized expanding beyond motors into related fields. (Photo by Tomoki Mera)

Nagamori has set a target of 10 trillion yen in annual consolidated sales by fiscal 2030. Sales this fiscal year are projected to rise to 2.1 trillion yen -- a record high but still a long way from this goal.

Nidec plans to invest 300 billion yen by fiscal 2025 in ramping up production of its E-Axle motor system for electric vehicles to power further growth, but this will not be enough on its own. That is where the robot component and machine tool business comes in.

"Chinese manufacturers have been getting better and better," Nagamori said. "If we lose good Japanese machine tool makers, it'll be Japanese users [in the manufacturing sector] who lose the most."

Morimoto added, "It could go the way of Japan's appliance industry."

With the exception of a few larger players like DMG Mori Seiki, which reported 396 billion yen in group sales last fiscal year, Japan's machine tool industry consists mostly of small and midsize businesses like OKK, which have lacked the capacity to keep up with rising demand.

The OKK acquisition marks a significant step into this business for Nidec and for Nagamori, who stressed diversification in a general shareholders meeting last week. "We are a motor company, but we'll move more and more into related fields," he said.