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December 06, 2019 09:03 AM

Nissei's Yoda discusses strategy for Negri Bossi purchase

Don Loepp
Editor
Plastics News Editor
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    Plastics News file photo by Michael A. Marcotte
    President of Nissei Plastic Industrial Co. Ltd. Hozumi Yoda said Nissei is scheduled to close on the purchase of a 75 percent stake in Negri Bossi on Jan. 27.

    Arlington Heights, Ill. — The main reason that Nissei Plastic Industrial Co. Ltd. is buying Negri Bossi SpA boils down to the Italian machinery company's sales network.

    "They have the network in Europe and also in South America, Russia and Africa. Those are areas that we do not cover as well as Negri Bossi," Hozumi Yoda, president of Nissei Plastic Industrial Co. Ltd., said in a Dec. 3 interview.

    "Of course Nissei has some [sales in those regions]," Yoda said. "But in those areas that we mention, we haven't had a large sales network. We have a very strong presence in the United States, China, eastern Asia and of course in Japan."

    Yoda said Nissei is scheduled to close on the purchase of a 75 percent stake in Negri Bossi on Jan. 27. Terms of the deal have not been disclosed, and Yoda said the final figure, which is still subject to due diligence, will be made public when the deal closes.

    The seller is Rush, N.Y.-based Kingsbury Corp., which has owned Negri Bossi since 2014. Nissei plans to buy the remaining 25 percent stake in Milan-based Negri Bossi within a few years.

    Negri Bossi's equipment range is also attractive. Yoda called Negri Bossi's injection presses "large and superlarge machines," up to 7,000 metric tons of clamping force. That's substantially larger than Nissei's existing press range, which goes up to 1,300 tons.

    "For the large and superlarge machines, the users of those machines are mainly carmakers, and we really want to enhance [our relationship] with the carmakers. Especially, we think, the possibility for business with Italian carmakers and other European carmakers.

    "We know very well, and we already have good relationships with the Japanese carmakers," Yoda said.

    Yoda said Nissei started to discuss a deal with Negri Bossi in May. Negri Bossi was looking for new investors, and four or five companies showed interest, he said. Others include Chinese and European plastics machinery companies, and private equity investors.

    Yoda did not attend K 2019 in Düsseldorf, Germany, because he was busy working on the Negri Bossi deal. It was the first K show that he has missed in 12 years.

    Major injection press manufacturers don't go up for sale every day, but there have been a few other significant deals recently. This year, Hillenbrand Inc. bought Milacron Holdings Corp. in a deal that closed in November. In early 2018, Platinum Equity bought Husky Injection Molding Systems Ltd. In April 2016, China National Chemical Corp. bought KraussMaffei Group GmbH.

    Yoda said Dec. 3 that he had not talked yet with Negri Bossi workers, but he was flying to Italy that afternoon for meetings. Since he had not met with Negri Bossi workers yet, he talked about some big-picture plans for the business.

    First, Negri Bossi's current manufacturing model is to buy most components from outside vendors and use them to assemble machines. Nissei's production is more integrated; the company makes its own castings and other components.

    In the future, Nissei can supply "almost every part that Negri Bossi is currently using," Yoda said. "We can support making their parts."

    That change will "decrease the cost of making Negri Bossi machines" and make the company more profitable, Yoda said.

    Yoda said Negri Bossi is on track to lose money in 2019. The last time the company made a profit was in 2016. Negri Bossi generated sales of 94.5 million euros ($104.6 million) in 2018, but lost 1.8 million euros ($2 million).

    Negri Bossi employs about 350 across two manufacturing sites in Italy, one in India and one in China. Yoda said Nissei has no immediate plans to change that.

    "Negri Bossi will exist as Negri Bossi. So we don't have any immediate plan for the employees," Yoda said.

    "Negri Bossi and Nissei were established the same year: 1947. Both companies have good, loyal customers. This is meaningful, we will continue to work with Negri Bossi together," he said.

    Yoda said Nissei, including the Negri Bossi business, has a goal to reach annual sales of 50 billion yen by 2022. That will require growth in excess of 20 percent. He did not disclose the company's 2020 sales, but sales for fiscal 2019, which ended March 31, were about 44 billion Japanese yen ($405.9 million). Nissei is publicly traded.

    "For 2020, our target for Negri Bossi is to break even," Yoda said. "Our first step is to stabilize Negri Bossi."

    Nissei opened its first U.S. manufacturing operation, in San Antonio, Texas, in 2018. That factory makes medium- and large-tonnage injection molding machines, up to 1,300 tons of clamping force. Officials previously have said that the plant has the crane capacity to make larger machines, up to 3,000 tons.

    Down the road, could Nissei make superlarge Negri Bossi machines in San Antonio? Probably not.

    "For the 7,000 ton, it's very heavy, so maybe it should be in Italy. But for the other sizes, we will think about if we will do that. It will depend upon the cost of production," Yoda said.

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