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At 8:30 am on April 15, Konica Minolta Business Solutions U.S.A. held a press conference to shed light on the newly announced memorandum of understanding (MOU) to form a joint venture with Fujifilm Business Innovation.
The meeting, however, started with some clarifying notes on the implications of the recent global optimization announcement. Sam Errigo, President and CEO of Konica Minolta Business Solutions U.S.A., noted that this prior announcement applied to all of Konica Minolta Inc. and not just the Business Technologies unit. Although a 2,400-person reduction in workforce was announced, there is minimal impact on Konica Minolta’s US operations as this was a global announcement impacting all business units. As a result, Konica Minolta in the US will not be selling any direct branches or All Covered, its IT property.
In fact, Errigo noted that business has stabilized. Although print volumes are not at pre-COVID levels, the business is healthy. No big changes to the US operations are anticipated due to the global optimization program, which is in the early stages of implementation and aims to help improve business contribution by ¥20 billion in fiscal year (FY) 2025. What the prior announcement did highlight is that the printing industry is not growing and, as a result, manufacturers must take market share to grow. Moreover, as the pandemic illustrated, they need to optimize their supply chains to de-risk the business and control costs—this provided the segue to the discussion of the joint venture.
The MOU is a feasibility study of a procurement business alliance for office and production printing equipment parts and raw materials only, which includes toner development and production. Printing equipment is not part of the MOU. The tentative timeline is the second quarter of FY 2024. Fujifilm Business Innovation is the majority shareholder.
The goal of this MOU is to explore if a joint venture can improve procurement capabilities and buying power to create a competitive advantage. Additionally, the two manufacturers aim to avoid the risk of an insecure global supply chain. The need to de-risk the supply chain is elevated by the rise in geopolitical instability. Moreover, Konica Minolta has begun to move its manufacturing of office equipment to Malaysia and partially moved manufacturing of production equipment to Japan—significant changes that likely contributed to the interest in a joint venture. One can assume that a major fire in a Konica Minolta toner factory, which was a challenge on top of the pandemic, highlighted the need to ensure a more robust supply chain.
Keypoint Intelligence Opinion
Konica Minolta and Fujifilm are exploring if a joint venture can secure a competitive advantage. Depending on if and how this initial joint venture progresses, and what other alliances potentially can emerge, the long-term desired outcome is to capture market share. For now, the joint venture is in such early stages that it does not even have a name.
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