It was the kind of PR blurb that arrives 40 times a day, making some inane announcement that everybody ignores. It came on Friday after 5pm, which is the time PR firms send stuff that they don’t really want you to read. That’s why I read it.
It was a pretty juicy piece of news, if you could read between the lines.
The DMG/Mori Seiki combo, which was announced in 2012 around IMTS, is making some major changes. Mark Mohr, the President of the combined American operation, is being sent to Davis, California, to run the DMG MORI USA manufacturing plant. Mohr had replaced Thomas Dillon in 2012 to much fanfare, as head of the merged DMG MORI USA operation. Davis, California is not exactly Siberia. It is a nice college town in Middle-of-Nowhere, California. The company is dispatching Dr. Thorsten Schmidt from the corporate office in Germany to run the U.S. organization. They are going to dramatically expand the number of direct sales and service offices in the U.S. to 27.
What does this announcement really mean? Maybe it means that the DMG MORI people in Germany have awakened to the mess they have in America with the pseudo takeover of Mori Seiki here. The unannounced rationale for the deal three years ago was to improve the service and reputation of the German machine tool builder in the U.S. by building on Mori’s reputation.
DMG makes wonderful machines and they are strong all over the world, but in the U.S. they could not get traction before the merger. They sent a new general manager every couple of years to the Chicago office, but it didn’t help.
Meanwhile, Mori was looking for assistance in Europe, which was the genesis of the deal. But from what I hear on the street the merger has not worked well, at least not here. Thus we have Dr. Schmidt to the rescue, and Mark Mohr is headed to a cow town to run a factory.
I have met Dr. Schmidt a couple of times. He is a high powered young guy and may well be the next head of DMG MORI. But this is a clear signal that the Germans will be calling the shots now at DMG MORI USA, which though not surprising, probably makes the folks at Mazak, Doosan, Haas and Okuma feel pretty good, because service has been the Achilles heel of DMG in America, and weakening service for Mori Seiki has harmed its reputation recently. The announcement also must be scary for the distribution network of the company because it implies that they will be going direct, which means cutting out the dealers in many areas. This is a dicey proposition, too. Machine tool builders constantly fret about direct sales versus representation. It’s a frequent topic at every IMTS. It will be a huge task to expand direct sales rapidly, and improve service. There are just not enough skilled service people available. It will not be easy to recruit an army of them around the country. And it will be an expensive task.
Was this predictable in 2012? Yes, and putting Mark Mohr in the lead position seemed like a good first step. But following a guy with Mr. Dillon’s stature was tough. Trying to make a marriage with DMG work in the U.S. was apparently an insurmountable task for Mohr.
Now we have Schmidt coming to save the day. If he can pull this makeover off he will deserve to be called Superman, and win the CEO job. Meshing the three different cultures – American, Japanese and German, while changing distribution and beefing up service will be a brutal task. For a German to do this from suburban Chicago after exiling the incumbent – yikes.
Good luck, Dr. Schmidt.
Question: Do you prefer to work directly with a machine tool company, or with distributors?