Joe Fahey, VP of Marketing for Echo Inc.
What led to the decision to merge the companies?
The relationship between Kioritz Corporation and Shindaiwa Corporation, both of Japan, started in May 2007, with the announcement of a strategic alliance to explore product and operational synergies. The two companies then merged under one holding company in Japan on December 1, 2008, about the same time worldwide economic conditions began to deteriorate. This ultimately led to the merger of the two operating companies in the U.S. and Japan to reduce costs and grow the combined business.
How will the merger affect product manufacturing?
The strategy is to continue high-quality manufacturing at the lowest possible cost. The potential for increased efficiency through combined sourcing and manufacturing is significant. Evaluation and implementation is underway but will likely not be completed anytime soon.
Will there be changes in product pricing?
The absolute impact on pricing is yet to be determined. However, dealers and customers should rest assured that the Echo and Shindaiwa brands are positioned to be competitive long into the future.
How will future product development be handled?
This is another exciting benefit of the merger. The combined engineering groups bring more design resource and capability to both brands. In addition, we now have the unique ability to create products for each brand that complement each other, instead of compete against each other. This allows each brand to maintain its own “persona” in the market. It also provides incentive for dealers to carry both brands, rather than one or the other.
How will distribution be affected?
This is a case where distribution and marketing strategies must work hand-in-hand. One of the fundamental marketing objectives of this merger is that the brands complement each other. Distribution needs to be able to execute this concept in order to be successful. The only way to do that is to have a single distributor handling both brands. This allows the salesman to help the dealer choose products that best suit his customers’ needs, regardless of brand. Unfortunately, that means some distributors will lose a line in order to execute the strategy.
How will dealers benefit?
Dealers stand to be the big winners. All dealers will have access to both brands. For Shindaiwa dealers, they will have access to a variety of products from Echo including high-end homeowner products, an expanded lineup of chainsaws, power pruners and our new bed redefiner, just to name a few. Echo dealers will also benefit by having access to Shindaiwa’s lineup of full-featured professional products, including the highest-performance blowers in the market. Even better, distributors will be able to offer the two brands in a single program that allows dealers pricing, freight, inventory and advertising advantages. This comes from working with a single distributor instead of two competing distributors.
How will the lines be branded in the U.S. and Japan?
Both the Echo and Shindaiwa brands are alive and well. Both have strong equity in their respective target markets and loyal customer bases and will continue into the future. Marketing for Shindaiwa has always been handled through the Portland headquarters. They have done a good job positioning, building and promoting the brand. The brand will now be marketed out of Lake Zurich, IL, separately with its own strategy, personality and feel. Marketing the brand outside of the Americas has been transferred back to Japan.
Background on the Merger
On December 1, 2008, Yamabiko Corporation was created as a holding company for Kioritz and Shindaiwa. Having the parent company would help them take advantage of management integration, sourcing, engineering, manufacturing and other efficiencies. Recent news reported a new plan for the company including expanding the merger to include the streamlining of all functions. Plans are set to have the operations of both companies merged in Japan by October 1, 2009.
The consolidation will also impact the North American operations of both companies. Shindaiwa Inc. of Tualatin, OR, will transfer sales and marketing responsibilities for Europe, Asia and the Middle East back to Japan as of April 1, 2009. It is their hope that eventually, all Shindaiwa operations will be merged with Echo, a subsidiary of Kioritz Corporation, in Lake Zurich, IL. Consolidation of the U.S. operations should be completed by October 1, 2009.