Web-exclusive: Sumitomo buys Demag

On March 3, 2008, as Sumitomo Heavy Industries (Japan) paid €77.6 million ($118 million) to purchase Demag Plastics Group, Sumitomo’s leader Katsuhiko Taniguichi stated that the two injection molding machine suppliers “will be acting on an equal eye level and as partners.”

The seller was the KraussMaffei Group, which is owned by the investment firm Madison Capital Group of Chicago.

Sumitomo, with total 2006 sales of €3.6 billion ($5.5 billion), says its annual sales of injection machines brings in more than €350 million ($532 million). Demag’s annual sales of IMs is reported at more than €250 million ($380 million).

The combination of the two businesses, according to their joint statement at the time of the sale, creates a globally operating company with a 12% share of the worldwide market for IMs, presumably measured in financial terms.

Klaus F. Erkes, Demag’s CEO, said that it is not size alone that matters to the now-united duo. He called it necessary to have technical excellence, thorough market knowledge, and termed mandatory the ability to follow one’s customers around the world. “And a certain critical mass is needed to succeed in doing so,” he said.

The companies jointly stated that in the future, they will offer electric, hydraulic, and hybrid injection molding systems on a common platform, along with total solution packages and automation centered on the machines. The Demag brand will live on, they said.