Konica Minolta and FUJIFILM Business Innovation Announce Plans to Create Joint Venture

Konica Minolta Business Solutions U.S.A. announced earlier today that its parent company, Konica Minolta Inc., has signed a memorandum of understanding to create a strategic alliance with FUJIFILM Business Innovation Corp. pertaining to the multifunction printer (MFP), office printer, and production printer segments. By the second quarter of FY 2024, they plan to create a joint venture that will handle the procurement of parts and raw materials for both companies' separate manufacturing operations. The joint venture — which has not yet been given a name — will be majority owned by FUJIFILM, although the ownership percentages were not made public.

In addition, the strategic alliance press release announced plans to partner on digital toner development. It also indicated that the prospect for other strategic business collaborations would be addressed separately as part of further discussions, and are not part of this agreement.

Sam Errigo
President & CEO
Konica Minolta Business Solutions U.S.A.

During a press and analyst briefing held this morning, Konica Minolta Business Solutions U.S.A. (KMBS) President and CEO Sam Errigo stressed that this agreement is being driven to create more stabilized supply chains and generate higher profits for the two major printing industry equipment manufacturers. He referenced the impact that COVID-19 had on the shortages — and subsequent price increases — of raw materials and parts used for manufacturing. Combining their efforts will give both companies greater procurement and buying power, better redundancy, and more protection from future supply chain instability.

For example, Errigo pointed out that it cost $30,000 to send a shipping container to the U.S. during the pandemic. That price is down to $3,000, but still much higher than what it was pre-COVID. The pricing and availability of computer chips, which was disrupted by the pandemic, represents yet another example. Within a continuing environment of inflationary pricing for parts and raw materials, he noted some of the resultant higher manufacturing costs cannot be passed along to customers and have to be absorbed. Consequently, this joint venture agreement should be beneficial to both organizations from a stronger buying power, and hence, profitability standpoint.

Errigo noted that Konica Minolta has shifted some equipment manufacturing from China to Malaysia, and also does assembly in Mexico. High-volume products are primarily manufactured to Japan. It also operates a toner plant in Goshen, New York.

Errigo also dispelled some industry rumors that KMBS would be spinning off All Covered or selling some of its branches as part of the company-wide, 32 billion yen restructuring plan that was announced April 4, 2024. This includes a 2,400 global head count reduction, spanning across all of Konica Minolta's varied businesses and markets.

He indicated that, with the help of AI and other technologies, KMBS has been able to eliminate and automate some mundane internal tasks and job functions. This has enabled KMBS to retrain personnel and/or make staff reductions in the U.S. of primarily administrative and financial personnel who had been doing those manual tasks. No reductions were made on the sales or service side of the business. "This [restructuring plan] has minimal to no impact in our sector ... From the U.S. standpoint, we [KMBS] are doing fine. We continue to perform."

Nevertheless, he recognized that with several MFP, office printer, and production press manufacturers competing for what is an overall shrinking market for unit sales, the reality is that market share growth now typically comes at the expense of a competitor. This has been especially apparent in the office printing segment. Although workers are returning to their workplaces in greater numbers since the pandemic ended, the levels are still not what they were pre-COVID, making subscription-based revenue streams paramount for MFP and office printer manufacturers.

"[Konica Minolta and FUJIFILM] are two strong companies with a vested interest in this industry — and they are being smart," Errigo added, in describing the newly announced procurement and parts joint venture agreement. "Those companies that can manufacture products with more buying power will be long-term winners. Two big buying powers can negotiate better prices."

This joint venture seems to be a win-win for both organizations, and will also help protect their respective customer bases should there be another major supply chain disruption. It will also be interesting to see whether it leads to further discussions on other ways they can collaborate to better serve the industry and drive their businesses forward.