(Bloomberg) -- Nidec Corp. President and Chief Operating Officer Jun Seki is planning to leave the electric-motor maker ahead of a management overhaul by founder Shigenobu Nagamori, 77, people with knowledge of the matter said, underscoring the Japanese company’s struggles to put in place a succession plan.
Most Read from Bloomberg
Seki, 61, who was demoted from chief executive officer earlier this year, is being stripped of further responsibilities and being excluded from key communication among managers at the company, the people said. He plans to leave Nidec by the end of September and Vice-Chairman Hiroshi Kobe, 73, will take his place, according to some of the people, who asked not to be identified discussing non-public information. The new structure is scheduled to be announced early next month.
The world’s top supplier of motors for everything from hard drives to power plants is facing a worsening global economic outlook and needs to prepare by putting in place leaders with deep experience within the company, Nagamori told senior managers, according to one of the people.
In a statement, Nidec said that it wasn’t the source of information on Seki, and that the management revamp hasn’t been announced or decided. Nidec’s shares fell 2.4% on Thursday following the news, the most in a more than a month.
The revamp is the latest chapter in a turbulent period for Nidec. Nagamori brought in Seki, 61, a former Nissan Motor Co. executive, in 2020 as his successor and promoted him to CEO last year. Yet, after 10 months, Nagamori took back the reins amid what he described as lackluster performance at the company he founded in a shack in 1973. Although Nagamori has built a solid reputation turning the manufacturer into one of Japan’s biggest companies, for years he has struggled to find a successor.
In an interview with Bloomberg News last month, Nagamori vowed to remain at Nidec until he’s restored its shares to a record and put it on a path of steady growth. “Every day I was in agony” as the stock lost a third of its value after Seki’s appointment, Nagamori said. “The company’s performance was getting worse and worse.”
When asked about the adoption of a new management structure Tuesday, Nagamori confirmed that plans were in place but declined to comment on Seki’s future. Seki didn’t respond to multiple requests for comment.
A billionaire who is Nidec’s top individual shareholder, Nagamori is concerned about the global outlook and is seeking out trusted allies within the company to fight a recession head-on, according to the people. That will involve aggressive cost cuts and inventory management, as well as boosting new products and productivity, they said.
Nidec’s travails reflect a wider dilemma across Japan’s corporate landscape, as leaders who came of age during the country’s economic boom run their company well into years when most people retire. It’s not the only company grappling with succession. Despite promising to retire at 65, Uniqlo founder Tadashi Yanai, now 73, still runs Fast Retailing Co. with a tight grip. Masayoshi Son, SoftBank Group Corp.’s 65-year-old founder and CEO, has parted ways with several potential successors in high-profile exits in recent years.
The current saga began almost a year ago, when Nagamori began sounding alarms about Nidec’s performance. After Bloomberg News reported in January that the founder had soured on Seki and was taking steps to sideline his chosen CEO, local media reported that investors had gone to Nagamori to express concern about the succession turmoil and urged him to resolve the issue. Even so, Nagamori took back the CEO job in April and put Seki in the role of COO, overseeing the company’s automotive business.
Despite Nagamori’s concerns, the manufacturer posted record profit and sales for the fiscal year that ended in March. Even so, the company’s shares are down about 30% this year, following a 4.1% climb in 2021.
Nagamori’s goal, according to the July interview, is to restore Nidec’s share beyond its 2021 record of 15,175 yen and reach 20,000 yen in two years, at the latest — roughly double current levels.
Analysts and investors have warned for years Nidec could lose its “Nagamori premium” without an orderly succession process. Potential CEO replacements brought in before Seki eventually left the manufacturer after the founder soured on their prospects.
In the interview last month, Nagamori said that he can’t accept handing off Nidec and seeing it stumble as long as he’s alive. He turns 78 next week.
“I built this company from the ground up and Nidec is like a part of my body,” he said then. “If the company were to become a failure it’d be like a physical wound for me.”
(Updates with company statement.)
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.