We’ve all heard it before, and Larry White is well aware of the talk track. The topic in question is the notion that the OEM pool is simply too big to support the office technology reseller community, and that consolidation is the answer.
However, the May 18 announcement that Toshiba Tec Corporation, the parent company of Toshiba America Business Solutions (TABS), and Ricoh had agreed to carve out a joint venture (JV) that will combine manufacturing operations may have signaled the genesis of a movement among office tech OEMs, but not in a way that was anticipated. In the end, resellers of these lines may benefit tremendously from the combined expertise and technology innovation, and the OEMs behind the curtain will reap considerable cost savings as a result.
That’s not to say the future won’t entail one manufacturer acquiring another outright, but if this JV provides an accurate and positive litmus test, similar agreements down the road could render straightforward purchase deals unnecessary. ENX Magazine chatted with White—president and CEO of TABS—for the latest installment of Two-Minute Drill to highlight the ambition of the JV. If fully actualized, this JV and similar deals could provide a blueprint that addresses the most pressing concerns among the manufacturers, yet maintains that church/state separation, identity and independent product map. If done right, it is the office tech reseller that ultimately wins.
The news of the joint venture (JV) between Toshiba and Ricoh was shocking, yet not surprising. The question is, given how long we’ve been witnessing a decline in unit placements, why did it take so long for two manufacturers to align in this manner?
White: Everybody knows units are declining, and when COVID struck a few years back, it only exacerbated the trend and made it more evident that something needed to happen. This was about the time our discussions with Ricoh began. It was a lengthy process for us to go through. We’re talking about two companies that are different and unique. They both take a great amount of pride in the technology that they employ to develop their product. Plus, our product roadmaps are quite different. That said, we also know that the products have become more commoditized over the years, and if you pull an MFP apart and look at all the components, although they’re made by different manufacturers, they’re similar in their nature and ilk. Toshiba and Ricoh just came to realize it faster than anybody else and was willing to collaborate. The fact that we already had a relationship with Ricoh and that they manufacture some of our accessories made it easier to have fruitful and honest discussions that led to this agreement. I’m not privy to whether other manufacturers have entertained the same types of discussions, but certainly, we were the first to get it done. It was the right thing to do. Everybody is going to face the same set of circumstances because manufacturing is really expensive. We need economies of scale in manufacturing. When that scale starts to decline, it creates issues and you have to adjust what you’re doing.
Do you see this as a triggering event that will prompt other manufacturers to do likewise in an effort to gain efficiencies and cost savings?
White: We’ve been talking about consolidation for a long time in this industry. That conversation has always centered on someone buying somebody else. I personally don’t think that’s going to happen. There’s not that much to be gained by one entity buying another. So, the natural evolution of that was taking a look at addressing the most expensive part of our business, which is manufacturing, and coming up with something different. I think you’ll probably see some manufacturers talking to each other, but I can’t say that is exactly what they’re going to do. Each company is different, and they may go after it uniquely. Only time will tell as far as that goes.
The JV essentially is a year away from being operational. Can you provide some details as to the work that lies ahead in making this a reality?
White: I’m immensely proud of our company, and Ricoh as well, in not trying to rush this. If you consider the sheer number of people that participate in our manufacturing process—and Ricoh is quite honestly much bigger than we are—getting that considerable number of people assimilated together takes a lot of work and time. You have to look at benefits programs worldwide; you have to look at ERP systems. We’re both on Oracle, but certainly not the same version of it. That alone takes a huge amount of time to combine the resources on that. You have to look at a submission method, payroll…there are just so many little nuanced items that you have to get right before you can officially start the JV. It’s going to take a lot of tactical work on the part of a lot of people to make sure it happens and gets done efficiently and right. Both companies are taking the time to thoughtfully go through this process.
The possibilities of this JV seem limitless. While you’re probably not in a position to speculate, can you talk about some of the goals you would like to accomplish beyond the efficiencies and cost savings that will benefit Toshiba’s resellers and their end-users?
White: Because I sell Toshiba Tec manufactured products, I’ll always have a bias that my product is the best. I’m sure my competitors all think the same about their products. The unique thing is, especially in Japan, you don’t see a lot of people moving from Toshiba Tec to Ricoh or Ricoh to Toshiba Tec, or Konica Minolta to Ricoh. In going through the due diligence process, both companies were extremely impressed with each other’s technology. The most exciting thing I am looking forward to is what these co-manufactured and developed products are going to look like. I think we’re going to see some innovation that probably wouldn’t have been developed without these companies coming together and sharing technology, ideas, thoughts and processes. Efficiencies and cost savings are great, and the scales can be phenomenal. That is all especially important. But as a sales and marketing organization, which is what TABS is, I’m excited to see what the future holds with the products that will be developed and released.