Building housing for Nidec's Semiconductor Solution Center in Kawasaki City. (© Sankei)
The sudden resignation of Nidec founder Shigenobu Nagamori brought an abrupt end to the company's response to allegations that threaten the future of the global manufacturing leader. Allegations of accounting irregularities, however, remain only partially explained. On December 19, Nidec announced that Nagamori had stepped down as chairman and CEO. While the company said the move reflected his personal wishes, the gravity of the allegations appears to have loomed large in the background.
In a statement released upon his resignation, Nagamori addressed the criticism and the company's future. "I founded Nidec and built it up, including its corporate culture. However, the fact that Nidec's corporate culture is now being questioned has caused concern among the public," he said. The remarks carried the unmistakably forceful tone long associated with the hard-driving founder.
The Rise of 'Nagamori-ism'
Founded by Nagamori in 1973, Nidec grew from a maker of precision small motors into a global enterprise. Its guiding motto, "Act immediately, see it through, and never fail to deliver," embodied a management philosophy centered on ambitious targets, relentless execution, and speed. This approach, widely known as "Nagamori-ism," fueled the company's rapid expansion.
Yet a corporate culture that placed such strong emphasis on numbers and results also carried unintended consequences. In June, Nidec disclosed the possibility of unpaid customs duties on motors produced by an Italian subsidiary. Then, in July, concerns surfaced over the accounting treatment of a temporary purchasing incentive, estimated at approximately ¥200 million JPY ($1.3 million USD), at a Chinese subsidiary. Subsequent investigations by external legal experts raised the possibility that improper accounting practices had occurred with the knowledge of management at both Nidec's headquarters and its group companies.
An Uncertain Path Forward
At a press conference in November, President Mitsuya Kishida said that "Nagamori-ism" must be reformed by adding a commitment to "doing things correctly without exception." Nidec shares were designated a "Security on Special Alert" in October by the Tokyo Stock Exchange, raising the risk of delisting if the company's improvement plans are judged insufficient after one year.
Nagamori himself has yet to address the allegations publicly, and the full scope of the problems remains unclear. It also remains uncertain whether his stepping away from day-to-day management alone will be sufficient to reform the company's corporate culture in the short term.
The sudden resignation was met with skepticism among financial professionals. One financial analyst noted that the move neither clarifies the irregularities nor enables the company to make a genuine fresh start, adding that Nidec still bears a responsibility to provide a full explanation of the accounting irregularities.
About two hours after his resignation announcement, Nagamori issued a further statement, saying he was entrusting all management of Nidec to President Kishida and expressing confidence that the company could now move toward recovery.
Even so, Nidec faces a difficult and uncertain road as it seeks to rebuild trust with investors and the broader market.
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Authors: Hiroto Kuwajima and Ryosuke Irizawa, The Sankei Shimbun
