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DMG Mori: The Story of German-Japanese Precision Engineering Excellence
I. The Machines That Make the Machines
On a gray October morning in 1870, in the industrial town of Bielefeld, Germany, a locksmith named Friedrich Gildemeister hung his shingle outside a modest workshop near the Cologne-Minden railway station. He founded the "Werkzeugmaschinenfabrik Gildemeister & Comp" during what might be called the "pioneer days" of German industrialization. Across the world, in a Japan still emerging from centuries of feudal isolation, the three Mori brothers would not be born for another seven decades.
Yet from these separated origins—a German locksmith's shop and a post-World War II Japanese textile equipment maker—would emerge the world's dominant machine tool empire. DMG Mori Co., Ltd., headquartered in Tokyo and Nara City, has become the largest machine tool builder in the world.
The question at the heart of this story is deceptively simple: How did a 150-year-old German company and a post-war Japanese startup merge to create a global champion? The answer lies in precision engineering, strategic patience, and a willingness to bridge two of the world's most distinct manufacturing cultures.
Today, DMG Mori operates a sales, service, and engineering network with 16 production sites and 113 sales and service sites in 43 countries, commanding a leading global market share of approximately 10%. But market share numbers barely capture what this company represents. DMG Mori builds "the machines that make the machines"—the CNC lathes, milling machines, and advanced manufacturing systems that produce everything from aircraft turbine blades to artificial hip joints, from smartphone components to automobile transmissions.
To understand DMG Mori is to understand modern manufacturing itself. The company's products embody the convergence of German precision engineering heritage with Japanese lean manufacturing excellence—a fusion that has proven extraordinarily difficult for competitors to replicate. DMG Mori Aktiengesellschaft is one of Germany's largest manufacturers of cutting machine tools and CNC-controlled lathes and milling machines, with focus on turning, milling, grinding, drilling as well as ultrasonic, lasertec and additive manufacturing for customers in aerospace, automotive, die & mold, medical and semiconductor industries.
II. The Machine Tool Industry: Setting the Stage
Before diving into DMG Mori's corporate saga, one must appreciate the extraordinary industry in which it operates. Machine tools are not consumer products. They do not generate viral marketing campaigns or attract retail investors seeking the next meme stock. Yet without them, modern civilization would grind to a halt.
A CNC (Computer Numerical Control) machine tool is a computer-controlled device that shapes metal, plastic, or other materials with extraordinary precision—often to tolerances measured in microns (thousandths of a millimeter). These machines cut, drill, mill, turn, and grind raw material into the precision components that populate everything from jet engines to medical implants.
The Machine Tool Market was valued at USD 89.5 billion in 2024 and is projected to reach USD 126.8 billion by 2034, registering a CAGR of 3.6%. This growth trajectory reflects the expanding manufacturing sector worldwide, driven by increasing automation adoption and technological advancements in CNC systems.
The industry structure reveals concentration among elite players. Leading manufacturers such as DMG MORI, Mazak, FANUC, and Siemens dominate the market, offering a wide range of CNC machines, lathes, milling machines, and other advanced technological solutions. These companies invest heavily in R&D, with new products meeting the specific needs of manufacturers in aerospace, automotive, medical devices, and semiconductor production.
Automotive kept its grip on 35.54% of 2024 revenue, yet the sector is in transition as internal-combustion machining contracts sunset alongside EV drivetrain ramp-ups. Aerospace & defense will post the fastest 6.80% CAGR thanks to pent-up jetliner demand and record defense modernization budgets.
Why does machine tool manufacturing tie so directly to national competitiveness and security? The answer lies in the "dual-use" nature of these products. A high-precision CNC lathe that machines automotive crankshafts can just as easily produce artillery shells or missile components. The same five-axis machining center that creates titanium hip implants can manufacture turbine blades for fighter jets. This dual-use reality explains why machine tools remain subject to strict export controls and why nations guard their precision manufacturing capabilities jealously.
The machine tool market is dominated by a few key nations, primarily China, Japan, South Korea, and India, where China is the world's largest manufacturer and consumer of machine tools. Asia Pacific led the market with a share of 53.98% in 2024, driven by strong investments in precision machining, industrial automation, and electronics manufacturing.
The competitive intensity in this market creates relentless pressure for innovation. Customers demand ever-tighter tolerances, faster cycle times, greater automation, and seamless digital integration. A machine tool company that fails to innovate becomes obsolete within a product generation cycle. This environment rewards scale, R&D investment, and global service networks—advantages that DMG Mori has systematically cultivated over decades.
III. The German Legacy: Gildemeister (1870-1990s)
Founding & Early Years
The story begins with Friedrich Gildemeister, a master locksmith whose ambitions extended beyond door hardware. Gildemeister was founded by Frederick Gildemeister in the town of Bielefeld, Germany, in 1870. The original factory, located at the Cöln-Minden Rail Station, began producing machine tools, and by the end of the century had established an extended range of tools.
By 1890, the company had around 100 employees, among them a wages clerk and three technicians to assemble the machines. In 1899, the former partnership was changed to a public limited company with capital assets of 1 million Goldmarks.
After nearly 40 years in business, Gildemeister retired in 1906. The direction of the company was then taken over by Wilhelm Berg, who remained as head of the company through World War II. Under Berg, the company began simplifying its range of machine tools, a process begun in 1907.
This simplification proved prescient. The more limited range permitted the company to adopt the newly developing industrialized production techniques pioneered by Henry Ford. By 1915, Gildemeister had reduced its production to just four main product areas: automatic multi-spindle lathes; drum turret lathes; longitudinal milling machines; and vertical and horizontal machines.
Post-War Rise
Germany's defeat in World War I presented existential challenges. The company's fortunes met a roadblock at the end of World War I, when the Allied powers placed the company on its banned companies list. Unable to continue production, Berg led the formation of a new company, Berg & Co., which specialized in the manufacture of tool components, specifically chucks and drives.
Berg continued its production, even after Gildemeister was allowed to resume its operations in the 1920s. Two factors enabled the company to grow during the economic crisis of the late 1920s and into the 1930s. The first was Wilhelm Berg's successful patent for a system for the clearance and disposal of wood chips created by its lathes and mills. The new tooling system also featured automated operations.
Following Germany's reconstruction after World War II, Gildemeister entered its golden era. In the post-war period, the company achieved a market-leading position in Europe—among other things with innovations such as the RV 50 turret lathe and the first eight-spindle automatic chucking machine.
Gildemeister went public in 1950, and at the end of 1969, the company became a public company with a broad spectrum of shareholders. This transformation from family enterprise to publicly traded corporation positioned Gildemeister for the technological revolution that would define the next half-century.
The CNC Revolution
The 1970s brought the computer revolution to manufacturing. Numerical control—the use of programmed instructions to control machine tools—promised to transform precision manufacturing from craft to science. Gildemeister recognized this inflection point and made a decisive move.
With the investment in the Hamburg machine tool manufacturer Heidenreich & Harbeck in 1970, Gildemeister finally acquired the necessary know-how for the development of CNC-controlled lathes. Shortly thereafter, in 1975, the company introduced the world's first electronic control system for machine tools as well as the N.E.F. manually numerically controlled lathe.
This 1975 milestone cannot be overstated. Electronic control systems represented a paradigm shift from mechanical to digital manufacturing. Gildemeister's early commitment to CNC technology established the company as an innovation leader rather than a fast follower—a position it would leverage for decades.
A pivotal moment for Gildemeister was its 1970 investment in Heidenreich & Harbeck, which brought expertise in CNC-controlled lathes. This led to the 1975 debut of the world's first electronic control system for machine tools.
By the late 1980s, Gildemeister had emerged as a European powerhouse in turning technology. Yet the company's product range remained incomplete—it lacked strength in milling machines, the other fundamental metalworking operation. This gap would drive one of the most consequential acquisitions in machine tool history.
IV. The Japanese Story: Mori Seiki (1948-2000s)
Founding in Post-War Japan
Halfway around the world, in a Japan devastated by World War II, a different origin story was unfolding. Mori Seiki was founded in 1948 by the three Mori brothers. It originally produced textile machinery, but in 1958, the company entered the machine tool manufacturing industry, and by 1968, it began manufacturing numerical control (NC) lathes.
The shift from textile machinery to machine tools reflects the broader transformation of Japanese industry during this period. As Japan rebuilt and industrialized, demand exploded for precision manufacturing equipment. The Japanese predecessor, Mori Seiki Co., Ltd., was founded in 1948 by three brothers surnamed Mori in Yamato-KĹŤriyama City, Nara Prefecture. The company initially manufactured and sold textile machinery in the postwar economic recovery period, capitalizing on Japan's nascent industrial base.
The 1958 pivot to machine tools proved transformational. Just ten years later, Mori Seiki was manufacturing NC lathes—positioning the company at the forefront of numerical control technology that would revolutionize manufacturing worldwide.
Technology Leadership and Global Expansion
The 1980s and 1990s marked Mori Seiki's global footprint, establishing factories in Europe and the U.S., solidifying its global market stance. Renowned for advanced CNC technologies, Mori Seiki introduced vertical machining and multi-axis turning centers, setting new industry benchmarks.
Mori Seiki's expansion followed a deliberate pattern. Rather than simply exporting from Japan, the company established local production and service capabilities in key markets. This strategy reduced currency exposure, shortened delivery times, and built relationships with local manufacturing ecosystems.
Strategic Acquisitions
In 2001, grinding machine manufacturer Taiyo Koki joined the DMG Mori Group, and in 2002, DMG Mori Co., Ltd. acquired business assets of Hitachi Seiki in Japan. These acquisitions expanded Mori Seiki's technological capabilities and production capacity while consolidating the Japanese machine tool industry.
The Hitachi Seiki acquisition deserves particular attention. Hitachi Seiki was a respected name in Japanese manufacturing, and its business assets—including technology, customer relationships, and production expertise—significantly strengthened Mori Seiki's competitive position.
By the mid-2000s, Mori Seiki had established itself as a global leader in lathe technology, with particular strength in Asian markets. Yet the company recognized that sustainable global leadership required broader geographical reach and complementary technological capabilities. The answer would come from an unlikely partner across the Eurasian landmass.
V. The Deckel Maho Acquisition: DMG is Born (1990s)
Crisis & Opportunity
The early 1990s brought crisis to the German machine tool industry. Economic recession combined with reunification challenges created a perfect storm that swept away companies with storied histories. Among the casualties was Deckel Maho AG, formed from the 1993 merger of two legendary names in German precision manufacturing.
In 1993, Deckel merged with the cutting machine manufacturer MAHO. A year later, DECKEL-MAHO was taken over by Gildemeister to create DMG MORI AG, which continues to manufacture the milling machines on which DECKEL had built its reputation.
In 1993, Deckel merged with Maho, but the merger only led to bankruptcy a year later. In 1994, Deckel Maho was entirely taken over by the turning machine manufacturer Gildemeister.
In that year, the company took over most of Deckel-Maho, a maker of universal milling and boring machinery and machining centers, which had gone bankrupt in the early 1990s. The acquisition enabled the company not only to expand its product focus, but also to redefine itself, from a simple manufacturer to a full-service provider of assembly and engineering services.
The German Brands Combined
To appreciate the significance of this acquisition, one must understand the heritage Gildemeister absorbed. Friedrich Deckel GmbH traced its origins to 1903 in Munich, initially specializing in camera shutters before pivoting to precision milling machines. Friedrich Deckel was already active at the end of the 19th century in the field of shutters for the photographic industry. In the early 1900s, Deckel began to specialize in the design and manufacture of high-precision machine tools for precision mechanics and mould making. In 1912, Deckel was the first company in Germany to introduce the 8-hour working day and at that time already had 500 employees.
In 1920, five engineers founded Maho AG as Mayr, Hoermann & Cie GmbH. Maho carved its niche as another German machine tool manufacturer with a focus on robust and reliable universal milling machines.
The 1990s saw the unification of Deckel, Maho, and Gildemeister into DMG, culminating in a comprehensive precision machinery line, globally lauded for its quality and innovation.
The combination transformed Gildemeister's strategic position. The addition of Deckel-Maho helped shift the group's revenue balance. By the mid-1990s, 40 percent of the group's turnover now came from its contract lathe work/machine tool and moulding engineering operations. By then, the automotive industry accounted for less than 10 percent of total group sales.
From this point forward, Gildemeister operated under the DMG brand (Deckel Maho Gildemeister), combining German excellence in turning technology with equally distinguished milling capabilities. The company had become a true "full-liner"—capable of addressing the complete range of customer metal-cutting requirements.
VI. Key Inflection Point #1: The 2009 Strategic Partnership
The Cooperation Agreement
The year 2009 marked an inflection point that would reshape the global machine tool industry. Against the backdrop of the worst financial crisis since the Great Depression, two proud companies—one German, one Japanese—signed a cooperation agreement that seemed almost counter-intuitive. Why would industry leaders choose to collaborate rather than compete?
Since 2009, DMG Mori Seiki Co (previously called Mori Seiki Co) and DMG Mori Seiki AG (previously called Gildemeister AG) have co-operated in sales, service, purchasing, development, design, manufacture and, more recently, financing. The pair have also had a cross-shareholding in each other since 2009.
The answer lay in complementary strengths and mutual recognition that global leadership required capabilities neither company possessed alone.
Why Both Companies Needed Each Other
Gildemeister's strengths included dominant European market presence, world-class milling technology from the Deckel Maho acquisition, and deep German precision engineering heritage. But the company struggled in Asian markets, where Japanese competitors enjoyed cultural and logistical advantages.
Mori Seiki excelled in lathe technology, boasted unmatched Asian market access, and embodied Japanese manufacturing efficiency (kaizen, just-in-time production, quality circles). However, European distribution remained challenging, and the company lacked the full milling product range that European customers demanded.
In 2009, a strategic merger birthed DMG Mori, a behemoth in machine tool manufacturing, combining DMG's CNC prowess with Mori Seiki's lathes expertise. The merger heralded a unified DMG Mori brand, a 50/50 joint venture enhancing both companies' brand recognition worldwide.
The Financing Joint Venture
The partnership extended beyond product and sales collaboration into financial services—a sophisticated move that reflected understanding of customer needs. Machine tools represent major capital expenditures for manufacturing companies, and financing solutions can prove decisive in winning orders.
In 2010, Gildemeister and Mori Seiki established MG Finance GmbH in Wernau, Baden-WĂĽrttemberg, in partnership with Japanese trading giant Mitsui & Co. Ltd. Gildemeister and Mori Seiki each held 33% of shares, with Mitsui holding 34%. This joint venture enabled integrated financing solutions that competitors struggled to match.
European Integration
Since September 2011, the two companies have continued to further expand their joint market presence in Europe. The European integration created operational efficiencies by eliminating duplicate sales and service organizations while presenting customers with unified DMG/Mori Seiki offerings.
The cooperation's success stemmed partly from the personal relationship between Dr. Masahiko Mori, CEO of Mori Seiki, and Dr. RĂĽdiger Kapitza, CEO of Gildemeister. Dr. Mori reflected on the origins of the business integration, recalling his discussion with Dr. RĂĽdiger Kapitza, then Chairman of the DMG Group, in a 2007 issue of SEISANZAI Marketing Magazine. "We had an engaging conversation that led to meals together and eventually culminated in the business integration of our companies," he recalled.
VII. Key Inflection Point #2: The Name Alignment (2013)
The 2009 partnership created operational synergies but presented a branding challenge. Customers encountered "DMG," "Mori Seiki," "DMG/Mori Seiki," and various combinations—creating confusion and diluting brand equity.
In order to strengthen their successful global cooperation, Gildemeister and Mori Seiki signed a cooperation agreement and decided to align their company names. On 1 October 2013, Gildemeister Aktiengesellschaft became DMG Mori Seiki Aktiengesellschaft. Mori Seiki changed its name to DMG Mori Seiki Company Limited. On the global market, both companies used the DMG MORI brand.
The October 2013 name change carried profound symbolism. By embedding both "DMG" (representing the German heritage of Deckel, Maho, and Gildemeister) and "Mori Seiki" (the Japanese founder's legacy) into unified corporate names, the companies signaled permanent commitment to partnership. This was not a temporary alliance of convenience—it was a German-Japanese "Global One Company."
In 2013, Gildemeister AG employed 7,236 staff and 261 trainees worldwide. The workforce would grow significantly as the partnership deepened and the combined entity captured market share from less globally integrated competitors.
VIII. Key Inflection Point #3: The 2015 Takeover & Full Integration
The Public Tender Offer
By 2015, the cooperative partnership had proven its value. The logical next step was full integration—but this raised complex questions about structure, control, and national identity. Would the German company absorb the Japanese one, or vice versa?
Machine tool maker DMG Mori Seiki Co of Japan is to make a voluntary public takeover offer for the outstanding shares of fellow machine tool maker and partner DMG Mori Seiki AG of Germany. The offer was set to begin 11 February, 2015 and run through to 11 March, 2015.
With a stated offer price of EUR 30.55 per share, the transaction had a maximum total value of more than EUR 1.5 billion.
Dr. Masahiko Mori's Philosophy on the Deal
Dr. Masahiko Mori's comments during the tender offer reveal a philosophy that distinguished this transaction from typical hostile acquisitions:
"I don't want to borrow from the bank, but I have to; I want to minimise the money [cost] for the sustainability of the two groups coming together."
Dr. Mori emphasized fairness to long-term shareholders over short-term traders, stating that he had "no responsibility to [short-term] shareholders" but had "a responsibility for my customers, employees, and long-term shareholders—typical German people who have been shareholders in Gildemeister over the last 20 years."
The Accelerated Timeline
The only real surprise has been the timing; the merger had been scheduled to occur by 2020. It was changed to take advantage of favourable low interest rates, as finance is required to support the share purchase.
This acceleration reflected both opportunistic financing conditions and growing confidence that cultural integration had progressed sufficiently to support full ownership consolidation.
Regulatory Clearance
The transaction has thereupon been notified to the merger control authorities in seven countries—Germany, China, Japan, Austria, Russia, Turkey and the USA. The respective merger control authorities approved the transaction between the beginning of February and the end of April 2015; all clearances were given within the first phase. Presumably, the approval received from the Chinese MOFCOM has been the fastest ever given by this merger control authority.
The Final Structure
In 2015, the Japanese company DMG Mori Seiki Co. acquired a 52.54% controlling stake in the German company DMG Mori Aktiengesellschaft.
At a 2016 AGM of DMG Mori AG, a profit and loss transfer agreement and a dominance agreement were approved, both with DMG Mori GmbH, a wholly owned subsidiary of DMG Mori Seiki, as the controlling company. The terms of the agreements will result in any profits being transferred to DMG Mori Seiki and any losses transferred to DMG Mori AG, with DMG Mori Seiki agreeing to compensate any shareholders of DMG Mori AG with an annual payment.
Today, DMG Mori Co., Ltd., through its subsidiary, holds 87.37% of the shares in its subsidiary DMG Mori AG.
IX. Dr. Masahiko Mori: The Architect of Integration
Understanding DMG Mori requires understanding the man who orchestrated its transformation. Dr. Masahiko Mori represents a distinctive blend of technical expertise, global business experience, and family legacy.
Dr. Masahiko Mori was born in Nara, Japan in 1961. After studying mechanical engineering at Kyoto University, Japan, he worked at ITOCHU Corporation as a salesperson of textile machineries and advanced composite materials for 8 years.
But it wasn't a foregone conclusion that he'd follow in the footsteps of his father and grandfather. In fact, growing up in the relatively tranquil historic city of Nara, the younger Mori dreamed of becoming a medical doctor, which was a common aspiration for many of his schoolmates.
In college, Mori got a BA in precision engineering at Kyoto University. Then he worked for C.Itoh & Co. (now Itochu Corp.) for eight years before joining the family business to help his then ailing father Yukio.
In 1993, he joined Mori Seiki (now DMG MORI) and was appointed Director in 1994. He subsequently served as Managing Director in 1996, Senior Managing Director in 1997, and became President in 1999. In 2003, he earned a Doctorate in Engineering from the University of Tokyo.
His doctoral thesis—"Research on Business Model of Domestic and Foreign Production in the Machine Tool Industry"—directly informed the global integration strategy he would implement over the following two decades.
DMG MORI President Dr. Masahiko Mori has a business philosophy similar to the "Sanpo-Yoshi" (Three-Way Satisfaction) principle of traditional Ōmi merchants in Japan—"Creating a sustainable business environment for our customers, suppliers and employees is of the utmost importance."
As part of the company's 70th anniversary project in 2018, he established the 5-axis Machining Association to raise awareness of Japan's lagging adoption of 5-axis machining compared to Europe. The initiative included an unprecedented program to lend 5-axis machining centers free of charge to 70 companies for one year. While the free loan program has now ended, the number of member companies has since doubled to 142.
He shared his management philosophy: "Work hard, play hard, and learn hard."
Mori also envisions a transformative future—even if it means selling fewer machines. That's because he believes there's a huge opportunity to replace aging equipment with a new wave of smarter, more efficient machines utilizing advanced technologies that can help alleviate the ongoing workforce shortage and create a cleaner, more sustainable world.
X. Key Inflection Point #4: Digital Transformation – CELOS & Industry 4.0
The CELOS Platform
The machine tool industry faces a fundamental challenge: how do you digitize a product category that has existed for over a century? DMG Mori's answer came in the form of CELOS—a proprietary digital platform that represents one of the most ambitious digitization efforts in manufacturing history.
CELOS is the digital brand core of DMG MORI and thus the heart of the digital transformation (DX). CELOS had its premiere over 10 years ago as the world's first APP-based machine control system.
With CELOS X, DMG MORI has created a platform that can scale with the increasing performance of machine tools and automation solutions. CELOS X offers a holistic solution for the digital transformation of a company in manufacturing and is DMG MORI's answer to global challenges such as the shortage of skilled workers and increasing price pressure.
Around ten years after introducing the world's first app-based machine control system, DMG MORI is revolutionizing manufacturing technology once again—this time even more profound and comprehensive. CELOS X will pave the way into the future of manufacturing.
CELOS X consists of the two components CELOS Xperience and CELOS Xchange. CELOS Xperience provides as a direct level of user interaction with applications and software systems. The cloud-based CELOS Xchange platform offers a centralized and secure data space for the end-to-end integration of the shop floor.
With 300 features and over 30 apps, CELOS X offers unprecedented consistency across all DMG MORI control variants, which will also be available to third-party providers in the future.
Machining Transformation (MX) Strategy
DMG Mori's strategic framework, called "Machining Transformation" (MX), articulates how digital transformation integrates with broader manufacturing evolution:
With its holistic view of Process Integration, Automation, Digital Transformation (DX) and Green Transformation (GX), Machining Transformation (MX) from DMG MORI opens up completely new perspectives for innovation, growth, competitiveness and sustainability.
Digital engineering accelerates the production ramp-up by up to 40 percent and reduces set-up times on the real machine by up to 80 percent. Digital Twin Test Cuts replace time-consuming and resource-intensive test machining on real machine tools.
The ADAMOS Alliance
Recognizing that no single company—not even the world's largest machine tool manufacturer—could establish industry-wide digital standards alone, DMG Mori co-founded a strategic alliance.
Through the joint venture ADAMOS (ADAptive Manufacturing Open Solutions), DMG MORI, DĂĽrr, Software AG and ZEISS as well as ASM PT are establishing a strategic alliance for the future topics of Industrie 4.0 and the Industrial Internet of Things (IIoT). Germany's first alliance of well-known industrial and software companies wants to establish ADAMOS as global standard for the industry and attract other machine builders to become partners.
ADAMOS GmbH and ADAMOS App Factory launch as of 1 October 2017 with about 200 experts. DMG MORI, DĂĽrr, Software AG and ZEISS as well as ASM PT are equal participants in ADAMOS GmbH registered in Darmstadt.
The auditing and consulting firm PwC Deutschland has acquired a 12.5 percent stake in ADAMOS GmbH. With this acquisition, ADAMOS now has an eighth shareholder in addition to DMG MORI, DĂĽrr, Software AG, ZEISS, ASM PT, ENGEL Austria and the KARL MAYER Group.
Advanced Technologies: Additive Manufacturing and LASERTEC
Beyond digitization, DMG Mori has invested heavily in additive manufacturing—3D metal printing—that represents a potential paradigm shift in how complex components are produced.
For Additive Manufacturing, DMG MORI offers the LASERTEC DED series, a process with a powder nozzle, and the LASERTEC SLM series, a process with a powder bed. With the combination of metal 3D printing and high-precision machining centers, DMG MORI offers its customers a comprehensive understanding of the process—from drawings to finished parts.
The LASERTEC 65 3D is a hybrid solution that incorporates the additive manufacturing function into a 5-axis machining center. Combining laser metal deposition and milling processes on one machine.
DMG MORI has been a successful player on the market since 2013 with its combination of laser deposition welding and machining on the LASERTEC DED hybrid series machines. While the LASERTEC 65 DED for pure laser deposition welding acts as a supplement to the already large range of machining centers, the LASERTEC SLM series expands the portfolio to include the powder bedding process using Selective Laser Melting.
XI. The Russia Controversy (2022-2023)
In February 2022, Russia's invasion of Ukraine thrust DMG Mori into one of the most challenging situations any manufacturing company can face: how to disentangle operations in a sanctioned market while protecting employees, assets, and reputation.
The company has stopped all sales and service activities in Russia as well as the production in Ulyanovsk. This also includes all deliveries of machines, spare parts, components and services to Russia.
However, subsequent investigations revealed complications that tested DMG Mori's corporate governance.
DMG MORI is no longer active in Russia as we have already stated on 14 March 2022 and confirmed again on 29 September 2023 and 25 October 2023... Our factory in Ulyanovsk had completely stopped its production and was conserved to prevent our technologies from falling into the hands of the Russian government. All but three employees of the production plant were immediately moved to a transfer company.
The employees of the sales and service companies in Russia were dismissed immediately, with the exception of a few employees in Moscow who work in legal administration and asset management. In fall 2023, we conducted an internal investigation against media allegations, which revealed that former employees had sold 122 machines produced in Russia on their own authority and without the knowledge of the properly authorized management.
By a decree published on 19 February 2024, the Russian Federation has brought our shareholding in Ulyanovsk Machine Tools ooo, Ulyanovsk (Russia), under state control. The DMG MORI AG Group has thus lost the ability to control and influence the company in Ulyanovsk. The loss of control over Ulyanovsk Machine Tools ooo led to the derecognition of this company from the consolidated financial statements of DMG MORI AG.
Through rigorous screening and management, DMG MORI has been committed to preventing its machine tools and technology from being used as a threat to world peace, not only in Russia but also in other countries and organizations with military concerns. As part of our efforts, we are globally implementing relocation detection devices to prevent unauthorized and unnotified transfer or use. The implementation began in 2006 with machines produced in Japan, and since 2023 all the machines from DMG MORI factories, including those in Europe and other countries, have been equipped with this device. In fact, we do not deliver products if the customer refuses to install the device. This resulted in the cancellation of about 8 billion yen in FY2023 alone, but we are willing to make such a sacrifice for export control.
The Russia situation carries significant implications for investors evaluating DMG Mori. First, it demonstrates the dual-use nature of machine tools—equipment designed for civilian manufacturing can enable military production, creating both ethical and regulatory risks. Second, it highlights the challenges of extricating from markets when geopolitical conditions deteriorate rapidly. Third, the reputational damage—Ukraine added DMG Mori to its "war sponsors" list—underscores ESG risks that investors must weigh against financial metrics.
XII. Financial Performance & Business Model Analysis
Recent Performance
In 2024, the global market for machine tools continued to be characterized by the war in Ukraine, ongoing geopolitical uncertainties and the associated economic restraint. Demand for capital goods remained subdued. In this challenging market environment, DMG MORI AG achieved a solid order intake of € 2,256.6 million (-13 %; previous year: € 2,583.6 million).
Sales revenues were at € 2,228.3 million (-11 %; previous year: € 2,498.6 million).
Income taxes amounted to € 75.3 million (previous year: € 65.6 million). This results in EAT from continuing operations of € 179.4 million (previous year: € 172.0 million). The deconsolidation of our production company in Russia and the subsequent decision by the Executive Board to discontinue our "ECOLINE" product line resulted in EAT from discontinued operations of € -91.9 million.
Free cash flow rose by +25 % to € 117.0 million (previous year: € 93.5 million).
As at December 31, 2024, the group had 7,498 employees, thereof 265 trainees (31 Dec. 2023: 7,515).
Forward Guidance
Sales revenues are expected to be between € 2.2 billion and € 2.3 billion. We forecast EBIT of between € 150 million and € 160 million. Free cash flow should be between € 110 million and € 130 million.
Business Model Strengths
DMG Mori's business model exhibits several characteristics that long-term investors should appreciate:
Razor-Razorblade Economics: Like printer manufacturers that profit from ink cartridges, machine tool companies derive substantial recurring revenue from service, spare parts, software upgrades, and consumables. A machine tool has a useful life of 15-20 years, during which the manufacturer can capture ongoing service revenue.
High Switching Costs: Once a manufacturing facility standardizes on a particular machine tool platform, switching costs become substantial. Operators develop expertise, tooling investments become specific to particular machines, and integration with production management systems creates technical lock-in.
Technical Differentiation: Unlike commodity products, machine tools differentiate on technical capabilities—precision, speed, reliability, software features. Customers frequently specify machines by manufacturer and model, limiting price-based competition.
Global Service Network: The integrated DMG/Mori Seiki service organization—113 locations in 43 countries—creates competitive advantage that regional competitors cannot easily replicate. Manufacturing downtime is extraordinarily expensive, making responsive service coverage a critical purchasing criterion.
XIII. Competitive Landscape
DMG Mori operates in a competitive environment characterized by several global players, each with distinct strengths:
Yamazaki Mazak Corporation sets itself apart as the top global seller of CNC machines through its broad product array, innovation, and strong international foothold. Other major players such as DMG MORI, Haas Automation, Okuma Corporation, and FANUC significantly contribute to the CNC machine industry's evolution.
Fanuc Corp. controls 65 percent of the global market share in CNC controls worldwide. This position as the dominant control system supplier creates both competitive and partnership dynamics with machine tool manufacturers.
Yamazaki Mazak (Japan): Yamazaki Mazak is the largest world's best CNC machine manufacturer & maker from Japan, founded in 1919, and its market share ranks first all year round in the world. Mazak's integrated manufacturing and global distribution represent DMG Mori's most formidable competitor.
Okuma Corporation (Japan): Okuma Co., Ltd. has a history of more than 100 years. It produces various CNC lathes, turning centers, vertical, horizontal, gantry (pentahedron) machining centers, and CNC grinders.
Haas Automation (USA): Based in Oxnard, California, Haas has built significant market share by offering competitive pricing with American-made reliability. Haas machines are particularly popular among smaller job shops and educational institutions.
FANUC (Japan): While primarily a controls and robotics company, FANUC manufactures machining centers and competes directly with DMG Mori in certain product categories.
Competitive Analysis: Porter's Five Forces
Threat of New Entrants (LOW): The machine tool industry presents formidable entry barriers—decades of accumulated engineering expertise, global service infrastructure, customer relationships built over generations, and capital requirements that deter new competition.
Bargaining Power of Suppliers (MODERATE): Key components include CNC controls (dominated by FANUC and Siemens), precision bearings, linear guides, and spindle motors. Supplier concentration creates some pricing pressure, though large manufacturers like DMG Mori exercise countervailing purchasing power.
Bargaining Power of Buyers (MODERATE TO HIGH): Large customers—automotive OEMs, aerospace primes, major industrial conglomerates—exercise significant negotiating leverage. However, technical differentiation and switching costs provide manufacturers some protection.
Threat of Substitutes (LOW TO MODERATE): Additive manufacturing (3D printing) represents a potential substitute for certain applications, though most metal parts still require subtractive machining. DMG Mori's investments in LASERTEC additive technology hedge this risk.
Industry Rivalry (HIGH): Competition among established players remains intense, with pressure on pricing, innovation pace, and service levels. The industry has consolidated significantly over recent decades, but remaining players compete aggressively for market share.
Competitive Moats: Hamilton Helmer's 7 Powers Analysis
Scale Economies: DMG Mori benefits from scale advantages in R&D (spreading development costs across global sales volumes), manufacturing (production efficiency at German and Japanese facilities), and service (global service network amortized across installed base).
Network Effects: Limited direct network effects, though the CELOS ecosystem creates some lock-in as customers integrate DMG Mori software into production workflows.
Counter-Positioning: DMG Mori's German-Japanese dual heritage creates positioning that competitors cannot easily replicate. A pure-play Japanese competitor lacks European engineering heritage; a German competitor lacks Asian market access.
Switching Costs: High switching costs exist at multiple levels—operator training, tooling investments, integration with production management systems, and qualification requirements in regulated industries (aerospace, medical).
Branding: The DMG Mori brand commands premium pricing, particularly in European markets where the Deckel, Maho, and Gildemeister heritage carries significant weight.
Cornered Resource: Access to precision engineering talent in both Germany (particularly Bavaria and Baden-WĂĽrttemberg) and Japan (Nara, Aichi) represents a resource that competitors cannot easily replicate.
Process Power: DMG Mori's integration of German precision engineering with Japanese lean manufacturing creates process advantages that have proven difficult for competitors to match.
XIV. Investment Considerations: Bull and Bear Cases
Bull Case
Market Leadership Position: As the world's largest machine tool builder, DMG Mori benefits from scale advantages that smaller competitors cannot match. The company's 10% global market share provides sustainable advantages in R&D investment, service infrastructure, and supplier negotiations.
Industry 4.0 Leadership: The CELOS platform, ADAMOS alliance participation, and comprehensive digitization strategy position DMG Mori to capture value as manufacturing digitizes. Companies that successfully sell software-enriched machines command higher margins than pure hardware vendors.
Secular Growth Drivers: Aerospace recovery, electric vehicle production expansion, semiconductor manufacturing investment, and medical device demand growth create tailwinds for precision manufacturing equipment. The global manufacturing sector continues expanding, particularly in emerging markets.
Recurring Revenue Growth: Services, spare parts, and software represent an increasing percentage of revenue—with higher margins and greater predictability than new machine sales.
Strategic Positioning: The German-Japanese combination creates unique competitive positioning that pure-play competitors cannot easily replicate.
Bear Case
Cyclicality: Machine tool demand correlates strongly with capital expenditure cycles, which amplify economic fluctuations. During recessions, manufacturers delay equipment purchases, creating revenue volatility that challenges operational planning.
Geopolitical Risks: The Russia situation demonstrates how geopolitical developments can disrupt operations and create reputational damage. As tensions between major powers continue, companies with global operations face increasing risks of sanctions, export restrictions, and market access limitations.
Chinese Competition: Chinese machine tool manufacturers have improved quality significantly while maintaining cost advantages. Continued technology transfer and domestic Chinese demand may enable Chinese competitors to challenge established players in certain market segments.
Technology Disruption: Additive manufacturing could reduce demand for traditional subtractive machine tools in certain applications. While DMG Mori has invested in LASERTEC additive technology, the ultimate impact of 3D printing on the machine tool industry remains uncertain.
Customer Concentration: Major customers in automotive and aerospace industries can exert pricing pressure and concentrate demand risk.
XV. Key Performance Indicators to Track
For investors following DMG Mori, three metrics deserve particular attention:
1. Order Intake (Auftragseingang)
Order intake represents future revenue and provides leading indication of demand conditions. The metric captures orders booked during a period, which typically convert to revenue over 3-12 months depending on machine complexity and production schedules.
In 2024, DMG MORI AG achieved a solid order intake of € 2,256.6 million (-13 %; previous year: € 2,583.6 million).
Monitor order intake growth rates, regional distribution (Europe vs. Asia vs. Americas), and sector mix (automotive vs. aerospace vs. general engineering). Divergence between order intake trends and broader manufacturing indicators may signal competitive position changes.
2. Service Revenue as Percentage of Total Revenue
Service revenue (spare parts, maintenance, software, training) provides higher margins and greater stability than new machine sales. Growing service revenue as a percentage of total revenue indicates successful installed base monetization and customer retention.
The trend toward "LifeCycle Services" and software subscriptions should drive this metric higher over time. Service revenue resilience during economic downturns provides important operational stability.
3. Average Order Value
Average order value reflects product mix shifts and pricing power. Higher average order values typically indicate customer adoption of more sophisticated machines with advanced features—5-axis capabilities, automation integration, CELOS software packages.
Although the number of machines ordered fell slightly, the average order value continued to increase significantly due to the high-tech equipment of the machines, confirming our strategic focus on integrated solutions in the production environment.
Declining average order values might indicate competitive pressure or customer trade-down to simpler machines.
XVI. Myth vs. Reality
| Myth | Reality |
|---|---|
| "DMG Mori is a German company" | DMG Mori is a German-Japanese company. The Japanese parent company (DMG Mori Co., Ltd.) holds 87.37% of the German subsidiary (DMG Mori AG). Headquarters are in both Tokyo and Bielefeld. |
| "Machine tools are commodities" | High-end machine tools differentiate on precision, reliability, software, and service. Customers routinely specify machines by manufacturer and model, indicating brand matters. |
| "China will dominate machine tools" | While China is the largest consumer and producer of machine tools, high-precision segments remain dominated by German, Japanese, and Swiss manufacturers. Quality gaps persist in demanding applications. |
| "Additive manufacturing will replace machine tools" | Most metal parts still require subtractive machining for final precision. Additive manufacturing creates opportunities for hybrid processes that DMG Mori addresses with LASERTEC products. |
XVII. Future Outlook
In September 2024, we held the groundbreaking ceremony for our European headquarters in Munich, Germany. Scheduled to open in 2026, the Munich European headquarters will serve as a hub for international exchange. Its strategic location near the Pfronten Plant in Germany—our largest development and production site in Europe—will enhance regional coordination.
The new Munich headquarters signals continued commitment to European operations and the German engineering heritage that distinguishes DMG Mori in global markets.
In FY 2025, to achieve our plan of sales revenue JPY 510.0 bn., we plan to convert this backlog into sales, while generating additional sales from new orders within the year as well. As stated in our medium-term business plan, DMG MORI provides high value-added products, systems, and services through process integration, automation, DX, and GX, and thus addresses environmental issues and contributes to a Circular Economy with our MX (Machining Transformation) strategy.
Through a tender offer from November to December 2024 with the aim of making TAIYO KOKI CO., LTD. (listed on the Tokyo Stock Exchange Standard Market) a 100% group company, our ownership ratio of shares increased to 92.84%. On January 7, 2025, TAIYO KOKI resolved the sale of shares of all non-controlling shareholders, with plans to acquire all outstanding shares in the first quarter of 2025.
XVIII. Conclusion
DMG Mori's story represents one of the most successful cross-border industrial mergers in manufacturing history. From a German locksmith's shop in 1870 and a Japanese textile equipment maker in 1948, two distinct industrial cultures converged to create the world's largest machine tool builder.
The company's success stems not from revolutionary technology or disruptive business models, but from patient execution of a clear strategy: combine German precision engineering with Japanese manufacturing efficiency, build global service infrastructure, invest continuously in digitization and advanced technologies, and maintain relentless focus on customer needs.
For investors, DMG Mori offers exposure to global manufacturing capital expenditure cycles with the characteristics of a quality industrial company—market leadership, technological differentiation, recurring revenue streams, and barriers to entry that protect competitive position.
The Russia controversy, ongoing geopolitical tensions, and the inherent cyclicality of capital goods markets present risks that warrant careful consideration. Yet DMG Mori's installed base of millions of machines worldwide, its commitment to digitization through CELOS, and its positioning at the intersection of German and Japanese industrial excellence suggest the company will remain a force in precision manufacturing for decades to come.
The machines that make the machines—from turbine blades to medical implants, from smartphone components to automobile transmissions—flow from DMG Mori's global production network. In an era of reshoring, manufacturing sophistication, and Industry 4.0 transformation, that position carries enduring strategic value.
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