Hitachi Construction Machinery (HCM) announces the company and Deere have decided to dissolve their joint venture in the Americas. The dissolution will be completed February 28, 2022, HCM says in a press release announcing the decision.
As such, Hitachi Construction Machinery Loaders America Inc. (HCMA) will become the regional headquarters for the Americas. It will assume all product and service operations for the Americas starting in Spring 2022. HCMA will remain a subsidiary of the Hitachi Construction Machinery Group.
According to HCM, 60 new jobs will be added to the North American headquarters in Newnan, GA, to help strengthen the company's efforts to build up its market position. The company emphasized it does not plan on eliminating any jobs as it feels adding more positions will help better its market opportunities.
For now, production of wheel loaders, excavators and mining equipment will remain in Japan, but HCM and HCMA will evaluate whether changes are necessary and some production should be moved to the Americas in the future.
HCM and Deere's partnership can be traced all the way back to the 1960s. Then in 1988 they formally began their joint venture; in 2018 the companies celebrated the 30-year anniversary of their partnership during which over 55,000 hydraulic excavators were manufactured for use in the North, Central and South American markets.
While the companies are ending their joint venture, some agreements with Deere will remain including:
- HCM will provide Deere with excavator kits to be sold to dealers as Hitachi brand excavators through February 28, 2022.
- HCM will continue to supply excavator kits, parts and complete machines, that Deere dealers will sell as Deere-branded machines for an agreed amount of time.
HCM clarifies the remaining supply agreement is between HCM and Deere, and does not include HCMA. Because of this, HCMA will be able to pursue the business strategies it sees will best fit for the Americas market while also being able to introduce new equipment.
Starting in Spring 2022, HCMA will assume all mining industry functions as well. The company plans to increase its focus on the mining sector and establish new strategies to grow its market share.
Building better market share
HCM says that by having direct ownership of HCMA, it will be better able to take the strategic steps necessary to improve the company's market share and determine the direction it wants to take in the Americas. The company says it has been investing in the Americas business since 2017 to improve parts and service, rental, used equipment, remanufactured parts and financing operations. It is also looking to further develop advanced technologies such as telematics, analytics and the Internet of Things (IoT) to better help customers.
With new equipment set to be introduced in Spring 2022, HCMA is looking to differentiate itself by incorporating new, advanced technologies into its equipment. The goal is to help customers increase safety and efficiency while also lowering their total cost of ownership. The company says these will be different from the kits it provides Deere dealers.
New hydraulic systems and advanced versions of the ConSite program and the Aerial Angle peripheral viewing system are among the technology updates the company plans to make for its new equipment. It also plans to assess the possibility of developing new products to meet the specific needs of customers in the Americas.
Deere also plans to make adjustments after the dissolution of the joint venture to benefit its market presence. "For many years, John Deere and Hitachi enjoyed a mutually successful partnership in the Americas," said John Stone, President, John Deere Construction & Forestry Division and Power Systems, in John Deere's press release announcing the end of the joint venture. "As we turn the page to a new chapter of Deere-designed excavators, we remain committed to supporting our customers of today and tomorrow."
"Looking to the future, John Deere will build on our legacy of quality and productivity and accelerate development of industry-leading technology and machinery that answers the fundamental need for smarter, safer, and more sustainable construction so our customers can shape tomorrow's world," Stone continued.
As part of the new license and supply agreements established in conjunction with the joint venture ending, John Deere says the following will occur:
- John Deere will acquire the Deere-Hitachi joint-venture factories in Kernersville, NC; Indaiatuba, Brazil; and Langley, British Columbia, Canada.
- John Deere will continue to manufacture Deere-branded construction and forestry excavators currently produced at the three Deere-Hitachi factories. These locations will discontinue production of Hitachi-branded excavators. John Deere will continue to offer a full portfolio of excavators through a supply agreement with Hitachi.
- John Deere's marketing arrangement for Hitachi-branded construction excavators and mining equipment in the Americas will end; Hitachi will assume distribution and support for these products.
More on the announcement from HCM's press release
Masaaki Hirose, Chairman and HCM executive officer, will continue to be responsible for HCMA. Alan Quinn, who currently serves as CEO, will continue in the same role.
“HCM, through HCMA, will be able to better determine its own destiny in the Americas with its own business strategies, improved products and services, and updated technologies, all provided through a revamped and strengthened distribution network,” Quinn said.
Beginning Spring of 2022, HCMA will introduce new equipment to the Americas with cutting-edge technologies that increase efficiency and safety while lowering total cost of ownership. The company plans to differentiate itself through the product capabilities of these new machines, including the latest in hydraulic systems, innovative “uptime” and IoT services, and advanced safety features. It will also assess the potential for completely new products that meet the needs of the Americas markets.
HCMA will be able to structure its business to respond to market changes and fulfill the evolving needs of equipment owners and operators. In construction, price competition for new machinery from emerging countries is intensifying and demands for improvement in safety and efficiency on job sites are becoming stricter. After-sales support and uptime services which utilize IoT and artificial intelligence (AI) is increasing, which the company would like to develop and capitalize on.
In mining, competition for hydraulic excavators and dump trucks used in mines has intensified as the global trend to reduce CO2 through automation, unmanned and electrification has increased. In after-sales service, the development of “uptime” services is also growing.
“HCM has been improving and investing in business strategies since 2017 to prepare for the creation of HCMA,” Quinn said. “This includes many ‘value chain’ initiatives to bolster parts and service, rental, used equipment, remanufactured parts and financing. It has also been improving technologies in analytics, IoT, telematics, fleet management and uptime services. In the future, HCMA will be able to better utilize these advances to capture more market share.”
In the short term, all wheel loaders, excavators and mining equipment will be manufactured in Japan. HCM and HCMA will continue to evaluate this supply structure for the future to evaluate the possibilities for production in the Americas.
One of HCMA’s main strategies will be to increase the usage of ConSite globally. The company will extend the service to new Hitachi brand excavators and continue to expand its use in mining. The goal is to increase the use of telematics and predictive analytics to increase uptime on the jobsite.
HCMA’s other goals include:
- Strengthen its regional headquarters in the Americas
- Formulate new market strategies
- Rebuild and strengthen its distribution network in North America
- Respond to increased demand from mining and civil engineering for safer equipment that is more productive and reduces total lifecycle costs
- Promote sustainable initiatives for manufacturing, construction and mining; reduce dependence on coal-related businesses, reduce CO2 emissions
- Continue to aggressively expand into mining, particularly in Latin America
- Steadily establish parts service bases
- Expand rental and used equipment businesses
“We are very excited to begin this new chapter as HCMA,” Quinn said. “We have an ambitious plan for the future, and we are focused on dynamically responding to the needs of our customers and the quickly changing nature of the equipment market.”