Kobelco to build US excavator factory

Kobelco Construction Machinery has announced plans to build an excavator factory in Spartanburg, South Carolina, US. Site preparation is due to start in April and the first machines are due to be produced in January 2016.

The move follows the dissolution of Kobelco’s 10-year joint venture with CNH at the end of 2012. Kobelco re-entered the US market on its own in 2013, selling machines built at its factory in Itsukaichi, Japan through a newly appointed dealer network.

A statement from Kobelco said, “Market development has been proceeding at a faster rate than expected and the Itsukaichi factory has no further available capacity. We have decided to manufacture standard hydraulic excavators for the US in North America because capacity shortage is expected sooner or later due to the market development speed.”

The company said it has secured a 340,000 m2 site in Spartanburg, and once built the 14,560 m2 factory will have an initial production capacity of 1,800 excavators per year. Kobelco plans to start with 20 tonne excavators and then, “Sequentially increase the menu and production in accordance with market development.”

Kobelco said building the US factory will mean shorter lead times and better after-sales service for its North American customers, while reducing pressure on its Itsukaichi factory. However, it added that special machines and mini excavators would continue to be supplied from Japan

The company said, “By taking advantage of the local production, we will enhance service functions further and reinforce our foundation in the North American market by improving after-sales activities including parts sales, continue increasing the presence of Kobelco’s hydraulic excavators, and put a group-wide effort into regaining a 10% share in North America that we had had before we formed an alliance with CNH.”

As a stepping stone to this market share target, Kobelco says it hopes to achieve a 7% or better market share in the 2015 fiscal year.

The new factory will be incorporated into Kobelco’s North American subsidiary, Kobelco Construction Machinery U.S.A. Inc. (KCMU), which is headquartered in Katy Texas under KCMU president: Katsuhiko Morita. Kobelco’s investment in the new factory is put at JPY 5 billion (US$ 42 million).