John Deere and Hitachi are dissolving their joint venture of more than 30 years for manufacturing excavators in North and South America.
After February 28, 2022, Hitachi Construction Machinery Americas Inc. will stand on its own for distribution and sales of its brand excavators on the two continents. Hitachi plans to manufacture all its excavators, as well as its wheel loaders and mining equipment, in Japan, and then import them to the North and South American markets.
Hitachi Construction Machinery Americas Inc. also plans to introduce new equipment to the markets, which the company says will have “cutting-edge technologies that increase efficiency and safety while lowering total cost of ownership.” Those technologies include advanced hydraulic and safety systems, “internet of things” services and telematics.
The two companies own a joint plant in Kernersville, N.C., where Deere and Hitachi hydraulic excavators of 13 to 47 metric tons are produced. They also own plants in British Columbia, Canada and Brazil.
Hitachi Construction Machinery Americas Inc. CEO Alan Quinn said in an interview with Equipment World that Deere will purchase the factories. He added that parent company Hitachi Construction Machinery and Deere have entered into a supply agreement in which Hitachi will continue to provide the excavator kits for Deere to assemble excavators after February 28.
Hitachi Construction Machinery Americas Inc. plans to keep its regional headquarters in Newnan, Georgia, where Quinn says it also plans to add 75 to 80 employees. About 60 of those positions will be local hires, he said. Positions will include sales, distribution, dealer service, marketing and more – across the board, he says. The company is also seeking a location for a parts distribution center, which Quinn said would be about 400,000 square feet and have about $150 million in parts stock. Hitachi Construction Machinery Americas Inc. will operate as a wholly owned subsidiary of Hitachi Construction Machinery, based in Japan.
Hitachi Construction Machinery Loaders America, formed in 2017 after the company purchased KCM wheel loaders, will also be part of the Hitachi Construction Machinery Americas Inc. umbrella, and “Loader” will be dropped from the name, Quinn said.
Deere and Hitachi began forging a supply relationship in the 1960s. They formed the Deere-Hitachi Construction Corporation in Kernersville in 1988. In 1998, they started a “Base USA” strategy in which the same models were built for both brands at the plant. The joint venture later branched out with an excavator plant in Canada and a forestry excavator factory in Brazil.
For Hitachi, the collaboration gave it Deere’s well-established dealer and distribution network, and Deere benefited from Hitachi’s design and manufacturing expertise. Hitachi is one of the top-selling excavator manufacturers in the world. It started mass production of cable-operated shovels in 1950, and in 1965 produced the first hydraulic excavator in Japan with entirely Japanese technologies, according to the company’s history.
Quinn joined Hitachi in 2017, and he says the goal in the ensuing years has been to position Hitachi to build its brand in the Americas to match its global standing. Hitachi has a base of 60 wheel loader dealerships in the U.S. Quinn said the company is looking for an opportunity to revolutionize distribution in the construction equipment industry.
“I think that we’re in a perfect place to really be one of those disruptors in innovation and really capture some of the new ways of doing business and looking after our customers,” he said. As for moving production to Japan, Quinn said that today’s machines are more standardized than they were 10 to 15 years ago.
“Today, the markets have become a lot more competitive. The technology is higher, but also the machines are more standardized,” he says. “And that’s really made it a little bit more cost effective and actually more customer friendly for us to bring it directly from Japan.”
As for the new excavators, he said Hitachi will be able to bring all its technologies and other features to differentiate its machines in the Americas.
“We get to make sure that all the equipment we sell has all of the technology available at Hitachi today,” he said. “So we’re going to differentiate the products that we bring by incorporating everything that we have to offer.”
Hitachi said new equipment would be introduced in the Americas in Spring 2022.
Quinn noted that the company’s wheel loaders and mining excavators and trucks are part of the new Hitachi Construction Machinery Americas Inc., and that includes South American markets as well. Quinn said a separate mining division would be housed at the Newnan headquarters. Company goals also include increasing the company’s rental and used equipment market presence and global usage of its ConSite telematics services.