FAR EAST: JAPAN REPORT
Kubota will invest up to US$ 93.9 Million (10 billion yen) by 2026 to build a factory for small construction equipment in the US. The company will manufacture crawler-driven models used for residential construction and other purposes locally to increase the production by 25%.
With COVID-19, there is a movement of people moving from the city center to the suburbs in the US. Kubota expects that the demand for small construction equipment will increase in the regions where it has sales channels and aims to become the largest manufacturer in the US by increasing production. First, they will invest 5.6 billion yen (56 Million USD) to build a new factory in Kansas.
The company will start mass production of its “Compact Track Loader (CTL)” in September 2022. By 2023, annual production will reach 3,000 units. Depending upon demand, the company could be producing 5,000 units annually by 2026. Japan is producing about 20,000 of the same model. With the addition of 5,000 units from the United States, the total production will increase by about 25%.
In the US, Bobcat leads the small construction equipment market with a 30% share. Kubota is second with 17% (2018) but has moved up from fourth place in 2013 due to its durability and operability. At the new plant, Kubota will manufacture small CTLs to compete with American companies such as Bobcat.
Source: The Nikkei (The original article was partially revised by the author.)
PSR Analysis: Kubota’s decision to make an investment of this magnitude as many equipment OEMs look for ways to adapt to an economic environment that is likely to become more challenging in the future is a sign that they see demand for small construction equipment in the U.S. continuing to be strong.
An increasing number of companies in the U.S. are telecommuting, and an increasing number of wealthy individuals are moving from cities, where there is a high risk of COVID-19 infections, to the suburbs where they purchase construction equipment to manage large properties. Kubota is targeting the growing number of these wealthy individuals.
At this point, there is no sign of COVID-19 ending, and if the shift to the suburbs continues, it could be a boost for Kubota’s sales network, which has stores in rural areas. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia for Power Systems Research
