JAPAN REPORT
Kubota Corporation and Sumitomo Construction Machinery Co., Ltd. said they have begun discussions regarding the mutual supply of construction equipment.
Internationally, the growing demand for housing and the expected increase in construction work related to infrastructure investment and urban development, plus the increasing shortage of construction labor, are expected to create strong demand for construction equipment to improve efficiency and reduce labor requirements.
Kubota develops, manufactures, and sells small construction equipment used in urban construction, while Sumitomo Construction Machinery specializes in medium and large construction equipment used in a wide range of civil engineering and forestry work.
Both companies are strong in technology development and ICT-based solutions to achieve fuel efficiency and high efficiency in their products. At the same time, both companies face the problem that their current product lineups do not meet the needs of their customers, and expanding their product lineups is one of their key management issues.
Under the agreement, Kubota will consider acquiring 14-ton hydraulic excavators from Sumitomo Construction Machinery, which are frequently used on construction sites in urban areas and are in high demand from overseas customers. Sumitomo Construction Machinery will consider distributing Kubota’s smaller models for overseas markets.
Source: Kubota News Release
PSR Analysis: Collaboration between two companies to complement each other’s product lines and fill in missing elements is gradually being seen more and more in other segments. As explained in their joint announcement, Kubota and Sumitomo Construction Machinery have different products and target different customers, so a situation in which their products do not compete is conducive to collaboration.
The focus of the formal cooperation agreement will be on price, but I believe that there is a very high probability that this discussion will be successful. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
