Transfer of the North American Hydraulic Excavator Plant

February 25, 2022
Kobelco Construction Machinery Co., Ltd.

Tokyo, February 25, 2022 - Kobelco Construction Machinery Co., Ltd. (or KCM), headquartered in Tokyo, has decided to transfer the land, buildings, ancillary equipment, etc. of the North American plant, located in Spartanburg County, South Carolina, U.S.A., of its U.S. subsidiary Kobelco Construction Machinery U.S.A. Inc. (or KCMU) to Takeuchi Mfg. (U.S.), Ltd. (or TUS), a U.S. subsidiary of Takeuchi Mfg. Co., Ltd., headquartered in Sakaki-machi, Hanishina District, Nagano, Japan, and has executed the final agreement between KCMU and TUS.

1. Background of the Transfer

KCM reentered North America in 2013 and has been selling its products through its North American subsidiary KCMU. To expand its sales and share in North America and to deal with the high burden on its Itsukaichi Plant, the main plant for hydraulic excavator manufacturing in Japan, KCM decided to build a North American plant in January 2015 and has been putting effort into the manufacturing of the main models for North America since the completion and launch of the plant in March 2016.

However, in 2021, issues were found in the certification of hydraulic excavator engines for North America. As a result, operations at the North American plant had been suspended since May 2021, and they were expected to resume this fall or later at the earliest.

Under such circumstances, KCM received an offer from TUS for the purchase of the North American plant and determined that transferring it would better for the improvement of its corporate value than maintaining and resuming the plant by itself.

For your information, the transfer will have only a minor impact on KCM’s business performance.

2. Description of the Asset to be Transferred

3. Timeline of Transfer

4. Outline of the Transferee (As of September 30, 2021)

Transferee’s Parent Company

Transferee

5. Complementation and Enhancement of Production Structure in North America as well as Global Production Structure after Transfer

Manufacturing of all models, which had issues in certification, for North America had been suspended. However, from this spring, KCM will be resuming the production and sale of these models one after another by manufacturing hydraulic excavators at the Itsukaichi Factory and crawler cranes at the Okubo Factory as new models equipped with alternative engines.

There will be no impact on KCM's business activities in North America due to the transfer. Leveraging the resumption of sale of the new models equipped with alternative engines, KCM will continue to bolster its sales structure, including enhancement of distributor retail sales and expansion and improvement of financial services, in order to increase its presence in North America.

Moreover, the transfer (closure) of the North American plant is part of the revision and enhancement of KCM's global production structure in response to the increasingly fierce competition in the market, and KCM will continue to consider what it can do for the revision and enhancement of its global production structure including the complementation of its production capacity.

Reference

Outline of Kobelco Construction Machinery U.S.A. Inc.

*The information contained herein is as of the date this announcement was made and it may be changed without prior notice.