A new agreement between IHI and Kato will see the two firms joining their construction machine operations together. IHI Corporation (IHI) announced has agreed to transfer all the shares in its wholly‐owned IHI Construction Machinery business to Kato Works.
The move will expand the product line-up for mini‐excavators, crawler cranes and other crawler equipment. All current facilities and network including overseas will remain without major changes for the time being. The two companies will assimilate over time, and develop synergies in the market.
IHI has explained that the decision is in keeping with IHI Group Management Policies 2016, which adopted a new portfolio management approach to reinforce IHI’s earnings base. This forms part of moves by the group to refocus its business operations.
IHI Construction Machinery focuses on mini‐excavators, cranes, crawler carriers, and other construction machinery. The sector has experienced a tough operating climate owing to slower growth in emerging nations and more uncertainty in the global economy. Construction machinery companies have endeavored to accommodate these dramatic changes and reinforce their business by forming alliances or restructuring.
Kato Works is pushing forward with Medium‐Term Management Plan 2016‐2018, targeting net sales exceeding ¥100 billion. It is deploying measures to reach the global market, develop highly competitive products and expand its lineup.
IHI considered its business structure with regard to IHI Construction Machinery and management concluded that integrating that subsidiary’s operations with those of Kato Works as a specialized construction machinery player would reinforce competitiveness. It would also deliver higher added value to customers by bolstering the lineup and leveraging IHI Construction Machinery’s Italian and Chinese business units and sales networks.
As part of the Kato Works group, IHI Construction Machinery will continue to make and sell products. The Kato Works group will broaden its lineup, expand its sales network, and reinforce development and design to boost its development capabilities. The transfer is subject to regulatory approval, with a scheduled transfer date of November 25th, 2016.
