Komatsu Ltd.

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Komatsu Ltd.

3-6, Akasaka 2-chome
Minato-ku, Tokyo 107
Japan
(03) 3561-2616
Fax: (03) 3587-2003

Public Company
Incorporated: 1921
Employees: 15,398
Sales: ¥792.81 trillion (US$5.52 billion)
Stock Exchanges: Tokyo Osaka Nagoya Luxembourg Frankfurt

A large Japanese multinational firm, Komatsu is the second-largest manufacturer of construction tractors and earth movers in the United States, after Caterpillar. Products include forklift trucks, dump trucks, bulldozers, hydraulic excavators, road surface survey vehicles, and rough-terrain cranes.

In 1988 Komatsu sharpened its competitive edge in the U.S. market by forming a joint venture with Dresser Industries, Komatsu Dresser Company. This combination of a major U.S. producer with a major Japanese global player, Komatsu, added considerable research-and-development resources to the U.S. firm. Furthermore, the combination has enabled Komatsu to move assembly of its construction equipment to the United States, using Dresser plants that were running at 50% capacity while Komatsu was unable to fill all of its orders.

Komatsu divisions produce a wide variety of products, including plastics injection molding machinery, electronic parts, optical tablets, laser machines, armored cars for the military, small-diameter pipe jacking systems, machine tools, diesel engines, and hydraulic presses. In addition, the company has business in real estate, trading, computer software, and printing and publishing.

While its main manufacturing operations are in Japan, Komatsu owns production plants as well as sales and services units in other countries, mainly in the United States, Canada, the United Kingdom, Mexico, and Indonesia. Other operations with foreign partners are located in India, New Zealand, Malaysia, China, Republic of Korea, Turkey, Germany, and Italy. Sales and support offices are found in Belgium, the Soviet Union, China, Spain, France, Singapore, Australia, Cuba, Austria, Kenya, Algeria, South Africa, Ivory Coast, Egypt, Iran, Pakistan, and India.

The firm has shown a quick response to the 1992 integration of Europe by the European Common Market. British operations included purchase agreements with the British firm of Perkins Engines Ltd. for diesel engines to power Komatsu excavators. The U.K. plant in Birtley is the main production facility for European construction equipment. Other parts come from Spain, France, Belgium, and Germany. An additional agreement with the Italian firm of FAI to manufacturer under license mini-hydraulic excavators adds to a strong European presence.

Komatsu had its origins in 1894 when the Takeuchi Mining Company was founded. A major expansion occurred in 1917, during World War I, when the Komatsu ironworks was established to manufacture mining equipment and machine tools to expand the mining operations. The name Komatsu came into existence in 1921 when the ironworks separated from the mining company to become Komatsu. Tashiro Shiraishi, an engineer, was the founder and first president, serving until 1925. In the 1920s and 1930s the firm grew as a major manufacturer of machine tools and pumps, including development of a metal press in 1924 and the firm’s first farm tractor in 1931. Production of steel materials began in 1935.

By 1929 the number of employees had risen to 742, from its original 1921 work force of 121 employees. During the height of the Great Depression in 1933 it dropped to 505 workers. The firm soon increased production and by 1936 increased its staff to 601. Mitsugi Nakemura served as president during the Depression and war years, from 1934 to 1946.

During World War II the firm expanded by supplying the navy with antiaircraft artillery shells and bulldozers. Bulldozer production gave the company its major product after the war, a redesigned bulldozer, which came off the assembly line in 1947. One year later diesel engines were produced. From 1947 to 1964 President Yoshinari Kawai provided key leadership in rebuilding the company and making it a global multinational corporation.

The Korean War gave the Japanese economy an economic boost with orders from the U.S. to supply its troops in Korea. At that time the firm had plants in Awazu, Osaka, Kaweasaki, Himi, and Komatsu, Japan. Production of forklift trucks, dump trucks, armored cars, and shell mold castings were added to the line. By 1959, defense production included armored personnel carriers and self-propelled cannons.

International activities increased in 1955 when both construction equipment and presses were shipped outside the country. In 1958, operations started in India with an agreement between the firm and the Indian government to manufacture tractors. Another license agreement was signed with a U.S. manufacturer, Cummins Engine Company, to make and sell diesel engines.

By the early 1960s the firm had grown to the point where a new headquarters was needed, and the present headquarters, Komatsu Building, was constructed in Tokyo. In 1964, the firm received the Deming Prize for implementation of quality control. William Edwards Deming was the father of quality control in the United States. Until the late 1970s, he was almost totally ignored by his fellow Americans, while his lectures and writings on quality control between 1950 and 1952 became the bible of Japanese manufacturing.

Ryoichi Kawai became president in 1964. The 1960s meant an economic build-up for Japan as a result of the Viet Nam War. Komatsu’s expansion continued at a rapid pace. The latter part of the decade saw a new engine plant starting production in Japan, as well as a radio-controlled bulldozer and the establishment of a technical research center.

In 1970, the firm began its first direct investment operations in the United States, with the establishment of Komatsu America Corporation. Other foreign operations soon followed, in Singapore in 1971, and Australia in 1979. Mexico, Brazil, and China, became sites for Komatsu’s bulldozer plants during the 1970s.

In 1981, Komatsu was awarded the Japan Quality Control Prize, to honor the company’s outstanding production quality. The following year Shoji Nogawa became president. The 1980s brought the flowering of global operations. In 1985, after a number of incentives from the state of Tennessee, Komatsu purchased a 55-acre empty plant in Chattanooga. This purchase reflected a decision by the firm to challenge its number-one world competitor, Caterpillar, in its home market. U.S. and Canadian operations expanded, including the joint venture with Dresser Industries. Two plants were built in the Canadian provinces of Quebec and Ontario. European operations included an interest in the West German construction firm of Hamomag AG, a licensing agreement with FAI of Italy, and a plant in the United Kingdom.

The year 1987 marked expansion in other areas such as the establishment of two financial subsidiaries in Europe, the marketing of plastics injection molding machinery, and the development of a telephone with a data terminal. From 1985 to 1987 construction equipment sales dropped each year. As a result the company president, Shoji Nogawa, was dismissed by Chairman Ryoichi Kawai and succeeded by CEO Masao Tataka.

Participation in the global market became essential for all large firms, and a reorganization of Komatsu reflected this necessity. In 1988 an international-business division was set up in the Tokyo headquarters. The division had three regional groups which were the main focus of the firm’s international business operations: the Americas, Europe, and Japan. The goals of the division included development of joint ventures around the world and overseas purchase of parts.

Another organizational change in 1988 was the establishment of a new subsidiary, Komatsu Trading International, to increase imports to Japan. This development was a response to the Japanese government commitment to reduce its trade surplus by importing more foreign products. As a result logging machinery from Canada, backhoe loaders from Italy, and high-powered motor boats from Norway were brought into Japan for sale in the domestic market under importer agreements between Komatsu and companies in the respective countries.

In 1988 Komatsu made an agreement with the Robbins Company of Seattle, Washington, which purchased Komatsu’s technology on softground tunnel-boring machinery to be used in constructing the tunnel under the English Channel.

In 1989 Tetsuya Katada became CEO. Extensive use of robots and continued modernization of Komatsu plants around the world were means of insuring global competitiveness.

Principal Subsidiaries

Komatsu Dresser Company (U.S.A., 50%); Komatsu UK Ltd.; Dina Komatsu Nacional S.A. de C.V. (Mexico, 68.4%); P.T Komatsu Indonesia (55%); Komatsu Dresser Brazil (50%); Komatsu America Industries (U.S.A.); N.V. Komatsu Europe S.A. (Belgium); Komatsu Baumaschinen Deutschland (Germany); Komatsu Industries Europe G.m.b.H. (Germany); Komatsu Singapore Pte.; Komatsu Australia Pty.; Komatsu Overseas Finance PLC (U.K.); Komatsu Finance (Netherlands) B.V.