Kobelco Cranes to be absorbed by excavator arm in Japan

Kobe Steel merges its crane and construction machinery subsidiaries from April 2016

Kobe Steel is combining Kobelco Cranes with Kobelco Construction Machinery in Japan, arguing that shared development, procurement and manufacturing will produce a stronger comprehensive machinery business.

Cranes absorbed from 1 April

Kobe Steel Ltd and its wholly owned subsidiaries Kobelco Construction Machinery Co. Ltd and Kobelco Cranes Co. Ltd decided in late 2015 to merge the two businesses. Kobelco Cranes is absorbed by Kobelco Construction Machinery with effect from 1 April 2016. The merger initially applies in Japan only.

Three stated benefits

Kobe Steel sets out three reasons for the move. The first is business efficiency: development, procurement, manufacturing, quality and sales functions are all to be reviewed, with common operations combined and rearranged.

The second is product development. The group expects synergies between environmental technologies for fuel efficiency and low noise, basic technology for new materials, and other shared elemental technologies, and anticipates new products emerging from the combination of excavator and crane engineering.

The third is global reach. Sharing personnel at overseas locations and merging common operations is intended to make international development more efficient.

The parent company describes the aim as a comprehensive construction machinery manufacturer offering both product ranges from one organisation. Because both parties were already wholly owned consolidated subsidiaries, Kobe Steel expected the merger to have an insignificant effect on its consolidated results.

Europe unchanged for now

At the time of the announcement no decision had been taken on whether a comparable merger would follow in Europe. Kobe Steel said considerations would continue regarding consolidation of domestic and overseas locations, but that for the foreseeable future Kobelco Construction Machinery Europe and Kobelco Cranes Europe would retain their independence.