management2013 hitachi construction machinery
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1
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
New Mid-Term Management Plan
“Go
Together
2013 ”【Period: 2011~2013】
Hitachi Construction
Machinery Co., Ltd.Copyright ©
Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
2
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Index
2. “Go Together 2013”2-1. <2020 VISION> and 6 Imperatives2-2. Hard (Product) Strategy2-3. Mining Strategy2-4. Solution (Sales& Service) Strategy2-5. Regional Strategy2-6. Enhancing Management base
1. Business and Market Environment
3. Target Performance
3
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Index
2. “Go Together 2013”2-1. <2020 VISION> and 6 Imperatives2-2. Hard (Product) Strategy2-3. Mining Strategy2-4. Solution (Sales& Service) Strategy2-5. Regional Strategy2-6. Enhancing Management base
1. Business and Market Environment
3. Target Performance
4
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
100
150
200
250
300
350
400
450
500
'00 '02 '04 '06 '08 '10 '12 '14 '16
-4
-2
0
2
4
6
8
10
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
IMF World Economic
Outlook (Apr.2011)
‘11 ‘12 ‘13
World total 4.4% 4.5% 4.5%
Advanced 2.4% 2.6% 2.5%
Emerging 6.5% 6.5% 6.5%
1. Business and Market Environment
Emerging
Advanced
Total
Real GDP Growth Rate
World economy is in steady Recovery Emerging countries are enlarging
Demand is correlated with GDP
-1%
'90 '93 '96 '99 '02 '05 '08
-40%
GDP Growth
Demand Construction Machinery
Dear GDP
(FY 2000=100)
India
Sub-SaharaM. East
China
Advanced
BrazilRussia
Scale of economy for China and India is expected to grow by more than 200%, and for Sub-Sahara, M. East, Russia, by 150%
approximately.
5
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
22 18 23 26 28 31 3320
10 14 18
28 2729
36 3742
52
26
1524
26
14 1519
2732
3024
17
10
1318
11 21
3216
2429
47
44
73
111
128
710
13 17
17
21
29
23 29
38
42
56
713
18
25
36
32 15
29
30
151162
221
179
155
133123
9787
229
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
千台
6%11%
6%
49%
17%
11%
7%10%
7%
48%
16%
12%
5%8%
8%
53%
14%
12%
2011 F
2010R
Composition
2013 F
Emerging79%
JapanW. Europe
N. America
China
Asia/Oceania
Others
Demand Growth Rate
'10 '11
+39% +26%+61% +8%+35% +40%+53% +15%+32% +11%+95% +6%+52% +15%Total
Japan
W. Europe
N. America
ChinaAsia/Oceanina
Others
Japan
W. Europe
N. America
China
Asia/Oceania
Others
Total
263
1. Business and Market Environment
Market will increase in double digits. Emerging Countries in main, covering 80%.
1000Units
R: ResultF: Forecast
*HCM Estimate
*Excluding Chinese Maker
Worldwide Demand Hyd Excavator
6
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Index
2. “Go Together 2013”2-1. <2020 VISION> and 6 Imperatives2-2. Hard (Product) Strategy2-3. Mining Strategy2-4. Solution (Sales& Service) Strategy2-5. Regional Strategy2-6. Enhancing Management base
1. Business and Market Environment
3. Target Performance
7
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
9,000
7,7387,442
6,058
9,405
1,085
488
197415
650
'07 '08 '09 '10 '11 '12 '13-200
300
800
1300
1800
New Mid-Term Management Plan Go Together 2013
2-1. <2020 VISION> & 6 Imperatives
1st step for
Sustainable Growth
【2011-2013】
Close and Reliable Partner anywhere on the Earth with Best Solutions through Kenkijin Spirit
2020VISION2020
VISION
2nd Step
3rd
Step
1st
Step for the
coming 10 years
Sales/ Operating Income (100 Mil Yen)
Sales (B
ar)O
perating Income (Line) ’20
Kenkijin SpiritGuiding Principles of HCM Group
8
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Hard (Product)
SolutionCustomer satisfaction
Transform to Global Management towards Sustainable Growth
Global Production Global Management
Research & Development
Life Cycle Support
Mining Operation
JapanAmericaEurope/ RussiaChinaAsia/ OceaniaIndiaAfrica/M. East
Marketing & Sales
Regions
Global Management basis
2-1. <2020 VISION> & 6 Imperatives
9
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Basic Policy1. Development for each
market needs2. Unified Quality3. Standardize, Integrate
Basic Policy1. Development for each
market needs2. Unified Quality3. Standardize, Integrate
Establish Global R & D Made
by
HITACHIMade
by
HITACHI
2-2. Hard (Product) Strategy
1.
Development on local requirement in China.
2. Cost Reduction by further localization
HCMC (China)
Share function
Telcon (India)1.
Develop specification for Emerging Market with better cost performance
2. Outsource Computer analysis function
Japan1. Control all products cross sectional2. Develop advanced technology
(Saving energy technology)3. Utilize Human Resources
(China, India)4. Collaboration and alliance with
HITACHI Group and suppliers5. Standardize, Integrate
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Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
●Mini Excavator
• Larger Production, Lower fuel consumption
• Simplified function• Easy Maintenance• Easy obtainable parts
Quality
Delivery Warranty
Price
Develop a New Brand Service Parts with high price competitiveness
Undercarriage, Tooth etcUndercarriage, Tooth etc
+
2-2. Hard (Product) Strategy
Develop Machine & Spare Parts for Emerging Market with overwhelming cost competitiveness
Well accepted3G Series
More Durable models for China Market
●Wheel Loader: Develop Emerging Spec Model Series together with KCM
• Environment-Friendly• Used Machine
Distribution
11
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
車両障害物歩行者
+
2-2. Hard (Product) Strategy Establish Technology for Electric and Robot
Utilize Strength of Total HITACHI Group
Hitachi IES
Inverter
Hitachi IES/Hitachi Ltd
Motor Energy Management
Hitachi Institute
Battery operated Excavator
HybridExcavator
ASTACO(Advanced System with Twin Arm for
Complex Operation)
Safety Improve Operation Efficiency
AHMAsset HealthManagement
Overview Monitor Cruise ControlTraffic ControlInformation Fault detection
Lower fuel consumption for Energy saving
Improve Safety and Operation efficiency
Improve Value for Customer
12
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
* Demand: HCM Estimate
UnitUnit
0
200
400
600
800
1,000
1,200
1,400
1,600
'10 '11 '12 '13 ' '180
200
400
600
800
1,000
1,200
1,400
1,600
'10 '11 '12 '13 ' '18
1.9
2.2
2.2
4.9需
要
販
売
: vs2010
1.5
1.6
: vs 2010
1.7
3.0
Strong in Mining. Establish Solid Business Model
2-3. Mining Strategy
Demand Excavator (>100ton) Demand RDT (>140ton)
• Apply Success Story of Excavator
(Reliability) to
RDT
• Sophisticate Most Advanced technology of
Hitachi Group (AC Drive, Trolley, AHM etc)
・Develop Excavator & RDT upon common
concept in Japan
・Deploy Own Service utilizing ICT
・Fulfill Service Infrastructure (HR, Re-Man)
【ICT: Information Communication Technology
Open Mining School (Australia)
13
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
+
New Unit
Service
Re-man
Parts
Realize Lowest Cost/Tonnage
Enlarge revenue ofService and Parts
Integrated Control & Maintenance through ICT
Integrated Control & Maintenance through ICT
Full Maintenance Contract (FMC)Full Maintenance Contract (FMC)
Win-Win Customer
2-3. Mining StrategyPackage of 1 Excavator with 4 Dump Trucks
Package of 1 Excavator with 4 Dump Trucks
Overwhelming Product
【ICT: Information Communication technology 】
Dump Area
Loading Area
TroubleshootingTool
Fleet Management System
Central Control of Information for all Machines at site
Achieve High Performance and Low Life Cycle Cost
14
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
LocationWarningCondition Parts Bulletin
Repair History
2-4. Solution (Sales & Service ) Strategy
Utilize Global e-Service
New UnitFinance
After Sales Service
PartsRental
Re-man
Used Resale
Life Cycle Support Operation
Parts Book
Parts Book
Location WarningCondition
Custom
er Satisfaction
Enlarge Revenue
Boost up Customer satisfaction and realize higher market share.(Acquire repeat orders)
Evolve support based on the ICT fully utilized data.
15
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
2-5. Regional Strategy
Enhance Sales & Service Operation for regional market requirement
【Demand Hyd. Excavator:’10→’13】
America
Europe/Russia China
Africa/ M. East
IndiaAsia/ Oceania
North
Middle & South
EuropeRussia/CIS
Africa M. East
Localize Operation, Faster decision, Enhance Strategic function
Japan
16
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
●Role of Telcon●Develop Product for Emerging Market
Increase Production Capacity
for Africa, M. East
Production (3 factories)unit
【2.6】
2-5. Regional Strategy -
India -Strengthen Dealer Sales & Service Network of Telcon
Dealer36
(226
outlets)
’10 ’1336(400
outlets)
Own Service Workshop 5 factories 12 factories
【2.4】
【 】:vs 10
【1.8】
Large Projects in India【Airport Maintenance】
Build facilities 1100 Bil Yen (up to ’13)
【Seaport Maintenance】
Major Seaports 1200 Bil Yen (up to 14)
【Commercial artery Delhi and Mumbai 】Freight Railway and Industrial Park, Inland Depot to Seaports
8300 Bil Yen (up to 16)
0
5,000
10,000
15,000
'10 '13
Hyd. Excavator
Backhoe Loader
17
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
ロシアロシア
現地生産工場現地生産工場 完成イメージ完成イメージ
Moscow
St Petersburg ゙Tver
2-5. Regional Strategy –
Europe/ Russia -Name : Hitachi Construction Machinery Eurasia
Manufacturing LLC
(HCRM)
Location:
Tver, Russia
Established : 1st
April 2011
Production:
Hyd excavator 2,000units/Yr
Start Operation: October 2013
Industry PolicyIn Russia Competition
Joint MarketingHCRS+Dealer
(Established in Mar 2010)
Build Substantial Russian Operation
1. Competition (Cost, Delivery,Market oriented)
2. Enlarge local procurement(Develop suppliers, Supply items to Europe)
3. Enhance Mining BusinessLocal production of Bucket, Vessel for Dump)
4. Avoid Import Duty Risk
Image HCMR FactoryImage HCMR Factory
18
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HMEC enhance Dealer Support in M. East, E. AfricaHCAF enhance Sales & Service Network
•Expand Presence
•Promote Wheel LoadersHMEC
HCAF Head Office
Ghana Office
MoroccoMorocco
AlgeriaAlgeria
TunisiaTunisia
NigeriaNigeria
S. AfricaS. Africa
LibyaLibya EgyptEgypt
SudanSudan
Demining
Machine BM307-V33
AngolaFind/Develop Dealer
Maintain Support Organization
Promote in Full line
India
HCAF
Mining Order
Taking
Working at Mozambique/Angola
Emerging SpecModels
Mozambique
HCAF
2-5. Regional Strategy –
Africa/ M. East -
Country Demand of Hyd Excavator >100 units/Yr
19
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HCMI factory
HMAP
HCMM
HCMT
HAP
HCA
CPL
1.
Enlarge Service Revenue
Enhance support for CustomerUtilizing Global e-Service
2.
Participate in Big Projects(Coal, Forestry, Infrastructure)
'10 '11 '12 '13
Used etc
Service
Parts
150%Parts/Service Sales Palm Oil Plantation
Highway Project Forestry Coal
OutletMining Project
2-5. Regional Strategy –
Asia/ Oceania -
Strengthen Home Market (Retail Sales and Service)Secure Presence in Biggest Market
20
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Shenyang Beijing
InnerMongolia
Nanning
Chengdu Hefei
Enhance Dealer Network ( by Market size, Growth Ratio)
2-5. Regional Strategy –
China -
Basic StrategyBasic Strategy
Strategy byProvince
Strategy byProvince
Support ControlPerformance
Support ControlPerformance
Large and Rapid
Small but Rapid
Large but Slow
Analyze per productBring strategic modelPrice Management
Focus on Specific Province Prioritized machine supplyEnhance Dealer Support
Establish HCS Branch office
Support Dealers through Score CardExpand to other area
Introduce Dealer Training Support SystemTraining through e-Learning
21
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2-5. Regional Strategy –
America -
Alliance to be Deepened, Enhanced and Developed
Sales started in North American Market for new Engine emission models
Increase production at Deere-Hitachi
Zaxis-5
Promote JD Products in Asia
DozerMotor Grader Forestry MachineBackhoe Loader
Sales range expansion and synergy expected for Excavator SalesIncrease sales volume per dealer
22
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Start HCM JapanStart HCM Japan1st
April 2012
Promote All-in-One Sales
Sales
Service Rental
20%
Total customers : 31,000
2-5. Regional Strategy –
Japan -
Satisfy customer needs of
“Rent”, “Buy”
and “Repair”Rental ServiceSales
Start as an comprehensive company
who can respond to any requirement in any place in Japan.
Reform structure to further strengthen Japanese market that is significant.
Japan : Rapid change in volume
Decreasing Construction Investment
Tier 4 emission Decrease Sales to Rental Company
Decreased Sales to End User
Low hour, Long term
Sales to wrapped user is 5 times. Target is to increase ratio to 20%
23
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Accelerate Growth by aggressive Production Capacity Expansion
HCMC (China) (17 30 K units at End FY2011)Increase Capacity for Components (42 60 K Units E/FY2011)Investment
USA
Indonesia
160%
170%180%
180%
170%
Production Capacity Medium Excavator
170% (2010 to 13)
140%
Production Capacity Mining (2010 to 13)
Ultra Large Excavator(100tup)
【160%】
Rigid Dump (140tup)
【300%】
Increase Production for Ultra Large Excavator, Rigid Dump Truck
JapanRussia
Europe
China
India
2-6. Enhance Management Base –Production -
24
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Procurement to Secure
Volume required
Procurement to Secure
Volume required
1. Enhance Purchase & Procurement
Aim No.1 Cost Competitiveness, Reduction of Total Cost thoroughly
2. Reduce SG&AProject activity of Promoting reduction of Indirect cost of Hitachi Group
Promote Cost Reduction activity
by Top Down
New Partnership Strategy
Introduce Score card of SupplierIntroduce Score card of Supplier
HCM Supplier
2-6. Enhance Management Base –Total Cost Reduction -
3. Enlarge Local ProcurementShorten lead time
Reduce cost Secure Volume
4. Reduce Logistic Cost & Loss CostStrengthen Supply Chain
Periodical ReviewStrategicPartner
Preferred Supplier
•Approved Supplier
25
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
HR Policy and Foster HR based on Global Operation
◆ HR Policy
Australia S. Africa Malaysia China
<Training for Overseas TOP Management>
Promote Localization of staffs
◆ Foster HRFoster TOP Management through Global Core Human Resource Program
◆ Promote Diversity
Share Kenkijin
Spirit
-
Foster and Strengthen Kenkijin
- (Share Value)
Foster and Utilize diversified Resources
2-6. Enhance Management Base –Human Resource -
26
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Amount of Investment (Accumulated from2011 to 13)
IT and others Production Facility Components for Excavator (Increase capacity)Sales & Service
(Outlets etc)
(Excluding Lease Property)
187Bil. Yen
Overseas Group for Production facility Production Facility
Mining Machines (Including Components)(Increase capacity)
2-6. Enhance Management Base –
Investment -
27
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Index
2. “Go Together 2013”2-1. <2020 VISION> and 6 Imperatives2-2. Hard (Product) Strategy2-3. Mining Strategy2-4. Solution (Sales& Service) Strategy2-5. Regional Strategy2-6. Enhancing Management base
1. Business and Market Environment
3. Target Performance
28
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
'10 '11 '12 '13
0
10
20
30
40
50
2020VISION2020
VISION
Sales/ Operating Income Ratio
FY2010
Operating Income Net D/E Ratio Payout Ratio
Profitability Soundness
ROE
Efficiency
0.9
Below0.8
3.6%
Over 15%
5.4%
Over10%
38.1%
Over 20%
Management Index
7,7389,000
Over 11,000
(100 Mil Yen, %)
Stable Dividend
5.4 7.2
Over 10%
3. Target PerformanceNew Mid-Term Management Plan Go Together 2013 1st
Step for the
coming 10 yearsClose and Reliable Partner anywhere on the Earth with Best Solutions through Kenkijin Spirit
Sales (B
ar)O
perating Income (Line)
FY2013
Exchange rate: 80¥/$, 115¥/Euro
29
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
The slogan “Go Together”
is aimed at encouraging efforts in combining the strengths of all employees of the HCM Group as we work to realize the 2020 Vision.
Let’s take on the challenge of global competition, with all HCM Group employees sharing Kenkijin Spirit
and
with the concept of “Global One”
under which everyone has a sense of solidarity.
Exert Kenkijin
Spirit, and give first priority to customer satisfaction.
Challenge (Spirit of Challenge)Customer (Individual customer
orientation)Communication (Open atmosphere)
Ideas underpin Kenkijin Spirit
HCM Group Attitude of Kenkijin
(Value and Guiding Principle)
Go Together 2013 Poster
30
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
End
31
Copyright © Hitachi Construction Machinery Co., Ltd. 2011 All Rights Reserved.
Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify “forward-looking statements.” Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future events which may not prove to be accurate. Undue reliance should not be placed on “forward-looking statements,” as such statements speak only as of the date of this document.
Factors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to:
■economic conditions, including consumer spending and plant and equipment investment in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the major industrial sectors Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;
■exchange rate fluctuations of the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro; ■uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing; ■uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write down equity securities that it holds; ■the potential for significant losses on Hitachi’s investments in equity method affiliates; ■increased commoditization of products; ■uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technologies on a timely and cost-effective basis and to achieve market acceptance for such products; ■rapid technological innovation; ■the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts for which Hitachi uses the percentage-of-completion method to recognize revenue from sales; ■fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins or shortages of materials, parts and components; ■fluctuations in product demand and industry capacity; ■uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials or shortages of materials, parts
and components; ■uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business; ■uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness and other cost reduction
measures; ■general socioeconomic and political conditions and the regulatory and trade environment of countries where Hitachi conducts business, particularly Japan, Asia, the United States and Europe, including, without
limitation, direct or indirect restrictions by other nations on imports and differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations; ■uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products; ■uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies; ■uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties; ■the possibility of incurring expenses resulting from any defects in products or services of Hitachi; ■the possibility of disruption of Hitachi’s operations in Japan by earthquakes, tsunamis or other natural disasters, including the possibility of continuing adverse effects on Hitachi’s operations as a result of the
earthquake and tsunami that struck northeastern Japan on March 11, 2011; ■uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information or that of its customers; ■uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its significant employee benefit related costs; and ■uncertainty as to Hitachi’s ability to attract and retain skilled personnel.
The factors listed above are not all-inclusive and are in addition to other factors contained in Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in other materials published by Hitachi.
Cautionary Statement