Musical excavators: JCB ends joint venture with Sumitomo; more on Sumitomo-case

Diesel Progress North American Edition, Oct, 1998 by Mike Brezonick

The somewhat labyrinthine world of hydraulic excavators became a little less complicated recently, as JCB announced the end of its seven-year-old joint venture with Sumitomo and Case provided more details on its alliance with Sumitomo announced earlier this year.

Hydraulic excavators, like skid-steer loaders and tractor loader backhoes, are one of the bellweather machines in the construction world. Approximately 15,000 tracked and wheeled excavators are sold in North America alone each year. Most of the major players in the construction equipment market sell excavators, but several market machines designed or built for them by other manufacturers, most of which are in the Far East.

As it ended its joint venture with Sumitomo for the manufacture of tracked excavators, JCB announced that it would produce and sell hydraulic excavators independently. The company said it would continue to manufacture its current range of 14 Sumitomo-designed tracked machines which range from 7 to 45 tons, all powered by four- and six-cylinder Isuzu diesel engines rated from 55 to 280 hp. It will also continue manufacturing its two JCB-designed 13- and 16-ton wheeled excavators, similarly powered by Isuzu diesels rated 85 and 96 hp.

JCB said it will continue to make and sell all of these machines using the existing Sumitomo and JCB technology and will add further design improvements and extensions to the full range.

The Japanese trading house Itochu held 10 percent of the original joint venture company, JCB-SCM Ltd., which was formed in 1991, and will retain that share in JCB's excavator business. JCB-SCM was located in Uttoxeter, England, and had sales of about $123 million in 1997. That represented around 10 percent of JCB's total sales, which were approximately $1.27 billion. Sumitomo, headquartered in Tokyo, had revenues of $1.1 billion last year.

The conclusion of the joint venture clears the way for JCB to market its excavator range worldwide, including North America where JCB plans an early introduction of its full-tracked line.

Sumitomo will continue to supply JCB with spare parts for at least 10 years, as well as components (although JCB currently manufactures most of its own).

"We had a good working relationship with Sumitomo, which is demonstrated by the continuing cooperation over the supply of parts and components," said a JCB spokesman. "However, it was felt that the joint venture had fulfilled its original aims, and it was time to move on."

While the venture with JCB was ending, Case Corp. and Sumitomo provided additional details on the manufacturing and marketing alliance it unveiled earlier this year (see March 1998, Diesel Progress).

As announced, a major part of the alliance involves the formation of a 50/50 joint venture company, LBX Company LLC (LBX), to acquire and operate the excavator business of Link-Belt Construction Equipment, which is a wholly owned subsidiary of Sumitomo. The new company will be based in Lexington, Ky., and will market Link-Belt-branded excavators in North America through the Link-Belt excavator distribution network. The joint venture company does not cover Link-Belt's crane business.

Case dealers will continue to sell Case-branded excavators designed by Sumitomo. LBX will have the exclusive North American manufacturing license for future excavator models designed by Sumitomo and initially, manufacturing will continue at Sumitomo Construction Machinery in Japan, and Link-Belt Construction Equipment in Kentucky.

In Case's European region, the two companies have reached an agreement through which Case dealers will sell Sumitomo-designed crawler excavators under the Case brand throughout Western and Eastern Europe, the Commonwealth of Independent States, Africa and the Middle East. These will be in addition to Case's current line of excavators made at the company's Crepy, France, facility and will result in a broader line of excavators.

In addition, the two companies have signed a memorandum of understanding relating to an alliance in Europe that would manufacture crawler excavators that combine technology from the two companies to produce models tailored to the European market.

In Latin America, Case-branded excavators designed by Sumitomo will be sold through Case construction equipment dealers, while Link-Belt branded excavators will be sold through the Link-Belt excavator distribution network. Case has already begun sales activity in Brazil and plans to introduce its excavators to other Latin American markets during 1998 and 1999.

In Australia, Case-branded excavators designed by Sumitomo will be sold through Case construction equipment dealers; Sumitomo-branded excavators will be sold through the Sumitomo distributor.