Case, Sumitomo expand excavator alliance - Case Corp. and Sumitomo Construction Machinery Company Ltd. joint venture

Diesel Progress North American Edition, March, 1998

Continuing the '90s trend of alliances and joint ventures between large manufacturers, Case Corp., Racine, Wis., and Sumitomo (S.H.I.) Construction Machinery Co., Ltd., of Japan, have signed a letter of intent to form a global alliance to market and manufacture hydraulic crawler excavators.

The agreement, announced in late January, builds upon a 1992 North American supply agreement between the two companies for hydraulic crawler excavators.

When fully implemented, the alliance is expected to provide both Case, one of the world's largest light-to-medium construction equipment suppliers, and Sumitomo, one of Japan's leading construction equipment manufacturers, greater penetration in the global excavator market.

The agreement with Sumitomo is just the latest in a series of interesting strategic moves on the construction equipment side by Case. Earlier in January, the company announced a supply agreement through which Ingersoll-Rand will supply three models of its telescopic handlers for sale as Case-branded equipment through Case dealers in North America beginning in 1998.

Last year, Case acquired Bor-Mor Inc., a maker of horizontal directional drilling equipment and in late 1996, Case bought Fermec Holdings Limited, a U.K. construction equipment company.

According to Case, the implementation of the alliance will vary in structure and timing in the companies' regional markets. In North America, Case will acquire 50 percent interest in Sumitomo's Link-Belt subsidiary, a manufacturer and marketer of excavators and cranes. The Link-Belt operations become part of a North American joint venture between the two companies that will market a full line of Sumitomo-designed excavators through a dealer network that will incorporate selected parts of the Case and Link-Belt distribution networks.

Link-Belt currently offers nine Quantum series excavators from 14,990 lb. to 99,800 lb., along with specialized equipment for scrap and logging applications.

The joint venture will also expand its manufacturing capability to better serve its customers in North America. The joint venture will manufacture and market the Link-Belt crane line exclusively through the Link-Belt existing distribution channels and under the Link-Belt brand name. Link-Belt offers a range of nine hydraulic rough-terrain cranes from 18 to 65 tons; seven hydraulic truck cranes from 14 to 100 tons; a 22-ton hydraulic all-terrain crane; three lattice boom truck cranes from 150 to 300 tons; and five lattice boom crawler cranes from 75 to 200 tons.

In Latin America, the alliance will include a supply agreement through which Case construction equipment dealers will sell Sumitomo-designed excavators beginning in 1998. This will significantly expand Case's construction equipment line in the Latin American region, where the company does not currently market a full line of hydraulic excavators, Case said.

In Asia, Case and Sumitomo will form a distribution joint venture to increase sales of Case and Sumitomo construction equipment.

In Europe, Africa, the Middle East, and the Former Soviet Union, Case will augment, where appropriate, the sales of its excavator line with Sumitomo-designed units.

Case began selling excavators in North America supplied by Sumitomo in 1992. Today, Case offers six Sumitomo-designed excavator models in North America, all in the medium industrial range of 12 to 50 tons. In 1998, Case is introducing two additional Sumitomo-supplied models for specific industry applications.

Case is selectively adding to its product line to capitalize on growing segments of the light-to-medium construction equipment market. Approximately 40 percent of Case's 1996 revenue of $5.4 billion came from sales of construction equipment, which includes loader/backhoes, wheel loaders, skid steers, excavators, trenchers, crawlers and drills.