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      Hitachi Construction Machinery


      Quick Review

      Background of Hitachi Construction Machinery

      Construction machinery is essential for building the cities where we live and for the development of social infrastructure. Today, the shiny taxi-yellow (orange) construction machinery of Hitachi Construction Machinery is deployed around the world for on-site civil engineering, construction work, and mine development operations.

      The history of Hitachi's construction machinery dates back to 1950. At the time, Japan was grappling with the urgent social task of having to make construction work more efficient through mechanization in order to rebuild the country and revitalize our economy. To address this need, the construction machinery division of Hitachi, Ltd., the predecessor of Hitachi Construction Machinery Co., Ltd. developed Japan's first cable-operated shovel using entirely from domestic technology and started mass production.

      Since then, we have been manufacturing and developing construction machinery while staying close to the job sites and the people who work there, and facing the social issues that change with each era and region.

      Our vision is to “To pass on a productive environment and prosperous cities to future generations. Hitachi Construction Machinery Group helps to create comfortable living spaces.”

      With this vision, we will improve our corporate value for the future by making an effort to solve social issues through construction machinery.

      Hitachi Construction Machinery Today

      Hitachi Construction Machinery has rapidly expanded across foreign markets since the 1990s by shifting from a business model centered on Japanese exports to a focus on local production, sales, and services. As a result, the ration of our local sales revenue has increased year after year from 44% in fiscal 2000 to 75% in fiscal 2019. Furthermore, the demand for construction machinery and mining machinery is also rising in emerging countries.

      At the same time, the environment surrounding the construction machinery industry has changed dramatically, and it has become imperative for us to respond to various social issues.

      In Japan, for instance, the rapid decline of the working-age population has made the recruitment and training of workers a pressing issue. In addition, there is an urgent need to address the maintenance of deteriorating social infrastructure and disaster prevention and mitigation measures against natural disasters, as well as a need to improve productivity and safety by digitalizing construction sites using ICT, IoT, and AI technologies.

      The decarbonization movement is also gaining traction around the world as global environmental problems are becoming more severe. With a growing demand for environmentally conscious products and greater interest in sustainability issues, we have also identified new trends to more effective use of our limited resources, including extending the lifecycle of construction machinery and allowing different parties to share machinery with less impact on the environment only when they need it.

      Figure:Hitachi Construction Machinery Today

      Shifting to a stable profit structure

      In order to respond to these changes in society and customers needs, Hitachi Construction Machinery is currently shifting our business model from one centered on the sales of new machinery to a value chain model that focuses on the entire life cycle of construction machinery, including parts and services, rental, used equipment, parts remanufacturing, and finance. This has resulted in the stabilization of our company’s profit structure, with the sales from our value chain business rising in 2019 to account for 41% of our total sales.

      Figure:Sales composition ratio of the value chain business

      Driving our global business
      with human talents

      With 73 of the 80 consolidated subsidiaries of Hitachi Construction Machinery Group located outside of Japan, and around 60% of the employees (approx.25,000) are foreign nationals, fostering a diverse range of cultures and values within the organization. In order to ensure that all employees are able to harness their individuality while working in the same direction and strongly advancing business, we have codified the "Kenkijin Spirit" as the common principle of Hitachi Construction Machinery Group. As a close and reliable partner, each and every employee is driving business globally by providing their ideas and services to solve our customers’ on-site issues as part of our effort to realize our brand concept "Reliable solutions."

      Figure:Number of employees by region

      Our three forces shaping the future Our three forces shaping the future

      1.Hitachi Construction Machinery
      The power to continue to take on the challenge of creating new value

      By combining unique research and development, advanced manufacturing technology, and digital technology, we are creating products and solutions that contribute to improving safety and productivity and reducing lifecycle costs, which are the challenges of our customers in the foreseeable future.

      The on-site digital transformation of Hitachi Construction Machinery: Creating construction sites where people and machinery work together safely


      "Create construction sites with zero accidents." This is our wish.

      Hitachi Construction Machinery is currently developing "Cooperative Construction Equipment" that is capable of autonomous operation in a cooperative safety by facilitating the exchange of information between "people and machinery," as well as "machinery and machinery" and "machinery and the construction site."

      In addition, we have developed ZCORE®, a system platform for autonomous construction machinery. It allows for the performance of a range of different actions that are typically carried out by on-site operators in the course of their work, including "recognize," as well as "make judgments" and "execute. "Equipping autonomous construction machinery such as hydraulic excavators, wheel loaders, and dump trucks with this system is part of our broader groundwork for achieving the highly autonomous operation of machinery at the construction sites of our customers in cooperative safety.

      We believe that the true essence of on-site digital transformation lies in building safe, efficient, and comfortable construction sites, as well as establishing an optimal relationship between people and machinery through the principle of "cooperative."

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      Evolving our failure prediction system to create construction sites and machinery that are always operational

      The construction sites of our valuable customers cannot afford to stop work as a result of their construction machinery breaking down. In view of this, we have developed a digital technology that is capable of accurately monitoring the operational status of machinery, recommending the replacement of parts at the right time before problems occur, and providing the necessary support through various services.

      This technology is "ConSite®," a service-based solution provided by Hitachi Construction Machinery that utilizes IoT technology to remotely monitor the operational status of a machine and supply information such as its operating time, fuel consumption, and data reports on any abnormal signs. This technology has been installed in 143,000 machines worldwide as of the end of March 2020. Moving forward, we hope to further increase the success rate of failure prediction by utilizing AI technology and the operating data we have accrued in order to provide our customers with construction machinery with lower life cycle costs that are capable of more reliable operation.

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      Autonomous Rigid dump trucks that help to address management issues during mining operations


      At mining sites, a variety of machinery and equipment are in operation in 24 hours a day, 365 days a year to extract, transport, and process minerals, making it a constant challenge to improve their safety and productivity. One solution we have developed is the Autonomous Haulage System (AHS) for Rigid dump trucks in mines. Rigid dump trucks that are installed with AHS can start, stop, and perform steering operations automatically in response to commands from the mining operation management system, making them fully autonomous vehicles. We are currently working on the future commercialization of this system.

      In addition, a demonstration test for autonomous operation of ultra-large autonomous hydraulic excavator will be started at a mine in Australia in fiscal 2021. Hitachi Construction Machinery will continue to develop new technologies that transform the future of mining sites.

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      2.Hitachi Construction Machinery
      The power to respond to change

      In addition to our value chain business, Hitachi Construction Machinery is also focusing on the effective utilization of human resources, which is vital for corporate growth. This allows us to enhance our profitability and production efficiency, and to develop a corporate culture that is resilient in the face of change.

      Enhancing our competitiveness throughout the value chain and addressing the challenges of our clients

      Many customers have expressed their wish to procure machinery that is most suited for their construction site and construction period at affordable prices, and to lower the lifecycle costs associated with construction equipment, such as the cost of fuel and maintenance. Along with the evolving needs of society and customers, the forms of value demanded of construction equipment are also becoming increasingly diverse.

      By strengthening our value chain business and focusing on areas other than the sales of new machinery, including parts and services, rentals, used equipment, and parts remanufacturing, Hitachi Construction Machinery is committed to helping our customers enhance their productivity and lower their lifecycle costs. Moving forward, we will further utilize digital technology to extend the solutions we currently provide to various points of contact with customers so that we are able to offer services of the highest quality and recommendations that are tailored to their individual needs.

      Nurturing new talents who can create new businesses and transform existing ones


      To build an organization that is resilient in the face of change, it is essential for us to incorporate diverse opinions that take into account the many different ideas and perspectives offered by people of different genders and nationalities. Hitachi Construction Machinery is strategically building an environment where our diverse talents can unleash their full potential, which would allow us to establish a competitive edge as a global company.

      One of the most important management themes we are prioritizing and focusing on is the nurturing of future global leaders. We have launched a variety of training programs that include initiatives aimed at nurturing "leaders of change and innovation" capable of creating new value in response to changes in the business environment, as well as plans to train future successors to take on the role of "local managers" at our local base outside of Japan.

      3.Hitachi Construction Machinery
      The power to address challenges facing our clients, society, and the environment

      Hitachi Construction Machinery will continue to contribute to the sustainable development of the international community by using our products and solutions to develop social infrastructure and resources in various countries and regions, and by addressing the threat of global warming through our business activities.

      Reducing the environmental impact of construction machinery throughout its lifecycle


      Hitachi Construction Machinery is working to reduce our environmental impact throughout the entire value chain, including the manufacturing of machinery, logistics, and sales. For instance, we have introduced policies to reduce CO2 emissions in our offices and works by adopting the use of solar power, investing in energy-efficient equipment, and consolidating redundant factories to improve production efficiency.

      In addition to developing hybrid and motorized construction machinery as low-carbon alternatives, we will also enhance environmental value added by optimizing on-site operations with ICT and IoT solutions. We are currently focusing on our parts remanufacturing business, where we collect used components and restore their functionality to a level that is comparable to their brand-new counterparts. We believe that this is an important initiative that will contribute to the achievement of the SDGs through waste reduction.

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      Challenge to realize a circular economy through the group


      As opposed to the conventional linear business model of mass production and sales of products, the circular economy is a business model that aims to achieve new growth while maximizing resources by extending the usage period of products through recycling, sharing, and product servicing.

      Hitachi Construction Machinery also believes that it is important to play a role as a manufacturer to bring our economy closer to a circular economy through different ideas such as extending the service life of products through the parts remanufacturing and equipment maintenance, developing more durable components by analyzing the data of components we have collected for repair, as well as rental and used equipment to make the most of every unit manufactured.

      Contributing to job creation and economic development in emerging countries through our business

      Our company hopes to help emerging countries tackle social issues such as their regional economic development and job creation through our business as we continue to grow alongside these countries.

      Our initiatives on this front include ongoing efforts to promote construction work in areas in need of more infrastructure and urban development by supplying these countries with high-quality used equipment. In 2011, we launched a machinery component refurbishment plant in Zambia, one of the hubs for mine development. In addition to encouraging the plant to hire Zambian residents as its local staff so that it can serve as a nexus of the local community, we are also involved in activities that support the education, training, and employment of young people, including the launch of internship programs for students at vocational colleges.

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