Kobelco Construction Machinery (or KCM) has decided to temporarily suspend the production of hydraulic excavators at the U.S. plant of its U.S. subsidiary Kobelco Construction Machinery U.S.A. (or KCMU) in Spartanburg County, South Carolina, USA, from May 1, 2021.
1. Reasons for the Suspension
In the middle of January 2021, Kobelco has been told by Hino Motors, that there has been a delay in the acquisition of certification for new model year engines*1 to be supplied for KCMU’s hydraulic excavators for the North American market, due to a problem in the process of achieving EPA emission certifications, with no clear outlook on future supply schedule.
After receiving this notice, Kobelco has been examining the impact on production and alternate solutions but has judged that the production of hydraulic excavators equipped with the relevant engines*2 would be difficult and decided to suspend the production at the KCMU’s Spartanburg plant.
*1 The engines need to meet EPA emission certifications for 2021
*2 Engine models: J05E, J08E, P11C, and E13C
On December 2020, also Hino Motors announced a formal pause of vehicle production at its plants in its consolidated subsidiaries in North America; the West Virginia plant at Hino Motors Manufacturing U.S.A., and the Woodstock plant at Hino Motors Canada, until the end of September 2021.
The pause was approved following challenges in the required U.S. engine certification testing process for new model years of the A09C, J08E, and J05E* engines for North America.
*A09C, J08E, and J05E: engine models
2. Details of the Production Suspension
The production of the following 7 models of hydraulic excavators, which are produced at and shipped from the KCMU’s Spartanburg plant, will be subject to be suspended. For hydraulic excavators equipped with certified engines, sales will be suspended once the present stock has run out.
- Models Produced in the U.S.
- Hydraulic excavators: SK170LC, SK210LC, SK260LC, SK300LC, SK350LC, SK390LC and SK500LC
The engines that are undergoing the certification process are also used in some models manufactured in Japan and supplied to the North American market, which includes hydraulic excavators (produced at KCM’s Itsukaichi factory) and crawler cranes (produced at KCM’s Okubo factory). Therefore, the production of the following models will also have to be temporarily suspended once the present stock of certified engines has run out.
- Models affected in Japan (for North America)
Hydraulic excavators: SK210HLC, SK230SRLC, SK270SRLC, SK380SRLC, SK500LC, and SK850LCCrawler cranes: CK850G, CK1100G, CK1200G, CK1600G, and CK2750G
Kobelco will suspend the production at the KCMU’s Spartanburg plant from May 1, 2021, until the supply of the engines is resumed (date undetermined).
4. Future outlook
Kobelco is currently scrutinizing the impact of the suspension of the production and sale on its business results. It will promptly make an announcement when any matters to be disclosed arise in the future.
During the suspension of the production, Kobelco will continue the business in North America, including the sales of models other than those subject to this suspension (various mini-excavators, 7ton/13ton class hydraulic excavators and the crawler crane CK3300G) and after-sales service for machines already delivered. Kobelco is considering installing an alternative engine for the models affected by this supply disruption. We strive to resolve this issue as soon as possible.
Sales Volume of Hydraulic Excavators in the North American market
In FY2020: About 1,000 units (of which about 600 are produced at the Spartanburg Plant)
Outline of Kobelco Construction Machinery U.S.A. Inc. (KCMU)
|Company Name||Kobelco Construction Machinery U.S.A. Inc.|
|Location||Headquarters in Katy, Texas, USA
U.S. plant in Spartanburg County, South Carolina, USA
|Stockholder||Kobelco Construction Machinery Co., Ltd. 100%|
|Opened in||March 2016|
|Business Operations||Production of hydraulic excavators
Sales and service of construction machinery in North, Central, and South America
|Employees||251 (as of the end of January 2021)|
Outline of the KMCU’s Spartanburg Plant
|Land Area||Approximately 310,000m² (76 acres)|
|Building Area||<Plant>Approximately 14,500m² (156,000 square feet)
<Office>Approximately 1,600m² (17,000 square feet)
|Employees||141 (as of the end of January 2021)|
*The information contained herein is as of the date this announcement was made and it may be changed without prior notice.