RACINE, Wis.--(BUSINESS WIRE)--Sept. 2, 1998-- Alliance Leverages Sumitomo's Superior Excavator Technology With the Companies' Distribution Strength To Create Dynamic Global Combination.
Case Corporation (NYSE:CSE) and Sumitomo (S.H.I.) Construction Machinery Co., Ltd., have completed details of a global alliance to manufacture and market hydraulic crawler excavators.
The alliance, covering both new and current technology, will enable the two companies to increase their penetration of the global excavator market and to expand their participation in a number of regions around the world.
"This long-term alliance with Sumitomo Construction Machinery will allow us to provide customers around the world with technologically advanced excavators, both now and in the future," said Jean-Pierre Rosso, Case chairman and chief executive officer. "Sumitomo has earned an excellent reputation for its engineering and design capability, and this long-term partnership ensures that we will continue to provide our customers innovative new excavators as part of an outstanding package of equipment and after-sales service.
This alliance creates significant opportunity for sales growth by establishing an excavator joint venture in North America, and expanding and strengthening Case's excavator line throughout our European region, and in Latin America and Australia."
Toshimasa Makino, Sumitomo Construction Machinery president, said, "Case and Sumitomo Construction Machinery are highly compatible partners in the construction equipment business. We share a commitment to bring our customers innovative new products that increase their productivity. Through our combined strengths, we will capture a greater share of the global excavator market."
The two companies formed the foundation for the current alliance in 1992, when Case began selling excavators supplied by Sumitomo Construction Machinery in North America. Today, Case sells seven excavator models in North America designed by Sumitomo Construction Machinery, ranging in size from 12 to 50 tons. Through this global alliance, Sumitomo Construction Machinery will provide technological improvements and new crawler excavator models solely to the distribution channels of Case, Sumitomo Construction Machinery and their joint ventures.
Regional Structure of Global Alliance
In North America, the two companies have formed a 50/50 joint venture company, LBX Company LLC (LBX), to acquire and operate the excavator business of Link-Belt Construction Equipment. The new company will be based in Lexington, Kentucky, and will market Link-Belt branded excavators in North America through the Link-Belt excavator distribution network.
Case dealers will continue to sell Case-branded excavators designed by Sumitomo Construction Machinery. LBX will have the exclusive North American manufacturing license for future excavator models designed by Sumitomo Construction Machinery. Initially, manufacturing will continue at Sumitomo Construction Machinery in Japan and Link-Belt Construction Equipment in Kentucky.
The North American joint venture will not include cranes. Link-Belt Construction Equipment, a wholly owned subsidiary of Sumitomo Construction Machinery, will continue to design and produce cranes, which will be sold through Link-Belt crane dealers.
In Case's European region, the two companies have reached an agreement through which Case dealers will be able to 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 available to customers.
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 Construction Machinery 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 demand has exceeded expectations. Building upon the success in Brazil, Case plans to introduce these excavators to other Latin American markets during 1998 and 1999.
In Australia, Case-branded excavators designed by Sumitomo Construction Machinery will be sold through Case construction equipment dealers; Sumitomo-branded excavators will be sold through the Sumitomo Construction Machinery distributor. The companies continue to explore opportunities to further expand the alliance in Asia and intend to work together to refocus distribution.
Excavators represent one of the largest segments of the construction equipment market. They are predominantly used in commercial, residential and infrastructure construction projects. Sumitomo Construction Machinery is a world leader in hydraulic excavator design, manufacture and technology.
Sumitomo (S.H.I.) Construction Machinery Co., Ltd., with 1997 revenues of $1.1 billion, is headquartered in Tokyo, Japan, and is one of Japan's leading manufacturers of excavators, cranes and other construction equipment.
Case Corporation is a leading worldwide designer, manufacturer and distributor of agricultural and construction equipment, and offers a broad array of financial products and services. Headquartered in Racine, Wisconsin, Case had 1997 revenues of $6 billion and sells its products in 150 countries through a network of approximately 4,900 independent dealers.
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