Born twenty-five years ago as a commercial partnership, the axis between San Gimignano’s Imer (a leader in construction machinery) and the Japanese IHI giant (multinational spanning from energy plants to shipbuilding, from turbochargers to bridges to offshore systems) has developed into a consolidated joint venture in the construction machinery sector. The Japanese group has chosen Tuscany to increase its production and strengthen its position on the market. Tutomu Kikuchi, president of the Ihimer jv, traces the origins of the collaboration between the two companies and discusses the objectives that will be followed and highlights the reasons behind IHI’s choice to invest in Tuscany.
IHi-Imer joint venture started in 2002 after a long commercial partnership between the two firms. Why did you choose to upgrade from a partnership to a jv and how do IHI and Imer benefit from this alliance?
The collaboration between IHI Construction Machinery Ltd. and Imer International has begun from 1989 by the simple Distribution Agreement and then to manufacture locally based on the License Agreement from 1994. Because of such long relationship and also severe market restriction of construction machineries in Europe, both parties decided to establish the joint venture in 2002. This decision was derived from the confidence by the both parties on win –win relationship, namely establishment of European manufacturing and expansion of construction machinery business in Europe for IHI and expectation of growth in construction machinery business for Imer International originated from small construction equipments.
What are the current targets of this jv?
Since the foundation, our JV has grown steady till 2008 as originally expected, however, due to Lehman Crises , not only our JV but also construction machinery business itself has suffered a lot from sharp decline of the demand and still not recovered yet to the level of 2007 and 2008. Current market share of our equipments under the IHI brand would be approximately 3 % in total European market, however, if we could see the brand synergy of both IHI and Imer Group, we can expect to increase the share by 5 %. That’s our company target in a medium term.
In the recent months, production of a new series of mini-excavators with IHI technology has begun at the San Gimignano plant: are any other production lines to be expected in near future?
For achieving our company target and objects, we are to plan to increase IHI machines locally manufactured by shifting from Japan to Italy. Should the new investment for human resources as well as facility be required, both share holders will make the proper judgment and decision accordingly.
In your opinion, and from the perspective of an investor or an international group, how is the business environment in Tuscany?
All international enterprises and investors will consider the following conditions when to plan investments,
1) Good infrastructures , such as logistic base, port, road, communication, electricity, industrial zone
2) Skilful and diligent labor availability
3) Industrialization in the field of material and components
4) Governmental support
5) Local demand at a certain level to support the company in initial stage
In accordance with those conditions available herein Toscana, we believe it fair in the ranking . As for our particular case, we appreciate it highly that Toscana or Italy were well known in the world as the suppliers of earth moving equipments and then procurement network already well set up. And more importantly to the perspective of IHI would be good and trustable local partner, namely Imer International. We believe no international joint venture could be successful in a medium and longer terms period without mutual respect and trust.
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