Armed with advanced IT, conglomerate chases train industry's Big Three
SHUNSUKE TABETA and HISASHI IWATO, Nikkei staff writers
SINGAPORE -- Hitachi is stepping up efforts to sell railway systems internationally. The Japanese engineering and electronics conglomerate has the world's top three railroad equipment suppliers in its sights and hopes to catch them by leveraging sophisticated information technology.
President Toshiaki Higashihara on Wednesday revealed a plan to make Singapore a base for its railway signal systems business. He told a news conference in the city-state that Hitachi may also consider building factories and maintenance facilities for train cars in Asia down the road.
Higashihara was in town that day for the Hitachi Innovation Forum 2014 Singapore, an event held to introduce some of the company's advanced technologies. During the opening ceremony, S. Iswaran, minister in the Singapore Prime Minister's Office, told that Singapore aims to bring new ideas to market with Hitachi before taking them global.
The same day, the company announced a deal with Sentosa Development to supply a new wireless signal system. The technology is to be used on the Sentosa Express light railway that connects Sentosa Island, an integrated resort, with the center of Singapore.
Combined with the purchase of a two-car train set, the order is valued under 3 billion yen ($25.4 million). The system is expected to include some of Hitachi's most advanced IT features.
For example, Hitachi's technology obviates the need for on-track devices that tell drivers when to stop and go. Instead, wireless transmitters on the train cars keep drivers abreast of where other trains are in real time. That way, they can maintain a minimum distance.
The system enables railway operators to increase the number of trains on a given track while cutting maintenance costs for standalone devices.
Advanced signaling is the latest trend in the railway business, as companies seek to streamline their operations. Alistair Dormer, Hitachi Rail Global CEO, said such systems are becoming bigger cash cows than rolling stock.
The Big Three industry players -- Germany's Siemens, France's Alstom and Canada's Bombardier -- are reportedly reaping more profits from signal systems than train cars.
Hitachi is working to close a deal to acquire train maker AnsaldoBreda and rail signaling group Ansaldo STS from Finmeccanica, an Italian defense and aerospace leader. AnsaldoBreda has been losing money for some time; Hitachi's main target is Ansaldo STS, which is highly profitable.
The Italian group's expertise could help Hitachi carry out its grand plan of selling both train cars and signal systems as a package. The planned base for signal technology in Singapore, which is to open in April 2015 with a staff of 10 engineers, is another aspect of the plan. Hitachi already has such an operation in the U.K.
Higashihara said management will think about adding production and maintenance facilities in Asia if orders from the region's railway companies grow.
Hitachi has proved its railway mettle at home, where it has contributed to the safe, punctual operation of bullet train lines that have been running for half a century.
More than two decades ago, Higashihara was responsible for building a system to manage trains in the Tokyo metropolitan area for JR East, the biggest railway operator in eastern Japan. Higashihara built in layered capabilities, so that if one function failed, another would take up the slack -- avoiding interruptions.
Now, Hitachi wants to make another leap with high-tech signal systems that offer greater safety at less cost. The company is taking a similar IT-driven approach with its core social infrastructure endeavors, including smart-city projects.