OSAKA -- Kubota is building a new construction equipment plant in the U.S. in a bid to tap into wealthy Americans' migration to the suburbs amid the coronavirus pandemic.
The Japanese company is encouraged by the trend of high-income families moving from cities to big homes in the suburbs, and by a recovery in U.S. housing starts. Kubota has already made customers of affluent homeowners who buy small construction machines to do yardwork on their expansive properties.
"If this shift to the suburbs continues, our sales network, which has equipment dealers outside cities, can easily respond to a rise in demand," a Kubota executive said.
Kubota will first spend 5.6 billion yen ($52 million) to build the plant in the state of Kansas. The factory will begin mass-producing compact track loaders, versatile machines that can both dig and load, in September 2022, with annual output to reach about 3,000 units in 2023.
Depending on demand, Kubota will expand production capacity to 5,000 units by 2026. While the U.S. economy is expected to slow in the near term as the coronavirus continues to spread, Kubota anticipates resilient demand for its equipment.
Because Kubota produces about 20,000 of the loaders in Japan, the Kansas facility could expand the overall scale of production by about 25%. Including the expense of relocating production of other models from Japan, total construction costs are expected to reach 10 billion yen.
In the U.S. compact construction equipment market, Kubota rose from fourth place in 2013 to the second spot in 2018. Kubota's offerings have received accolades for their durability and usability.
North Dakota-based Bobcat is the U.S. market leader with a roughly 30% share, compared with Kubota's 17%. The Kansas factory will bolster Kubota's capacity to produce the track loaders and put the Japanese company in a position to rival Bobcat.
Kubota aims to raise its U.S. market share in small construction machines to around 30% by 2030, overtaking Bobcat. It seeks to create a supply chain that balances local procurement with exports from Japan.
In addition, Kubota will deepen its operational partnership with Great Plains Manufacturing, a farm implement maker acquired in 2016. Through Great Plains, Kubota will expand its lineup of auxiliary devices for mowing and logging. The parent will also boost Great Plains' research and development capabilities.