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Interview

Hitachi's new president eyes US recovery amid economic stimulus

Kojima says he will spur growth after two large M&As, focus on China for smart cities

India will be Hitachi's most important source for hiring IT engineers, President Keiji Kojima said. (Photo by Suzu Takahashi)

TOKYO -- Hitachi's new president, Keiji Kojima, is eyeing the U.S. industrial sector as a key focus in the next few years as the Japanese company looks to expand its businesses outside of its home market.

Kojima succeeded Toshiaki Higashihara as president this month, after Hiroaki Nakanishi resigned as chairman over illness in May. Higashihara became chairman and remains a chief executive.

Kojima said his predecessor laid the foundation for Hitachi to grow globally. The company bought global technology group ABB's power grid business last year and announced the acquisition of the U.S. software developer Global Logic in March. Hitachi "took in very large assets, so it is [now] about how to utilize them for growth," Kojima said in a recent joint interview.

While the company has been operating across different regions, "industry in North America would have the most opportunity," said Kojima. Manufacturing would grow, driven by economic stimulus under President Joe Biden, Kojima suggested. He said the region would be the "most important market in the next midterm plan," which is likely to cover fiscal 2022 to 2024, as Hitachi's midterm plans usually run for three years.

Hitachi generated annual revenue of 8.7 trillion yen in the fiscal year that ended in March 2021, and roughly half of it came from Japan. North America is its second-biggest market, amounting to 1.1 trillion yen.

Kojima became president and COO of Hitachi in June. (Photo by Akane Okutsu)

At the core of the company's strategy has been to make use of information technology and data to enhance various products and operations. Kojima, who joined Hitachi in 1982, was involved in the launch of Hitachi's key Internet of Things platform, called Lumada, in 2016.

The subsidiary Hitachi High-Tech, which makes semiconductor manufacturing equipment, recently announced it would set up a new research and development facility in Oregon. "I expect a lot of investment related to [semiconductors] from now on in North America," said Kojima. He explained that Hitachi can make use of its IT capabilities to improve semiconductor products by analyzing various data from the manufacturing process to increase yields.

Regarding the Asia region, Kojima said China will be the most promising ground for smart cities because of lower regulatory hurdles compared to other countries. A data-driven city often entails difficult concerns including privacy. He said he hopes to "develop the current elevator business into something like a smart-city business."

India will be the most important location in terms of hiring IT engineers, Kojima said. The company will strengthen its recruiting to secure enough resources in the country, as "the number of good engineers determines wins and defeats," he suggested.

Asked about potential future acquisitions, Kojima said Hitachi already has most of the resources necessary for its IT business. He said the company is still short of teams with digital skills within product segments such as rail and health care. "It is possible that we will take in [such teams] from outside inorganically, depending on circumstances," he said. For rail, "we would want a bit more resources, as we would start various things such as information systems and mobility as a service."

Amid increasing geopolitical uncertainty, "one of the themes in the next midterm plan will be risk control," said Kojima. He said he feels the need to strengthen intelligence and be able to assess potential risks.

"I think there is still a lot of room for growth in Japan," Kojima added. He said key areas would be digitization and environment-related businesses, including systems for electric vehicles.

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