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. Last Updated: 07/27/2016

Komatsu Plans to Open Russian Plant

bloombergJapan's No. 1 manufacturer of earthmoving equipment is already in a joint venture with Ivanovo-based Kraneks.
ST. PETERSBURG — Komatsu, Japan's No. 1 manufacturer of construction equipment, said on Tuesday that it was planning to set up a production facility in Russia.

"Komatsu Ltd. has plans to open a machine-building or a component-making facility in Russia," the company's Moscow office, Komatsu CIS Co., said in a statement.

Earlier on Monday, Bloomberg cited a Komatsu executive as saying that Komatsu was planning to invest 3 billion yen ($27 million) into a Russian plant, most likely near Moscow or St. Petersburg. The plant, which would employ up to 300, would annually produce 600 units of 30-ton earthmovers, Taizo Kayata, Komatsu's executive officer in charge of overseas marketing, told the news agency in an interview in Tokyo.

The Japanese firm would own up to 66 percent of the assembly facility, with the rest of the shares being controlled by Ivanovo-based Kraneks, a maker of excavators, Bloomberg reported.

Anatoly Komov, vice president of Kraneks, said on Monday that his company had been in talks with Komatsu but had not yet received a concrete offer.

Kraneks already operates a 50-50 joint venture with Komatsu in Ivanovo, which since 1999 has been producing plates used in hydraulic shovels.

Iwao Ohashi, head of the Japan External Trade Organization in Moscow, said Komatsu had been looking at building a new plant in Russia for some time.

"Komatsu has supplied a lot of equipment to the coal mining and seaport construction projects in Russia's Far East since the '90s. They also sell a lot of equipment to timber producers," Ohashi said. Komatsu, the world's biggest after Caterpillar of the United States, said in a July forecast that it expected annual CIS sales to rise 30 percent to 25 billion yen ($224 million) this financial year compared with the previous year.

Sergei Osutin, president of the board at consultancy OSV in St. Petersburg, said the arrival of Komatsu would likely drive prices for construction equipment down as competition tightened.

"This is a serious investment amount, so the company must be confident in its sales," Osutin said.