Heavy Equipment

Deere, Hitachi to End 30-Year JV for Excavator Production

The JV was formed in 1988 to produce excavators in North Carolina.

Updated on

August 28, 2021

John Deere and Hitachi Construction Machinery are ending their 33-year joint venture to manufacture excavators for the North and South American market, in a move that seeks to unlock new business opportunities for both companies.

The JV was set up in 1988 to co-produce excavators in North Carolina before it expanded to include the production of forestry swing machines and joint marketing across America.

The dissolution, which goes into effect on February 28, 2022, will see Deere acquiring the joint venture plants in Kernersville, N.C., Indaiatuba, Brazil, and Langley, British Columbia.

Intellectual property

The company will also acquire the intellectual property license to continue manufacturing Deere-branded excavators indefinitely. Both acquisitions will cost $275 million.

Deere will produce self-branded excavators at the plants but will cease manufacture of Hitachi excavators. On the other hand, Hitachi will produce all of its excavators, wheel loaders and mining equipment in Japan and then export them to the Americas.

John Stone, president of construction & forestry division and power systems said: “John Deere will build on our legacy of quality and productivity and accelerate development of industry-leading technology and machinery”.

Supply agreement

Deere will enter into a “long-term supply agreement with Hitachi to source and produce the current products at existing locations,” the company said in a statement.

On its part, Hitachi – one of the world’s top-selling excavator manufacturers – will introduce new products in America, which will feature “cutting-edge technologies that increase efficiency and safety while lowering total cost of ownership.”

Advanced hydraulic and safety systems, “internet of things” services and telematics are some of the key technologies that Hitachi plans to introduce into the Americas.

Hitachi Construction Machinery America CEO Alan Quinn said his company will operate as a wholly-owned subsidiary of the Japan-based Hitachi Construction Machinery.

It will retain its regional headquarters in Newnan, Georgia, where it plans to add 75 to 80 employees for positions ranging from sales, marketing, distribution, and dealer service.

“I think we’re in a perfect place to be one of those disruptors in innovation and capture some of the new ways of doing business,” Quinn said.

He said the market had become very competitive, which makes it “a little bit more cost-effective and more customer friendly for us to bring it directly from Japan”.

“Base USA”

Deere and Hitachi started a supply relationship in the 1960s – which resulted in the formation of Deere-Hitachi Construction Corp. in Kernersville in 1988.

A decade later, the partners started a “Base USA” strategy in which similar models were produced for both brands at the U.S. factory.

The new Hitachi-branded machines will arrive in the Americas in Spring 2022.

“It feels for us like the skies have opened up,” Quinn added. “And we can do everything in our power to build the Hitachi brand in North America.”