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Kobelco Eyes US Comeback With New Plant

Kobelco Construction Machinery plans to build an American factory as early as 2015 to meet growing demand for equipment used in real estate development and shale gas production, according to the company.

Kobelco Construction Machinery plans to build an American factory as early as 2015 to meet growing demand for equipment used in real estate development and shale gas production, according to the company.

TOKYO -- Kobelco Construction Machinery plans to build an American factory as early as 2015 to meet growing demand for equipment used in real estate development and shale gas production, according to the company.

The wholly owned Kobe Steel subsidiary will spend $9.6 million to as much as $19.2 million on the new plant, which will make such equipment as excavators as well as some parts. The facility will have an annual production capacity of 2,000 to 3,000 units.

Since 2002, Kobelco had outsourced construction machinery sales in the U.S. and Europe to CNH Global of the Netherlands. But the partnership was terminated at the end of last year because Kobelco's American market share had declined sharply.

The Japanese firm began building up its U.S. sales network at the start of the year. It has signed sales agent contracts with about 50 companies nationwide so far. Sales in the U.S. are projected to double to roughly 800 units this year.

Kobelco hopes to boost U.S. sales to 2,000 units in 2015 by adding another 10 or so agents to its network, aiming to take a 10% share of the U.S. market. By launching local production, it expects to offer more price competitive products that fit customers' preferences.

Kobelco does not make large excavators used in mines, specializing instead in small and midsize models used at construction sites and other locations. Its products are known for good fuel efficiency. Once the new plant goes online, the company may ship products from the U.S. to Chile, Colombia and other South American markets.

Kobe Steel and U.S. Steel expanded their automotive steel sheet plant in the U.S. earlier this year. In addition to boosting output of construction machinery in that country, the Kobe Steel group intends to strengthen other fields expected to grow on the back of the shale gas boom, including machinery for plastic manufacturers and steel mills that use natural gas.