Hitachi Construction Machinery and Komatsu Reach Basic Agreement for Collaboration in Production and Procurement

Komatsu Ltd. and Hitachi Construction Machinery Co., Ltd. have held discussions since April this year, concerning collaboration in production and procurement mainly of components for construction and mining equipment. The two companies have recently reached a basic agreement to collaborate in and promote the following areas as the first phase of their efforts.
The collaboration aims at further strengthening the cost competitiveness of the two. They have discussed a wide range of measures to reinforce their cost competitiveness by reducing production costs mainly through cross supply and joint procurement of components. To further expand the benefits of cost reduction efforts, they have come to a mutual understanding that adaptation of common designs will be effective. Specifically, by promoting common designs within the scope of not substantially affecting their product differentiation, they will be positioned to take advantage of economies of scale in cross supply and joint procurement.
By defining this agreement as the first phase of collaboration, the two are going to build on and materialize collaborative relations which are mutually beneficial.

Specifics of Agreement
1. Hitachi Construction Machinery will produce undercarriages for super-large hydraulic excavators based on a common design and supply them to Komatsu.
2. Komatsu will produce undercarriages for mini hydraulic excavators based on a common design and supply them to Hitachi Construction Machinery.
3. Komatsu will supply the power train for dump trucks to Hitachi Construction Machinery.
4. The two will jointly procure undercarriage parts for small and medium-sized hydraulic excavators in the rapidly growing Chinese market.
5. In the form of collaboration between Indonesian subsidiaries of the two, Hitachi Construction Machinery will supply fabrications and welded parts to Komatsu, while Komatsu will supply castings to Hitachi Construction Machinery.
6. As for other collaborations, Komatsu will supply flat shoes for medium-sized hydraulic excavators to Hitachi Construction Machinery, while Hitachi Construction Machinery will supply undercarriages for large crawler cranes to Komatsu�fs high-post type hydraulic excavators.
The agreement covers production and procurement only, which will not affect the sales network or brands or product identities of the two companies, and excludes the areas of sales and services. The two companies have no plans for mutual capital participation.

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