Japanese crane manufacturer Kato and Indian crane and telehandler manufacturer ACE (Action Construction Equipment) have formed a 50/50 joint venture to manufacture high capacity mobile cranes in India – ACE Kato Pvt.Ltd.
The deal is a culmination of more than two years of discussion and negotiations.
The cranes will be targeted not only at the domestic Indian market but also for export worldwide. The range will eventually include truck and Rough Terrain cranes as well as crawler cranes. Kato will lead the product engineering, design and technology, while ACE will be responsible for manufacturing, sourcing and what it refers to as ‘localisation’.
The joint venture has taken over an 11 acre manufacturing plant in Haryana and plans to invest around ₹200 crore ($21 million) to develop the facility, with advanced production systems and technology, as well as product development. The two companies have also agreed to make additional investments in phases as it comes on stream, in order to expand capacity and add further manufacturing capabilities.
ACE executive director Sorab Agarwal said: “ACE Kato marks a defining milestone in our growth and reinforces our long term commitment to strengthening India’s construction equipment manufacturing ecosystem. For more than three decades, ACE has been at the forefront of indigenous manufacturing and has built a strong foundation through engineering excellence, operational capabilities and customer reach.”
“By partnering with Kato, we are combining globally proven Japanese technology with India’s manufacturing strengths to create a world class platform for high capacity crane manufacturing.”
“Our vision extends beyond manufacturing products. We are building a long term technology and manufacturing partnership focused on creating a strong, future-ready crane manufacturing platform in India. This phased approach will enable us to address the evolving requirements of customers while strengthening our competitiveness across domestic and international markets.”
Kato director Tomoyasu Kato added: “ACE has established itself as one of India’s most respected construction equipment manufacturers with strong manufacturing capabilities, a robust supplier ecosystem and an extensive market presence. Through ACE Kato we are creating an additional manufacturing base within the Kato global production network while working together to deliver reliable, technologically advanced crane solutions for customers in India and overseas markets.”
ACE is based in Palwal, Haryana and was established in 1995. Today, it claims to be the world’s largest manufacturer of pick & carry cranes. Its full range, however, includes Rough Terrains, crawler cranes, tower cranes, truck cranes, aerial work platforms, telehandlers and forklifts, along with other construction equipment and agricultural equipment. See: New models for ACE
In India, the company works through a sales and service network with more than 125 locations, supported by 13 regional offices. While not a major part of its business, the company already exports its machines to 42 countries.
In mid 2020 C&A interviewed Sorab Agarwal of ACE for Cranes & Access – See: ACE High on page 20
Vertikal Comment
“ACE is not new to Joint ventures. In the distant pass it had agreements with PM loader cranes, Zoomlion, Maber mastclimbers and Airo-Tigieffe work platforms.
It is a fact that joint ventures are a real challenge to get right. In order for them to work equally well for both parties, the two partners need to view the venture and what it aims to achieve in the same way. Easily said, far tougher to achieve. It also helps if they have very similar corporate cultures, standards and business practices. From an outside point of view, this does not appear to be the case here.
Some of the joint ventures that work best are those that are set up as suppliers to the two owners, and are run in a hands-off way, at least in terms of day to day management.
One of the hoped for benefits of this arrangement is that ACE will gain Japanese levels of quality and long term reliability for the machines that the joint venture manufactures. Don’t count on it! Japanese crane manufacturers struggle to fully achieve that aim, with the overseas companies they own outright and have full control over…even in Germany, where passion for perfection and quality is perhaps more similar to Japan.
Looking at it from another angle, Kato has not been brilliant at selling and marketing its cranes internationally, at least not in Europe and North America. Although it had some significant success in the 1970s and 1980s, in parts of Europe with its truck cranes through Kranlyft, and more recently in smaller way with its city type Rough Terrains through the Irish company Rivertek.
ACE, on the other hand, is savvier and more dynamic when it comes to selling and marketing its products. If the two could combine and then accentuate their strengths, it could be a real winner – but again, easier said than done.
Kato not the first
Kato is also not the first Japanese mobile crane manufacturer to form a joint venture with an Indian pick & carry crane manufacturer, Tadano formed one in 2018 with Escorts in which it retained a 51 percent stake.
Once it was up and running Tadano closed its subsidiary Tadano India and transferred its assets to Tadano Escorts. When the venture struggled to gain momentum, followed by the Covid pandemic, Tadano took full control of the venture.
Will this one succeed? Hmm… time will tell.
