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THE BEST OF BOTH WORLDS DEERE-HITACHI BLENDS AMERICAN, JAPANESE BUSINESS CULTURES

THE BEST OF BOTH WORLDS DEERE-HITACHI BLENDS AMERICAN, JAPANESE BUSINESS CULTURES

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There are no time clocks to punch at the Deere-Hitachi Construction Machinery Corp. Production workers keep their own time records.

That's not the only thing that separates this manufacturer of hydraulic excavators from the run-of-the-mill manufacturing plant.All workers are paid on a salaried basis. Along with other employees, non-union production workers have unlimited sick leave, unlimited access to the plant and are allowed unrestricted use of company telephones, including long distance calls home.

The only designated parking spaces are for visitors or unassigned company cars. Executives don't receive bonuses.

Production workers inspect their own work. One set of rules governs all employees' behavior.

Executives and production workers wear optional open-collared shirts and khaki trouser uniforms and min gle in the company lunchroom.

Management solicits workers' opinions on matters ranging from production schedules to rules for the employee handbook.

The $30 million plant is a 50-50 joint venture of John Deere & Co. of Moline, Ill., and Hitachi Construction Machinery Co. Ltd., a subsidiary of the giant Japanese conglomerate Hitachi Ltd.

Since the first excavators were shipped in August, the plant has become a showcase for the latest robotic welding technology and its innovative work force policies. Deere-Hitachi is also considered a key test of whether giant American and Japanese companies can meld their cultures.

``We had the good fortune of being able to create a company from a clean sheet of paper,' said plant manager Fred Korndorf.

The plant now has 102 workers - 52 production employees and the rest administrative and clerical workers. The company expects to hire an additional 38 workers by the end of 1991.

Deere, established in 1837, is the second oldest Fortune 500 company. It is the world's largest producer of farm equipment and also manufactures industrial equipment used by the construction and forestry industries. Deere's annual sales exceed $6 billion.

The Hitachi Group of Tokyo is perhaps best known for its consumer electronics divisions. It produces a host of other manufactured goods and has worldwide sales of $48 billion.

Hitachi has several other joint ventures in the U.S. with American partners, according to Osamu Naito, a spokesman for Hitachi America in Tarrytown, N. Y.

The Kernersville plant in Forsyth County produces Deere and Hitachi brand hydraulic excavators and competes in a North American market with over $250 million in annual sales.

The largest machines made in Kernersville weigh 40 metric tons and cost more than $3 million, while more typical medium-sized excavators costs about $150,000.

The boom and arm of the excavator is manufactured in Kernersville, according to Deere spokesman Gordon Tjelmeland. They're attached to a body that comes from Hitachi in Japan.

Hitachi and Deere excavators are then painted, labeled and distributed through Hitachi and Deere dealerships in the U.S., Canada and Central and South America.

While Japan gobbled up more than half the worldwide demand for hydraulic excavators in 1988 - 48,587 of the 84,290 sold around the globe - the North American market accounted for 10,799 sales, quadruple the North American demand in 1982.

In Japan, one of every two pieces of heavy-duty construction equipment is an excavator, used for digging trenches and a variety of other construction uses. American construction companies have used a wider variety of equipment to do the same work. But they are turning more to excavators because of their efficiency and reliability, said Korndorf, a Deere employee since 1971.

``The hydraulic excavator is versatile and contractors are learning all the time they can apply this machinery in many ways they can't apply other machinery,' Tjelmeland said.

Because Hitachi has supplied excavators to Deere for many years, ``it was natural to get into this business relationship with Hitachi' in Kernersville after North American demand increased, Tjelmeland said.

The joint venture also has marketing subsidiaries in Houston and Toronto.

Joining Korndorf on the management team is Mori Morikawa, executive vice president and a member of the board of directors of Hitachi Construction Ma-chinery in Tokyo.

Although Deere-Hitachi Construction Machinery is co-managed by executives from both parents, the company operates as an autonomous corporation with its own profit and loss statement, business plan and marketing objectives.

The company's management team was able to blend Japanese and American business practices plus be innovative. The result is a factory unlike any other in Japan or the U.S.

``We're getting a lot of visitors here because it's working,' Korndorf said. Sales have held up despite a slowing economy.

``Quality-wise, we are very competitive,' noted Morikawa.

The plant has been so successful that it's exporting some products to Japan, ``which was never part of the deal,' Korndorf said. ``We have out-competed from a quality standpoint the normal Japanese sources for components. That's the real acid test,' he added.

One group that touts Deere Hitachi as a role model is the industrial extension service of N.C. State University, which advises manufacturers on quality control and better management practices.

``They treat everybody like a grownup. It's pretty much a model, we think, for what's coming,' said Robert L. Edwards, supervisor of technical services for the university's industrial extension service.

``The whole concept is to treat the factory worker more like a human being, give him some of same privileges that management gets in the hopes he will be more of a company man and take a greater interest in what he's doing,' said Larry D. Hollis, an analyst for Robert W. Baird & Co. in Milwaukee.

Deere started down the path that led to the Kernersville plant about ten years ago, Edwards said.

To become globally competitive, Deere ``they first thought they could do it all with technology. But then they found out that was not entirely the answer, and they started making cultural changes.'

The result is that Deere is now a competitive leader among American manufacturers of industrial equipment. ``What you see in that plant is a good mixture of the Hitachi and John Deere philosophy,' Edwards said.

After a search that began with 300 available sites, Deere Hitachi bought the former ITT-Grinnell plant in Kernersville, where pipes for nuclear power plants were once made.

Korndorf said Deere Hitachi settled on the 61-acre site because it is the geographic center of the major market for excavators in the U.S.

``The location from a standpoint of the market and transportation and the availability of a skilled labor source played the biggest part,' in the site selection, Strickland said.

Renovating the 335,000-square foot plant rather than building a new one cut the startup time by a year, Korndorf said.

The Kernersville facility is one of only two non-union Deere plants in the United States. Deere, which has 26 U.S. plants, also operates a non-union assembly plant for lawn mowers in Greenville, Tenn., said Tjelmeland.

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