Not long ago, in the early 1990s, Tadano of Japan lied claim to the title of the world’s largest manufacturer of mobile cranes. The collapse in the Japanese market and the rise in volume manufacturing in China and Russia has put paid to that claim, but it remains one of the giants of the industry. In 2003 Tadano made 1,180 rubber tyred mobile cranes at its factories in Japan and Germany, plus several thousand stiff boom loader cranes.
New president Koichi Tadano, who took over from his uncle Sakae Tadano on 27 June 2003, has the good fortune to have taken over leadership of the company at a time that he believes represents the bottom of the market, following six straight years of a declining Japanese public economy. In fact, the crane market has been in decline in Japan since 1992. (Tadano’s annual production peaked in 1990 at 4,100 units). Tadano’s group sales of ¥83bn in the 2003 fiscal year 2003 (to March 2003) are half what they were in the early 1990s. In fiscal 2004, however, worldwide sales were up 16% on the previous year to ¥97bn ($854m). Tadano also returned to profitability for only the second time in six years, making a net profit of ¥2.8bn ($24.4m) .
Despite a tough few years, the outlook is generally reasonably positive for Tadano and the company appears well positioned. It has seen its share of the domestic wheeled mobile crane market rise from its traditional level of 40% or 45% to 52% today. ‘The Japanese market is recovering but the basic situation for Japanese customers is still bad,’ Koichi Tadano says. ‘Rental rates are stagnating and have not yet hit the bottom, but the machines are too old now and some customers think they need new machines.’
The US market is also set to improve, he believes. ‘I think it will recover soon because the excavator market is recovering now and the crane market generally follows the excavator market.’
It might seem inevitable that Koichi Tadano would one day take over as boss of the business. He is the eldest son of the eldest son of the company founder. A Tadano family member has always been president and he is the first member of his generation to take the top job, following in the footsteps of his grandfather Masuo Tadano, his father Hiroshi and three uncles, Yasuo, Hisashi and most recently Sakae, who is now chairman of the company. However, Tadano is a public corporation, listed on the Tokyo stock exchange. The family’s shareholding is 20%. According to both Koichi Tadano and his senior colleagues, it was never a foregone conclusion that he would one day be the leader. Instead, it was something that he worked hard towards achieving. After graduating from the top Japanese business school Hitotsubashi University with a degree in economics, he joined the Marubeni trading company for 11 years. In 1988 he joined Tadano as chief of corporate planning and administration. From 1996 to 1999 he was president of Faun GmbH in Germany before returning to Japan to be in charge of domestic sales and new product development. He was selected as president by a board of directors that is appointed by shareholders.
Koichi Tadano’s background gives him a clear perspective on the challenges he faces. He blames the dramatic decline in sales between 1992 and 2003 not on the problems of the Japanese economy, as he would be totally justified in doing, but on the company’s own failings. ‘The reason why was that we depend on the Japanese market too much,’ he says. This fact shapes his goals. ‘My interest is to make the Tadano group stable,’ he says. To this end, he has five central points on which he is focusing.
The first is to continue the internationalisation of the business. Compared to its major domestic competitor, Kato Works, Tadano cannot be faulted here, having acquired Faun of Germany in 1990, for example, established Tadano America Corporation in 1993 and set up a manufacturing joint venture in China this year.
However, the domestic Japanese market still accounts for more than two-thirds of group sales – 70% in fiscal 2003, reducing to 68% in fiscal 2004. Koichi Tadano’s goal is to bring the ratio of domestic sales to exports down to 50:50 by 2008. In this way, Tadano will be better insulated from the ups and downs of individual markets, and Japan in particular.
The second focus point is technology. ‘During the last 10 years we couldn’t develop advanced products because of the market situation,’ he says, a little unfairly since the cranes that Tadano has brought out in the past decade have hardly lagged behind on the technology front. However, he insists: ‘We have to make our technology stronger than before. We have shifted engineers from Japan to Germany to develop the new series of ATs.’
The latest technological development from Tadano, and the first under the new boss, is the Lift Adjuster, as seen on the new 160t capacity ATF 160-5 all terrain. The load sway reduction technology, a combination of hardware and software, was developed by Japanese and German engineers working in co-operation, he says. Its development seems significant for Tadano, bridging the east-west divide. Customers in Japan prefer stiff, rigid booms, while in Europe the lighter, more flexible boom is common. By reducing the sway of the load as it is picked off the ground, not only the cranes made safer but also the flexible European booms may become more attractive to Japanese customers.
The third focus point is service and the quality of after-sales product support. The day before this interview a Tadano customer had told Cranes Today: ‘The maintenance cost of Tadano RTs is next to zero.’ Despite the widespread satisfaction of customers, this is not good enough for Koichi Tadano. ‘I am not satisfied with the current level of quality and I want to raise it up.’
The fourth focus point is the price of cranes. ‘The present price level around the world is not reasonable for manufacturers, but rental prices are low. There are structural problems in the industry.’ Manufacturers now have another problem with rising steel prices. Raw materials and components are all getting more expensive. He has no solution yet, though. ‘It is very difficult to say what we can do about prices so we have to think about that.’
The fifth and final focus point, all of which have the common goal of making the business more stable, is diversification beyond cranes and aerial work platforms. The company is exploring markets for new machinery to simplify the maintenance of buildings and infrastructure. For example, last year it produced eight units of machine that the company developed for elevating railway tracks. These 100t capacity pedestal cranes have found a market among public works contractors who are working on projects to move metro railways in congested Japanese cities from street level to elevated, above-street running.
A quick way to diversify is through acquisitions. Koichi Tadano says he has ‘no concrete ideas at the moment’ on this subject ‘but acquisitions and alliances are a good way to expand,’ he acknowledges.
Extending alliances is at the forefront of his thoughts. Tadano has alliances with two leading Japanese crawler crane manufacturers, both Hitachi-Sumitomo and Kobelco. The former is a marketing agreement that sees, among other things, Sumitomo’s US subsidiary Link-Belt re-badge Tadano Faun ATs. Tadano has shipped and sold 10 units to Link-Belt so far. ‘We want to increase the range of models that they sell. We have to make our alliance with Link-Belt stronger,’ Koichi Tadano says. The latter alliance sees Tadano supply Kobelco with carriers for 25t and 50t rough terrains. There is talk of this being extended to Tadano supplying complete RTs to Kobelco, but nothing has been agreed on this, he says.
One prospect that he absolutely rules out, however, is a merger with or acquisition of any of these companies. ‘We are not interested in the crawler crane business. We will not merge with a crawler crane manufacturer or start making them. No interest at all.’
As to the longer term future of the company, there are more Tadano family members around to succeed, should they prove capable enough. Koichi has three cousins in the company. So far, however, none of his own three sons (aged 22, 19 and 17) have yet committed to the company and their father says that he has no desire to push, guide or steer them in that direction. Time will tell.
