Hitachi Seeking Consulting Assets Overseas to Add 6,000 Jobs
(Bloomberg) -- Hitachi Ltd. is looking to buy consulting and system engineering companies overseas to help add as many 6,000 workers to boost sales of products ranging from trains to construction machinery.
The Tokyo-based company has set aside as much as 800 billion yen ($7 billion) for acquisitions over the next two years, Chief Financial Officer Mitsuaki Nishiyama said in an interview Thursday.
“By far and away, overseas is where we lack people,” he said. “We need to add people to solve problems, introduce systems and products and handle repairs and maintenance.”
Hitachi has sought purchases abroad, put units for sale and pared costs to improve competitiveness versus rivals including Siemens AG and General Electric Co. As part of its budgeted plan to invest 1 trillion yen in the three years through March 2019, Hitachi hasn’t made much headway barring a few purchases including the units and assets of Accudyne Industries earlier this year. It had 765 billion yen in cash and equivalents at the end of March.
“We want to use the cash to take advantage of opportunities for investment,” Nishiyama said. “We’re focusing on growth. We’re not considering share buybacks at this point.”
Hitachi shares fell 0.9 percent to 683.9 yen as of 11:04 a.m. in Tokyo Friday. The stock has advanced 8.2 percent this year, compared with a 4.7 percent gain in the Nikkei 225 Stock Average.
The company has mostly finished selling stakes in firms it owned, Nishiyama said. Hitachi has already sold stakes in its distribution and finance units and merged its air-conditioning business. KKR & Co. offered in April to buy a controlling stake in Hitachi Kokusai Electric Inc., which involves the purchase of Hitachi’s majority shareholding.
The same month, Hitachi agreed to acquire the Sullair brand division from Accudyne that makes air compressors to get access to a global sales network focused on North America. Hitachi and CVC Capital Partners have also made a joint offer to buy Landis+Gyr from Toshiba Corp. and Innovation Network Corp. of Japan, a person familiar with the matter said in April.
Hitachi is increasing its focus on use of digital technology to help boost sales of trains, construction machinery and wind turbines. It is targeting consulting work to come up with solutions for clients and maintenance contracts to repair machinery and equipment.
For instance, in the U.K. the company makes trains and has a maintenance contract for them. In the past engineers would have had to examine all the doors on carriages to check for faults. Now it places sensors on the doors and uses the data to track their closing speed. When a door starts closing more slowly, it usually means there is a fault and so it sends an engineer to fix that door, reducing labor costs and preventing breakdowns while in service.