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Komatsu and Hitachi Construction halt shipments to Russia

  • March 5, 2022
  • , Nikkei Asia , 6:58 a.m.
  • English Press

YASUFUMI TSUGE and HISASHI IWATO, Nikkei staff writers

 

TOKYO/OSAKA — Heavy equipment makers Komatsu and Hitachi Construction Machinery, along with technology group Panasonic, on Friday joined a growing list of Japanese companies cutting business transactions with Russia.

 

Komatsu will stop delivering construction equipment in Russia, it said, either through imports or by local production. The company makes excavators and dump trucks at a factory in the western Russian city of Yaroslavl.

 

“Due to the situation in Ukraine, the disruption in the supply chain surrounding Komatsu has become extremely difficult and the impact on the financial and economic situation remains uncertain,” Komatsu said in a statement.

 

The Commonwealth of Independent States (CIS), a region that includes Russia and former members of the Soviet bloc, contributed 8% to Komatsu’s revenue during the three quarters through December.

 

Due to the Ukraine conflict, Komatsu established an emergency task force reporting directly to the company’s president at the end of February.

 

Hitachi Construction announced it will gradually cease local production and exports of construction equipment to Russia. The decision was also made over supply chain risks stemming from the invasion of Ukraine.

Hitachi Construction’s excavator plant near Moscow will maintain output for the short-term using the available inventories of parts, but facility operations are expected to cease in mid-April, according to current projections.

 

Important excavator components are delivered from Japan. Hitachi Construction determined that delays in maritime shipping and other factors would severely impact the production schedule.

 

CIS accounted for 4% of Hitachi Construction’s revenue during the April-December period. The company fields sales offices in Moscow as well. There are about 10 Japanese employees in Russia.

 

“We’ll consider temporarily repatriating [the workers] as we monitor ongoing developments,” said a Hitachi Construction representative.

 

Earlier Friday, Panasonic suspended virtually all business transactions with Russia following the invasion of Ukraine, with the Japanese group citing “economic, logistical and other practical challenges.”

 

This month’s shipment of goods to Russia has been stopped, it said. Because it does not own factories inside the country, products are supplied externally by the group for sale within Russia.

 

Concerning transactions after this month, Panasonic said it would monitor developments and make decisions based on the situation.

 

“We have been very concerned about the current situation in Ukraine and would like to express our deep condolences to all the victims. We hope that the world will return to peace and security as soon as possible,” it said in a statement.

 

Panasonic’s distribution subsidiary in Russia is maintaining normal operations, and the company’s electronics continue to be sold in stores. It appears the subsidiary will respond to the change in the short term with inventory on hand.

 

The company has halted operations at the Ukrainian distributorship. The unit’s Japanese employees have already left the country.

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