Kubota is the world’s largest supplier of mini-excavators and last year achieved record sales in the UK. Margo Cole speaks to its newly appointed UK managing director about its success.
Japanese equipment manufacturer Kubota has been in the UK for the last 34 years, but until now has never had a non-Japanese managing director here. That changed earlier this year, when Dave Roberts was put in charge of the UK operation.
The decision was big news internally - Roberts is still one of only three non-Japanese territory managing directors within the company.
Osaka based Kubota had previously followed the tradition for Far East companies and dispatched senior managers from its Japanese base to head up operations overseas. Its UK managing directors typically stayed for around three years at a time.
Roberts had spent 21 years with Kubota UK before leaving in 2010 to work as operations director for a large agricultural equipment dealer. He returned 18 months later to take up the post of sales and marketing general manager, and was promoted to managing director in April this year.
Roberts says his appointment reflects an awareness within Kubota of “the need to learn what’s happening” in each territory and to “understand the heartbeat of the market really closely”.
“I can transmit and communicate what our customer needs,” he explains. “For me one of the main objectives is to know what our customers’ needs are, and adapt our business to meet those needs,” he says.
“Kubota is a $14bn (£9.2bn) business, and it will have strategic plans to drive the business,”
This year we’ve seen a big upturn - a big bounce in construction
Dave Roberts, Kubota
“From my point of view, I’ve got to take those global strategies and make sure we implement them sensibly and sustainably in the market we’re in.”
Kubota’s history dates back over 120 years, with the company originally starting out as a manufacturer of cast iron water pipes. It started making powered equipment in the early 1900s, including tractors for the rice paddy fields of Japan. This lead to a move into the global agricultural equipment, followed by diversification into construction equipment.
Today, Kubota is the worldwide market leader in mini excavators - a position it also holds in the UK, ahead of main rivals JCB and Takeuchi.
The UK arm of the business turned over £130M last year - a record that exceeds even pre-recession levels. Around 30% of that figure came from construction equipment, with the remainder being split between sales of engines to other equipment manufacturers, agricultural machinery and what it calls “groundcare” equipment - the kit used by landscaping contractors, golf courses and park maintenance departments at local authorities.
Roberts is expecting all four areas of the business to grow during the current year, and has already seen encouraging signs on the construction equipment side during the first half.
“Last year the market was where we’d expect it to be, but this year we’ve seen a big upturn - a big bounce in construction,” he says.
He says last year’s sales were in part driven by hire companies and contractors re-stocking their fleets, which had been pared right down at the start of the recession. But now, the improved turnover does seem to be prompted by an upturn in workload within the industry.
“We’re really positive at the moment in terms of outlook,” says Roberts. But he adds, cautiously: “There is no point in popping the champagne corks yet - it is still a very tough, very competitive market out there.”
One of the factors driving this impressive increase in turnover has been the introduction of a new 8t excavator at the top of the Kubota range, which starts at just 0.75t. This machine, which Roberts describes as a “big ticket item”, is an important example of the global strategy that Roberts refers to, as it was developed as a way of driving growth by filling a gap in the market.
Traditionally, the bulk of mini excavators sold in the UK and the rest of Europe are at the smaller end of the range - between about 1.5t and 3t.
Kubota has gradually been extending that range upwards, and in the last few years has built a successful market for 5t and 6t machines.
What Kubota realised a few years ago was that, for real growth, they would need to look outside their core market
Dave Roberts, Kubota
“What Kubota realised a few years ago was that, for real growth, they would need to look outside their core market,” explains Roberts.
“Although there was an established market, it leapt from 6t to 12t or 13t, and they identified a gap there.”
Kubota has an ambitious strategy to double global turnover over a period of just eight years. Roberts accepts that emerging markets are likely to drive a large proportion of the growth - particularly in Asia, where Kubota is focusing much of its efforts - but he believes the UK business should also contribute its share.
“If that [growth strategy] is to succeed, then we need to do that here,” says Roberts. “In isolation the UK is a small part of it, but there’s a lot of these businesses around the world.”
The introduction of the 8t excavator indicates what Roberts sees as a trend to move into larger machines, be they engines, tractors or excavators. But he says the company is also moving into new sectors, such as skid steer loaders and wheel loaders.
One way Roberts may be able to deliver growth in the UK is by helping potential customers understand the importance of considering the total cost of owning each machine, rather than just the initial capital cost.
“If it just came down to price, we wouldn’t be where we are now in terms of being the market leader,” he explains, acknowledging that Kubota machines are not the cheapest on the market.
“From a rental company point of view or for an end user, there are three things that dictate what you buy: the initial buying price, the running cost and the residual value,” he says, adding that Kubota machines may not be the cheapest to buy - but that “you’ve got to be at the races” - but “score very highly” for reliability and durability, ticking all the right boxes for operating costs and for desirability when it comes to selling them on.
“The recession is making people really analyse and micro manage their cost base,” adds Roberts, who believes cost of ownership and/or operation is starting to become a really important issue for fleet owners and people responsible for hiring plant within building and contracting firms.
Increasingly this also means that they are not simply looking for a good deal on the initial price, but wrapping this up as a monthly cost that includes all servicing, warranties and maintenance. If they can compare different manufacturers on that basis, Roberts again says Kubota “scores highly”, thanks to high levels of productivity and reliability.
Roberts has, in his words “a very strong vein of Kubota going through me”, as a result of which he understands the company’s culture and how its Japanese heritage influences the way the company is run.
“I think all of the things you read and the clichés about them being a bit more reserved and conservative have an element of truth to them - for example when it comes to decision making,” he says.
“But it comes out in a positive way in the products: design changes are fewer and further between, and right first time. I’d take that any time.”