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Hitachi anticipates a surge in infrastructure spending and a return to manufacturing under Biden’s administration, as the Japanese industrial conglomerate is betting on the U.S. market to drive its next phase of growth.
Keiji Kojima, the new chairman of the group, said Hitachi would hire more digital talent from India to compete in the US after a $ 9.5 billion offer buy GlobalLogic, a Silicon Valley-based software engineering company.
“In general, we believe that the greatest opportunity is in North America. We believe that a large part of the industries, including manufacturing, will return to North America, ”he told reporters Kojima, who was appointed last week.
Hitachi’s U.S. focus comes after years of efforts to transform the large Japanese conglomerate into an IT and infrastructure specialist by merging and selling listed subsidiaries.
With the asset restructuring program almost complete, Kojima said that “the next ten years will be a decade of growth,” as the group aims to expand its Lumada software business worldwide.
The company will increase investment in the US as President Joe Biden launches his $ 1 billion infrastructure plan. Biden has boosted support for the manufacturing industry to help semiconductor companies produce more goods in the US.
Hitachi said in May that its wholly owned subsidiary Hitachi High-Tech would establish one semiconductor research facility in Oregon, where all of its American chip technology would be centralized.
The group has not revealed how much it will spend on the new facility, but Kojima said it would maintain a “close partnership” with U.S. semiconductor companies as the Biden administration increases spending to strengthen its supply chain .
North America is already Hitachi’s largest market outside of Japan, accounting for 13% of its annual revenue.
Prior to acquiring GlobalLogic, Hitachi bought JR Automation, a Michigan-based industrial robotics integrator, for $ 1.4 million in 2019. The Japanese group has said it wants to increase revenue for its companies in this segment. of industry in North America up to $ 200 billion ($ 1.8 billion) in the current year, a rise of 73 billion ¥ three years ago.
Analysts said Kojima’s challenge would be to oversee the integration of GlobalLogic, a costly effort to expand Hitachi’s software business while digitizing its hardware assets. The group’s operating profit margin of 6% also remains low compared to global peers such as Siemens and ABB.
“We still have a lot of product companies, so we have to innovate Hitachi products using GlobalLogic’s digital resources,” said Kojima, who oversaw Lumada’s creation.
He added that the company could carry out additional acquisitions in railway and healthcare companies to fill the gaps in digital capacity.
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