Kubota setting up regional R&D centre in Thailand

 

The company yesterday announced it was setting up its first research and development centre in the region with an investment of Bt600 million.

Hiroshi Kawakami, president of Siam Kubota Corporation, said the move would be in line with the company’s plan to double its sales to more than Bt90 billion within the next five years, up from Bt46 billion posted last year. Established in August 2010, Siam Kubota is a 60:40 joint venture between Kubota Corporation and Siam Cement Group. However, Kubota agricultural products have been sold in Thailand for almost 37 years.

Kawakami said the company expected its export contribution to increase significantly from 30 per cent to 40 per cent in the next five-year period, mainly driven by the company’s strong penetration into Myanmar, Laos and Cambodia.

“Thailand’s complete immersion into the AEC [Asean Economic Community] at the end of this year will pose a big challenge for Siam Kubota,” he said. “There will be more competitors but also opportunities due to a bigger marketplace, which will translate into more customers. 

“The most challenging part is how we plan to maintain our leading position in the market. We must then focus on product and service research to learn and further understand different customers in all Asean member countries.” 

Located on 14 rai (2.25 hectares) in Navanakorn Industrial Estate, Pathum Thani, the R&D centre’s construction will start in July, and it will begin operations next April.

Kawakami said the R&D centre would strengthen the company’s capability as a manufacturing base for agricultural machinery for export to many markets, especially in Asean.

The centre will help Siam Kubota develop agricultural machinery appropriate to Thailand and other particular markets in Asean, especially Laos, Cambodia and Myanmar, countries that play a crucial part in the company’s exports, which grew by 1.5 times last year.

 

Unit in Myanmar next year 

“We set up sales and marketing subsidiaries, namely Kubota Cambodia Co Ltd and Kubota Laos Sole Co Ltd, in Phnom Penh and Vientiane last year. Next year, we will open a sales and marketing subsidiary in Myanmar, which will be in line with our sales and marketing network expansion in the region,” Kawakami said.

He said Thailand was a more advanced market for agricultural machinery than neighbouring markets. Myanmar, Cambodia and Laos are in the early stages of adopting agricultural mechanisation to replace traditional methods using manpower and animals. Most farmers in those markets have been utilising small machines such as diesel engines and power tillers. However, the trend towards using modern machinery can be seen, mostly in contract-farming groups for commercial purposes.

“Siam Kubota is a leading company in the agricultural-machinery market in this region and we have realised the importance of R&D for machinery and particular product development. Among Asean countries, there are some differences in customer behaviour in particular countries based on different types of agriculture and business activities. The R&D centre then will play an important role to ensure that our products and services will fit in with customers’ needs and requirements in all particular markets in Asean.”

He said the R&D centre would also benefit the company in terms of having a better understanding of the market and economic situations and customer requirements. It will also provide the company with better understanding of how to develop outstanding products and services to surpass those of its competitors and increase customer satisfaction.

Siam Kubota operates two major manufacturing facilities in Thailand, at Navanakorn Industrial Estate and in Amata Nakorn Industrial Estate in Chon Buri.

Receiving promotional privileges from the Board of Investment, Siam Kubota’s first factory was set up at Navanakorn to produce agricultural diesel engines and power tillers, with annual capacity of 100,000 and 130,000 units respectively. The second factory at Amata Nakorn, which opened about seven years ago, produces tractors, harvesters and rotary tillers, at annual capacity of about 50,000, 7,000 and 34,000 units respectively.

Kawakami said almost 90 per cent of the content in Siam Kubota’s tractors was made in Thailand, and only 10 per cent imported from its headquarters in Japan. The company four years ago opened a factory for tractor engines at 304 Industrial Park in Prachin Buri.

He said about 30 per cent of the company’s production in Thailand was exported to many markets around the world, of which one-third went to Cambodia, Myanmar and Laos, and the rest to Vietnam, Indonesia, India and Australia. It also exported parts to Canada. Siam Kubota expects its export contribution to increase significantly to about 40 per cent of total revenue within the next five years.