Komatsu builds a sustainable future through innovation

Construction sites worldwide are beginning to look different. Remote-controlled excavators now dig up soil, and autonomous haul trucks remove it. Sensors let operators gather data on the machines‘ conditions and see if any parts need changing. Such technologies have driven Komatsu Ltd. to achieve further global growth, establishing its position as the world’s second-largest maker of construction machinery, after Caterpillar.

Komatsu, which now generates about ¥490 billion ($3.3 billion) in annual group operating profit on sales of ¥3.5 trillion, has grown based on its corporate philosophy, including the “Komatsu Way,” its guiding principles for action. The creeds it spells out developed as parts of the corporate culture over a long time, and in 2006 they were written down to help them permeate broadly among the staff. The Komatsu Way explains the strengths of Komatsu and the beliefs supporting these strengths, covering a wide range of themes from leadership to monozukuri (production) and brand management. It is now available in 13 languages.

When Komatsu celebrated the 100th anniversary of its foundation in 2021, it decided to sow its corporate beliefs more thoroughly among its workers. The main background behind this is that it has become a global firm with more than 60,000 workers, around 70% of whom are not Japanese, and this has increased the need to present the direction Komatsu is heading in a way that is easy to understand for its diverse employees and stakeholders. Its buyout of Joy Global Inc., a Wisconsin-based maker of mining equipment, in 2017 also was an impetus.

Komatsu’s corporate purpose, as written on its website, is “Creating value through manufacturing and technology innovation to empower a sustainable future where people, businesses and our planet thrive together.” And its website also explains about its corporate identity. “We had the founding principles and the Komatsu Way for a long time, and now we have our corporate identity, which is an easy-to-understand, systematic presentation of our purpose and values established in 2021, along with other existing ideas,” said Mitsuko Yokomoto, a director and the senior executive officer supervising human resources, education and sustainability at Komatsu. The interview was part of a monthly series by Naonori Kimura, a partner for the consulting firm Industrial Growth Platform Inc. (IGPI).

The company’s foundation dates back to 1921, when Meitaro Takeuchi started an ironworks company to develop mining equipment for a copper mine in the Ishikawa city of Komatsu. The entrepreneur — an older brother of future postwar Prime Minister Shigeru Yoshida — aimed to develop local industries, even after the mine later closed down, because he knew that enriching a country requires industry and human resources. In the corporate culture passed down from that foundation era, the company has pursued quality and reliability, and made efforts to build strong relationships of trust with stakeholders. Based on this history, the Komatsu Way was born, and Komatsu presented four values in 2021: ambition, collaboration, perseverance and authenticity.

Komatsu has had to overcome a series of crises on its own. After World War II, the machinery maker survived fierce competition with Caterpillar, the first operating deficit in 2001, the global financial crisis sparked by the failure of the U.S. investment bank Lehman Brothers in 2008 and the Great East Japan Earthquake in 2011. Through the experience of overcoming the crises, the company created a culture where workers can find business opportunities through innovation and developing new value in manufacturing and technology, which further strengthened and company, Komatsu says.

“With this independent spirit and ability to turn crisis into opportunity, we have always had a strong will to make a strong company that would grow even more. And this will is still being nurtured by the Komatsu Way,” Yokomoto said.

More than two decades ago, the company invented a revolutionary service called Komtrax, an Internet of Things system that lets operators remotely access condition and location information on construction machines equipped with sensors and Global Positioning System devices, relayed via satellite. The innovation was backed by the Komatsu Way concept of aiming to provide new value that is far superior to other companies’ offerings.

The growth strategy defined in the current midterm management plan (fiscal 2022 to 2024) has three pillars: 1. accelerate growth by means of innovation; 2. maximize earning power; and 3. enhance corporate resilience. Central to the innovation is its DX Smart Construction, which introduces advanced technology to overall operations. It measures land with drones and creates three-dimensional geographic data for analysis and planning. This process is followed by actual construction, inspected via drones. Besides this, Komatsu has already introduced autonomous haul trucks, bulldozers and excavators equipped with functions for automatically controlling their blade or bucket. And Komatsu is working to further increase the levels of automation and autonomy in equipment and to expand its lineup.

As for the second pillar, Komatsu continues to maximize its business opportunities with machinery that has urban civil engineering specifications in growing markets such as other parts of Asia. Part of the third pillar of enhancing resilience is cultivating human resources. While top managers frequently talk about the corporate purpose and future strategies, employees share their targets as key performance indicators, Yokomoto explained. Even though it can be hard to quantify elements relating to personnel, education and sustainability, the company has long believed that human resources are important, and that part of employees’ identities comes from contributing to society through the business, she said.

Deploying its technologies and expertise, Komatsu in 2008 started programs to help Cambodia remove land mines using its machinery and otherwise aid the country’s restoration for community development purposes. These were just part of its activities to contribute to the regions where it does business. As of April 2023, it had removed 4,272 land mines from 4,355 hectares of land, built 10 elementary schools in some of those now-safe places, turned 80 hectares to rice and cassava farmland and used its bulldozers to make 48 reservoirs as infrastructure development in the country.

Other projects include free-of-charge lending of machinery to aid areas hit by natural disasters, regenerating forests on mountains that had been mined in North America and planting trees to widen green spaces in China and Indonesia.

“It is part of our philosophy to contribute to society through our business operations. We also want to make contributions by using the knowhow and strengths we have developed in our business,” Yokomoto said.