From Japan, to Chile, via Pennsylvania26 July 2016
Kito Americas is establishing its presence in South America, selling hoists in Chile, Colombia, Panama and Venezuela. While these countries’ economies are closely tied to struggling mining and oil prices, Paola De Pascali reports, the company aims to find alternative sectors such as property and food manufacturing.
Japanese manufacturer Kito’s US subsidiary Harrington Hoists established Kito Americas to better serve customers in Latin America, with a sales and support organisation in the same time zone.
Harrington Hoists is one of the oldest, most established hoist and crane suppliers in the US market today. The company, based in Mannheim, Pennsylvania, has been a supplier of hoist from Japanese manufacturer Kito since 1968. Harrington became a fully-owned subsidiary of Kito Corporation in 1990, making it the sole supplier of Kito hoists in the USA.
“In 2005 Harrington was given the authority to sell its hoists directly to crane dealers in Mexico from Japan,” explains Jim Small, international sales manager at Harrington and Kito Americas. “We started off this business with zero dollars and we were extremely successful over the next five years with a massive growth. In 2011 we decided to establish Kito Americas to improve the service with customers. Until then, they had communication problems with Kito because we spoke by phone or by email due to different business hours between the US and Japan.”
Small explains that they have had representatives from Japan, travelling two times per year, but it was not enough. “Another problem was the delivery time, with two or three months for delivery,” he says. “Our aim was to improve Harrington business strategy, doubling direct relationship with customers.”
Investing their resources in Spanish speakers, Kito Americas could rely on local representatives and engineers.
“We started with Panama along with Colombia and Venezuela because we wanted to move slowly to avoid any disruptions to dealer service from the Kito group.”
“We chose these countries because they are the closest to the US and from an electrical standpoint, these countries have the same electrical voltage and frequency as North America.
“At the beginning we had few customers, so we discussed with Kito representatives from Japan how to increase South American’ sales.” In 2012 Ecuador, Peru and Chile were added to the Kito Americas business. “We took the same philosophy, moving slowly and checking how the market was evolving in this area,” said Small adding that Chile was the last, because they have 380v and 50hz, when it comes to three phase electric. “This is something that we currently can’t provide from our factory in the US. So, we have taken over all the business relationship there. In addition, Chile still gets the electric hoist products from Japan, but all the other products come from factories in the US. We are currently in the process of changing that, planning to ship 380-50 voltage/hertz products over the US. This is a project we are currently working on to better serve our customers.”
In order to support after sales service, they provide training seminars on our products through the “Repair Academy”. This is an in-depth school for maintenance and repair of theirhoist and crane products. “We have several Repair Schools in Pennsylvania and California, where experts can teach users how to inspect products and how to repair them. We invested a lot of money to train customers and this is something that our customers really appreciate.”
With regard to the parts supply, they provide parts of all products from Pennsylvania. Thus, customers don’t need to wait three weeks for delivery, but one week or one day, if necessary.
Small adds: “We supply a complete crane system with the beam. It means our dealers will buy the complete crane system from us except the runway structure. But there is also another option; we can provide components like end trucks, hoist, and control panel. The dealer will find a source for the beam locally and then, they will assemble the crane on their own.”
“South American dealers usually choose the second option because it doesn’t make sense to ship a simple beam so far. Dealers will just buy the key components from Kito Americas and then, will source the beam locally. Sometimes for both US and South America, the dealers may also source their own wiring and panel”. Small also explained as Colombia, Chile and Venezuela’s economies, which are all closely tied to mining and oil and gas extraction, have affected his business in these countries.
“Chile and Peru are related to mining, primarily copper mining and now the cost of copper is so low. Colombia, Ecuador and Venezuela depends on oil and the price of oil is falling in the recent years,” said Small. “Our business has fallen off significantly in the past year and half, of course it’s a difficult time for sales.”
But Small says that they have a new strategy in these countries,looking at areas such as power generation. The countries still need power and are still building, so they can work in building and general manufacturing for the construction industry.
“We want to focus on that, trying to find alternative businesses, as well,” added Small. “When mining is slow, companies will continue to do maintenance on their equipment, which may not include large amounts of equipment, but will still continue to purchase whatever is necessary to keep them up and running.
“For example in Ecuador we have had success not related to oil and mining, but in automotive manufacturing, supplying electric hoists, small-capacity cranes and slinging materials to sites that manufacture engines, transmissions and vehicle bodies. Another case study in South America is the need for food grade equipment where food manufacturing and preparation is done. Our KITO products are used in the food manufacturing industry and they are developed in response to actual on-site feedback and therefore satisfy food grade requirements. Of course we’re trying to do as much as we can in each sector.”
However, Kito Americas encountered another obstacle on its own path that is the difficult political situation in Venezuela. “When we started with Colombia and Venezuela, business was possible, says Small. “But right now, business does not exist there because the government doesn’t assist customers, giving dollars to pay for products. Conversely, we are starting to see more activities in Argentina thanks to recent political changes; I feel that we can have some better growth there.”
Analysing Panama business, Kito Americas has benefitted a lot from the canal expansion.
Small said: “We sold a quite bit of products and we have two dealers for new projects in this area. More products are coming out the US, because some of the large contractors, who supply people in the US, are targeting major projects.” Kito Americas’ plans for the future are to keep adding new products and focusing on Latin America market. “Our aim is to develop new products, such as 380 volt hoists to better serve the market in Chile and Argentina,” urged Small. “Of course we hope that the price of oil and copper will go up, because they currently affect our business, negatively, making our products more expensive on the market. I think that 2016 will be the same as the past years, but we are confident in 2017. We are encouraging dealers to focus on alternative industrial sectors.”
In addition, Small mentioned the recent business development of Kito Americas, which has acquired Peerless Industrial Group. Based in Minnesota, this company supplies chain, overhead lifting, cargo control and traction for the fishing and forestry industry.
“Now Peerless is part of Kito Group, and we have salespeople who are selling their products, says Small. “We decided to combine Kito Americas with Peerless to expand our product offer and to better serve worldwide customers.”
Regarding the general state of the market, Small added: “Currently we have one salesman based in Mexico and only one more in Chile – two in total. As business grows we expect to add more.” Juan Esteban Bluhm, CEO at Acero Comercial Ecuatoriano, described the historical relationship between Acero and Kito.
“Acero is a company with 60 years of work experience in selling and assisting clients with products for construction industry, oil, mining and public sector,” explained Bluhm. “We started selling Kito products more than 26 years ago, before the establishment of Kito Americas.”
Bluhm says that the biggest advantage in being supported from USA than Japan was a better communication and the possibility to get rush orders. “The geographical affinities and the same business hours contributed to improve significantly the service,” he said.
Bluhm says that the price of commodities has affected his business. “When the price of oil came down last year, it affected the whole economy,” he said. “Thus, the government has had to stop spending as much as before. Many companies are also reducing their expenditures, but fortunately the public sector represents the biggest partner for us.”
As a result of the changing market, Acero is also looking at new business areas such as rentals. “We would like to set up a rental department to rent out equipment, among which the Kito products,” Bluhm says.
“We are glad to work with Kito Americas because this company represents the best business partner that we could choose. We believe that this brand can guarantee the best solutions in terms of technology, quality, safety and reliability. It’s not by chance Kito products are appreciated by industrial segments due to the cost benefit obtained in the long-term.”
He has also described a recent sale of Kito products, an electrical hoists approval in an assembly line at Continental Tires in the city of Cuenca. “The hoists have a unique system of braking power thanks to proof design electrical faults, which ensures that the brake will not release unless the engine is running,” said Bluhm. “Such system has minimized the time of stoppage for preventive and corrective maintenance, making it a high quality and reliability hoist. In addition, Kito provides a 10-year warranty.”