As with any other company operating in the UK, Kubota is having to navigate the murky waters of Brexit. But through this uncertain period, Kubota is focused on delivering reliable machinery.
David Hart, the managing director and vice president of Business Transformation at Kubota UK is taking it in his stride. He has been with the equipment and engine manufacturer for just over a year, having previously worked at John Deere for 28 years – the last seven as the company’s regional leader for strategic and key account management, covering Europe, the Near Middle East, North Africa and CIS.
“We don’t know what we don’t know. That’s the situation we find ourselves in,” says Hart.
Kubota finds itself second-guessing what the economy is going to do. Will the UK construction market continue to struggle as the residential market slows, or might there be a sudden upturn as pent-up demand finds expression after Brexit? Kubota does not want to reduce its inventory only to find that it cannot then take advantage of such an upturn.
“It’s very unsettling, but to the point where we can’t worry about it anymore,” Hart says. “We just have to continue. We’ve got a workforce that we need to employ, we’ve got dealers that rely on us, and we’ve just got to continue the best way we can.”
The company has little choice but to push on, yet it’s costing multiple millions of pounds to prepare for the possibility of a no-deal Brexit.
When questioned about the company’s direction in terms of innovation, Hart draws the focus back to uptime of machinery. You get a real sense when talking to him that while innovation is something that the company is working hard to achieve – primarily with its new innovation centres in Japan and Europe – the company’s focus is to be reliable to the core.
“When we’ve got a hire industry within the UK that perhaps takes up to 70% of our types of product, innovation is one piece of the puzzle, but actually the uptime piece is of more interest to them because they’re renting machines to customers and every time a machine breaks down that actually costs the rental company money,” says Hart.
“The reason that the rental market in the UK is as strong as it is, is because the residual value is where a lot of these businesses make their final margin, by selling it when they get it back after it’s been on rental,” says Hart.
He adds, “Residual value is nearly more important than the initial purchase price, because that gives you the cost of ownership. If you have a reasonable or fair initial purchase price and you have a good residual value, the cost of ownership is unbeatable.
“If, after three or four years, the machine doesn’t need a full overhaul, then you know the residual value is going to be far greater,” says Hart. “Reliability is the key in all of this. And I think Kubota has got a very good track record of having reliable machines and reliable engines.”
Commenting on the uptake of new digital technologies, Hart suggested that, until recently, customers have not demanded an advance in technology because there has not been the economic pressure over the past 40 years to optimise the products.
However, this is changing as global economic headwinds pick up, prompting people to look at equipment that is sitting unused on construction sites and ask how more could be achieved with fewer assets.
“I think if we go through a tough period economically, that’s when you’ll start to see that the telematics side of the business needs to actually advance quite quickly because they’ll need to make sure that they’re getting the most out of that asset,” says Hart.
Aftermarket services were also singled out by Hart as an increasingly important part of Kubota’s offering.
Based on his wealth of experience in the industry, Hart said that when it comes to agricultural equipment, aftermarket services are the engine of dealerships. The construction equipment industry is not at the same level.
“I think the construction business is still built very much on the whole goods being sold at the front end, and then it’s a necessary evil to do the service and parts. But I think, in the future, if we’re to be successful and grow our market share, we need to lead in the aftermarket segment,” says Hart.
In this way, Hart hopes to grow Kubota’s market share in the up-to-8-tonne excavator sector from 30 to 40%.