Hitachi has targeted strong U.S. growth in Biden’s infrastructure plan

Hitachi predicts a wave of infrastructure spending and a return to manufacturing under Biden’s administration, which the Japanese industrial conglomerate is betting on in the U.S. market to guide its next phase of growth.

Keiji Kojima, the group’s new chairman, said Hitachi will take on more digital talent from India to compete in the United States after a $ 9.5 billion deal to buy GlobalLogic, a Silicon Valley-based software engineering company.

“Overall, we believe the biggest opportunity lies in North America. We believe that a large portion of the industry, including manufacturing, will return to North America,” Kojima told reporters, who was appointed last week.

Hitachi’s U.S. focus comes after years of efforts to transform the Japanese conglomerate into an IT and infrastructure specialist, merging and selling listed subsidiaries.

With the asset restructuring program almost complete, Kojima said that “the next 10 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 United States, while President Joe Biden will spread his $ 1tn infrastructure plan. Biden has vowed to support the manufacturing industry to help semiconductor companies produce more goods in the United States.

Hitachi said in May that its wholly-owned subsidiary Hitachi High-Tech set up one semiconductor research facility in Oregon, where all of its U.S. chip technology would be centralized.

The group did not disclose how much it will spend for the new facility, but Kojima said it would have a “close partnership” with U.S. semiconductor companies, as the Biden administration increases spending to strengthen its supply chain.

North America is already the largest Hitachi market outside of Japan, accounting for 13 percent of its annual revenues.

Prior to acquiring GlobalLogic, Hitachi bought JR Automation, a Michigan-based industrial robotics integrator, for $ 1.4 billion in 2019. The Japanese group said it wants to increase its companies ’revenues in this segment of industry in North America to 200 billion yen ($ 1.8 billion) in the current financial year, a growth from 73 billion ¥ three years ago.

Analysts said Kojima’s challenge would be to monitor 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 percent remains even low compared to global peers such as Siemens and ABB.

“We still have a lot of product companies, so we need to innovate Hitachi products using GlobalLogic’s digital resources,” said Kojima, who oversaw Lumada’s creation.

He added that the company could make additional acquisitions in railway and healthcare companies to fill gaps in digital capacity.

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