Komatsu America Corp.’s Peoria, Ill.-based division manufactures mining haul trucks for a global market fueled by the international need for iron, copper and other metals and materials.
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Komatsu America Corp. is a mining powerhouse, producing heavy equipment to extract metals and materials throughout the world. While the U.S. housing slump put a damper on stateside copper and iron mining, global thirst for raw materials continued unquenched, driven by the urbanization of China and infrastructure development in India.
“Around the world, appetite for commodities continued to grow as the China and India markets expanded,” says Rod Schrader, executive vice president and general manager of the company’s mining division. “We’ve seen a nice ramp-up in total demand. In turn, this means we got our fair share of the business and can produce more product.”
In 2009, the mining equipment market fell off about 25 percent due to the global financial crisis. The company experienced a bit of a stall in momentum, but it appears to be returning to stride this year. Indeed, it expects demand for its mining haul trucks to return to pre-recession levels for 2011 and 2012. In fact, with Komatsu holding steady during an overall decline in the sector in recent years, the company’s overall market share has increased. “With the demonstrated preference for Komatsu trucks that’s out there, we were able to maintain our production and sales levels while the market was down 25 percent in 2009. As a result, we gained in market share,” Schrader says.
What sets Komatsu apart from some intense competition in the large-capacity dump truck market is its focus on continuous improvement to drive the customer’s production efficiency. The success of the Komatsu trucks in mining operations has made Komatsu the dominant manufacturer of electric drive trucks, which are growing in use in mining operations worldwide.
Komatsu’s largest competitor, Caterpillar, is a giant in mechanical drive trucks, featuring a design not unlike the mechanical transmissions in automobiles. By contrast, Komatsu engineers are experts in chassis design and the integration of electric drives. A large diesel engine turns the alternator, sending A/C electric power to motors in the rear wheels. This means fewer moving parts, less oil needed for lubrication of mechanical components, and a more efficient system.
“The trend in the industry continues to move toward electric drive for off-highway mining trucks. A higher proportion of the overall market in the largest sizes, which we call ‘Ultraclass,’ is now electric-drive trucks. The market agrees with Komatsu that it’s the most efficient, cost-effective style of truck for the mining environment,” says Schrader. Every other mining truck manufacturer makes electric drive trucks, but Komatsu is the biggest and leads the sector. “What sets us apart from other electric drive makers is the quality of our design and manufacturing processes,” comments Schrader. “The other advantage over the smaller competitors is the strength of our distribution and dealer network around the world. We are much more advanced, larger, and more experienced than those other global competitors, from a dealer perspective.”
He notes that the service and parts operations from Komatsu are key to customer satisfaction.
One of three Komatsu’s North American manufacturing facilities is located in Peoria. The other manufacturing operations are located in Newberry, S.C. (which makes wheel loaders, mini-excavators, and forklifts) and in Chattanooga, Tenn. (which produces hydraulic excavators, articulated dump trucks, and forestry products). “But Peoria is the ‘mother plant,’ in Komatsu terminology,” Schrader points out. “It means that our mining division campus is responsible for research and development along with manufacturing. In one facility, we combine the important functions of service, parts, marketing and sales that support our trucks with our customers on a global basis.” (While Komatsu manufactures 150 ton and smaller equipment in other factories, the large electric trucks only come from Peoria.)
From a manufacturing standpoint, Komatsu follows continuous improvement models for advancing production. The Peoria plant was able to improve its production more than 20 percent in the past three years by applying simple activities that focus on quality and on-time delivery of parts and subcomponents required at each stage of the manufacturing process. With this supply chain predictability, the plant was then able to optimize the efficiency of its manpower and processes to maximize throughput of product, from start to shipment to the customer. “We deal with big stuff. So the less time and effort we spend moving it around, the better. We’ve determined how to optimize material flows through the factory, reducing the number of hours for efficiency improvement while also seeing some cost enhancements,” he says.
Komatsu is an expert integrator that gets its diesel engines from Cummins and drive systems from General Electric and Siemens. Structural components like hydraulics, brakes, suspensions, and operator’s cabs are produced in Peoria. Other parts come from additional supplier partners.
“Because of our passion for quality, we build up the truck completely in the factory and test all the systems. It takes longer but ensures a higher quality product is delivered to the customer,” Schrader says. “Once testing is complete, we disassemble it into smaller sections that can be shipped by rail or specialty trucks. A well-written assembly manual assists the distributor in the final construction and checkout of the truck at the mine.”
He notes that 70 percent of sales and distribution are outside of the United States.
TWO NEW TRUCK MODELS
In early 2009, Komatsu introduced two new models, its 960E-1K, a 360-ton payload capacity truck; and the 860E-1K model, a 280-ton payload capacity truck.
For the 860E-1K model, an innovative electric trolley version is also available. Instead of using the electricity generated by the on-board diesel engine, the trucks can also use electricity distributed by overhead lines. This technological innovation creates an environmentally friendly win-win solution. The electricity is generated in clean power plants or hydroelectric stations, and the trucks run faster on trolley power, which increases production and increases the life of the truck.
“When electricity takes over, the engine goes to idle, and that electricity propels the truck up the ramp so you get faster travel speed, lower fuel consumption and lower operating costs because of less wear and tear on the truck,” Schrader says. “From an environmental standpoint, because you are running the engine at lower RPMs, you’re emitting lower particulate and carbon dioxide into the environment.”
Applications for the company’s equipment include iron ore in Australia, metallurgical coal (used in steel production), and oil sands from western Canada, as well as thermal coal in China and the United States used for power generation. Copper mines from Chile and Peru all the way to the North America use electricdrive mining trucks from Komatsu. With some trucks weighing 1,270,000 pounds fully loaded, these are the tools of professional miners and are also used for gold production and conflict-free, open-pit diamond mines.
Komatsu believes that win-win solutions best serve their customers and their supplier base. Komatsu maintains close relationships with all of its suppliers across the production chain. The approach is in keeping with the company’s continuous improvement philosophy.
“Some companies will treat their suppliers as an opponent so to speak and beat them down continually for lower price. We are keen on keeping costs in line and providing the best value,” says Schrader. “Our approach is to work hand in hand with our suppliers and to help them grow in the size of their business and capabilities. As such, we maintain a very close relationship. We meet with them frequently at our facility. We make sure our people are intimately familiar with the details of their operations. We frequently have our experts in purchasing, manufacturing, and engineering in their facilities to help them sell us a higher quality product.”
The on-time delivery of components from Richardson is a good example of the benefits from Komatsu’s relationship building activity. By regularly working together, the two companies have been able to find solutions to issues before they turn into problems. “Genuine passion for the success of our customers drives us to produce high quality products and provide the parts and services necessary for them,” says Schrader, summarizing Komatsu’s keys to success.