Komatsu to Halve Power Use in 3 Years After Fukushima Disaster

Battling power shortages after last year’s nuclear accident, Komatsu Ltd. (6301) will spend 58 billion yen ($740 million) to scrap aging facilities and become more energy efficient.

The world’s second-largest construction equipment maker’s goal is to save several hundred million dollars a year by cutting its electricity usage in half by March 2015, it said in an e-mail. As part of that effort, it will replace 40 of the 90 buildings at its 12 Japanese plants by 2020.

Komatsu, which derived 84 percent of its sales from outside Japan in the last financial year, produces components domestically for assembly at overseas plants. Japan will remain the most important manufacturing base for Komatsu, Senior Executive Officer Yoshisada Takahashi said in an earlier interview.

“Unless we invest in people, factories and facilities in Japan, new technologies wouldn’t come to our mind,” said Takahashi, who is also head of production.

Japanese firms’ struggles with power shortages and rising fuel costs are adding to the problems they face from lackluster domestic demand and a strong yen, which hurts overseas sales.

“Cutbacks in electricity will be an unavoidable issue for Japan,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. The government should offer power-saving incentives to enable owners of homes, factories and office buildings to boost spending and prop up the economy, he said.

Before the Fukushima accident, nuclear energy accounted for 30 percent of Japan’s electricity production. The nation’s energy mix remains in doubt after Cabinet stopped short of fully endorsing Prime Minister Yoshihiko Noda’s proposal last week to scrap nuclear energy by the end of the 2030s.

To meet its target of cutting electricity usage by half, Komatsu plans to save 10 percent by eliminating wasteful use of lights and air conditioners, said Takahashi. Another 10 percent will come from utilizing natural resources, including solar power for lighting and underground water as a coolant. Production efficiencies will drive the remaining 30 percent, as engineers review the manufacturing process to save more power.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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