OREANDA-NEWS. Hitachi, Ltd. announced that it has decided to transfer its elevator and escalator business in Japan and integrate it with Hitachi Building Systems Co., Ltd., a wholly owned subsidiary, on April 1, 2014.

The purpose of this restructuring is to strengthen and expand the elevator and escalator business in Japan. Specifically, Hitachi will use a company split to transfer the design, manufacturing and sales divisions related to elevator and escalator business in Japan operated by Hitachi in-house company Urban Planning and Development Systems Company to Hitachi Building Systems, which handles sales, installation, maintenance and refurbishment.

The Urban Planning and Development Systems Company will now focus on global corporate functions and development oversight functions in the elevator and escalator business, while the respective businesses in Japan, China  and Asia will be conducted by Hitachi Building Systems, Hitachi Elevator (China) Co., Ltd. and Hitachi Elevator Asia Pte. Ltd. as regional headquarters.

Certain disclosures and details have been omitted as this transaction is a company split transferring businesses from Hitachi to its wholly owned subsidiary.

The global elevator and escalator market is forecast to see higher demand going forward, particularly in emerging markets such as China and India, which account for approximately 60% of demand for new elevators and escalators. Hitachi established Hitachi Elevator (China) in 1995 in Guangzhou, Guangdong, China, and Hitachi Elevator Asia in 2010 in Singapore as the regional headquarters for China and Asia respectively, and is working to expand business globally in this field. Recently, Hitachi has been promoting the standardization of production management systems, which were different in each country and region, as well as strengthening manufacturing globally. Meanwhile, in Japan Hitachi's Urban Planning and Development Systems Company, which is responsible for the development, design, manufacture and sale of elevators and escalators, has been working to develop business with Hitachi Building Systems, which handles sales, installation, maintenance and refurbishment. Amid lackluster demand for new elevators and escalators in Japan in recent years, Hitachi has been taking steps to strengthen the refurbishment business, since there are an increasing number of elevators and escalators due for modernization.

In addition, Hitachi is concentrating on the Social Innovation Business, which aims to provide IT-enhanced social infrastructure on a global basis.

At the same time, Hitachi is working to improve the efficiency and speed of fundamental tasks and decision-making through the Hitachi Smart Transformation Project, with the goal of transforming Hitachi into a global major player. Recently, Hitachi has been pushing ahead with efforts to create a simpler, highly functional organization that focuses on strategy formulation and implementation, and on making proposals and providing support to executives. The aim is for Group Corporate divisions to drive Hitachi Group activities for promoting the Social Innovation Business.

Through this company split, Hitachi will transfer the design, manufacturing and sales divisions related to elevators and escalators of the Urban Planning and Development Systems Company to Hitachi Building Systems to realize integrated management. In this way, Hitachi will be able to provide one-stop solutions extending from manufacturing to sales and services. Moreover, this move is intended to optimize management resources and increase cost competitiveness. At the same time, by strengthening the refurbishment business, which is expected to see higher demand going forward, Hitachi aims to expand and reinforce the elevator and escalator business in Japan. Meanwhile, the Urban Planning and Development Systems Company will focus on global corporate functions, including global business oversight of the elevator and escalator business, and development oversight. By supporting regional headquarters for Japan, China and Asia and strengthening governance, this in-house company will develop global strategy models and promote overall optimization of manufacturing, thereby expanding business.