Komatsu, the second largest construction equipment manufacturer and one of the most important suppliers to the Japanese Ministry of Defence, has discontinued the development and construction of armoured vehicles.
For a limited period of time, Komatsu will continue with its ongoing production of the NBC reconnaissance vehicles, maintenance and repair for the existing armoured vehicles fleet, a Komatsu spokesman said. According to industry sources, Komatsu also laid off all its military advisers, most of whom were retired generals of the Japanese Self-Defence Forces (JSDF).
In 2018, Komatsu was the seventh largest supplier to the Ministry of Defence (MoD), supplying products and services worth a total of JPY2.8Bn. However, this represents only 1.1% of Komatsu’s consolidated net sales, which amounts to JPY2.5Tr in 2018.
For some years, ammunition and detonators for tanks, howitzers, mortars, etc. accounted for two thirds of Komatsu’s overall turnover and one third of its armoured vehicles. In recent years, however, orders for armoured vehicles have declined.
The engine of the LAV had to be adapted to the new emission regulations and the MoD instructed Komatsu to modify the LAV. In 2016, the MoD requested JPY300M for the improved version of the LAV; however the Ministry of Finance rejected this request as overpriced.
The unit price of the LAV was JPY30M to JPY35M, about three times as expensive as other foreign competitors such as the VBL. The unit price of the new LAV version was JPY50M. When the MoF asked for a cost reduction, Komatsu considered using overseas engines like the Cummins. However, the idea was not accepted by MoD. Komatsu then developed another improved version and a 6×6 version of the LAV on its own, which was also rejected by the MoD.
For the record, on 27 July 2018, the MoD announced that the procurement of the 8×8 WAV (Improved) or WAV-In armoured wheeled vehicle to replace the Komatsu 96 8×8 APC used in the GSDF, which had been discontinued. While the MoD declared that Komatsu was unable to uphold the quality of its armour, an industry source said that the problem was not only armour, but also mobility, certain services as well as overall quality.
These problems with LAV and WAV-In were the reason why Komatsu was unable to maintain its production line for armoured vehicles. This was probably the trigger for Komatsu to withdraw from the armoured vehicle business.
The GSDF plans to replace the LAV and the soft skinned High Mobility Vehicle with one vehicle. Mitsubishi Heavy Industries, Hitachi and another large automotive company have all expressed interest in the programme, an industry source said. Komatsu does not intend to participate in this programme.
And Komatsu’s the ammunition business also looks bleak. Japanese National Defence Programme guidelines for 2019 to 2028 state: “We currently have 600 tanks and 500 artillery pieces, but in the future, we will reduce them to 300 tanks and 300 artillery pieces.”
This means that Komatsu’s ammunition business will be halved. To make matters worse, Komatsu had developed precision-guided artillery ammunition for the GSDF, but then abandoned development. Although the JSDF has not yet introduced precision-guided ammunition, it plans to do so in the future and import it from abroad. This will further reduce Komatsu’s sales and make it more difficult for Komatsu to maintain its production line. The MoF has criticised the exorbitant price of Japanese ammunition and said that there are too many small players on the field, suggesting a reduction in the number of ammunition suppliers.
In short, it is very likely that Komatsu will withdraw completely from the defence business.