'Scott Park' Strategic Base Mexico Factory, Considering Expansion Beyond Loaders

[Financial News] Doosan Bobcat is considering expanding beyond loaders (equipment for loading soil, gravel, and sand) at its Mexico factory. It seems to be readjusting its North American strategy due to tariff impacts. The Mexico factory is a strategic base chosen by Scott Seongcheol Park, Vice Chairman and CEO of Doosan Bobcat. Vice Chairman Park has stated that he will use the Mexico factory as a foundation for long-term growth. In the North American market, Doosan Bobcat's tariff burden is similar to that of Caterpillar and Deere. It has a relative competitive advantage over Kubota and other Korean companies.
According to the industry on the 3rd, Doosan Bobcat recently stated in a conference call that "we are considering moving the sourcing of other products to Mexico in the long term." This suggests an expansion from the existing loader-centric plan to other products.
Doosan Bobcat's main products include compact construction equipment (loaders, excavators, etc.), agricultural and landscaping equipment (tractors, lawnmowers, etc.), logistics equipment (forklifts), and portable generators.
The new Doosan Bobcat factory being built on a site within the Monterrey Industrial Park in Mexico will cover an area of 65,000㎡. Doosan Bobcat is investing 400 billion won (300 million dollars). Construction is scheduled to start in June 2024 and is expected to be completed next year.
Doosan Bobcat plans to produce over 12,000 units of the steady-selling 'M-Series' compact loaders at the Mexico factory for export to the United States. When the Mexico factory becomes operational, Doosan Bobcat's production capacity in North America will increase by about 20%. This is because it produces over 67,000 compact loaders annually at its North Dakota factory in the United States.
A Doosan Bobcat representative stated, "The Mexico factory is progressing well as planned. We are approaching cautiously due to potential changes in the US-Mexico-Canada Agreement (USMCA)," adding, "Since it is a plan to procure products previously imported from Europe in Mexico, we do not intend to delay production in Mexico due to European tariff rates."
Doosan Bobcat stated that it has not excessively stocked parts or finished products in advance to respond to tariffs. The inventory of North American dealers was highest at the end of June 2024. It is gradually being reduced, with the current material handling (MH) inventory being maintained at a level inside four months from 5-6 months at the end of 2024.
Doosan Bobcat is "continuing to focus on U.S. infrastructure investment. We also anticipate corporate tax reduction effects under the Trump administration's OBBBA (Infrastructure Bill). Approximately 40 million dollars annually," it explained.
Kwangsik Choi, a researcher at Daol Investment & Securities, said, "Doosan Bobcat's sales share is 74% in the U.S. and 15% in Europe," adding, "After mutual tariffs are confirmed in the second half, the cost increase burden cannot be fully passed on to the average selling price (ASP), and the profit margin may decrease."
ggg@fnnews.com Kang Gugi Reporter