A Komatsu BX50 forklift.

Komatsu Ltd's board of directors will merge the Japanese company's forklift and small construction equipment manufacturing subsidiaries on April 1.

The merger is expected to capitalise on the subsidiaries' manufacturing synergies and help Komatsu boost its small equipment business.

Komatsu Forklift Co Ltd, in Minato-ku, Tokyo, had 3,434 employees and consolidated sales of JPY123,086 million (USD1.02 billion) for the financial year ended March 31, 2006. The company manufactures and sells forklifts and logistics equipment.

Komatsu Zenoah Co Ltd, in Kawagoe-city, Saitama, had 1,877 employees and consolidated sales of JPY97,950 million (USD811.1 million) for the financial year ended March 31, 2006. It manufactures and sells construction equipment, hydraulic components and outdoor power equipment.

Komatsu Ltd had been aiming to create greater synergy in its manufacturing processes, a company statement said. Komatsu Forklift's forklifts and Komatsu Zenoah's mini construction equipment products were similar in size and weight. Both companies produced similar product volumes.

After the merger, Komatsu Forklift, the surviving company, would change its name to Komatsu Utility Co Ltd. The company's planned line of business would be "research and development, manufacture and sale of Komatsu Group's small equipment", the Komatsu statement said.

Head office would be Komatsu Forklift's current office. Komatsu Ltd product division's current president, Susumu Isoda, would be Komatsu Utility Co Ltd president.

"Komatsu Utility Co Ltd will retain [its] existing sales and service network and continue to use the name 'Komatsu Forklift'," the statement said.

The subsidiary reorganisation, excluding the sale of Komatsu Zenoah's outdoor power equipment business, would not affect Komatsu Group's consolidated results, the statement said.

Komatsu Ltd is negotiating to sell Komatsu Zenoah's outdoor power equipment business to Husqvarna AB, of Sweden. Komatsu Zenoah's hydraulic component business will be integrated into Komatsu's engines & hydraulics business division on April 1.

After the merger, Komatsu companies that conduct forklift and small construction equipment business in Japan and overseas will be under Komatsu Utility Co Ltd's control.