Hitachi is buying JR Automation, a Holland, Michigan-based industrial robotics integrator, for $1.425 billion. The acquisition is expected to close by the end of 2019. When the deal closes, Hitachi will acquire all shares in JR Automation held by U.S. private equity fund Crestview Partners.

JR Automation, founded in 1980, designs and builds custom automation equipment and provides services in the automotive, aerospace, medical device, pharmaceutical, food processing and construction industries. JR Automation has about 2,000 employees and had sales of about $600 million in 2018.

Hitachi is looking to tap into JR Automation’s robotics integration expertise and customer base, which will also help Hitachi’s growing internet of things (IoT) business.

“Securing JR Automation’s robotic systems integration business in North America is an important milestone for us,” says Hitachi Executive Vice President Masakazu Aoki. “By providing customers with new value that combines Hitachi’s products, [operational technology], IT, and advanced digital technologies, we will accelerate the global rollout of our Social Innovation Business.”

Hitachi also recently completed the acquisition of KEC Corporation, a Japanese robotic systems integrator. The image below illustrates how Hitachi sees its recent acquisitions working together.

Growing Hitachi’s IoT business

Hitachi has an IoT platform called Lumada that helps customers turn their workplace data into insights to drive digital innovation. Hitachi has made a string of IoT-related acquisitions in recent years. For example, in December 2018 Hitachi announced it was acquiring 80.1% of ABB’s Power Grids unit for $11 billion. Hitachi plans to close the purchase in the first half of 2020, making Power Grids a consolidated subsidiary. Hitachi has entered into a purchase option to acquire the remaining 19.9% stake in Power Grids and make the business a wholly-owned subsidiary.

“In the manufacturing and logistics fields, there has been a growing demand for automation because of decreased working age populations, intensifying global competition, and further quality improvement requirements to prevent significant product recalls,” Hitachi points out in its announcement of the JR Automation deal. “As a result, the global robot-based automation market continues to expand, with a high average growth rate exceeding 10% per year.”

JR Automation also recently made some acquisitions. In April 2018, JR Automation acquired Setpoint Systems, a Littleton, Colo.-based integrator of building automation solutions and Setpoint, an Ogden, Utah-based amusement park ride designer. And in June 2018, JR Automation acquired fellow industrial robotics integrator ESYS Automation.

Since JR Automation was acquired by Crestview in 2015, it grew from $170 million in sales and five production facilities in North America to more than $600 million in sales and 23 facilities worldwide.

“We are very excited to partner with Hitachi to take this next step in the company’s evolution,” said Bryan Jones, CEO, JR Automation. “With our combined capabilities, Hitachi and JR Automation will be a uniquely qualified global leader in next generation smart manufacturing, and this partnership will enable us to continue to drive tangible value creation for our customers through innovative custom solutions.”