China's Economic Austerity Policies Foreign Construction Machinery Enterprises To Survive Difficult

Online, October 30, 2012 (Newswire.com) - The third quarter of this year, China's GDP growth rate of 7.4%, reaching the level of the lowest growth rate since the past three years. Is expected this year, China's economic growth rate slipped to 7.7% from 9.3% last year. This makes the market feel concern that may be caused by the global economic slowdown, in particular, suffered a recession in Europe, under the background of the U.S. economic recovery is weak.

Construction machinery industry and national infrastructure, real estate investment is closely related to, associated with the national policy. Since last year the state adopted a series of tightening policy in order to curb inflation, leading to a lot of projects because of funding problems are "stuck" so that the construction machinery industry downturn. The rapid decline of the Chinese market, forcing other countries exporters suffered winter.

Engine manufacturer Cummins (Cummins) earlier this month lowered operating income is expected, and at the end of the year because of the weak demand from China, is expected to lay off 1000 people to 1500 people. The world's leading metal recycling company SchnitzerSteelIndustriesInc due to the decline in exports to China have laid off 300 people, equivalent to 7% of the total number of employees. And this week, the world's largest mining and construction machinery manufacturer Caterpillar said the decline in sales in China, and global earnings guidance for 2012 will be lowered.

Layoffs has caused a shock such as mining, heavy machinery, and scrap metal (Scrapmetal) industry. Analysts pointed out that, as the world's second-largest economy, China's economic growth rate continued to slow down, it will be a wider range of the U.S. economy pose a risk.

Europe's largest engineering group Siemens, Germany's BASF, the world's largest chemical manufacturers, United Technologies and Japan's Hitachi Seisakusho have recently said that the impact of China's economic slowdown is not small. Hitachi said its first quarter more than 40% of the decline in sales of construction equipment in China, adding that this year, I am afraid there will not be improved much. "people believe that China's construction equipment market at least until January next year will be back to warm, but not just that people are so, Komatsu and Caterpillar this," Hitachi executive vice president ToyoakiNakamura said.

Komatsu and other foreign-funded enterprises, including 23 vendors excavator sales since May last year, has been lower than the previous year. Even so, in order to meet the construction machinery in the peak season demand before and after the Spring Festival, the Chinese manufacturers from the end of last year started to increase production. Insiders, however, said that "sales were lower than expected, the stock increased dramatically.

Komatsu President Kunio Noji prior to the conference call, did not hide their own fears about the future, said the highly competitive Chinese market sales, declining market share in the expected ". Joint sales for the fiscal year is expected to decrease by 1%, than for a rich man in early predictive value was 1.97 trillion yen, down 130 billion yen.

Emerging economies, the slowdown in demand also spread to other companies. Hitachi Construction Machinery fiscal year 2012 (ended March 2013), operating profit down than the previous forecast of 6 billion yen, an increase of 31% over the previous fiscal year, to 72 billion yen. Kobe Steel subsidiary Kobelco Construction Machinery FY12 recurring profit is also expected to reduce by 52%, only 11 billion yen.

Although the Chinese government is taking a cut in interest rates and other monetary easing measures, but that "as long as the construction of infrastructure such as direct investment does not start, it will not stimulate demand for construction machinery Komatsu Noji president. Komatsu Chinese demand is expected to return to growth have to wait until spring next year. Mining machinery, it is difficult to expect coal prices to rebound, demand recovery.

Caterpillar (Caterpillar) has reduced production in China, United Technologies also lowered its OtisElevatorCompany sales forecast, the main reason is weak demand.

In fact, the deterioration of the performance of the major construction machinery manufacturer, mainly due to the rapid decline of the Chinese market. China's demand plummeted, the current inventory of manufacturers is increasing dramatically. While promoting infrastructure investment trends in China, but to deal with the backlog of inventory is not enough. Many in the industry believe that the production recovery of local factories have to wait until after next year.

China's construction machinery giant Sany Group Chairman Tang Xiuguo full of expectations that sales will start to recover in the second half of this year. However, competition from cheap Chinese enterprises dealing with inventory becoming hotter is also not ignore the fact, the strength in the future vendors competing will be more and more intense.

Beginning in late May, the Chinese government speed up the approval of investment in infrastructure and equipment investment projects. June and July 2 consecutive months introduced cut interest rates and other economic stimulus, but the intensity is smaller, and the effect is not obvious. Japan Kobelco Construction Machinery Company "projects are indeed commenced, but it works on the construction side less, use 1 ~ 2 years ago to buy the machinery is enough to deal with, so the newly purchased machinery willingness weak".

Judging from the current situation, the future integration of the construction machinery industry is inevitable. Because after four trillion government investment policies in 2008, has attracted many companies involved in this industry, so businesses are more and more, the future of the industry will definitely happen integration.