Komatsu seeing rebound in Chinese machinery sales

JIJI

Komatsu Ltd. President Kunio Noji said in a recent interview sales by the construction machinery maker in China are showing signs of recovery.

“Month-on-month changes in sales of 6-ton or larger hydraulic shovels in China have become plus since October, and the operating rates at its construction machinery plants are also recovering,” he said.

Noji revealed a plan by Komatsu to promote consolidation of production bases in Japan to improve output efficiency and maintain domestic production.

China is an important market that has grown drastically even after the global financial crisis triggered by the Lehman Brothers collapse in 2008.

However, demand from China has receded sharply since the beginning of this year as a result of monetary tightening by Chinese authorities wary of a possible collapse of the country’s property bubble.

Monthly sales volume of hydraulic shovels briefly suffered year-on-year falls of 50 percent or more, but the drop slackened since October. The market for used shovels in China has also begun to pick up steam, Noji said.

“The point is whether full-fledged demand will return after the Chinese New Year in early February,” he said.

Although the operating rates of Komatsu plants are low amid the global economic slowdown, the company achieves a profit margin of better than 10 percent thanks to high production efficiency.

Komatsu hopes to further raise its operation efficiency to keep manufacturing business in Japan, Noji said.

The company plans to consolidate plants by investing ¥30 billion to ¥50 billion to rebuild aging small and midsize factories into newer, larger ones.

Komatsu will also review production lines and cut annual spending on electricity to ¥3 billion, from ¥5 billion to ¥6 billion now.