Komatsu Ltd.'s customers in China are reluctant to buy construction equipment because they are unsure when building projects will start, underscoring the challenges the Japanese supplier and its peers face in a market that is cooling more than expected.
"Things in China are tougher" than previously forecast, Chief Executive Officer Tetsuji Ohashi said last week in an interview at the company's Tokyo headquarters. "Customers themselves are unsure of the timing for the start of construction works. It feels like they'll wait to buy machinery until after they see that projects are underway."
Komatsu's concerns in China mirror those of Hitachi Construction Machinery Co., which last week said excavator demand this quarter is running almost 50 percent below year-ago levels. In response to conditions in China, Komatsu is reducing labor costs, while Hitachi is cutting stockpiles by operating Chinese plants at half capacity.