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26/11/2012

XCMG boosting capacity

First Publishedon www.DailyNews-Online.com/Bauma-China
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2012
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XCMG machines from Venezulea
XCMG won a huge order for machines from Venezuela, with this consignment of cranes being one of the final batches for delivery

Increased manufacturing capacity has been a key focus for XCMG in recent years, with the firm having committed to upgrading its production facilities.

XCMG has invested heavily in new manufacturing capacity for its ranges of cranes and wheeled loaders and both the Heavy Machinery and Wheeled Loader divisions now have new factories.

The heavy crane facility produces machines in the 90tonne category and above and all production moved to the new plant in 2012 as the old factory was too small. The new facility can produce over 2000 cranes/year and commenced operation in June 2012. Around US$317 million (2 billion RMB) was invested in the factory, which is still being fully commissioned but when it is complete, the firm will be a serious player on the world market.

Looking at XCMG’s new wheeled loader factory it is important to appreciate the sheer scale of the operation, which can produce up to 40,000 machines/year. The company buys in engines and transmissions, although it also has a joint venture partnership with Doosan for diesel engines. Some of the axles are made in the factory, although most are imported. Customers in China have a choice of a number of locally-made engines, such as Suchai, Weichai or Yuchai as well as Chinese made Deutz or Dongfeng Cummins, or imported power units from companies like Cummins. Engine choices vary but each machine is available with an option of 2-3 power units.

XCMG employs around 25,000 in Xuzhou and has a major presence in the city, while the company has seen a huge increase in export sales in a short period, from US$40 million in 2011 to an estimated $80 million due for 2012. Further overseas sales growth is expected in due course. Zhao Qing Sheng is director of the marketing group at XCMG and explained that particular success was achieved with a deal to supply machines to Venezuela for its oil industry. The firm also won a major order in Angola a few years ago for truck cranes and wheeled loaders.

Other overseas sales increased 20-30%. Zhao said, “We’ve focussed on Brazil, Chile, India, Indonesia, Iran, Kazakhstan, Malaysia, Russia, Saudi Arabia and Singapore.”

The company exports a significant percentage of its production run and fully intends to boost this level.

“In India and Brazil we compete with domestic manufacturers but in Russia we compete with Western and Japanese manufacturers. Our target this year is for US$1.6 billion of exports.”

He explained that the type of competition however varies and in some developing countries there are strong sales of secondhand machines made in western nations, as well as new equipment from other Chinese firms.

XCMG’s divisions are strong in certain export markets, with truck cranes and crawler cranes making up much of the business in India, Iran, Kazakhstan, Russia and Saudi Arabia for instance. Meanwhile the wheeled loader business is strong in Argentina, Brazil, Chile, Kazakhstan, Russia and South East Asia, as well as some African countries including Algeria, Angola and Ghana. Zhao said that the Iraqi market shows potential but the firm is still looking for suitable dealer support in this territory.

Zhao said that the company is a leader for exports in China for machines including truck-mounted cranes, pavers, wheeled loaders, and graders. He added, “Export sales are more important but it is not enough.”

The home market remains important and the company claims a strong market position in China with its truck cranes in particular ahead of its nearest competitors, although in crawler cranes it has had to be content with being the second largest supplier. Competition for XCMG is strong from other Chinese firms also and most particularly LiuGong, Sany and Zoomlion.

XCMG has still to fully integrate the German Schwing concrete pump business it acquired earlier this year and the plans for the marketing strategy have still to be revealed. However Zhao said that the firm may opt to keep the Schwing products for international sales into developed markets with the XCMG range for China and developing markets.

But XCMG is bullish about the future. New models will be launched at bauma China and the company is releasing information about its plans closer to the show.
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