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Hitachi canceling massive expansion

Hitachi Construction Machinery will freeze plans to build $1 billion worth of new plants in China and Asia, Bloomberg reports.

The effects of the global financial turmoil have spread to China and emerging nations, where Hitachi and rival Komatsu Ltd. previously expected sustained growth to mitigate sales declines in the U.S., Europe and Japan. As recently as Oct. 28, Hitachi was expecting 26 percent growth in China sales this fiscal year.

Now Hitachi has suspended a plan to boost output capacity in China by 25 percent to 15,000 units after the excavator market there shrank 50 percent in November and 37 percent in December from prior year levels. China’s 4 trillion yuan ($585 billion) stimulus package, which aims to expand road and railway infrastructure, won’t likely benefit the industry as quickly as executives at Hitachi initially hoped, with the market expected to shrink next fiscal year, Kikawa said.

Asia’s two largest makers of earthmovers are halting overseas expansion and shedding temporary jobs, and their bigger U.S. rival Caterpillar Inc. is cutting executive pay as much as 50 percent to pare costs.

Hitachi was last seen here last week with a gloomy forecast for excavator demand.

I can’t help wondering about the two new facilities Caterpillar has announced in the past four weeks.

Anybody else remember the steel skeleton that stood for years next to Interstate 74 when the Morton parts plant expansion got stopped dead in its tracks by the early 1980s recession?

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Tom Mangan posted at 9:48 pm January 12th, 2009 |