Hitachi invests US120million to strengthen China operation

Hitachi will invest JPY 10 billion (US$120million/€90 million) over the next three years to expand its Chinese operation.

The investment will be used to boost annual excavator production capacity in the country from 20000 to 30000 units, as well as to open four parts and service locations and strengthen its dealership network in the country.

Akihiko Hiraoka, the recently appointed managing director of Hitachi's Chinese business, Hitachi Construction Machinery (Shanghai), told KHL that he was confident of continued growth in demand for excavators in China. "China government development initiatives are very concrete and detailed. At least another five years of infrastructure development is required."

He said Hitachi had forecast that sales of excavators in China by foreign manufacturers would reach 76000 units this year, but that the actual figure was closer to 100000. He forecast that Hitachi's excavator sales would grow by around 15% in 2011.

In addition to investing in its existing facility, Mr Hiraoka said Hitachi would strengthen its component supply chain to eliminate potential production bottlenecks in China. For example, consideration is being given to acquiring Chinese component suppliers. "Japan can no longer be the only source of components", he said.

Hitachi makes excavators in the 6 to 87 t range in China, but will increase the range to include 120 t models by the end of next year.

At Bauma China the company showed an all electric version of the scrap handling unit, the 36 t Zaxis 360LC.

Mr Hiraoka said much of the design work for the electric model was done in China and the machine is being targeted at specific applications in China including demolition, waste handling and work in chemical plants. The first customer is a Shanghai scrap handling company.