New Kobelco JV to build crawlers in China

Japanese manufacturer Kobelco will build a crawler crane factory in China as part of a joint venture with Chenggong Construction Machinery Co., Ltd. (CG).

The agreement, to be signed in October 2010, will form the Chengdu Kobelco Cranes Co., Ltd., partnership of which Kobelco will own 51%. It will start production in August 2012, concentrating on Kobelco's existing 250 tonne capacity CKE2500 model.

Kobelco said Yen 2 billion (US$23.3 million) will be invested in the new plant and it aims to produce 80 crawler cranes a year by 2015 to meet about 7% of total demand in China. According to the manufacturer, the annual Chinese market for crawler cranes is about 700 units, with worldwide demand reaching 2,500.

"CG has been a partner with Kobelco Construction Machinery Co., Ltd. for many years and has a deep understanding of Kobelco's manufacturing methods. To make a full-scale entry in China, where Chinese construction equipment makers are rising, Kobelco Cranes came to the conclusion that teaming up with CG was essential to keep investment costs down and to quickly enter the market," said a Kobelco spokesman.

Kobelco's new plant will be in the Chengdu Economic & Technological Zone in Chengdu, Sichuan Province, adjacent to CG's new plant, to which it will move in 2011.

This will be Kobelco's second overseas manufacturing plant, following its new facility in India which will start production in October.

"The world market for crawler cranes temporarily dropped following the financial crisis in autumn 2008, but has begun to pick up again. The Chinese market is currently supported by strong demand from sharply rising infrastructure investments. Demand is steadily growing, and over the medium- to long-term future, it is expected to continue expanding. Development of the western region is underway, especially in the inland region of Sichuan Province. Kobelco is targeting its 250 tonne class crawler cranes, in which it excels, for this market," added the spokesman.