Shantui and Manitowoc crane joint venture

Manitowoc and Shantui have signed a joint venture agreement to build cranes in China, IC learned exclusively. Subject to Chinese authority approval, Shantui Manitowoc Crane Company, Ltd will build truck cranes for the domestic and export markets.

Construction equipment manufacturing giant Shantui, part of Shandong Heavy Industry, will hold 51% and Manitowoc 49% of the new joint venture entity. It will be structured so that Manitowoc is responsible for design engineering, manufacturing engineering, plant and product quality, which will follow the approach taken in other Manitowoc factories around the world. Shantui will handle operations, financing and purchasing, plus the domestic distribution.

“It is a very important tactical and strategic move for us. We have a great fit with this company. Shantui is one of China’s leading manufacturers of earthmoving equipment and the company is looking to develop its presence in the country’s mobile crane market. Similarly, Manitowoc has been developing its own presence in the Chinese truck crane market and we are now ready to move to the next stage of development with a stronger and larger partner,” said Eric Etchart, Manitowoc Cranes president.

“I am very pleased with the co-operation between the Shantui and Manitowoc teams to create a new company that leverages the strengths of both,” said Jiang Kui, president of Shandong Heavy Industry Group.

During its massive recent growth the Chinese market has migrated west to new markets in remote provinces. “Getting access for distribution was critical. To build a distribution network from scratch in China in all those new provinces was really very difficult for us so the primary driver behind the joint venture was really the strength of Shantui and its distribution network,” Etchart explained.

“Secondly, we have said in our strategic plan that we need to be strong in China. To get to that we knew that we needed to change our existing partner and team up with a large company familiar with the Chinese market. Shantui is an established company with great production quality and well trained employees,” Etchart said, “It has a world class manufacturing philosophy and is a good fit for us.”

Another reason for the new partnership, Etchart explained, is that although the Grove brand name in China is famous, it is in the niche AT market, so teaming up with Shantui and using both brands is going to speed up the acceptance of the Grove product, especially in China.

“If you want to be a relevant in a market the size of China you need to achieve at least a 10% market share so that is what we want to shoot for in the truck crane business. There are many players and it is a very competitive market. We have to move it up from our current share of about 1% to 10%. I believe it is a reasonable target for the joint venture given the strength of Shantui,” Etchart said, “A three to five year timeframe for this is reasonable, to get us into the top five in the truck crane market.”

Etchart went on to explain further benefits of the joint venture. “To partner with Shantui was very compelling because of the association with Shandong Heavy Industry and Weichai Power.” Within the group is production of components, including engines, axles and gearboxes used in truck cranes. One issue for which Manitowoc was penalised in its other joint venture was that it didn’t have a carrier licence in China. A subsidiary in Weichai Power is a chassis manufacturer, Shanxi, so Manitowoc will now have access to that.

Manitowoc’s existing truck crane manufacturing joint venture partner, Tai’An Dongyue Heavy Machinery, is selling out and Shantui is coming in, with additional investment. The cranes will be manufactured at the current joint venture facility built in 2007 in Tai’an, about an hour from Shantui headquarters in Shandong Province. Approval is anticipated around May or June 2013.

Four truck cranes will be available initially; GT8, GT10, GT20 and GT25, 8 to 25 tonnes capacity. Three are models from the existing, 2008, joint venture and the largest one, the 25 tonner, will be new, to be followed by a new 55 tonner and other new models in the 70 to 100 tonne capacity range, Etchart said.

Distribution in China will be via Shantui’s extensive dealer network and Manitowoc truck crane dealers. Grove all terrain and rough terrain cranes in China will also be available exclusively from Shantui dealers. Branding in the domestic market and in export markets managed by Shantui will be Shantui Grove while Grove Shantui will be the brand for export markets managed by Manitowoc.

Export markets for the truck cranes are being divided up according to the strength of each manufacturer’s existing presence. Manitowoc has the USA, Brazil and other parts of the Americas, Europe, India, Australia, New Zealand, Singapore and the Middle East. Shantui has Africa, Russia, the so-called ‘Stan countries and most of South East Asia.