Kobelco opens US$ 125 million Chinese factory

December 23 saw the official opening of Chengdu Kobelco's new factory in Chengdu, Sichuan Province, China. The new facility in the city's Longquan District Economic & Technological Development Zone has doubled Kobelco's excavator production capacity compared to the previous factory and added +20% to its mini excavator manufacturing capabilities.

This equates to the capacity to build 5000 excavators per year and 2400 mini excavators - 7400 machines in total from the facility that has a gross area of 31.8 Ha.

As well as producing more machines, Kobelco also plans to use the new CNY 850 million (US$ 125 million) factory to produce a wider range of machines in China for the Chinese market.

At present the company's Chinese-built excavators span the 20 to 30 tonne classes, but this will be expanded to include models around the 13 to 14 tonne classes as well as heavier units around 46 and 48 tonnes. The same applies to Kobelco's mini excavator offering, which will be increased from the single 7 tonne Chinese-built machine to include locally manufactured 5.5 and 6 tonne machines too.

According to Kobelco, the expansion is expected to see its sales from the Chengdu factory increase from about CNY 6 billion (US$ 882 million) anticipated for 2009 to CNY 10 billion (US$ 1.47 billion) in 2011.

Underlining the significance of the Chinese market for Kobelco, the company said that in the first half of the 2009 fiscal year (starting on 1 April 2009), some 64.4% of its sales were derived from developing markets in Asia - predominantly China. Sales in China itself were up +49% in the six-month period compared to the start of fiscal 2008.

The excavators manufactured at the Chengdu plant are Kobelco's Acera Geospec series, a range that was originally launched in Japan in 2006 and feature engines compliant with European Stage IIIA and US Tier 3 exhaust emissions legislation. These models consume as much as -20% less fuel than the Stage II/Tier 2 Dynamic Acera range. Indeed, the 7- and 13-tonne models were recognised with prestigious 2008 Good Design Awards from the Japan Industrial design Promotion Organisation.

Long history

Kobelco has had a presence in China since 1994, when it formed a joint venture with local wheeled loader manufacturer Chenggong to build excavators. In that first year it made just 50 machines, although that was a reasonable number at the time, with the Chinese construction equipment market just a fraction of the size it is today.

The plant was expanded in 1998, while late 2003 saw Kobelco break ground on another excavator plant in China, this time in the eastern city of Hangzhou, Zhejiang Province. Following the expansion in Chengdu, Kobelco now has the capacity to build 12000 mini and full-sized excavators in China per year.

According to Kobelco, the market for all sizes of excavator in China last year was about 66000 units. The company says its sales were around 7500 units, including machines imported into China as well as those built locally - an 11% share

According to Kobelco Construction Machinery President & CEO, Shigeto Kotani, the company has grown its market share in China over the last year, but jokingly said how this was achieved was "the company's secret."

Kobelco Construction Machinery executive vice president Kazumitsu Takiguchi added that the company's main markets over the last year had been infrastructure and real estate projects, accounting for 70% of its sales.