Hefei plant has reduced average production rates to 25% during the first weekly suspension, half the level a year earlier. The plant, set up in the eastern Chinese province of Anhui in 1995, has capacity to make 30,000 excavators a year.
“We had expected Chinese demand to pick up in the October to December quarter,” Tsujimoto said. “Given accumulated inventories and machine utilization, the market is unlikely to grow as we had thought.”
The company, which gets 16 percent of its sales from China, and rivals Caterpillar Inc. (CAT) and Komatsu Ltd. (6301) have cut production in the world’s biggest construction equipment market. While Tsujimoto said demand may recover in the first quarter of 2013, the pace of growth wouldn’t be fast enough to fill the “huge” capacity added by Chinese and foreign suppliers.
In July, Hitachi Construction Machinery forecast industry sales of excavators built by foreign suppliers in China will drop 20 percent to 56,000 units in the year to March 2013, following a 37 percent slide the previous year. The government’s tighter monetary policy has cooled the construction boom and curbed sales at Hitachi and Komatsu since the April to June quarter of 2011.