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05 December 2023

Hitachi freezes expansion plan

By Staff Writer

Hitachi Construction Machinery Co, the world's largest maker of giant excavators, will freeze a $1 billion (Dh3.67bn) plan to expand production in China and other emerging markets as the deepening recession damps demand.

The two-year investment in capacity expansion will be put on hold, Chief Executive Officer Michijiro Kikawa said in an interview. Industry-wide demand for excavators is on pace to fall 25 to 30 per cent in the six months to March 31, and may slide another 20 per cent next fiscal year, he said.

"I've never before experienced seeing sudden, simultaneous drops in worldwide demand," Kikawa said in an earlier interview in Tokyo. "New investment won't be implemented until we can foresee how the market will recover."

The effects of the global financial turmoil have spread to China and emerging nations, where Hitachi and rival Komatsu Ltd previously expected sustained growth to mitigate sales declines in the United States, Europe and Japan. As recently as October 28, Hitachi was expecting 26 percent growth in China sales this fiscal year.