‘China is our fastest growing market,’ says Knut Stewen, maintenance service director at Konecranes Shanghai. ‘Double digit sales growth is being driven by industrial growth and our company profile in the market. We have made big efforts to promote the company and it has paid off.’
The company reported 2004 sales of 149.4m Euros, which made it, for the first time, larger than the company’s Nordic and Eastern European markets.
According to Stewen about 50% of Konecranes’ sales are to foreign companies and joint ventures and 50% of sales are largely to local companies.
Most local companies are large government-run enterprises and large private firms, particularly steel mills and aluminium plants, pulp and paper mills, power plants, heavy electrical factories and general manufacturing enterprises.
‘They buy Konecranes hoists as these are high quality products,’ Stewen says. ‘If Chinese companies have big finance, they want to be world class and buy the best equipment like machine tools, compressors and cranes. They look at what commitment you have in China.’
Meanwhile, one difference when comparing China with most other crane markets today is the large number of multi-crane projects which are being awarded in China. Customers buy more cranes in one single order in China than in many other countries, due to the number of completely new plants that are being built. Orders of 40 to 50 cranes are common, with orders up to 70 cranes being received occasionally.
‘Foreign companies are investing here to set up complete new plants,’ Stewen notes. ‘These are completely fitted with everything new. In the United States and Europe, existing companies just buy some extra cranes.’
One reason for the large investment in new plants is that, in addition to the new production capacity being built, heavy industry is being moved out of a number of cities as part of government efforts to clean up city centres and reduce urban pollution.
In fact, factories and other heavy industry formerly located in the centre of Beijing already have been moved out of the capital to new industrial estates, freeing up the old factory sites for the government to use to build facilities for the 2008 Olympics.
‘Government and private companies are moving site to new industrial zones. The government offers them money, so do the banks,’ Stewen says. ‘They shift their plants and want everything new. Usually the heavy industries move – especially in the north and northeast of China. In Shenyang there were a lot of factories close to the city that have moved out. The government wants to clean up the cities.
‘We have a strong indication that this trend will go on for a while. Foreign investment will continue in China; but the Beijing Olympics heavy industry move is done.’
Second hooks
Stewen says that sales of industrial cranes are mainly of 10t models but that 30t units also are selling well.
‘This is typical for a developing country where industrial capacity is being built. We do not sell many big cranes in developed countries where there is industrial development already,’ Stewen says. ‘We expect sales of 10t and 30t cranes to continue. Our 30t cranes are being used by the automobile industry and metal companies such as aluminium and copper processors.’
Ten tonne cranes are used for general manufacturing by customers such as glass manufacturers, machine shops, and pulp and paper mills. Construction machinery companies also buy larger cranes.
‘Generally we supply the same hoist products in China as elsewhere; but in China we have discovered for the past two years EOT cranes with two hoists on the same trolley; the main hoist and an auxiliary hook,’ Stewen says. ‘This is very common in China, but we heard from customers that it is because it is available, as Chinese hoist companies do not make this. For us it is a standard product.’
‘The Chinese customers for this product generally are heavy machinery companies that need an auxiliary hook for turning a lifted item in the air. Typically it consists of a 20 ton main hook and a five ton auxiliary hook common. Heavy machinery manufacturers – generation, transmission, machine tool makers and motor engine makers – buy this.’
While China’s rapid industrial growth has been keeping Konecranes busy, the company has been monitoring the impact of the Chinese government’s decision in May 2004 to impose credit restrictions on investment in various fast expanding industries as part of overall attempts to prevent the economy from overheating.
The impact has been small on Konecranes’ business. Stewen noted a number of very large projects, which previously had been approved, have been delayed but not cancelled.
‘Funding was reviewed for some projects and the companies could not get funding according to the original schedule. We have followed the situation carefully and now some aluminium projects have been approved and will follow the original schedule. Our client base is diverse, so we are not affected by the credit controls.
“We bid for 70 to 100 projects a year for special and heavy cranes; which is just part of the market. Most of our projects are in East China including Beijing, Shanghai, Xiamen in Fujian province and Guangzhou in Guangdong. Chongqing is a growing area for Konecranes.’
Cranes used in power plants and to lift transformers are normally 200t to 300t units. Hydroelectric power stations require the heaviest units with cranes up to 400t supplied.
Recent special cranes orders
‘We are growing so fast. Each year we are doubling our sales,’ says Konecranes special cranes area director, Taisto Jarvinen. ‘This year we have had an order from Namsan Aluminium Corporation for six heavy process cranes and 40 industrial cranes. The cranes were ordered for a plant expansion in Shandong province. The heavy process cranes include one 75t unit, two 120t units and one 150t crane. The industrial cranes ordered ranged from 5t to 40t each.’
In the pulp and paper sector, United Paper Mills of Changshun in Jiangsu province, about 100km west of Shanghai, recently ordered 10 process cranes for a plant expansion. Two 120t cranes were ordered for installation on the paper machine while another 120t unit was installed for the winder. Two other 100t cranes were used for the calenator.
United Paper Mills also ordered two 6t, automatic roll storage cranes. ‘These are fully automatic with paper rolls that are picked up by vacuum,’ Jarvinen says. ‘We delivered a storage administration system as well. The paper is used for printing paper.’
Hen Yang transformer factory is one of three transformer manufacturers to have ordered heavy cranes from Konecranes recently. Jarvinen says that Konecranes was asked to deliver two 300t cranes to use in tandem to tandem lift high voltage transformers weighing up to 600t per unit. In addition, the customer ordered four 50t cranes for use in erecting the transformers in the transformer erection hall.
Other pulp and paper plant hoist orders have been received from Hebei Pan Asia, Hua Tai No 11 paper mill and Asean Pulp and Paper of Ningbo. Asean Pulp ordered three 130t cranes plus one 80t service crane.
Other special projects include supplying cranes for waste to energy power plants. ‘We do automatic crane systems to supply waste to the power plant,’ Jarvinen says. ‘Guangzhou automated grabbing cranes are handling 1,000t a day.’
