TOKYO — Hitachi Construction Machinery will downsize its plant in China that manufactures midsize and large hydraulic shovels in order to improve the profitability of the operation.
The Hitachi group company Thursday announced plans to close the No. 2 factory at its Hefei plant in Anhui Province by March of 2017, reducing the plant’s annual capacity to 35,000 excavators from the current 50,000.
Hitachi Construction built the second factory in 2011 in anticipation of a further expansion in China’s market for excavators. But the market soured instead and the factory was mothballed without ever being fired up.
The Japanese company revealed Thursday that its overall sales in China declined 6% in the April-September half compared with the same period last year, hurt by the currency-exchange rate. Nevertheless, it believes demand has bottomed out and now projects sales to grow 15% for the full year, rather than fall 6% as previously forecast.