From A Bucket To A Track

Jan. 9 (Bloomberg) — Hitachi Construction Machinery Co., Asia’s second-largest maker of earth movers, forecast industry wide demand for excavators will decline more than it estimated as the global recession prompts builders to halt projects. The worldwide market will shrink 15 percent to 17 percent in the year to March 31, worse than the 6 percent forecast in October, Chief Executive Officer Michijiro Kikawa said today in an interview in Tokyo. Demand may slide 10 percent to 20 percent in the next fiscal year with “no sign of a recovery,” he said. Waning sales are forcing Hitachi Construction and bigger rival Komatsu Ltd. to reduce workers, freeze expansion in Asia and slash output. The global financial crisis has spread to the construction industry , triggering a sudden decline in sales in China and emerging markets. “We can’t see the bottom yet,” Kikawa said in his Tokyo headquarters. “It’s unprecedented.” Tokyo-based Komatsu, the world’s largest maker of earth movers after Caterpillar Inc., will halt spending on capacity expansion, Chief Executive Officer Kunio Noji said in a Dec. 19 interview. The company will slash by half spending on facilities used to make building and mining machinery in the next fiscal year, he said. Hitachi Construction will seek to cut prices of steel plates used in its machines to at least the 2007 level as the company needs less of the alloy because of a slump in demand, Kikawa said. Hitachi Construction Machinery is paying 40 percent more for plates for the current year as steel makers had passed on increased costs of iron ore. Hitachi Construction’s shares rose 3.1 percent to 1,225 yen on the Tokyo Stock Exchange today, gaining 18 percent for the week, the most in four. The stock has lost 62 percent in the past 12 months, compared with a 39 percent slide in Japan’s benchmark Nikkei 225 Stock Average. Source.