Machinery makers struggle through financial crisis

China’s largest construction-equipment makers are under downward pressure to consolidate as the industry struggles with overcapacity, The Wall Street Journal reported, citing a top executive. Guangxi Liugong Machinery (SZ.000528) President Zeng Guang’an warned that a consolidation in the industry was imminent as production is cut and companies step up efforts to sell more equipment. “We have too much investment. We need more consumption,” Zeng said in a recent interview. “In China, we are going to slowly change the structure of our economy,” he said, alluding to top-down efforts to stimulate domestic consumption. The heavy machinery industry has slumped during the global financial crisis, with Liugong’s third quarter net profit falling 85% to US$3.3 million. Zeng blamed the crash on high inventories, bad debt, overcapacity and an excess of second-hand machines.