Caterpillar expects demand for excavators in China to improve but not close to the 201012 peak period
Caterpillar expects demand for excavators in China to improve but not close to the 2010-12 peak period.

Caterpillar Forecasts Lower Chinese Demand for Equipment

Caterpillar warned this week that it does not expect Chinese demand to recover to the peak years of 2010-2012, according to several media reports quoting comments by Tom Pellette, the Caterpillar group president for construction equipment. The comments were made in response to China’s economy recording its slowest growth rate since 2009 in the third quarter because of declines in construction and manufacturing that many economists believe have not hit bottom yet.

The forecasts by Caterpillar highlight China’s efforts to re-balance the economy away from manufacturing and investment and towards consumer spending.

Despite the headwinds, Caterpillar remains optimistic about the long-term future for its business in China, in large part because the urbanization of the country is likely to continue. Also the Chinese government plans to double gross domestic product and its income base between 2010 and 2020.

Pellette said industry-wide sales of hydraulic excavators between 10 and 90 tonnes will total about 23,000 machines in China this year, compared to more than 112,000 in 2010.

Pellette told the Financial Times that he expects the market to improve compared to current levels, globally as well as in China, but not to 2010-12 levels. Caterpillar, which recently announced a decision to lay off more than 10,000 workers, has not announced the extent of its planned reductions in China.

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