The biggest in the world14 November 2006
Stuart Anderson visits the biggest mobile crane manufacturer in the world
In the first half of 2006, Xuzhou Heavy Machinery Co. Ltd. - the crane making division of XCMG - manufactured and sold over 4,000 truck cranes of between 8t and 200t capacity, giving it a share of about 54% of the approximately 7,500 such cranes produced in China between January and June.
XCMG is, of course, much more than a crane manufacturer. XCMG is China’s largest manufacturer of construction equipment with 2005 sales of about RMB 17bn ($2.1bn) and group products range from wheel loaders to compaction equipment. In 2005, 94% of XCMG’s production was sold domestically, with just $120m being exported, but this is changing rapidly.
XCMG is also highly vertically integrated, manufacturing not only
its crane carriers and crawler undercarriages but also swing bearings, hydraulics, axles, load moment indicators and slew bearings.
In many cases XCMG developed its products by acquiring know-how through licenses or joint ventures with the likes of Caterpillar (excavators), Liebherr (telescopic cranes and concrete mixers), Putzmeister (concrete pumps), Alvin Meritor (axles), PAT (LMIs) and Rothe Erde (Slew rings). The crane licence with Liebherr was entered into some twenty years ago and involved 1980s technology but you would not know that looking at XCMG’s latest all terrain crane line up!
In October 2005, after a long auction process managed by J. P. Morgan and involving two rounds of bidding and six international bidders, Xuzhou City Council agreed to sell 85% control of Xugong Construction Machinery Group (XCMG) to the Carlyle Group of New York for RMB 3bn ($375m) in cash. That should have been the end of one story and the beginning of another but the ‘deal’ has become a lightning rod for political policy discussion within China and, remarkably, over a year later has still not been ratified by the Chinese central government.
Initially standing between Carlyle and ownership of XCMG was the Chinese Government’s ministry of finance and commerce (MOFCOM), which halted the deal to investigate assertions that it might create a monopoly and be damaging to other Chinese manufacturers of construction machinery. MOFCOM requested an anti trust report from Carlyle, along with guarantees that it would not sell the business or create a monopoly. As the political debate became front-page news in China, the Xuzhou City Council was described by the Chinese central government as (merely) ‘supervisors’ of this ‘state-owned business’. In June, China’s State Council issued a statement that key Chinese equipment makers should be domestically controlled and said: “Big and important equipment producers must seek the opinion from relevant (government) departments of the State Council if they want to sell stakes to foreign investors”.
At the same time Xiang Wenbo, CEO of Sany Heavy Industries, publicly and fiercely denounced the deal via the internet and said that Sany would pay 30% more than Carlyle for XCMG. Sany, China’s largest privately owned manufacturer of construction machinery, then recruited Guosen Securities as its financial advisor to prepare a rival bid. Meanwhile Carlyle, while obviously frustrated by this turn of event, announced “We have a definitive agreement with XCMG on the purchase of Xugong that was announced in October 2005. Since then both companies have continued to develop their strong relationship and commitment to the successful completion of the transaction.”
During the past 3-4 years XCMG has transformed itself and its product line. Like other leading Chinese crane makers, the pace of development at XCMG is reminiscent of the frenetic pace last seen during the formative years of the crane industries of the US, Europe and Japan. However, unlike those of the 60s and 70s, the engineering departments of today's Chinese crane industry are armed with all the latest computer aided tools and staffed by young, alert and well educated Chinese engineers. For XCMG a key milestone was the introduction of the first K-Series truck cranes in 2002, which set a new standard of sophistication and performance in the Chinese market. Now the company has eleven K-Series truck cranes of 16, 25, 30, 35, 50, 65, 70, 100 and 130-tonnes capacity. However, the XCMG crane line still reflects a variety of technologies with several different boom profiles, upper and carrier designs. Boom designs range from simple four-pate welded rectangular thru formed hexagonal similar to earlier Liebherr designs to fully rounded booms. From 50-tonnes up, the rounded shapes are preferred.
Amongst the most impressive truck crane units are the K5 series models of 25 and 35-tonnes capacity with five section booms of 38.5m and 39.6m () length respectively. The largest truck crane is the 130-tonne capacity QY 130K which carries a six-section “U Shaped” 58m (ft) pinned boom manufactured from Swedish Weldox 960 high-grade steel employing a single telescopic cylinder and remote latching system. The crane is powered by a 162 kW Volvo turbocharged diesel and the 12 x 8 x 8 wheel drive/steer carrier travels at highway speeds of up to 70 km/hr thanks to a 390kW Mercedes Benz Euro III electronic injection diesel driving through a ZF Tronic automatic transmission. The unit features sophisticated electro-proportional crane controls and a CAN-Bus system and for extra reach a three stage 11.55 to 28m swingaway jib providing up to 88m maximum tip height. However axle loads in travel configuration reach as high as 12,700kgs.
Having entered the crawler crane sector ten years ago when domestic demand was extremely limited, XCMG is now rapidly developing a full line of lattice boom crawler cranes to meet the tremendous growth being experienced in this sector in China. The range of models of 35, 50, 100, 150 and 300t capacity has already been bolstered with new 220 and 260t models and larger models of 450 and possibly 600t capacity are near to introduction.