Chinese machine production is expected to increase again this year — by 7.4%. Interestingly, that’s a slowdown in expansion, from 7.9% growth in 2013, according to the quarterly tracker for Chinese Machinery Production from IHS.
When I wrote about China’s equipment-manufacturing growth almost five years ago (www.plantservices.com/china1 and www.plantservices.com/china2), researchers were predicting that machine-building behind the Great Wall would surpass that of any other country by 2011. As we head down the homestretch of 2014, China has now set its sights on building and hosting the world’s largest machine. The reigning goliath, CERN’s Large Hadron Collider (LHC) near Geneva, Switzerland, fired its first protons on Sept. 19, 2008, and it’s taken China six years to declare its intent to build a bigger beast.
At Beijing’s Institute of High Energy Physics (IHEP), scientists are hopeful to have a 52-km underground Higgs factory built within the next 15 years. For reference, that is double the size of the LHC ring at CERN.
While Chinese leaders are taking measures to keep the economy stable with a series of mini-stimulus programs, moderate growth is the new norm for machinery production. The IHS study shows downward revisions to the 2014 and 2015 forecasts for China. In 2013, industries such as construction machinery, metal cutting, and metal working struggled with overcapacity. Because of weak investment, heavy industries, including mining machinery and crane and hoists, declined. The plan for IHEP’s collider could help to revitalize China’s machine-building economy, but it’s just the first step toward a next-generation super proton-proton collider in the same tunnel.
That is quite a long-term stimulus package, but the short-term outlook in China includes some additional opportunities.
The new norm for China’s industrial structure will be driven by domestic consumption. “Many domestic manufacturers are keen to master the key technology through acquisition from international suppliers,” says Jay Tang, analyst, industrial automation, for the Asia Pacific region at IHS. “Some domestic manufacturers are becoming active in the international market.”
|Mike Bacidore is chief editor of Plant Services and has been an integral part of the Putman Media editorial team since 2007, when he was managing editor of Control Design magazine. Previously, he was editorial director at Hughes Communications and a portfolio manager of the human resources and labor law areas at Wolters Kluwer. Bacidore holds a BA from the University of Illinois and an MBA from Lake Forest Graduate School of Management. He is an award-winning columnist, earning a Gold Regional Award and a Silver National Award from the American Society of Business Publication Editors. He may be reached at 630-467-1300 ext. 444 or firstname.lastname@example.org or check out his Google+ profile.
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But first Chinese machinery producers will need to reduce their outdated capacity, explains Tang. China’s production capacity exceeds the demand in many industries. Reducing the excess capacity will be a main mid-term trend. For example, China produced 2.4 billion tons of cement in 2013, but the demand is only 2.3 billion tons. China produced 2.5 billion tons of steel in 2013, but the demand was only 2.1 billion tons, says Tang.
In the wake of a 30-year growth period, the Chinese economy has entered post-industrialization, which begins the shift from manufacturing to services, explains Tang. This includes equipment lifecycle management and attention to upgrades through software such as ERP, MES, PLM, and CMMS/EAM. “The increase in the use of software is a trend because Chinese manufacturers are trying to implement industrial upgrading,” says Tang. “This means more investment into developing the product design ability and manufacturing precision.”
Upgrades also are occurring in the equipment’s ability to communicate. More Chinese manufacturers are taking measures to promote the smart factory, to meet the goals of the industrial upgrade strategy, explains Tang. And often, maintenance and equipment reliability practices are being implemented to enable that. “For example, OEMs are installing sensors in machines for monitoring the condition of components or equipment, installing motor drives or replacing general ac motors with servo systems, and using more automation components in machinery to increase the manufacturing precision and reliability,” he says.
This growing focus on asset healthcare and upgrades could spark even bigger developments behind the Great Wall.