How Heavy Machinery Enterprises Get Out of the Ice Age

It is understood that the development of China's heavy machinery industry has slowed since 2009. Among them, the increase in mining machinery and material handling machinery has dropped by more than half. Many small and medium-sized enterprises are close to closing. Given the current problems faced by heavy machinery enterprises, what can we do to succeed in the “cold ice period”?

First, we must focus not only on small and micro enterprises but also on large and medium-sized enterprises. For example, Dalian Heavy Machinery Co., Ltd. has a total of more than 50 small-sized enterprises. If Dalian heavy machinery fails, these companies cannot live. Large enterprises have a pulling effect on economic and social development. The state can formulate guidelines for the development of heavy equipment manufacturing planning and focus on building one or two international-type group companies.

Second, it is hoped that the identification of the first (set) domestic equipment, the risk compensation mechanism for use, and the compensation measures for encouraging development will be introduced as soon as possible to support the development of major technical equipment for the first set of heavy machinery.

At the same time, it is recommended that the proportion of technical reform investment support in the national industrial policy be increased to 30% to 50%. At the same time, major technical equipment related to national security should be given a policy of extending the equipment depreciation period. And let major technology and equipment enterprises enter the military high-end research and development fields, give play to the advantages and capabilities of these leading enterprises in the civilian field, and contribute to the development of national defense construction.

Third, due to the late start of the heavy equipment manufacturing development in China, the lack of trust in domestic equipment recommended the introduction of relevant policies to encourage the central enterprises to give priority to the purchase of equipment manufacturing central enterprises, and included in the performance assessment. It is also recommended that relevant state agencies continue to grant the purchase of domestically-manufactured equipment credits for the policy on corporate income tax and encourage enterprises to purchase domestic equipment.

Fourth, it is recommended to strengthen market planning, prevent redundant construction, and strictly control the repeated construction of industrial enterprises by means of administrative examination and approval.

At present, the state has not made sufficient plans for the development of heavy equipment. Users of major technical equipment are often industries with monopoly characteristics such as electricity, metallurgy, petrochemicals, and railways. These monopolies often expand their own equipment manufacturing systems, causing unfair competition and increasing excess capacity due to redundant construction. Measures should be taken to solve the drawbacks of the second manufacturing system.

Some non-industry enterprises have also newly built low-end heavy equipment manufacturing companies and have been blindly expanded. For example, most of the steel industry has a machinery manufacturing company. The railway construction company has built a shield machine manufacturing plant. The result is a large excess of low-end capacity (manufacturing capacity only), capacity deflation and disorderly competition, and shopping prices.

5. At present, China's manufacturing, design, and general package sectors are each heavy machine companies that are involved in the manufacturing process. They have high costs and thin profits. Therefore, it is recommended that companies can use investment methods to complement each other's advantages and integrate resources. If the iron and steel metallurgy research institute with the qualification of the general contractor is combined with the heavy machinery company, the R&D production efficiency and product profit will be greatly increased.

The heavy machinery manufacturing industry in developed countries in the world has gradually entered the direction of “big manufacturing” in the service industry. In the last century, Germany merged two major heavy machinery companies, Mark and SMS, into SMS Siemag in Manchester, retaining only its important manufacturing image. The development of China's heavy machinery enterprises today also requires the creation of a group with "big manufacturing" capabilities.