18.11.2008

JLG to produce in China

JLG broke ground today for a new manufacturing facility in Tianjin, China, that will build aerial lifts for the Asian market. Tianjin is in northern China south east of Beijing, with good access to the Pacific ports in the Bohai gulf.
Please register to see all images

The groundbreaking ceremony for JLG's new plant

Attendees at the ceremonial groundbreaking included Oshkosh and JLG executives and local officials, including: Dr. Chen Zongsheng, deputy secretary general of Tianjin Municipal Government; Feng Zhijiang, president of Tianjin Airport Industrial Park; and Gao Jixi, deputy director general of Tianjin Municipal Commission of Commerce
Please register to see all images

Craig Paylor helps kick off the excavations

JLG opened a Chinese sales office in 2002, while Oshkosh's Beijing corporate office opened in 2006 and serves as the hub for Asian operations and is responsible for the sale, service, and support of Oshkosh Corporation's products. In March of 2008, Oshkosh opened a Shanghai corporate office largely devoted to the sourcing of parts and components Oshkosh and JLG production plants around the world.

Craig Paylor, president of JLG said: “This new Tianjin facility is a major milestone in our global business expansion and operations strategy. We have chosen to expand in China because we believe the Asian market holds tremendous long-term potential for our access equipment. In many respects, our Asian customers are just beginning to see the tremendous value that access equipment can provide in construction, manufacturing, maintenance, industrial and shipyard applications.”
Please register to see all images

Craig Paylor addresses those assembled at the ceremony

“We are committed to providing the best value to each of our customers individually, customized for their location, application and duty cycle. This new facility will allow us to better supply and support our customers in the region,”

Robert G. Bohn, Oshkosh chairman and chief executive said: "Today's groundbreaking is confirmation of our investment in the future, and a significant opportunity for our customers, as well as the company. This facility will be the first ever China-based manufacturing facility for Oshkosh Corporation. The facility we are building in Tianjin is a strategic initiative to directly service regional customers with a faster delivery turnaround for our JLG brand of aerial work platforms."

"This locally-produced product will give Oshkosh a distinct strategic advantage in a very aggressive, competitive Asian landscape. JLG product made at the Tianjin facility will be targeted for the China and Asian markets and be a complement to other JLG manufacturing facilities which build product for the rest of the world,"

Vertikal Comment

JLG is following rapidly on Genie/Terex-AWP’s heals in setting up an aerial work platform facility in China. Genie broke ground in its new plant on September 20th, although it first announced its intention to do so last year.

More recently Terex announced that it was slowing down the development of its Chinese plant, due to the falling demand levels for aerial lifts. It was probably also sensitive to how opening a new facility in China would look at home, when it was laying off employees in North America and Europe, and putting plants on intermittent shut downs.

Aside from this the market for aerial lifts in China and most of Asia is relatively small, and labour rates in all of the most populous markets are still way too low to stimulate serious aerial lift volumes. There is also an absence of a strong rental infrastructure, a necessity if aerial lifts are to really take off. With these facts in mind it is curious that both Genie and JLG are diving in at this stage.

There is an argument of course that with its huge population and massive capital spending, even with a tiny market penetration can generate significant unit sales, and one day it will of course be huge – possibly the world’s largest market for aerial lifts.

With this in mind being in place early helps a foreign manufacturer to become accepted as a local supplier, while also keeping local upstarts in their place and helping prevent them from becoming too big a force on the world stage.

Perhaps it is the emergence in the past two years of companies like JCHI in China and Junjin CSM in Korea, who are now taking their first run at Europe and the Middle East has sounded the alarm bells in Redmond and Hagerstown?

.