Manitowoc has completed the sale of its 50 percent interest in its Chinese joint venture Manitowoc Dong Yue Heavy Machinery Company, to its partner, Tai’an Taishan Heavy Industry Investment.
The joint venture was created in March 2008 for the production of mobile and truck-mounted hydraulic cranes – see: Manitowoc buys into China. A number of new models were launched in late 2008 and the most recent being in 2012 – see: Two new cranes from Manitowoc Dongyue.
The sale is expected to result in non-cash losses with an impact in the region of $36 million in the year ended December 2013.
Chief executive Glenn Tellock said: “The sale of our joint venture interest is consistent with our strategy to better align resources across Manitowoc’s crane segment and to maximize financial performance. Looking ahead, we remain committed to the Chinese market which remains a vital element of our global footprint. Our plans for this key geographic market include an ongoing commitment to our wholly owned Potain tower crane operation at our manufacturing facility in Zhangjiagang, which supplies best in class products to China, the Greater Asia/Pacific region, Latin American and the Middle East markets.”
In September Shantui pulled out of an agreed mobile crane joint venture with Manitowoc, citing China’s economic restructuring and the sharp decline in the construction machinery market, which adversely impacted its business – see: Shatui quits planned JV.
The Chinese market for mobile/truck cranes has been a nightmare for foreign companies, as Manitowoc’s experience has shown. Terex also struggled with its joint venture – Sichuan Changjiang Engineering Crane Company – in which it took a 50 percent stake in 2006. It was able to dilute its holding substantially in 2012 – effectively exiting the business.
Chinese regulations still restrict foreign companies from owning more than 50 percent of a truck mounted crane manufacturer which prevents outright control of the business, and 50/50 partnerships between American and Chinese crane companies clearly do not work. On the other hand there are a number of successful examples in the tower crane and crawler crane market where such ownership limitations do not apply.
