In its attempt to avoid paying Trump's increased tariffs on Chinese imports, China's largest heavy machinery manufacturer by sales has announced plans to expand its US production. Sany Heavy Industries revealed that it has already started to assemble its new hydraulic excavators at its facility in Atlanta, Georgia with minimal use of components imported from China.
The manufacturer revealed that the construction of its SY215 and SY265 models are now using components from additional suppliers from Japan and South Korea. Some of the components have also been sourced domestically from US firms.
According to the Sany America's chief executive, Doug Friesen, the medium-sized excavators are still of top quality and are able to go head to head with the best products in the US market. Sany's products are currently competing in the highly-lucrative market against US firms such as Caterpillar and John Deere.
Sany's decision to diversify its supply chain by shifting away from imports and its plan to expand production in the US is its strategy to remain competitive in the US market amidst Trump's recent tariff hikes on Chinese imports. The company is planning to increase its production with two new models, also using components from suppliers outside of China.
Trump's imposed tariff hike on Chinese goods hit the company's components imports in July of last year. The tariffs accelerated the company's plans for its US production expansion. According to Friesen, despite winning a tariff exemption in May of this year, Sany's US expansion plan remains unchanged. Apart from assembly and manufacturing, Sany also plans to move its design departments into the US in the near future.
Friesen also revealed that its expansion in the country should generate more than 300 local jobs and a significant expansion of its dealer network. If the plan is successful, Sany plans to build two more manufacturing facilities within its headquarters in Georgia.
While the US has lost to China in being the largest construction market in the world, its second-place ranking is still nothing to scoff at. Last year, an estimated $34 billion was spent on construction and heavy equipment in the United States.
While Sany may be relatively unknown in the US market, it is actually a venerable giant in China. The company's reported total revenues of $8 billion last year, dominating the industry in the region with an estimated 23 percent market share. In its home turf, Sany has managed to beat foreign rivals such as Japan's Komatsu and Hitachi as well as the US' Caterpillar.