The downturn market has tested the "five major" operating forces of heavy machinery

The heavy machinery industry is one of the major sub-sectors of major technical equipment manufacturing industry. It is an industry engaged in large-scale, heavy-duty and complete sets of major technical equipment. Heavy machinery belongs to the "master machine" manufacturing industry and plays an extremely important role in the entire national economy. In recent years, with the development of the national economy, the implementation of major projects such as “West-East Gas Transmission”, “West-to-East Power Transmission” and “South-to-North Water Transfer”, the development of the national economy leading industries such as steel, electric power, petrochemical, coal, and urban foundation The large-scale construction of facilities, while increasing the service capacity and technical level requirements of the domestic heavy machinery industry, despite the ups and downs, the demand market scale shows a gradual gradual increase, and the sales of China's heavy machinery industry from 2007 to 2012 See the chart below for income and growth rates.

In the domestic market, after the global financial crisis broke out in 2008, there are many SMEs in the heavy machinery industry, and those “seven core” enterprises with traditional concepts feel different from the past. The investment benefits brought by the super-saturation of the entire basic industrial sector are declining (the most typical example is that the domestic steel industry is already at the junction of losses and measurable profits in the whole industry in 2012), making the traditional service targets of the heavy machinery industry as colored. The demand for equipment such as building materials and electric power, especially metallurgical equipment, has recently shrunk severely. The investment enthusiasm in the industry has been greatly reduced. New construction and technological transformation projects have been simultaneously reduced. The application of new energy and other emerging industries is still in the development stage in China. These seem to have caused the market in the heavy machinery industry to be tepid, and for the heavy machinery industry that is accustomed to relying on fixed investment, the situation of gradual increase seems to be equally difficult to adapt. The problems of “not enough to eat” and “can’t eat” inherent in the industry still have not changed much.

In the international market, the current environment facing global economic development is very complicated. When the new energy, new industries and fossil energy and traditional industries are intertwined and alternated, the world economy will show inaccurate adjustments during the process of fierce adjustment and change. The contradictions such as imbalance, uncoordinated and unsustainable are becoming more and more prominent; various new situations, new problems and new conflicts have caused the world economy to be full of uncertainty in the process of recovery. This uncertainty will inevitably affect investment enthusiasm and cause a decline in demand. The internationally renowned heavy machinery enterprises represented by the German SMS group, Siemens VAI, Italy Danieli Group, Korea Doosan Heavy Industries, and Mitsubishi Heavy Industries of Japan have obvious advantages in terms of product line, technology level and system integration capability. Basic control of the high-end areas of the product.

Faced with such internal and external markets and industrial environment, the “five major” listed companies in China's heavy machinery industry – China Yizhong, Double Heavy Equipment, CITIC Heavy Industry, Taiyuan Heavy Industry, Dalian Heavy Industry, etc. were affected in different degrees in 2012. The data published by the “Big Five” companies has already explained the problem. All five companies are state-owned enterprises, of which China's one-and-two heavy equipment is a central enterprise belonging to the State-owned Assets Supervision and Administration Commission. However, in the context of the overall convergence of the situation, there are also differences in the operating power between companies.

Despite the fact that the market scale is slowly increasing, enterprises generally feel that domestic demand has fallen sharply in 2012, and accounts receivable has increased significantly. The overall growth rate of production and sales has declined, and the profit rate has declined. It is understood that nearly one-quarter of the companies in the industry are losing money.

For the judgment of the market outlook, Huang Wei, deputy director of the National Energy Administration, believes that according to the current domestic energy situation, heavy machinery enterprises must prepare for hardships. Relevant persons of the China Machinery Industry Federation believe that the whole industry needs to enhance the sense of crisis, prepare for "tight days", and consciously promote product innovation and accelerate structural adjustment.

Insiders pointed out that in 2013, the overall situation of domestic heavy machinery and equipment manufacturing industry is still grim, and the current domestic high-end manufacturing sector has insufficient investment in R&D, insufficient technical reserves, and unable to keep up with the “bottleneck” constraints such as domestic and international market changes.

In fact, with the continuous expansion of the industrial scale, the rapid development of high technology and the increasing international competition, the equipment manufacturing industry will inevitably face the strategic transition period of industrial restructuring and industrial form transformation. The level of awareness of this process and the ability to operate may determine the future survival of the company.

Get rid of the difficulties

China’s top executives said that in 2013, we must break the “shackles” of traditional thinking, make breakthroughs in transformation and upgrading, and go all out to ensure that there is no loss. It can be seen from this that ensuring no loss through transformation has become the main tone of the company in 2013.

In 2011, China's first heavy-duty petrochemical container output created the world's largest, producing 110 hydrogenation reactors throughout the year; the succession of Shandong Yuanda cold rolling, Zhejiang Lianxin cold rolling mill, Beihai Chengde stainless steel and Nigeria 900 mm cold The general contracting projects such as continuous rolling have created better economic benefits. In addition, the company has also achieved the construction of heavy forging equipment and process innovation capability platform, giant heavy-duty forging manipulator, nuclear power key equipment, large-scale key forgings development, large-scale exchange A number of internationally advanced research results, such as heat exchangers and new vertical spray quenching devices, have greatly promoted production and management; progress has been made in the construction of the four bases, and the Fulaer base forging and forging steel base has surpassed the extreme of "7654". The manufacturing target has made the production capacity of a large-scale large casting and forging part the first in the world, and has successively built a circulating water treatment system, a sand treatment system and an automated three-dimensional storage system. Judging from the 2012 semi-annual report, China Yizhong has used 4.223 billion yuan of funds raised for large-scale petrochemical containers and one-million-kilowatt nuclear power primary circuit main equipment manufacturing projects, construction of cast-forged steel bases and large-scale casting and forging auto-renovation projects. China's one heavy coastal manufacturing base project. However, the company did not disclose the specific income data of these three projects. The spread of many projects at the same time seems to make the company's IPO quickly exhausted. China Yizhong reminded investors in the corporate bond announcement that insufficient financing may have an impact on the company's expansion plans and development prospects.

The question is how much money does the company need to use? Can a corporate shop be eternal? After harvesting the stalls, you can naturally gain benefits? This development approach is unsustainable, no matter how many reasons.

Double reloading launched a private placement plan of 5.072 billion yuan in less than one year after its listing, but it was overdue due to market “circle money”. Taiyuan Heavy Industries plans to issue a short-term financing bill of 1 billion yuan after issuing a performance loss. The funds raised from this part of the short-term financing bill will be used to replace part of the bank loan.

Obviously, for most companies in the “Big Five”, blood transfusion is not only a stage need, but also continuous. However, from the perspective of market performance, blood transfusion does not keep the company healthy. Instead, it causes the company to have a serious dependence or even inertia. It is easy for people to associate with the habit of “waiting, relying on, and wanting”.

Faced with the downturn in the securities market, companies are trying to solve the problem of capital on the one hand, and on the other hand, they are turning their attention to internal reduction and efficiency. Recently, the double-reloading officially started the annual activities of the team to reduce costs and increase efficiency, and regarded the activity as an important supporting measure to complete the 2013 business objectives.

Several companies have acted in launching new products to stimulate the market. In 2012, the “Giant Heavy Duty Forging Operation Equipment” jointly developed by China Yizhong and Shanghai Jiaotong University was successfully developed. Double-loaded Fuqing Nuclear Power Project Coolant pump seal chamber forgings also passed the user joint inspection. Its mechanical properties, grain size and other indicators fully meet the technical requirements, one-time pass, marking the country's largest nuclear power copper-containing steel forgings successfully developed . CITIC Heavy Industry Machinery Co., Ltd. successfully developed the world's largest gearbox. The latest technical achievements of the five heavy industry enterprises are shown in the table below.

In addition, efforts to expand the international market and actively promote the internationalization strategy have become an important means for the “Big Five” enterprises to cope with the weak state of the domestic market. In 2012, China's one-manufactured large-scale forged welded structure hot-wall hydrogenation reactor was exported to India; the 4 cubic meters, 10 cubic meters, and 35 cubic meters of mining excavators manufactured by Taizhong were exported to India, Russia, Kazakhstan, etc.; CITIC Heavy-duty large-scale ball mills are exported to more than 20 countries including Australia, Brazil, and Russia, and have established sales networks in Australia, Brazil, and Chile. Dalian Heavy Industry's large bulk material handling machinery is exported to Brazil. According to relevant persons from Dalian Heavy Industry, the error performance of overseas business has greatly compensated for the decline in profits of domestic wind power and other industries.

In terms of overseas mergers and acquisitions, after the acquisition of a Spanish company by CITIC Heavy Industries, the latter's performance achieved a contrarian growth, which not only created good results in the same year, but also reserved orders for 2013.

Operational way determines the future

The "Twelfth Five-Year Plan for the Development of Machinery Industry" issued by the China Machinery Industry Federation proposes that during the "Twelfth Five-Year Plan" period, the machinery industry will focus on five key areas and implement five major development strategies. Among them, the five key areas are: high-end equipment products, emerging industry equipment, mechanical equipment for people's livelihood, key basic products, basic processes and technologies. The five development strategies are: focusing on high-end, innovation-driven, strengthening foundation, integration, and green.

As the main force in the traditional sense of high-end equipment and equipment manufacturing in emerging industries, the “Five Big” companies of the heavy machine can only have a future if they actually put the five development strategies into place, implant and take effect.

It should be said that the development model of most state-owned enterprises in the heavy machinery industry is very similar to the macroeconomic movements, mainly relying on investment expansion to follow the demand generated by investment. In the past ten years, including the implementation of IPO in recent years, large-scale technological transformation of heavy machinery enterprises has been quite common. For heavy forging equipment alone, according to incomplete statistics, there are currently more than 10 tons of domestic hydraulic presses and hydraulic presses. It is said that some enterprises have prepared 20,000-ton hydraulic presses for nuclear power equipment. Due to the downturn in the nuclear power and shipping markets, the current operating rate of presses is relatively low, resulting in a large amount of waste of resources. The short-term “prosperity” effect brought about by “four trillions” has caused enterprises to have a stronger stimulating effect on capacity expansion, resulting in a serious overcapacity, high asset-liability ratio, low total investment contribution rate and low investment efficiency. . The industry's evaluation of this is: Under the existing mechanism, state-owned enterprises are still unable to get rid of the fate of relying on national policies and investment in fixed assets.

In fact, the hardware level of the domestic “Big Five” heavy machine companies is not inferior to those of famous foreign companies. But in terms of software investment, there is a huge gap in the ability to provide system solutions to customers. When a powerful "processing workshop" faces a change in the market and is useless, when it does not receive processing fees, the company will be unable to do anything. Double reloading is one of the best examples.

At present, the technical and social environment in which the equipment manufacturing industry operates and the needs of customers are undergoing profound changes. In the entire industrial process complete project, the user's focus is not on individual components in the project, but whether the overall project function meets the demand. . In the industrial field, specialized system services have become a consumer trend, which requires enterprises to provide complete solutions to users, from host suppliers to package providers.

From the reality of the current industry, the transformation is an unavoidable task for enterprises, whether they are willing or not, despite the existence of mechanism obstacles, despite the extreme complexity of the operational level. In this process, innovation is the core element. The effect of the transformation may change the original pattern of the “Big Five” or “Seven Big” leading domestic market.

For the transformation and upgrading, CITIC Heavy Industries, a leading company in the heavy machinery industry, has a deep understanding and is reflected in its actions. CITIC Heavy Industry is pushing the “three transformations” to achieve a fundamental change in the way of growth. The "three transformations" are the transformation from manufacturing enterprises to high-tech enterprises in terms of connotation; second, in the business model, from host suppliers to complete service providers; third, in extension, from localized enterprises to international Transformation of the enterprise. In the view of CITIC Heavy Industries, transformation is a profound change that requires a strong driving force. Technology-driven, talent-driven, capital-driven and culturally driven constitute a comprehensive power system of “three transformations”.

Schneider Electric has had a famous “Decade of Transformation” program. In this sense, the transformation and upgrading of enterprises is a relatively long process, and the results of the transformation cannot be fully quantified by the staged business performance of the enterprise. But whether or not to actually implement the transformation may mean that the business force between enterprises will gradually change substantially. In this sense, the transformation has a long way to go for the "Big Five."