The Shanghai-based International Finance News reported that Sany has receivables of over 20 billion yuan ($3.16 billion), which leads to a large-scale staff layoff.Shares in Sany lost 4% on the reported layoff plans, which have declined by more than 30% in the past year.
The newspaper cited a technician with Sany as saying that "some staff were sacked for minor mistakes" while others "opted to leave because of a new salary plan" by the firm which would see incomes of workers like him drop from some 4,000 to 2,500 yuan per month.
A senior official of the construction machinery manufacturer said "the staff turnover in our company remains normal and there isn't a large-scale layoff here,” as there is no need for Sany to do this for two reasons.
First, the construction machinery industry in China has good prospects despite a slump of nearly 20 percent this year, with the country's GDP growing annually at more than 8 percent every year and the process of urbanization continuing. Second, Sany's own steady growth, asfirst-quarter sales rose by 4.9%, and the second quarter will also keep up “relatively good” growth.
However, the analysis from the Financial Times tells a different story.
Beijing’s lower economic growth target, combined with restrictions on property purchase, have put the brakes on China’s red-hot construction sector, which is the largest construction market in the world and a key driver of global demand for commodities.
Driven partially by a 4,000 billion yuan stimulus package announced in 2008, the urban construction boom in China contributed to the rise of construction machinery makers. But since 2011, the "cooling down of investment in the real estate sector, especially railway construction, dampened demand and profits," Wang Yutong, secretary-general of the concrete branch of the China Construction Industry Association (CCIA), told the official Global Times.
Data from the Ministry of Railways released in June showed that the fixed asset investment in railway construction plunged 41 percent year-on-year over the first five months of this year.
Sany and Zoomlion Heavy Industry Science & Technology Development Co, both leading construction machinery makers with a combined 30 percent market share in terms of output in China, have been locked in price wars for months to survive weak demand.