subscribe to ENR magazine subscribe
contact us
careers industry jobs
events events
Dodge Data & Analytics
ENR Logo
Web access will be provided
as part of your subscription.

Liugong-Cummins Engine Plant Fires Up in China

Text size: A A
Photo by Tudor Van Hampton for ENR
Liugong, which is building diesel engines with Cummins, displayed 28 machines at Bauma 2013.
Photo by Tudor Van Hampton at ENR
Tom Linebarger, chairman and CEO of Cummins, says the deal will help it access emerging markets.
----- Advertising -----

Last year's roughly 40% decline in heavy-equipment sales in China was not just a sales nightmare—it was also a potent reminder to the Chinese manufacturers that they need to increase their share outside of China to support their high-volume production. However, many Chinese companies often lack the parts, distribution, and support needed to reach world markets.

That's why in 2011 Liugong—founded in 1958 and one of China's first wheel loader producers—decided to team up with Columbus, Ind.-based Cummins in a joint venture to produce diesel engines.

"Cummins will be the main engine supplier for Liugong all over the world," announced Zeng Guang'an, vice chairman and president of Guanxi Liugong Machinery Co. Ltd., on the first day of the April 15-21 Bauma equipment expo in Munich.

The Liuzhou City-based factory, which covers 200,000 square meters, last month began producing a 9.3-liter, off-road engine jointly engineered by Liugong and Cummins. The plant, one of the largest diesel engine factories in China, has a capacity of 50,000 units per year.

For Cummins, the deal helps it access more emerging markets. "We'd like to gain a position in wheel loaders," said Tom Linebarger, chairman and CEO of Cummins, which already supplies to several excavator producers. The company worked with Liugong to tweak the power output and torque for wheel-loader applications.

"I think our engines, although terrific products, were not designed well for wheel loaders," Linebarger admitted.

Liugong has a roughly 20% share of China's 140,000-unit-a-year wheel loader market and 5% share of the 115,000-unit  excavator market, it claims. Last year, exports accounted for 28% of Liugong's sales, or roughly $700 million. "Hopefully, in three years we can double that," said Zeng.

The Cummins deal gives Liugong access to clean-diesel technology that it needs to meet various emission regulations around the world. Cummins has "a very excellent supply chain in China," says Zeng, adding that the Indiana company builds about 200,000 truck engines in China.

One developing market for Liugong is Brazil, though the country imposes high duties on imports, which makes it difficult for new players to enter the market. Last year, Brazil's government increased those duties to 35% from 14% on most construction machines.

"That's a big disaster, not just for Chinese companies but for all the manufacturers," said Zeng.

Cummins also has broad parts support globally and can help Liugong serve clients in areas where it lacks strong dealer reach, Linebarger added. "There is a large and really rapidly growing developing market for construction equipment" that doesn't come at a premium price, he said. "Companies around the world are trying to meet that sweet spot just right."

Liugong is no stranger to such ventures. In 1995, it tied up with Germany-based ZF to supply transmissions and axles for heavy equipment. Last year, both companies each invested approximately $60 million to build an axle plant in China. It is expected to open next year and produce 3,300 units per year initially and expand to 30,000 units by 2018.

The Cummins and ZF deals "have accelerated the process of growing into a global player," said Wang Xiaohua, chairman of Liugong. "It is also worth noting that all this happened in the worst economic environment for construction equipment in a long time," noted Linebarger.


----- Advertising -----
  Blogs: ENR Staff   Blogs: Other Voices  
Critical Path: ENR's editors and bloggers deliver their insights, opinions, cool-headed analysis and hot-headed rantings
Project Leads/Pulse

Gives readers a glimpse of who is planning and constructing some of the largest projects throughout the U.S. Much information for pulse is derived from McGraw-Hill Construction Dodge.

For more information on a project in Pulse that has a DR#, or for general information on Dodge products and services, please visit our Website at

Information is provided on construction projects in following stages in each issue of ENR: Planning, Contracts/Bids/Proposals and Bid/Proposal Dates.

View all Project Leads/Pulse »

 Reader Comments:

Sign in to Comment

To write a comment about this story, please sign in. If this is your first time commenting on this site, you will be required to fill out a brief registration form. Your public username will be the beginning of the email address that you enter into the form (everything before the @ symbol). Other than that, none of the information that you enter will be publically displayed.

We welcome comments from all points of view. Off-topic or abusive comments, however, will be removed at the editors’ discretion.