Hitachi forecasts wave of Chinese infrastructure spending

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The Japanese conglomerate Hitachi forecasts a wave of infrastructure spending in China as Beijing attempts to boost the economic recovery after the coronavirus outbreak.

The group, which manufactures everything from nuclear power plants to high-speed trains, said its elevator plant in China has resumed production and expects the construction industry to rebound as cities end their closings.

“These situations force governments to really recover the workforce and, as a result, infrastructure spending will increase,” said Alistair Dormer, head of rail and mobility for the group. “Everything indicates that China is moving at full speed. “

As the first country hit by the virus, governments, businesses and investors are closely watching China’s efforts to break the deadlock. Last week, Wuhan, the city of 11 million people where the disease first broke out, officially ended quarantine for more than two months.

Beijing is expected to release figures on economic performance in the first quarter on Friday, with economists forecasting a sharp contraction.

For Hitachi, the pandemic has already forced it to postpone the publication of its annual revenues until mid-May. Dormer said the sprawling group of companies has helped to cushion the blow from the pandemic. Last week, the company sought to reassure investors that it had a $ 12.9 billion financial cushion, including cash, corporate bond issues and bank loans.

“People say that we prefer companies that focus only on one sector. In these times of uncertainty, this is not a bad thing, “said Dormer. “There is an impact here and there, but overall, the business is still solid and continuous.”

One of Hitachi’s businesses that has been hit hard is its rail operations in Italy, which manufactures signaling equipment. Hitachi has had a majority stake in Ansaldo STS since 2015, but has been forced to close its Italian factories as Rome seeks to tame the virus epidemic.

Hitachi shares fell 32% this year, compared to a 17% drop in the Japanese benchmark Topix.

Its UK train assembly plant in the North East of England has been on standby since March, although its Newton Aycliffe site in County Durham is slated to resume production from Tuesday.

Beyond the actual shutdown of manufacturing, the pandemic has also created new challenges for Hitachi.

Its British employees continue to maintain the fleet of trains even if one fleet is stationed and most of the others operate at reduced capacity. Wearing face masks and measuring their temperature before starting work, Hitachi workers must make sure that each train is activated every few days so that the wheels do not get flat.

“Safety and commitment to our customers is the number one issue on the agenda,” said Dormer. “The rest of the focus is on making sure that when the situation improves, and it is safe, we can restart quickly and rationally.”

All the other aspects of the way it does business have changed. Each evening, Mr. Dormer organizes a crisis meeting with employees around the world via video conference. For senior management meetings at its headquarters in Tokyo, the CEO and his five executive vice-presidents sit two meters apart, wearing masks and washing their hands before and after the meeting.

“This is a good leadership challenge for all of our employees because you have to be much better at communication,” said Mr. Dormer.

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