Bad news for U.S. makers of construction and mining equipment: China is closing the quality gap.
Rio Tinto (RIO) CEO Sam Walsh said earlier this week that his company has been increasing purchases of heavy equipment and other items from China, and has found the quality impressive.
Among RIO's purchases were heavy-duty trucks, equipment for loading ships and rail cars that carry ore; "the quality actually was much higher" vs. the traditional supplier, Walsh said. "Instead of spot welds, for example, on the sheet metal they were actually continuous welds."
At the best Chinese equipment makers, “it’s incredible the speed at which they are coming up the quality curve," a J.P. Morgan analyst say, spelling tougher competition for a host of Western equipment makers, including Caterpillar (CAT) and Joy Global (JOY).