The fundamental reason for Lansi Heavy Equipment’s huge loss of 1.39 billion
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This post was last edited by wiseboy on 2019-2-9 at 14:33. Lanshi Heavy Equipment is said to have incurred a loss of 1.39 billion; it falls under the category of low-end manufacturing involved in processing orders based on provided designs. Despite having first-class processing equipment, I give it a score of 70. First-class manufacturing equipment: 50 points; custom processing based on drawings: 20 points. Regarding the option of \"processing based on provided drawings\", ignoring thermal design means that such companies are destined to be low-end manufacturers – with a huge volume of work and extremely low profit margins. I had suggested it before, to no use; losses were inevitable.
Does Lanshi not have its own equipment design studio?
Lanzhou Lanshi Heavy Equipment Co., Ltd. (hereinafter referred to as Lanshi Heavy Equipment) was established in 1953 and is a pioneer in China’s petrochemical equipment manufacturing industry. On October 9, 2014, the company’s shares were listed for trading on the Shanghai Stock Exchange (stock code: 603169). Its predecessor was the Lanzhou Oil Refining and Chemical Equipment Factory, which was one of the 156 key construction projects funded by the former Soviet Union for China during the First Five-Year Plan period. It is a company in China with a long history, large scale, and strong capabilities; it offers comprehensive solutions covering the entire process – from research and development, design, manufacturing, and installation to after-sales technical service – for high-end energy equipment such as those used in oil refining, coal chemical processing, rapid forging units, plate heat exchangers, as well as nuclear and other new energy technologies. Lanshi Heavy Equipment currently has over 3,600 employees and covers a total area of 1,800 mu. The company owns several subsidiaries, including Qingdao Lanshi Heavy Machinery Equipment Co., Ltd., Xinjiang Lanshi Heavy Equipment Energy Engineering Co., Ltd., Lanzhou Lanshi Heavy Industry Co., Ltd., Lanzhou Lanshi Heat Exchanger Equipment Co., Ltd., Lanzhou Lanshi Testing Technology Co., Ltd., and Luoyang Ruize Petrochemical Engineering Co., Ltd. (referred to as “Ruize Petrochemical”), as well as a super-large container mobility factory. It has now established a strategic layout that includes a high-end energy equipment design and manufacturing base in Lanzhou New Area, a large-scale equipment research, development, design, and manufacturing base in Qingdao West Coast New Area, and an energy equipment manufacturing base in Xinjiang.
Long time no see! Happy New Year. I also posted a thread on this topic; I posted another one a few days ago as well: [Night Talks by HaiChuan] What’s happening with Lanxi Heavy Equipment? While orders kept coming in, there were huge losses of 1.3 billion yuan. https://bbs.hcbbs.com/thread-2283198-1-1.html (Source: Haichuan Chemical Industry Forum)
The owner probably won’t trust Lanshi’s own design studio? ? ?
This post was last edited by wiseboy on 2019-2-9 at 17:37. For companies like this, I have advised against such actions dozens of times: modern processing equipment alone is only of limited use. The management only cares that the equipment is good, not realizing that equipment is just hardware; it constitutes only half of the problem, while completely ignoring the “software” – the other half of the issue. It also has design – just mechanical design; the core process and thermal design are virtually non-existent. I have been to this company and mentioned it as well. But they still insist on focusing on hardware. “Largest scale, earliest establishment, most advanced equipment, the largest number of customers… — These advantages are worth at most 50 points, and on their own they are not sufficient to qualify as ‘the strongest’ in today’s context! Moreover, without soft skills (with core emphasis on innovative design), one cannot truly be considered ‘the strongest’. Despite having so many advantages, the company still suffered huge losses in 2018, when the chemical industry was experiencing a general recovery.
This post was last edited by wiseboy on 2019-2-9 at 17:32. Of all types of investments, hardware investment is the most cumbersome. What does that mean? In other words: the investment is large, and it’s hard to get out of it. If the investment is too large and exceeds the market capacity, or if there are sudden changes in the market, there is no way to reverse the hardware investment – it’s like trying to turn cooked rice back into uncooked rice; losses are inevitable. Chinese companies, especially private ones, have always preferred to buy a brick rather than sell a book: because they believe that a brick is tangible (it’s heavy) and therefore worth something!
Typically, large-scale equipment manufacturing companies have their own design departments, which are responsible for carrying out secondary design based on the equipment drawings provided by design institutes; this secondary design involves breaking down the equipment design details to be used in the manufacturing process. Of course, the revised design drawings must be reviewed by the design institute and the client. If there is no equipment design department, one can only do contract manufacturing for others. However, I believe Lansi has this foundation.
It was only then that I learned that “Luoyang Ruize Petrochemical Engineering Co., Ltd.” is actually a subsidiary of Lansi; Luoyang Ruize is a private first-class oil refining design firm that handles the design of local refineries. With design capabilities, engineering companies, and equipment manufacturing capabilities, it is possible to pool resources to provide EPC turnkey project services.
In 2019, losses will likely continue. Because many glories are but the stars of last night, lagging behind the pace of the times; low profits are inevitably accompanied by low technology. It’s strange if a company claims to be superior in terms of technology yet still incurs losses.