SCOOPING Out the Growth Pie

Riding on the high waves in roads sector, and coupled with initiatives in the fields of power, irrigation, railways, airports, ports and urban infrastructure; the CE industry foresees a strong and sustained demand, especially for excavators.

The last couple of years have seen unprecedented push not only for infrastructure development, but also removing the bottlenecks of many of the stalled projects, especially in the road sector. This has revived the equipment demand, especially earthmoving equipment. To be more specific, sale of excavators paced northward. “The last one year has seen a sizable growth in demand – as much as around 40 per cent, and over 50 per cent for some players. The steep demand even has even led to short-term supply gap.

“All OEMs had been deferring capacity enhancements during the previous 3-4 years when the market was down. It probably took some time for them to accept the fact that the growth in demand was here to stay and only when they were sure, they have revived their plans for capacity increase. This has led to a short-term supply gap, which is expected to be filled over the next few quarters,” states Vikram Sharma, Advisor, Kobelco Construction Equipment India. He adds, “Road projects have been the main growth driver for excavators’ demand. With the constant efforts of the government to address the issues with stalled projects, the growth is likely to stay. Other initiatives in the fields of power, irrigation, railways, airports, ports and urban infrastructure will definitely increase the market size over the next few years.”

“The excavator market has been witnessing steady growth from H2 of FY15-16 fuelled predominantly by spurt in infrastructure development. Also, the construction industry being cyclical in nature, after the four odd years of downturn, the industry has come back into the positive cycle. Roads & Highways, Railways, Irrigation projects have triggered demand for excavators in the 10T – 40T range,” says BKR Prasad, Head – Marketing, Tata Hitachi.

The players in the excavators segment believe that the growth is here to stay, and demand for higher capacity models is expected to go up. Says Dimitrov Krishnan, Vice President and Head, Volvo CE India, “Volvo CE foresees that the demand for excavators will remain strong. As the Indian government continues to push forward its ambitious plan to improve infrastructure, we are confident that it will facilitate further growth in the economy and the construction equipment industry. This will be a major growth driver as developers are in need of more powerful machines to meet construction deadlines.” He adds, “Additionally, coal mining activity is also picking up. Therefore, in the short to medium term, we expect to see an increase in demand for larger excavators.”

“The tracked excavator, as a category, has shown a healthy growth rate in the year 2016 over 2015. The segment is fast gaining popularity at Indian construction sites, primarily owing to the growing size of infrastructure projects,” Jasmeet Singh, Head – Corporate Communication, JCB India. He adds, “Roads and highways has been a major driver for growth for the segment. As more large scale projects are announced and implemented in sectors such as Railways, Irrigation, Mining and affordable Housing, we foresee favourable growth in the excavator category.” He further adds, “Moreover, Government’s continued thrust on developing world class infrastructure coupled with significant allocations in successive Union Budgets are aiding overall growth of the ECE sector.”

SharwanAgnihotri, Head-Marketing, Hyundai India explains the growth trends, “After consistent decline in demand from 2012 to 2014, excavator demand started growing from 2015. The growth in 2015 was around 8% over 2014 and the demand growth in 2016 was around 48% over 2015. Road sector and allied applications remained the major demand drivers for excavators in 2015 and 2016. Government’s focus on overall development of infrastructure and announcement of various projects in Railways, Irrigation and Port helped the growth to sustain 2017 and Q1 of 2017 registered a growth of around 28% over similar period of 2016. Market in India is concentrated towards 20T class of excavators and with expansion of mining capacities in coal, iron ore or granite sectors, the distribution is expected to normalize across the product segments.”

“In 2016 the crawler excavator segment grew at 50% YoY in terms of units sold. The mini excavator segment too grew exponentially. The excavator segment grew by 26% in Jan-Apr 2017 compared to Jan-Apr 2016. In 2017 too, the segment is expected to have a healthy growth in double digits,” Dheeraj Panda, Vice President & Business Head, Excavator Business Unit, Sany Heavy Industry India. He adds, “Infrastructure sector is under intense focus through development of roads and ports, enhancement and modernising railway network, building new airports in tier II and III cities, expansion of irrigation projects in select states, water supply projects and Swachh Bharat and river cleaning projects. This has led to a huge demand being created for machines that are efficient as well as cost effective, as the expectations from the project participants are extremely high. This momentum is likely to be maintained at least till 2024 and we are optimistic about the prospects for the construction equipment sector.”

Buyer Options
How an OEM perceives the parameters a customer looks into while opting for an excavator? Points out Sharma, “Today, the customer is well educated and conversant with the key considerations for choosing an excavator for his job in hand. However, many buyers still rely heavily on the landed cost, which is definitely a short-sighted approach. It is very important to consider the productivity, the reliability of the components, the quality of support, the operator comforts, other features for better operation and maintenance.”
According to Prasad buyers typically take into consideration the brand, reliability of excavator, technical edge of the product, service support, fuel efficiency and the pricing.

Says Krishnan, “Our customers appreciate the cost savings and operational efficiencies that Volvo technologies bring to them. Particularly in the current work environment, where projects are getting bigger and timescales are getting tighter, contractors are looking to equipment and technology to bring them some advantage.” He adds, “Today, customers demand machines that offer the best in class productivity, reliability, profitability, without compromising on safety and comfort. They are increasingly looking for options which offer the best operating experience through ergonomically placed controls. They want equipment that performs reliably and also increases their profitability at the same time.”

According to Jasmeet after sales support is critical and greatly contributes to the reliability of the machine. Over the years, we have set-up the largest distribution network in the industry. Moreover, to address the challenge of machines which are operating in deep interiors of difficult and arduous Indian sites, we also have mobile vans that operate on the concept of ‘Workshop on Wheels.’ These vans are fully equipped to handle most service and repair jobs on JCB machines. Additionally, we have initiated various customer connect programmes and service campaigns wherein our trained service engineers visit the customer site across India and offer Service and Parts support.

Agnihotri says, “Buying decisions are influenced by various factors like the end application of machines, tenure of deployment, usage pattern etc. We have tried to capture requirements of various segments of customers in our recently launched Smart series of machines. These new series machines are equipped with value added features to enhance operators comfort and convenience by offering powerful air conditioner in cabin with improved airflow ducting. Height adjustable operator seat and fuel filling pump to reduce unproductive time spent by the operator. We have also worked on improving the performance of machine by adding features like fuel saving kit and air pre-cleaner on the machines. The machine reliability is improved by adding reinforcement to high stress areas and optimizing the linkage design for effective transfer of forces. Analytical capabilities of Hyundai machines for sensing, diagnosing, communicating and storing the problem records differentiates Hyundai machines from many other available options and truly make Hyundai machines smarter.”

“One of the most important considerations that a buyer looks out for is the product quality and we are confident that the quality of our products exceeds this expectation. Another factor that is of paramount importance to the customer is the after sales support and spare parts availability. It is our constant effort that the after sales service we provide exceeds the industry standards,” says Panda. He adds, “Operating efficiencies is another parameter that influences the buyer’s decision. Our excavators are known to be among the best in this regard.”
In the hyper-connected world of technological innovation, competitive advantages of product features are short lived, and after sales support is becoming a sustainable differentiator at the market place. Quality of service at the lowest possible cost plays a pivotal role not only in creating new clients but also to sustain the existing base.

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