Paved with good intentions
Few sectors have had it so bad last couple of years than the road construction equipment market. Sales were down and the outlook dismal as infrastructure projects didn’t seem to be taking off. Going by market reports, the large companies kept themselves busy with peering into technology upgradation and thinking of schemes to boost sales.
So it’s likely that when the market picks up, which is expected to be over the next few months, the competition will have got stiffer. Most OEMs are bracing themselves for glimpses of opening as product selling seems to have got tougher. According to an industry source, “Going by what the new government has promised about going all out to spruce up infrastructure, then the market could see a glut of new products. But there could be a bigger issue. Most manufacturers have upped the ante in terms of offerings and it’s possible that returns on the new products could be affected.”
Driven by growth in investment in the infrastructure sector, domestic construction equipment industry is likely to grow at 12% increasing India’s global share to 10% by 2017, according to a survey. According to a report by Roland Berger Strategy Consultants, India’s construction equipment market, though small by global standards, is extremely competitive and has players operating under different strategies.
A burgeoning real estate industry, increasing coal production and mechanisation of mining operations, will aid the growth in the country’s equipment industry. India is expected to see more competition among the existing players in this segment with an aggressive growth strategy.
The construction of road and highways basically consists of three phases, rough grading (or earthmoving), fine grading (which includes sub-grade preparation), and surfacing, which can include gravel, concrete, asphalt, or a combination of the three. Another important element is compaction of all road and highway construction. When the compaction is complete, it will ensure a better life of the road. It is up to the operators to do their work well in a manner that will provide for maximum compaction. Then there is the fine grading operations that must be executed well so that surfaces have been graded to fine tolerances. All this requires skill.
Hiten Kapadia, business line manager, road construction equipment, Atlas Copco India, says, “We believe in innovation for better quality of roads and continuous improvement in present technology is a must. Not only is it necessary to improve in innovation but it is also imperative that we adapt new technologies being used in developed countries.
“New and advanced technologies are coming into the market and their acceptance is gradually picking up. With focused and concentrated efforts on market education and a required push from the local government authorities for more rigorous quality measurement, there will be an increased customer pull towards upgrading to superior methods of compaction and paving.”
For a long time, projects from the National Highways Authority of India (NHAI) had dried up. Most of the issues could be attributed to projects getting embroiled in land clearance issues. But in a country like ours where most roads are still waiting to be built, this hardly matters. However, state and rural roads in a few states have been showing growth resulting in increased marginal demand in 2013 over 2012 for road construction equipment like compactors. With the new government in place, there is an expectation of speeding up NHAI project rollouts, which along with the boost in the state and rural road projects will help companies tap new business opportunities.
In terms of equipment, most Indian companies are looking at reducing total cost of operation, mainly through fuel efficiency and higher productivity. Considering the competition awaiting them, companies are also keenly eyeing to maintain their positions in the market in various segments. For instance, in a bid to provide efficient service to compactor customers, Case New Holland Equipment has set up CASE Customer Assistance toll free number and increased dealership network to 59 dedicated CASE Dealers with over 200 touch points.
When sales happen, it’s possible that most manufacturers will look at volumes based on the range of offerings to suit the emerging demand requirements. But there’s another movement in the background. Brand retention is as important. This will largely depend on addressing the emerging complexities of the road construction projects in India, through the equipment offerings and product support.
According to a well known equipment manufacturer, it’s time that road equipment manufacturers also looked at bringing down costs of operation to the contractors. Another thing that manufacturers will do well to note is offer a range of products that are required from the initial stage to the completion stage. This will ensure that road paving equipment manufacturers can not only retain existing customers but have a higher chance of bagging new ones.
Kapadia says, “Atlas Copco fleet of Dynapac compactors, rollers, compact planers and pavers are actively engaged in prestigious projects across India. The compact planer is an important segment, considering that the traffic is increasing on aging roads. The planers play a vital role in the up-keep of the roads at the same time helping to reclaim material for reuse. Dynapac planers are designed to deliver maximum productivity in varying job sites and Indian operating conditions.”
He adds that specifically Dynapac paver finishers have unique features such as high compaction screed to pave high layers of thickness in one go. With the high compaction screed, a pre-compaction of approximately 95% is achieved easily, followed by Dynapac high frequency tandem rollers and pneumatic tyred rollers which complete the compaction process of the thick layer. Atlas Copco is a leader in compaction and paving applications, committed to customer performance worldwide. Further, Dynapac soil compactors can be used to compact the base layers which is the critical foundation to make quality top layers.
Global equipment manufacturers who are present in India say they have come a long way in terms of offering quality products. “A few decades ago, it was the times of licensing agreement and manufacturers were used to selling old technologies. But that is passé. Now all international companies have either invested heavily in manufacturing facilities and new technologies or formed joint ventures to give the right technology to Indian customers," says Ramesh Palagiri, managing director & CEO, Wirtgen India. Now, global manufactures develop products keeping the local condition in mind but maintain the same quality.
Business sentiment for the near future is positive. Palagiri is buoyant that Q4 2014 will see a surge in sales as state highway projects in Bihar, Madhya Pradesh, and other states in north India.
There’s also the north-eastern landscape in particular, which needs more roads to be built to increase connectivity. Looking at current activities and expected quick turnaround time for awarding projects, we foresee demand for equipment will also increase gradually across India, says Kapadia of Atlas Copco India.
On the products side, Wirtgen India has introduced novel cold milling and cold road rehabilitation and recycling segments, which are seeing decent sales. “Cold milling is not considered a new technology anymore,” says Palagiri. “In time, cold recycling will become as established.” Wirtgen has also introduced the DASH 3 generation of asphalt pavers that boasts of new productivity features to keep operating costs low. Even though the brand was a late entrant in the compaction segment, it has introduced two world-class products and is on course to achieve its targeted 20% market share. Wirtgen´s line of Hamm compactors feature India-only characteristics, such as conforming to the Indian homologation standard and a specially developed sunshade canopy.
Another aspect that is very important to manufacturers is training & development of the sales and service team as well as dealers. This is a continuous process. Besides this, there is training for operators too who are required to undergo training and refreshment courses at regular intervals. Atlas Copco India has also started ‘one number concept’ (1800 200 0030) for all supports and complaints in order to have a better control of the situation. “Our sales and service engineers are trained on sub-assembly like engines. We refer to the manufacturer only for problems. With a keen interest in core competency building within our team, we are able to meet market expectation of getting the right product information and service on time,” says Kapadia.
In terms of emerging technologies, all major companies believe in continuous process of innovation and product development. Developing technology products and promoting high quality products enable them to offer world class products in order to be a part of making world class roads in India.
For instance, the Dynapac machines are designed for toughest conditions. To name a few, lowest operating cost for the customers, most advanced compaction technique like high frequency for asphalt rage rollers to achieve the end result in minimum passes, unique fully floating screed for the pavers to achieve excellent surface finish, compact planers with milling widths from 0.35mm to 1m have excellent manoeuvrability and effortlessly achieve a depth of 200mm to 300mm. In fact the small cutting radius of only 230mm, unequalled in this class, makes the high performance Dynapac PL1000 compact planers very flexible for milling even around manholes and so on.
Atlas Copco offers soil compactors from 4-27tonne, asphalt compactors from 1tonne to 18tonne, pneumatic tyred rollers from 6tonne to 27tonne, and mostly delivered from their manufacturing facilities in Sweden, Germany, Brazil, China and India. For product localisation, with local features added in, the company hopes to manufacture road construction equipment locally at their Nashik plant in India.