Increasing interest rates have had great impact on construction equipment sales
The year 2011 had gone well for construction equipment sector. However, it was not the same for the year 2012. Rohit Punjabi, General Manager (Strategy Development), LiuGong India, gives the in-depth views of the industry.
2012 compared to 2011The high commodity prices are not showing signs of coming down, and increasing interest rates have had great impact on sales. But the positive part is liquidity. As long as liquidity remains, there will be always demand and sales. However, it does not mean new projects should not be cleared. New projects need to be cleared. Because there is a gap of policy logjam, whether it is land acquisition or environmental issues, new projects were not moving. The road projects have some movement and we expect some momentum next year.
Current order book of LiuGongLiuGong has been in the construction equipment business in India for over 10 years. Our equipment are designed to excel in Indian conditions and well-suited to take up any project-specific requirement for construction. The wheel loaders have received tremendous response from the market. Our production schedules are running tight, and we are always having high order bookings.
The hurdles we facedOur construction industry suffers from capacity constraints: lack of trained manpower and managerial skills with performance much below international level. We should modernize, train our employees, enhance turnover and change the mindset. The industry is starved of finance. Small and medium contractors don’t have the wherewithal to upgrade their capabilities — both hard and soft — to undertake high-value time bound projects. FIDIC conditions are not rigorously followed and the contract agreements continue to be heavily loaded in favour of the owner and client. Quality, safety, environment and social aspects are also not being addressed appropriately.
The road aheadThe construction equipment industry, overall, is expected to go far in the upcoming years and achieve a global recognition. Rapidly converting the older technology into upgraded form will surely attract attention. New players are also expected in because of massive growth opportunities. Joint ventures would make improved technology and improved mechanized methods are easily available too. Improvement in productivity, reduced operating costs and control of gradation are the major fields which must be worked upon in future. Construction and road making industry would be experiencing comparatively more growth than other units because of some major projects in the pipeline.
Target for 2013I don’t have any number as we need to achieve so much in 2013. Indian construction equipment market is already having an access to the technology, as most of the major global players are here in India. The question: Can we adapt the technology and match up the speed? Five years ago, the Indian construction equipment industry was much smaller, yet we were able to keep up with the pace. We are now much more geared up to do things better because of higher momentum, and we are adapting as well as moving further.