Undisputedly the most commonly used Construction Equipment, Excavators perform a variety of tasks and find use in many industries and applications. The Indian Construction & Earthmoving Equipment scenario is no different with Excavators constituting nearly 60% of the total market.
Excavators were in use in India mostly by Government entities for large-scale excavation till the late 70s. Private Contractors were largely dependent on manual labour for executing Excavation jobs for various works on Road/Rail/Irrigation projects. Excavators from various global players like Caterpillar, Demag, O & K, Liebherr, etc. were to be found working with Government Projects/Companies.
Manufacturing in India was taken up initially by the state-owned BEML in collaboration with KOMATSU, Japan and subsequently by the L & T Group having a tie-up with Poclain SA, France. It was around this time that large Projects involving huge excavations were launched and the Contractors were expected to use machines to complete the Works in prescribed timelines. The days of excavation using manual labour were probably over.
L & T enjoyed a virtual monopoly for several years before other manufacturers like Tata-Hitachi and Stanford-Eder emerged on the scene in the early 80s and provided a choice to the Indian Customer. The Excavator market has been growing almost consistently thereafter reaching substantial numbers in the 90s, thereby attracting other international players like Volvo, Hyundai, Doosan, Caterpillar, Kobelco, etc along with some Chinese manufacturers like Sany. The Indian market was largely unaffected by the global downturn in 2008 and continued to grow in size. However, the market did see a negative trend in recent years primarily due to political, economic and execution bottlenecks within the country.
In spite of the prevailing shortfall in growth projections for the Indian market, most analysts agree that the Indian market will definitely see a boom in the short or medium term, once the Infrastructure potential is realized. Many Companies have already invested in local manufacturing capacities to take advantage but are now having to carry the burden till the projected demand is there.
Actually, on closer observation, one can notice some changes taking place. As the overall market size has shrunk in the last few years, Customers are gradually seeking more Value for money with productivity and fuel economy becoming increasingly important criteria. This is a definite shift in the market from low-cost low-end machines to higher-end machines with better fuel and output advantages. This is becoming noticeable and some Companies are responding by upgrading their earlier models with more current technologies and features.
The overall need for creating/improving the infrastructure (Roads, Power, Ports, Airports, Railways, etc) continues to drive Companies to anticipating a boom in the very near future. So far, the expectations have been belied by a painfully slow pace of progress especially when compared to the rapid growth in China. A lot is expected from the next Government in power after the current General Elections – provided it is a stable one with a clear focus on moving ahead on the growth path and addressing the critical issues before the economy and industry. Five years of good governance can still bring in the much-awaited “boom”.
Another aspect of the business which is becoming significant is the quality of after-sales support and the expectations of Customers vis-a-vis equipment performance and reliability not just during the warranty period but throughout its primary life span. Customers seek commitments on fuel consumption, hourly output, machine availability, service/ spare parts availability, etc.
One thing is certain – the Customer is having the best of everything and is in a position to negotiate with strength. Also, this situation will bring out the best in most Companies. Manufacturers with good Value propositions, strong Customer focus and innovative strategies can definitely expect an increasing market share.
Some Companies are looking at options like adding new related products (Wheel Loaders, Backhoe Loaders, Motor Graders, etc), or extending the range of their products (new models/segments), or even introduce some add-on business like attachments.
S K Jaruhar
Advisor – Support Services
Kobelco Construction Equipment India Pvt. Ltd.