There seems to be a sort of demand balancing happening in the backhoe and wheel loaders market. Manufacturers of backhoe and wheel loaders are now staying increasingly closer to customers so as to create that spurt in demand. According to market estimates, the demand for backhoes in Mumbai and Thane region alone was 900 units in 2011. In 2014, this figure had slipped to 350 units. While this created apprehension, makers of these equipment are trying to appear calm. Most of them are relying purely on the government’s insistence to buoy the infrastructure projects that had been severely lagging.
Rajesh Shrivastava, general manager, marketing and dealer development, Terex India, says, “Remaining attached and staying closer to our customer base helps catch new enquiries and offer innovative solutions for new equipment sales. Our focus on trade in, old machine replacement schemes is helping to increase sales.”
“Backhoes market has pretty much bottomed out.We are expecting the full financial year to be one of positive growth. The demand for backhoe loaders will steadily rise as new project implementation picks up,” says Kairas Vakharia, senior VP, innovation and business head, construction equipment sector, Mahindra & Mahindra.
Vendors are expecting that it could take a couple of years more for the market to pick up and reach 2011 level. While for some, the number of equipment sold in the market continues to remain the same, the proportionate share of the type of equipment has changed and that is where the profitability gets affected. Some are happy with the performance (though the figures are nothing to brag about), while others are struggling to create some space in the pie. However, one thing they are certain about. Backhoes will bring in the revenues in the future too.
In terms of wheel loaders, Amit Gossain, executive vice-president, sales, marketing and business development, JCB India Ltd, says, “It’s specialised equipment and plays a vital part in the overall chain of aggregate management. Like any product, a high degree of reliability is expected by our customers for wheeled loaders. This calls for using high quality components which comes at a cost. The only other way to give value to the customers is to ensure lower operating costs.”
Product innovation is a continuous thing. Over the last couple of years, most vendors have had time to go back to the drawing board to rework some of the features of backhoes and wheel loaders. There have been some quality upgradations in the improved range with changes in engine, cylinders, structures, etc. Ergonomic changes have also found their way in cabins and bonnets. Most of the changes were done based on the feedback received from customers on certain problems they faced. Hence, machines have evolved and now it’s a matter of time before the customers come buying again.
For Mahindra & Mahindra, it is a matter of pride that they pioneered the introduction of joystick controls and telematics in India and have continuously led in terms of fuel consumption. The company also says that the maintenance costs of its loaders are significantly lower than the competition, adds Vakharia.
“Innovations and changes are continuous and ongoing in our product development process. Fuel efficient Kirloskar engines, reliable and faster hydraulics, lowest owning and operating cost, larger cabin with unmatched styling and enhanced interiors are some features which not only comply with key demands of customers like-fuel economy, operator comfort & lower maintenance cost but also distinguish us form other equipment makers,” says Shrivastava of Terex.
Vakharia says, “We have recently introduced the EarthMaster Sx MDI backhoe loader, a 76HP class backhoe loader which is the most fuel efficient in its category, providing 4 litres per hour fuel consumption for excavation. This backhoe loader also comes with an all new loader and cabin. We have also introduced our 4- wheel drive, 6-in-1 bucket variants which will cater to the government segment and export markets.”
Companies are also looking at making reliability an important factor in the loaders. For instance, JCB wheeled loaders are fitted with fuel efficient engines and ZF transmission. This enables the machines to productively work for long hours. The machines also have robust structures to make them work reliably for years. Thus, when you consider cost over life of the machine, JCB loaders are most competitive and offer value for money.
Cost of steel as well as the higher level of bought out content makes cost management challenging in this industry. Mahindra & Mahindra works on a rigorous cost reduction programme year-on-year and have made strong gains in cost reduction over the last four years. The company has begun in-house manufacture of backhoe loader cabins to control both cost as well as provide best-in-class quality.
The focus on engineering and manufacturing all the products are mainly to ensure that the machines are of high quality and serviceable globally. Most prefer to fit the machines with state-of-the-art aggregates and features that increase productivity for the end user. Upgraded backhoes help strengthen position as the fastest digging and loading backhoes in its pack in the toughest strata. Wheel loaders with latest technologies can be made available at very cost competitive levels. “We at Terex not only believe in this, but also are making great progress in this direction. Our strategic tie up with Lonking is helping and with the immense talent pool of efficient engineers, we are doing a lot of good things for our wheel loader customers. Our recently launched 5T and 3T payload loaders are making a mark and customers are very appreciative,” says Shrivastava.
Ease of operation is another factor that matters to customers. Gossain says, “We currently offer three variants in the wheeled loader category – the 430 ZX, the 432ZX and the 430ZX Plus which is the latest addition in this segment. JCB loaders are known for their productivity and efficiency and this new product is no different. It is fitted with unique features like Livelink, ZF Transmission and rugged heavy duty axles. It also offers unmatched operator comfort and ergonomics to increase the productivity of operators and the equipment. They are widely used in the material re-handling segment, ready-made concrete units, mining and quarries, and are gaining popularity in handling solid waste in waste recycling plants.”
In terms of innovative features in the loaders, Gossain says that their wheel loaders are capable of continuous hours of uninterrupted and productive operation. The machines are fitted with multi plate oil immersed disc brakes that makes the machine more effective in any kind of working condition. The recently launched – 430ZX Plus has the saving potential of more than Rs 2 lakh in three years and are fitted with an advanced telematics technology – the Livelink. Livelink allows customers to monitor their machines even from remote locations. Keeping the long working hours in mind, the company has also introduced ergonomically placed operator controls, servo controls and machines with an air conditioner as an option. For the operators, they also offer a kick down button on operating lever for quick interchange of 1st & 2nd gear.
For the backhoes, Mahindra & Mahindra, on the other hand, has regularly evolved its designs over the last four years in the areas of fabricated components, drivelines, engines and hydraulics as well as the cabin. The objective of design changes have been improvement in performance, reliability as well as cost reduction.
Considering that safety is a prime objective of the manufacturers, it is not wrong to assume that all the vendors comply with set safety norms. Speaking for Terex, Shrivastava says, “Safety is not a variable in our business practices; it’s the foundation stone of our business. With this philosophy we take utmost care for our operator safety and comfort while designing our machines. We offer ergonomically designed cabins with tinted safety glass-wide glazed surface glass giving total visibility, larger and spacious cabin with enhanced interiors that provide safety during operations. Boom & Swing lock facility is provided within cabin for operator to control the same while remaining in cabin, in-built loader arm locking strut that provide safety during road transport and idle position are few features that are focused towards the safety of operator.”
In all this, offering total cost of ownership (TCO) is the prime factor for vendors and especially in an environment where sales are dismal. However, on the other hand, customers too are grappling with certain issues. Shrinking business and escalating cost of overheads and operations are becoming the order of the day.
Forming strong dealership networks is another focus for companies. “We have a motivated nationwide dealer network with over 52 dealers with 120 branch offices all across India and the neighbouring countries to ensure availability of local support. As part of a major overhaul exercise of our dealer distribution network and in line with our objective to make the distribution network more responsive to the needs of our customers we have further plans to expand and reach to end user,” says Shrivastava.
Mahindra & Mahindra has around 40 dealers across the country selling backhoe loaders, which will soon an increase by 50% during this financial year.
JCB, in order to ensure that customers receive the best-in-class after-sales support, has established a strong distribution network in the industry with 60 dealers and 600 outlets. Recently, it announced two new dealerships in Kerala – The Popular JCB and Kadoor JCB. With these new additions, the aim is to provide an unmatched product service to our customers. “Our dealers have made strategic investments in setting up world class infrastructure facilities, which are at par with JCB global standards. Currently, our dealers employ over 6,000 people in India out of which over 5,000 look after after-sales support and are regularly trained by JCB India to ensure they are always abreast with the latest in the industry,” says Gossain.
At a macro level, manufacturers believe that the new capex cycle of contractors and corporate buyers will follow substantial funds infusion by the government. The government has to start the investment cycle, read as spending, before others put their money on the block.
Policy development and clarity is helping, but it is scant for a vast country like India, thanks to its diversity of business and commerce and positions taken up by conflicting stake holders.